Congressional Record, Volume 143 Issue 93 (Friday, June 27, 1997)

[Congressional Record Volume 143, Number 93 (Friday, June 27, 1997)]
[Senate]
[Pages S6670-S6720]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

REVENUE RECONCILIATION ACT OF 1997

The PRESIDING OFFICER. Under the previous order, the Senate will now
resume consideration of Senate bill 949, which the clerk will report.
The assistant legislative clerk read as follows:

A bill (S. 949) to provide revenue reconciliation pursuant
to section 104(b) of the concurrent resolution on the budget
for fiscal year 1998.

The Senate resumed consideration of the bill.
Pending:

Dorgan amendment No. 515, to authorize the Secretary of the
Treasury to abate the accrual of interest on income tax
underpayments by taxpayers located in Presidentially declared
disaster areas if the Secretary extends the time for filing
returns and payment of tax (and waives any penalties relating
to the failure to so file or so pay) for such taxpayers.
Dorgan Amendment No. 516, to provide tax relief for
taxpayers located in Presidentially declared disaster areas.
Jeffords amendment No. 522, to provide for a trust fund for
District of Columbia school renovations.
Domenici-Lautenberg amendment No. 537, to implement the
enforcement provisions of the Bipartisan Budget Agreement,
enforce the Balanced Budget Act of 1997, extend the Budget
Enforcement Act of 1990 through fiscal year 2002, and make
technical and conforming changes to the Congressional Budget
and Impoundment Control Act of 1974 and the Balanced Budget
and Emergency Deficit Control Act of 1985.
Biden amendment No. 539 (to amendment No. 537), to provide
for the transfer of funds from the general fund to the
Violent Crime Reduction Trust Fund.
Nickles modified amendment No. 551, to provide for an
increase in deduction for health insurance costs of self-
employed individuals, and to modify rules for allocating
interest expense to tax-exempt interest.
Gramm amendment No. 552, to allow families to decide for
themselves how best to use their child tax credit.
Kerry amendment No. 554, to allow payroll taxes to be
included in the calculation of tax liability for receiving
the children's tax credit.

Amendment No. 551, as Modified

The PRESIDING OFFICER. The pending business is the Nickles amendment
No. 551, with 2 minutes equally divided for debate.
Mr. NICKLES. Mr. President, on behalf of myself, Senator Hagel,
Senator Abraham, Senator Domenici, and others, the amendment that we
proposed last night we have modified. We did receive some requests from
Senators to delete the provision that dealt with corporate
deductibility of tax exempts. That was not a major portion of the
amendment. We did delete that.
I might mention I think it is a good provision. It is a provision
that is in the House bill, so it will be in conference.
Mr. President, this amendment accelerates self-employed deductibility
for insurance. It allows self-employed individuals to be able to deduct
a greater proportion of their health insurance needs. It increases it.
For example, in 1997, current law is 40 percent; it increases it to 50
percent. In 1999 it increases it to 60 percent. And so on.
Mr. President, I ask for the yeas and nays on the amendment.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
Mr. KERREY. I am not in opposition, but with the 2-percent provision
stricken, I ask unanimous consent to be added as a cosponsor to this
amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. NICKLES. I also ask unanimous consent that Senator Thurmond be
added as a cosponsor.
The PRESIDING OFFICER. Without objection, it is so ordered.
The question is on agreeing to the amendment.
The yeas and nays have been ordered.
The clerk will call the roll.
The assistant legislative clerk called the roll.
Mr. NICKLES. I announce that the Senator from Kansas [Mr. Roberts] is
necessarily absent.
Mr. FORD. I announce that the Senator from Illinois [Ms. Moseley-
Braun] is necessarily absent.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The result was announced--yeas 98, nays 0, as follows:

[Rollcall Vote No. 138 Leg.]

YEAS--98

Abraham
Akaka
Allard
Ashcroft
Baucus
Bennett
Biden
Bingaman
Bond
Boxer
Breaux
Brownback
Bryan
Bumpers
Burns
Byrd
Campbell
Chafee
Cleland
Coats
Cochran
Collins
Conrad
Coverdell
Craig
D'Amato
Daschle
DeWine
Dodd
Domenici
Dorgan
Durbin
Enzi
Faircloth
Feingold
Feinstein
Ford
Frist
Glenn
Gorton
Graham
Gramm
Grams
Grassley
Gregg
Hagel
Harkin
Hatch
Helms
Hollings
Hutchinson
Hutchison
Inhofe
Inouye
Jeffords
Johnson
Kempthorne
Kennedy
Kerrey
Kerry
Kohl
Kyl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lott
Lugar
Mack
McCain
McConnell
Mikulski
Moynihan
Murkowski
Murray
Nickles
Reed
Reid
Robb
Rockefeller
Roth
Santorum
Sarbanes
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Specter
Stevens
Thomas
Thompson
Thurmond
Torricelli
Warner
Wellstone
Wyden

NOT VOTING--2

Moseley-Braun
Roberts

The amendment (No. 551), as modified, was agreed to.
Mr. ROTH. Mr. President, I move to reconsider the vote by which the
amendment was agreed to.
Mr. LOTT. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. LOTT addressed the Chair.
The PRESIDING OFFICER. The majority leader.
Mr. LOTT. Mr. President, I ask unanimous consent that the remaining
votes in sequence be limited to 10 minutes in length.
The PRESIDING OFFICER. Is there objection?
Mr. REID. Mr. President, reserving the right to object, is this going
to be a real 10 minutes?
Mr. LOTT. Mr. President, I can respond to that question. I was just
fixing to say that the 10 minutes be strictly enforced. Please don't
leave the Chamber. We just had a couple of Senators that didn't make
that vote because it had been beyond the normal time. When the 10
minutes is up we are going to turn it in.

[[Page S6671]]

The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ROTH. Mr. President, I have a further unanimous consent.
Mr. President, I am asking unanimous consent that following the
previously ordered stacked vote that the remainder of the sequence be
in an alternating fashion with the two managers determining the order.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.
Mr. ROTH. Mr. President, I ask unanimous consent that following the
disposition of the Kerry amendment No. 554 that Senator Domenici be
recognized to offer an amendment No. 537, to be followed by the
amendments in the following order: Biden-Gramm, Gramm, Bumpers, Craig,
Brownback, Frist, Abraham, and Byrd.
The PRESIDING OFFICER. Without objection, it is so ordered.

Amendment No. 552

Mr. ROTH. Mr. President, what is the order of business before us?
The PRESIDING OFFICER. The pending amendment is the Gramm of Texas
amendment No. 552.
Mr. ROTH. I yield the floor.
The PRESIDING OFFICER. The debate is limited to 2 minutes equally
divided.
The Senator from Texas.
Mr. GRAMM. Mr. President, from the very beginning of this tax debate
we have talked about a $500 tax credit per child. And the logic has
been to let working families decide how to spend their money on their
children. Then suddenly out of the Finance Committee on a very close
vote has come a provision that says we are going to give you a $500 tax
credit but you get it only if you use it the way we determine you
should use it, which is to have an educational IRA. I think educational
IRAs are wonderful, if you can afford them. But the whole purpose of
the $500 tax credit was to let working families decide.
I know the Senate is full of brilliant people, and we think we can
decide things for families better than they can. But that violates the
agreement we had with the American people on this bill. We hear every
time an issue is debated that this violates the commitment to the
Congress, or it violates the commitment to the President. This
provision violates the commitment to the American people, and all of us
talk about a $500 tax credit. We talk about parents choosing. Let's let
them choose.
Mr. ROTH addressed the Chair.
The PRESIDING OFFICER. There is 1 minute to the opposition.
Mr. ROTH. Mr. President, I strongly oppose this amendment.
We had two goals in this legislation: To provide tax relief to the
family, to provide assistance for higher education to the families, and
this carefully crafted compromise does exactly that.
I yield what time is remaining to the Senator from Louisiana.
The PRESIDING OFFICER. The Senator from Louisiana.
Mr. BREAUX. The problem of bringing up the amendment is there is no
requirement that the tax credit be used for the child. This is a per-
child tax credit. We think there should be at least some encouragement
that it be used for the child.
Mr. KERREY. Mr. President, this provision would change American
families with children, and it will generate more wealth. It is good
for American families. We have been talking about it. In addition to
the child tax credit, there are a number of us--Republicans and
Democrats--talking about ways to make this tax credit a vehicle for
generating wealth for the last few years. It is a good provision.
I hope my colleagues will vote against the motion to strike.
The PRESIDING OFFICER. The time has expired.
Mr. ROTH. I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on agreeing to the amendment
of the Senator from Texas. On this question, the yeas and nays have
been ordered, and the clerk will call the roll.
The legislative clerk called the roll.
The result was announced--yeas 46, nays 54, as follows:

[Rollcall Vote No. 139 Leg.]

YEAS--46

Abraham
Akaka
Allard
Ashcroft
Bond
Brownback
Burns
Campbell
Coats
Collins
Conrad
Coverdell
D'Amato
DeWine
Domenici
Dorgan
Enzi
Faircloth
Frist
Gramm
Grams
Hagel
Helms
Hutchinson
Hutchison
Inhofe
Johnson
Kempthorne
Kyl
Lugar
McCain
McConnell
Murkowski
Nickles
Roberts
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Thomas
Thompson
Thurmond
Warner
Wellstone

NAYS--54

Baucus
Bennett
Biden
Bingaman
Boxer
Breaux
Bryan
Bumpers
Byrd
Chafee
Cleland
Cochran
Craig
Daschle
Dodd
Durbin
Feingold
Feinstein
Ford
Glenn
Gorton
Graham
Grassley
Gregg
Harkin
Hatch
Hollings
Inouye
Jeffords
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lott
Mack
Mikulski
Moseley-Braun
Moynihan
Murray
Reed
Reid
Robb
Rockefeller
Roth
Sarbanes
Specter
Stevens
Torricelli
Wyden
The amendment (No. 552) was rejected.
Mr. ROTH. Mr. President, I move to reconsider the vote.
Mr. SANTORUM. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
The PRESIDING OFFICER. May we have order, please.
Mr. ROTH. Mr. President, what is the pending order?
Mr. MOYNIHAN. Mr. President, we must have order.
The PRESIDING OFFICER. We will not proceed until there is order in
the Chamber.

Amendment No. 554

The PRESIDING OFFICER. The pending question is on the Kerry of
Massachusetts amendment No. 554.
Mr. ROTH. Mr. President, I yield the floor.
Mr. KERRY. Mr. President, may we have order.
The PRESIDING OFFICER. Two minutes equally divided. The Senator from
Massachusetts.
Mr. KERRY. May we have order, Mr. President.
The PRESIDING OFFICER. May we have order, please.
Mr. KERRY. Mr. President, we just heard the Senator from Texas talk
about getting a child tax credit for children. Under the child tax
credit as it is written in the Finance Committee bill, 99 percent of
the children eligible in the lowest 20 percent of income will not get
it; 86 percent of the children in the next quintile will not get it.
This is because, as we all know, most people in America pay their taxes
by the payroll tax.
What I do in my amendment is take the Contract With America provision
that was supported by Senator Gramm, Senator Lott, and Senator Coats
and apply a refundable tax credit so that we expand by 7 million the
number of children who will be given a tax credit. If we really want
the working people of America to get this credit, it is appropriate
that a working family that is earning $22,000 with two parents and two
children be able to get the credit. Under the current legislation, they
would not get the credit.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. KERRY. Only by the Contract With America provision can we expand
the number of children.
The PRESIDING OFFICER. One minute in opposition. The Senator from
Oklahoma.
Mr. NICKLES. Mr. President, I urge any colleagues to vote no on the
Kerry amendment. This is really an amendment to make the credit
refundable. Another way of saying that, this is a way for the Federal
Government to spend more money. Costed out, the outlays will increase
in this bill under this amendment by $22 billion over 5 years, by $47
billion over 10 years.
I might mention, refundable credits are one of the most fraudulent in
government. The EITC program has exploded. It has an error rate of over
25 percent. This is an amendment to redistribute wealth, and it denies
tax credits for families that have incomes above $60,000. I urge my
colleagues to vote no on this amendment.
Mr. DOMENICI. Mr. President, I rise to make a point of order against
the

[[Page S6672]]

amendment. It would increase outlays by $22 billion over 5 years, $47
billion over 10 years and it thus violates section 302(b) of the Budget
Act.
Mr. KERRY addressed the Chair.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KERRY. Mr. President, this is revenue neutral, and I move to
waive the Budget Act to accept a revenue neutral amendment.
The PRESIDING OFFICER. Does the Senator ask for the yeas and nays?
Mr. ROTH. Yeas and nays.
Mr. KERRY. I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second? There is a
sufficient second.
The PRESIDING OFFICER. The yeas and nays were ordered.
There are 2 minutes equally divided on this vote.
The Senator from Massachusetts.
Mr. KERRY. Mr. President, let me just say to my colleagues this does
not cost one penny additional because we change the phase-in. It is
$100,000 plus that you extended to the people in the Finance Committee.
I put the phaseout at $65,000 to $70,000, and we phase in the children
by age. So there is no impact on the budget. It is revenue neutral.
Mr. NICKLES addressed the Chair.
The PRESIDING OFFICER. May we have order, please.
Mr. KERRY. And it extends it to 7 million additional children. You
cannot say you are covering working children in America if a working
family is not able to take advantage of the credits.
The PRESIDING OFFICER. The time has expired.
Mr. NICKLES addressed the Chair.
The PRESIDING OFFICER. If we can all have order, please.
The Senator from Oklahoma has 1 minute.
Mr. NICKLES. Mr. President, I am advised by the Senator from New
Mexico that the low-income family with two children under the EITC
Program, if they have incomes of about $14,000, receive a refundable
tax credit of $3,680, a lot more than their total tax liability. The
Senator from Massachusetts wants to add to that and increase outlays by
$22 billion.
Mr. DOMENICI addressed the Chair.
The PRESIDING OFFICER. The Senator from New Mexico.
Mr. DOMENICI. Mr. President, there is a budget point of order,
neutrality or no neutrality. The expenditures in this amendment exceed
the expenditures that are allocated under the budget resolution, and
the Budget Act says you cannot spend more than is allocated to the
committee, regardless of whether it is neutral or not.
Mr. BYRD. Mr. President, may we have order in the Chamber.

Vote on Motion to Waive the Budget Act

The PRESIDING OFFICER. The Senate will be in order. The question is
on agreeing to the motion to waive the point of order. The yeas and
nays have been ordered. The clerk will call the roll.
The assistant legislative clerk called the roll.
Mr. FORD. I announce that the Senator from Illinois [Mr. Durbin] is
necessarily absent.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
who desire to vote?
The yeas and nays resulted--yeas 39, nays 60, as follows:

[Rollcall Vote No. 140 Leg.]

YEAS--39

Akaka
Biden
Bingaman
Boxer
Breaux
Bumpers
Cleland
Coats
Collins
Conrad
Daschle
Dodd
Dorgan
Feingold
Feinstein
Ford
Glenn
Harkin
Hollings
Inouye
Jeffords
Johnson
Kennedy
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Mikulski
Murray
Reed
Reid
Robb
Sarbanes
Specter
Torricelli
Wellstone
Wyden

NAYS--60

Abraham
Allard
Ashcroft
Baucus
Bennett
Bond
Brownback
Bryan
Burns
Byrd
Campbell
Chafee
Cochran
Coverdell
Craig
D'Amato
DeWine
Domenici
Enzi
Faircloth
Frist
Gorton
Graham
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Kempthorne
Kerrey
Kyl
Lieberman
Lott
Lugar
Mack
McCain
McConnell
Moseley-Braun
Moynihan
Murkowski
Nickles
Roberts
Rockefeller
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Stevens
Thomas
Thompson
Thurmond
Warner

NOT VOTING--1

Durbin

The PRESIDING OFFICER. On this vote the nays are 60, the ayes are 39.
Three-fifths of the Senators duly chosen and sworn not voting in the
affirmative, the motion is rejected. The point of order is sustained
and the amendment falls.
Mr. ROTH. Mr. President, I move to reconsider the vote.
Mr. MOYNIHAN. I move to lay that motion on the table.
The motion to lay on the table was agreed to.

Amendment No. 537

The PRESIDING OFFICER. The question now is on the Domenici amendment
No. 537, to which the pending business is the second-degree amendment,
No. 539.
The Senator from New Mexico.

Amendment No. 539 To Amendment No. 537

Mr. DOMENICI. I do not see Senator Biden on the floor but I do see
Senator Gramm. Do you object if I modify my amendment to include your
Biden-Gramm amendment, so when we vote on mine we would be taking yours
with us?
Mr. GRAMM. Why don't we put it on my amendment?
Mr. DOMENICI. I will object. Do you object?
Mr. GRAMM. No, being a sweet, wonderful person, I will not object.
Mr. DOMENICI. Being that everyone in the Chamber would want it to
happen, he agrees.
The PRESIDING OFFICER. Is there objection? Hearing none, it is so
ordered.
The amendment (No. 539) was agreed to.

Amendment No. 537, as Amended

The PRESIDING OFFICER. There will be 2 minutes equally divided.
Mr. DOMENICI. Mr. President, I am the proponent of the waiver at this
point, so I get 1 minute for the waiver.
All we have done here is taken current law, with reference to points
of order and the processes that we have to enforce budgets, the pay-go,
and what we put in is the 5-year caps which we did on the last 5-year
budget. We only did 2 years on the defense wall instead of 5. That
exists today.
Mr. MOYNIHAN. Mr. President, we must have order.
The PRESIDING OFFICER (Ms. Collins). The Senate will be in order.
Mr. DOMENICI. So, in order to enforce the agreement that we are
claiming is a balanced budget, we must adopt this amendment or it is
unenforceable, in terms of the appropriated accounts.
Mr. MOYNIHAN. Madam President, might I just take a moment to observe
that, with no uproar, we are about to do something rather important. In
this vote on budget procedures we are going to legislate a change in
the inflation index used to update official calculations of baseline
spending.
Under section 257 of the Balanced Budget and Emergency Deficit
Control Act of 1985 (Gramm-Rudman-Hollings), required inflation
adjustments are made using a ``fixed-weight index'' produced by the
Commerce Department's Bureau of Economic Analysis. Section 1559(a)(3),
of the changes in budget enforcement procedures now before us, require
that in the future the adjustments should be based on the ``domestic
product chain-type price index''--also produced by the Bureau of
Economic Analysis. Given the improvements in index number theory, this
is a perfectly appropriate change.
Might I also just remind my colleagues that the Department of Labor's
Bureau of Labor Statistics compiles two other indexes used by the
Government--CPI-U which is used to adjust provisions of the Tax Code
and CPI-W which is used to adjust benefits such as Social Security.
For the record I note that none of these indexes give the same
estimate of inflation.
Here are the numbers for 1996:

[In percent]

CPI-U...............................................................3.0
CPI-W...............................................................2.9
Fixed Weight Price Index............................................2.3
Chain Weight Price Index............................................2.1

Today's vote on budget procedures should be recalled when we return--
as we must--to the issue of producing an accurate cost of living index
for the purpose of automatic indexation of

[[Page S6673]]

Government programs. No one is referring to today's legislative actions
as ``politicizing'' the calculation of budget updates. We are just
getting the numbers right.
And no one should refer to legislating a correction in automatic
indexation formulas as a ``political'' fix.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. BIDEN. Madam President, I ask unanimous consent that Senators
Hatch and Gregg be added as cosponsors to the amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DOMENICI. Madam President, I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The Senator from Texas.
Mr. GRAMM. Madam President, I would like the 1 minute on the Biden-
Gramm second-degree amendment.
The PRESIDING OFFICER. The 1 minute has expired.
Mr. GRAMM. But we have a second-degree amendment that was added to
the Domenici amendment by unanimous consent. We would like it.
The PRESIDING OFFICER. The amendment has been accepted. All time has
expired.
Mr. DOMENICI. I ask consent that he gets 1 minute. It is fair.
The PRESIDING OFFICER. Without objection, it is so ordered. The
Senator from Texas.
The Senate will be in order.
Mr. GRAMM. Let me take 30 seconds and allow Senator Biden to have the
other 30 seconds. Our colleagues will remember that we set up a violent
crime trust fund to guarantee adequate funding for law enforcement, and
for our antidrug effort. That provision was set to expire and all we
are doing in this amendment is simply extending that trust fund. This
is a mightily important matter. I am confident no one is going to
oppose it. I simply wanted to make note of what we are doing. I yield
the remainder of the time.
Mr. BIDEN. Madam President, there is nothing to add. This is simply
extending the extent, the life of this agreement--the existence of the
trust fund.

Vote On Amendment No. 537, As Amended

The PRESIDING OFFICER. All time has expired. The question is on
agreeing to the amendment. The yeas and nays have been ordered.
The clerk will call the roll.
The legislative clerk called the roll.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
who desire to vote?
The result was announced, yeas 98, nays 2, as follows:

[Rollcall Vote No. 141 Leg.]

YEAS--98

Abraham
Akaka
Allard
Ashcroft
Baucus
Bennett
Biden
Bingaman
Bond
Boxer
Breaux
Brownback
Bryan
Burns
Byrd
Campbell
Chafee
Cleland
Coats
Cochran
Collins
Conrad
Coverdell
Craig
D'Amato
Daschle
DeWine
Dodd
Domenici
Dorgan
Durbin
Enzi
Faircloth
Feingold
Feinstein
Ford
Frist
Glenn
Gorton
Graham
Gramm
Grams
Grassley
Gregg
Hagel
Harkin
Hatch
Helms
Hollings
Hutchinson
Hutchison
Inhofe
Inouye
Jeffords
Johnson
Kempthorne
Kennedy
Kerrey
Kerry
Kohl
Kyl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lott
Lugar
Mack
McCain
McConnell
Mikulski
Moseley-Braun
Moynihan
Murkowski
Murray
Nickles
Reed
Reid
Robb
Roberts
Rockefeller
Roth
Santorum
Sarbanes
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Specter
Stevens
Thomas
Thompson
Thurmond
Torricelli
Warner
Wyden

NAYS--2

Bumpers
Wellstone

The amendment (No. 537), as amended, was agreed to.
Mr. MOYNIHAN. Madam President, I move to reconsider the vote by which
the amendment was agreed to.
Mr. DOMENICI. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. DOMENICI addressed the Chair.
The PRESIDING OFFICER. The Senator from New Mexico.
Mr. DOMENICI. Madam President, what actually happened on that vote,
the Parliamentarian misunderstood and he had us vote up or down on this
amendment, and I had asked that it be a waiver of the Budget Act. In
light of the fact we have--how many votes?
The PRESIDING OFFICER. Ninety-eight yeas.
Mr. DOMENICI. I would like to clear the amendment and make sure we
have waived the Budget Act for this amendment so it is no longer
possible to raise a point of order against it.
So I move to waive the Budget Act for consideration of this amendment
to this bill and any conference report that returns with it in.

Vote on Motion to Waive the Budget Act

The PRESIDING OFFICER. The question is on agreeing to the motion to
waive the Budget Act with respect to amendment No. 539, as amended.
The motion was agreed to.
Mr. MOYNIHAN. Madam President, I move to reconsider the vote by which
the motion was agreed to.
Mr. ROTH. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. ROTH. The next amendment is Senator Gramm's.
The PRESIDING OFFICER. The Senator from Texas is recognized.

Amendment No. 566

(Purpose: To guarantee a balanced Federal budget and expand tax relief
options)

Mr. GRAMM. Madam President, let me remind everybody that in the
budget that we are enforcing here, we had $7 billion of net deficit
reduction as compared to current policy. Ninety-seven percent of
deficit reduction was simply assumed. That deficit reduction and policy
changes has now fallen to $1 billion because we are short on spectrum.
Everything we are doing in balancing the budget is based on
assumptions. The only enforcement mechanism we now have is on
discretionary spending, and the first act in considering this budget
was waiving that discretionary spending cap in the last budget.
My amendment sets out the deficit reduction targets that we have
committed to and enforces them with an across-the-board cut if we
refuse to meet them. Also, my provision says that in paying for a tax
cut, you can pay for it by cutting entitlements, by raising other taxes
or by lowering the discretionary spending caps. So it gives us the
option in the future, if we ever do another tax cut, to not have to cut
Medicare in order to pay for tax cuts, so that if we want to reduce
discretionary spending and put a spending cap in place, we can do it.
This budget has a lot of assumptions in it. We need as strong as
possible an enforcement. If you want strong enforcement, vote for this
amendment.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. LAUTENBERG addressed the Chair.
The PRESIDING OFFICER. The Senator from New Jersey.
Mr. LAUTENBERG. Madam President, I oppose the Gramm amendment. The
amendment would radically change current budget rules by allowing
temporary, unspecified cuts in discretionary programs to pay for
permanent tax cuts. That would violate the bipartisan budget agreement
and could explode the deficit in the future.
This amendment also brings back the discredited Gramm-Rudman system
of automatic across-the-board cuts, the system that led to a
proliferation of gimmicks and rosy scenarios, and we didn't
significantly reduce the deficit until we got rid of it.
Madam President, fool me once, shame on you; fool me twice, shame on
us. I yield the remainder of my time to my colleague from New Mexico.
The PRESIDING OFFICER. The Senator from New Mexico.
Mr. DOMENICI. Madam President, Gramm-Rudman-Hollings didn't work
before, and it won't work the next time. The Senator from Texas would
like to put back into effect Gramm-Rudman-Hollings automatic sequesters
if you miss your targets. As a Senator, I personally don't believe you
ought to offset appropriated accounts, to cut them to put in permanent
tax cuts. I think that deserves far more consideration than 30 seconds
on the floor of the Senate.
Mr. LAUTENBERG. Madam President, I raise a point of order that the
pending amendment is extraneous and violates section 313(b)(1)(A) of
the Congressional Budget Act.

[[Page S6674]]

The PRESIDING OFFICER. If the Senator will withhold, the clerk will
first report the amendment.
The bill clerk read as follows:

The Senator from Texas [Mr. Gramm] proposes an amendment
numbered 566.

Mr. GRAMM. Madam President, I ask unanimous consent that the reading
of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

At the appropriate place, add the following:

SEC. . GUARANTEED BALANCED BUDGET.

(a) Maximum Deficit Amount.--Section 253 of the Balanced
Budget and Emergency Deficit Control Act of 1985 is amended--
(1) in subsection (b), in the last sentence by striking the
period and inserting ``and $10,000,000,000 for fiscal years
1998 and thereafter.''; and
(2) by striking subsections (g) and (h) and inserting the
following:
``(g) Maximum Deficit Amount.--In this section--
``(1) Notwithstanding any provision of this or the term
`deficit' shall have the same meaning as the term `deficit'
in section 3(6) of the Congressional Budget and Impoundment
Control Act of 1974 as on the day before the date of
enactment of the Budget Enforcement Act of 1990; and
``(2) the term `maximum deficit amount' means--
``(A) with respect to fiscal year 1998, $90,500,000,000;
``(B) with respect to fiscal year 1999, $89,500,000,000;
``(C) with respect to fiscal year 2000, $82,900,000,000;
``(D) with respect to fiscal year 2001, $53,100,000,000;
``(E) with respect to fiscal year 2002 and fiscal years
thereafter, zero.''
(b) Look-Back Sequester.--Section 253 of the Balanced
Budget and Emergency Deficit Control Act of 1985 is amended
by adding at the end thereof the following new subsection:
``(h) Look-Back Sequester.--
``(1) In general.--On July 1 of each fiscal year, the
Director of OMB shall determine if laws effective during the
current fiscal year will cause the deficit to exceed the
maximum deficit amount for such fiscal year. If the limit is
exceeded, there shall be a preliminary sequester of July 1 to
eliminate the excess.
``(2) Permanent sequester.--Budget authority sequestered on
July 1 pursuant to paragraph (1) shall be permanently
canceled on July 15.
``(3) No margin.--The margin for determining a sequester
under this subsection shall be zero.
``(4) Squestration procedures.--The provision of
subsections (c), (d), and (e) of this section shall apply to
a sequester under this subsection.''
(c) Offsetting Tax Cuts With Cuts in Discretionary
Spending.--Section 252 of the Balanced Budget and Emergency
Deficit Control Act of 1985 is amended by adding at the end
the following:
``(f) Offsets With Discretionary Spending.--For purposes of
subsection (b), revenue reductions increasing the deficit may
be offset by reductions in discretionary appropriated amounts
reducing the deficit.''.
(d) Adjustment of Discretionary Spending Levels for Tax
Cuts.--Section 251(b)(2) of the Balanced Budget and Emergency
Deficit Control Act of 1985 is amended by adding at the end
the following:
``(I) Tax relief adjustments.--If, for any fiscal year or
years, appropriations for discretionary appropriations are
reduced that Congress and the President designate in statute
as offsets for tax relief, the adjustments shall be the total
amount of such reductions in appropriations in discretionary
accounts and the outlays flowing in all years from such
reduction.''
(e) Notwithstanding, any provision of this or any other
Act, section 253 of the Balanced Budget and Emergency Deficit
Control Act is extended through fiscal year 2002.

The PRESIDING OFFICER. The Senator from Texas.
Mr. GRAMM. Madam President, under section 904 of the Budget Act, I
move to waive the point of order against the pending amendment, and I
ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.

Vote on Motion to Waive the Budget Act

The PRESIDING OFFICER. The question is on agreeing to the motion to
waive the Budget Act with respect to amendment No. 566. The yeas and
nays have been ordered. The clerk will call the roll.
The legislative clerk called the roll.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The yeas and nays resulted--yeas 37, nays 63, as follows:

[Rollcall Vote No. 142 Leg.]

YEAS--37

Abraham
Allard
Ashcroft
Bond
Brownback
Coats
Collins
Coverdell
Craig
Enzi
Faircloth
Frist
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hollings
Hutchinson
Hutchison
Inhofe
Kempthorne
Kyl
Lott
Mack
McCain
McConnell
Nickles
Santorum
Sessions
Shelby
Smith (NH)
Thomas
Thompson
Thurmond

NAYS--63

Akaka
Baucus
Bennett
Biden
Bingaman
Boxer
Breaux
Bryan
Bumpers
Burns
Byrd
Campbell
Chafee
Cleland
Cochran
Conrad
D'Amato
Daschle
DeWine
Dodd
Domenici
Dorgan
Durbin
Feingold
Feinstein
Ford
Glenn
Gorton
Graham
Harkin
Inouye
Jeffords
Johnson
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lugar
Mikulski
Moseley-Braun
Moynihan
Murkowski
Murray
Reed
Reid
Robb
Roberts
Rockefeller
Roth
Sarbanes
Smith (OR)
Snowe
Specter
Stevens
Torricelli
Warner
Wellstone
Wyden
The PRESIDING OFFICER. On this vote the yeas are 37, the nays are 63.
Three-fifths of the Senators duly chosen and sworn not having voted in
the affirmative, the motion is rejected. The point of order is
sustained, and the amendment falls.
Mr. ROTH. I move to reconsider the vote.
Mr. MOYNIHAN. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
The PRESIDING OFFICER. Under the previous order, the Senator from
Arkansas is recognized to offer an amendment on which there will be 2
minutes of debate equally divided.
The Senator from Arkansas.

Amendment No. 568

(Purpose: To prohibit the scoring, for budget purposes, of revenues
associated with the sale of certain federal lands)

Mr. BUMPERS. Madam President, I send an amendment to the desk.
The PRESIDING OFFICER. The clerk will report the amendment.
The bill clerk read as follows:

The Senator from Arkansas [Mr. Bumpers] proposes an
amendment numbered 568.

Mr. BUMPERS. Madam President, I ask unanimous consent that further
reading of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

At the appropriate place add the following:
``(f) Budgetary Treatment of Sales of Certain Federal
Lands.--The amounts realized from the sale or lease of lands
or interests in lands which are part of the National Park
System, the Forest Service System or the U.S. Fish and
Wildlife refuge system shall not be scored with respect to
the level of budget authority, outlays, or revenues.''

Mr. BUMPERS. Madam President, this amendment will prohibit the
scoring of the sale of any lands from a national park or a national
wildlife refuge or Forest Service lands.
To my colleagues, I want to say, I have witnessed over the past 10
years an irresistible urge on the part of some of my colleagues to
dispose of some of the national treasures of this country, even
suggesting a commission to determine which lands, which national parks,
we can do without and sell.
This amendment is designed to do two things. No. 1, it is designed to
discourage that by making it impossible to score the proceeds from a
sale of national parks, Forest Service lands, or wildlife refuges in a
reconciliation bill; and, No. 2, I want to say that I think it is a
terrible practice. When I was Governor, I never allowed a one-time
asset to be used in the budget.
Finally, to those who would say, well, this will keep us from leasing
ANWR, that is simply not true. You can lease ANWR. You can lease
anything, wildlife refuge or otherwise, but you cannot use it as an
asset in the reconciliation bill.
I yield back such time as I may have.
The PRESIDING OFFICER. The Senator from New Mexico is recognized.
Mr. DOMENICI. Madam President, fellow Senators, the bipartisan budget
agreement and the Domenici-Lautenberg amendment revised the asset sale
scoring rule. The new rule prohibits scoring asset sales that would
lead to a financial loss to the Government.
Much work has gone into this. Democrats and Republicans have worked
on it. Senator Bumpers wants to make a special exception for public
lands.

[[Page S6675]]

Let me suggest the awesome situation that he has talked about never
has happened in the U.S. Senate. We have never tried to sell national
parks. We have never had any commission to sell national parks.
Somebody in the House had a wild idea, and, frankly, that is never
going to happen here.
As a matter of fact, this amendment, what we have already adopted,
says that if there is any financial loss to the Government, you cannot
count an asset sale.
I make a point of order against the Bumpers amendment. It violates
section 313 of the Budget Act.
Mr. BUMPERS. Madam President, I move to waive the Budget Act for
Senate consideration of my amendment.
I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.

Vote on Motion to Waive the Budget Act

The PRESIDING OFFICER. The question occurs on agreeing to the motion
to waive the Budget Act. The yeas and nays have been ordered. The clerk
will call the roll.
The bill clerk called the roll.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The yeas and nays resulted--yeas 48, nays 52, as follows:

[Rollcall Vote No. 143 Leg.]

YEAS--48

Akaka
Biden
Bingaman
Boxer
Bryan
Bumpers
Byrd
Chafee
Cleland
Collins
Conrad
Daschle
Dodd
Dorgan
Durbin
Feingold
Ford
Glenn
Graham
Gregg
Harkin
Hollings
Inouye
Jeffords
Johnson
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Mikulski
Moseley-Braun
Moynihan
Murray
Reed
Reid
Robb
Rockefeller
Sarbanes
Snowe
Specter
Torricelli
Wellstone
Wyden

NAYS--52

Abraham
Allard
Ashcroft
Baucus
Bennett
Bond
Breaux
Brownback
Burns
Campbell
Coats
Cochran
Coverdell
Craig
D'Amato
DeWine
Domenici
Enzi
Faircloth
Feinstein
Frist
Gorton
Gramm
Grams
Grassley
Hagel
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Kempthorne
Kyl
Lott
Lugar
Mack
McCain
McConnell
Murkowski
Nickles
Roberts
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Stevens
Thomas
Thompson
Thurmond
Warner
The PRESIDING OFFICER. On this question, the yeas are 47, the nays
are 52. Three-fifths of the Senators duly chosen and sworn not having
voted in the affirmative, the motion is rejected, the point of order is
sustained, and the amendment falls.
Mr. ROTH. I move to reconsider the vote.
Mr. MOYNIHAN. I move to lay it on the table.
The motion to lay on the table was agreed to.

Amendment No. 569

(Purpose: To modify the pay-as-you-go requirement of the budget process
to prohibit the use of tax increases to pay for mandatory spending
increases)

The PRESIDING OFFICER. Under the previous order, the Senator from
Idaho is recognized to offer an amendment on which there will be 2
minutes of debate equally divided.
Mr. CRAIG. Madam President, I send an amendment to the desk.
The PRESIDING OFFICER (Mr. Enzi). The clerk will report.
The legislative clerk read as follows:

The Senator from Idaho [Mr. Craig] proposes an amendment
numbered 569.

Mr. CRAIG. I ask unanimous consent the reading of the amendment be
dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

At the appropriate place insert the following:

SEC. . RESTRICTION ON THE USE OF TAX INCREASES.

(a) In General.--In the Senate, for purposes of section 202
of House Concurrent Resolution 67 (104th Congress), it shall
not be in order to consider any bill, joint resolution,
amendment, motion, or conference report that provides an
increase in direct spending offset by an increase in
receipts.
(b) Waiver.--This section may be waived or suspended in the
Senate only by the affirmative vote of three-fifths of the
Members, duly chosen and sworn.
(c) Appeals.--Appeals in the Senate from the decisions of
the Chair relating to any provision of this section shall be
limited to 1 hour, to be equally divided between, and
controlled by, the appellant and the manager of the
concurrent resolution, bill, or joint resolution, as the case
may be. An affirmative vote of three-fifths of the Members of
the Senate, duly chosen and sworn, shall be required in the
Senate to sustain an appeal of the ruling of the Chair on a
point of order raised under this section.
(d) Determination of Budget Levels.--For purposes of this
section, the levels of direct spending and receipts for a
fiscal year shall be determined on the basis of estimates
made by the Committee on the Budget of the Senate.

Mr. CRAIG. Mr. President, my amendment would change the current pay-
go procedures by establishing a 60-vote point of order against using
tax increases to pay for new mandatory spending increases. My amendment
is the first step toward reining in the uncontrolled costs of mandatory
spending programs that I believe threaten our fiscal future. This
budget should have gone further in entitlement reform and it should not
have added more entitlement spending, but there is one reform that
should be made definitely, and that is to cause no further harm.
My amendment will not affect a single current beneficiary of a single
existing entitlement program. My amendment will not affect a single
person who will qualify to become a beneficiary under the current
requirements of any existing entitlement program. My amendment will not
prevent the creation of a new entitlement program if there is a true
need for the program. It simply will require that such a need be truly
demonstrated.
My amendment will not prevent a tax increase that is used for deficit
reduction.
What my amendment will do is put an end to the fiction that tax
increases are capable of offsetting the cost of additional mandatory
spending.
Mr. LAUTENBERG addressed the Chair.
The PRESIDING OFFICER. The Senator from New Jersey is recognized.
Mr. LAUTENBERG. Mr. President, I rise to oppose the Craig amendment.
The amendment would change the pay-go system and mean that we could not
provide for health insurance to children by closing unnecessary tax
loopholes. You heard it from the Senator directly.
This is outrageous. It would undermine our efforts to ensure that all
of the 10 million children who lack health coverage in this country can
have it. There are already budget rules that limit the use of savings
that come from tax loopholes. This amendment would go much farther and
make it tougher to invest in children's health programs. If you vote
for the Craig amendment, you are voting to protect tax loopholes. If
you vote against it, you are voting to help children obtain health
insurance in the future.
The PRESIDING OFFICER. All time is expired.
Mr. LAUTENBERG. Mr. President, I raise a point of order that the
pending amendment is extraneous and violates section 313(b)(1)(A) of
the Congressional Budget Act.
Mr. CRAIG. Mr. President, under section 904 of the Budget Act, I move
to waive the point of order against the pending amendment, and I ask
for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a such second.
The yeas and nays were ordinary had.

Vote on Motion to Waive the Budget Act

The PRESIDING OFFICER. The question occurs on agreeing to the motion
to waive the Budget Act. The yeas and nays have been ordered. The clerk
will call the roll.
The assistant legislative clerk called the roll.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The yeas and nays resulted--yeas 42, nays 58, as follows:

[Rollcall Vote No. 144 Leg.]

YEAS--42

Abraham
Allard
Ashcroft
Bennett
Brownback
Campbell
Coats
Coverdell
Craig
D'Amato
Enzi
Faircloth
Frist
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Kempthorne
Kyl
Lott
Mack
McCain
McConnell
Murkowski
Nickles
Roberts
Roth

[[Page S6676]]

Santorum
Sessions
Shelby
Smith (NH)
Stevens
Thomas
Thompson
Thurmond
Warner

NAYS--58

Akaka
Baucus
Biden
Bingaman
Bond
Boxer
Breaux
Bryan
Bumpers
Burns
Byrd
Chafee
Cleland
Cochran
Collins
Conrad
Daschle
DeWine
Dodd
Domenici
Dorgan
Durbin
Feingold
Feinstein
Ford
Glenn
Gorton
Graham
Harkin
Hollings
Inouye
Jeffords
Johnson
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lugar
Mikulski
Moseley-Braun
Moynihan
Murray
Reed
Reid
Robb
Rockefeller
Sarbanes
Smith (OR)
Snowe
Specter
Torricelli
Wellstone
Wyden
The PRESIDING OFFICER. On this vote, the yeas are 42, the nays are
58. Three-fifths of the Senators duly chosen and sworn not having voted
in the affirmative, the motion is rejected.
The point of order is sustained, and the amendment fails.
Mr. ROTH. Mr. President, I move to reconsider the vote by which the
motion was rejected.
Mr. MOYNIHAN. I move to lay that motion on the table.
The motion to lay on the table was agreed to.

Amendment No. 570

(Purpose: To establish procedures to ensure a balanced Federal budget
by fiscal year 2002)

The PRESIDING OFFICER. Under the previous order, the Senator from
Kansas is recognized to offer an amendment on which there are 2 minutes
of debate equally divided.
Mr. BROWNBACK. Mr. President, I have an amendment at the desk in the
second-degree.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from Kansas [Mr. Brownback], for himself, Mr.
Kohl, and Mr. McCain, proposes an amendment numbered 570.

Mr. BROWNBACK. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

At the end of the bill, add the following:

TITLE --BUDGET CONTROL

SEC. 01. SHORT TITLE; PURPOSE.

(a) Short Title.--This title may be cited as the
``Bipartisan Budget Enforcement Act of 1997''.
(b) Purpose.--The purpose of this title is--
(1) to ensure a balanced Federal budget by fiscal year
2002;
(2) to ensure that the Bipartisan Budget Agreement is
implemented; and
(3) to create a mechanism to monitor total costs of direct
spending programs, and, in the event that actual or projected
costs exceed targeted levels, to require the President and
Congress to address adjustments in direct spending.

SEC.--02. ESTABLISHMENT OF DIRECT SPENDING TARGETS.

(a) In General.--The initial direct spending targets for
each of fiscal years 1998 through 2002 shall equal total
outlays for all direct spending except net interest as
determined by the Director of the Office of Management and
Budget (hereinafter referred to in this title as the
``Director'') under subsection (b).
(b) Initial Report by Director.--
(1) In General.--Not later than 30 days after the date of
enactment of this title, the Director shall submit a report
to Congress setting forth projected direct spending targets
for each of fiscal years 1998 through 2002.
(2) Projections and assumptions.--The Director's
projections shall be based on legislation enacted as of 5
days before the report is submitted under paragraph (1). The
Director shall use the same economic and technical assumption
used in preparing the concurrent resolution on the budget for
fiscal year 1998 (H.Con.Res. 84).

SEC.--03. ANNUAL REVIEW OF DIRECT SPENDING AND RECEIPTS BY
PRESIDENT.

As part of each budget submitted under section 1105(a) of
title 31, United States Code, the President shall provide an
annual review of direct spending and receipts, which shall
include--
(1) information on total outlays for programs covered by
the direct spending targets, including actual outlays for the
prior fiscal year and projected outlays for the current
fiscal year and the 5 succeeding fiscal years; and
(2) information on the major categories of Federal
receipts, including a comparison between the levels of those
receipts and the levels projected as of the date of enactment
of this title.

SEC.--04. SPECIAL DIRECT SPENDING MESSAGE BY PRESIDENT.

(a) Trigger.--If the information submitted by the President
under section----03 indicates--
(1) that actual outlays for direct spending in the prior
fiscal year exceeded the applicable direct spending target;
or
(2) that outlays for direct spending for the current or
budget year are projected to exceed the applicable direct
spending targets,

the President shall include in his budget a special direct
spending message meeting the requirements of subsection (b).
(b) Contents.--
(1) Inclusions.--The special direct spending message shall
include--
(A) an analysis of the variance in direct spending over the
direct spending targets; and
(B) the President's recommendations for addressing the
direct spending overages, if any, in the prior, current, or
budget year.
(2) Additional matters.--The President's recommendations
may consist of any of the following:
(A) Proposed legislative changes to recoup or eliminate the
overage for the prior, current, and budget years in the
current year, the budget year, and the 4 outyears.
(B) Proposed legislative changes to recoup or eliminate
part of the overage for the prior, current, and budget year
in the current year, the budget year, and the 4 outyears,
accompanied by a finding by the President that, because of
economic conditions or for other specified reasons, only some
of the overage should be recouped or eliminated by outlay
reductions or revenue increases, or both.
(C) A proposal to make no legislative changes to recoup or
eliminate any overage, accompanied by a finding by the
President that, because of economic conditions or for other
specified reasons, no legislative changes are warranted.
(c) Proposed Special Direct Spending Resolution.--If the
President recommends reductions consistent with subsection
(b)(2)(A) or (B), the special direct spending message shall
include the text of a special direct spending resolution
implementing the President's recommendations through
reconciliation directives instructing the appropriate
committees of the House of Representatives and Senate to
determine and recommend changes in laws within their
jurisdictions. If the President recommends no reductions
pursuant to (b)(2)(C), the special direct spending message
shall include the text of a special resolution concurring in
the President's recommendation of no legislative action.

SEC. . REQUIRED RESPONSE BY CONGRESS.

(a) In General.--It shall not be in order in the House of
Representatives or the Senate to consider a concurrent
resolution on the budget unless that concurrent resolution
fully addresses the entirety of any overage contained in the
applicable report of the President under section __04 through
reconciliation directives.
(b) Waiver and Suspension.--This section may be waived or
suspended in the Senate only by the affirmative vote of
three-fifths of the Members, duly chosen and sworn. This
section shall be subject to the provisions of section 258 of
the Balanced Budget and Emergency Deficit Control Act of
1985.
(c) Appeals.--Appeals in the Senate from the decisions of
the Chair relating to any provision of this section shall be
limited to 1 hour, to be equally divided between, and
controlled by, the appellant and the manager of the bill or
joint resolution, as the case may be. An affirmative vote of
three-fifths of the Members of the Senate, duly chosen and
sworn, shall be required in the Senate to sustain an appeal
of the ruling of the Chair on a point of order raised under
this section.

SEC. 06. RELATIONSHIP TO BALANCED BUDGET AND EMERGENCY
DEFICIT CONTROL ACT.

Reductions in outlays or increases in receipts resulting
from legislation reported pursuant to section __05 shall not
be taken into account for purposes of any budget enforcement
procedures under the Balanced Budget and Emergency Deficit
Control Act of 1985.

SEC. 07. ESTIMATING MARGIN.

For any fiscal year for which the overage is less than one-
half of 1 percent of the direct spending target for that
year, the procedures set forth in sections __04 and __05
shall not apply.

SEC. 08. EFFECTIVE DATE.

This title shall apply to direct spending targets for
fiscal years 1998 through 2002 and shall expire at the end of
fiscal year 2002.

Mr. BROWNBACK. Mr. President, Senator Kohl and I have offered this
amendment. It is a very, very simple amendment. It just says if we are
going to break the spending caps on this bill, on this budget agreement
that we've told the American people is going to balance the budget, if
we're going to break the spending limits on it, we have to vote on it.
And we have to vote and pass that by a 60-vote margin. That's it.
The President has to say how he is going to get us to a balanced
budget. If we're going to break that cap, he has to say how he is going
to get us to a balanced budget; if we're going to break that spending
cap, he has to say where we're going to make the spending cuts, and we
have to vote if we are going to break it.
I think this is the least we can do for the American people. It says,
``Folks,

[[Page S6677]]

we meant it when we said we were going to balance the budget. We meant
it when we said we're going to balance it by the year 2002.'' And if we
are going to break it, we've got to break it by a 60-vote margin.
I yield the remainder of my time to Senator Kohl.
Mr. KOHL. Thank you.
Mr. President, I also am a supporter of this amendment. What it
simply says is that we are going to do what we set out to do, which is
to balance the budget, and, if we go over it in any year, then we are
going to have to decide how we are going to reduce that spending to be
sure we stay on target to get the budget balanced over the next several
years. That is all this does. It is not a sequester. Nobody should fear
that. But it is simply an enforcement mechanism which is necessary.
Mr. LAUTENBERG. Mr. President, this amendment is a fast-track ticket
to deep cuts in Medicare and Medicaid. It would essentially create a
cap for these and other essential mandatory programs like the Medicare
and Medicaid.
Mr. President, we ought not punish the people who are on Medicaid or
Medicare just because these programs grow faster than a particular
rate. Sometimes growth in these programs could be good.
For example, the first reconciliation bill includes money to recruit
3 million uninsured Medicaid-eligible children to sign up for the
program. If this happens, obviously Medicaid spending is going to
increase. But the question is, What do we want to do? Do we want to
take care of those kids or don't we? This would not be a good reason to
cut the program. This is a dangerous gimmick. We can balance the budget
without it. Furthermore, we ought not accept an amendment that could
force quick, drastic cuts in Medicare and Medicaid.
I urge my colleagues to oppose this amendment to protect Medicare and
Medicaid.
Mr. President, I raise a point of order that the pending amendment is
extraneous and violates section 313(b)(1)(A) of the Congressional
Budget Act.
Mr. BROWNBACK. Mr. President, I make a motion to waive the Budget Act
with respect to my amendment, and I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second question?
There is a sufficient second.
The yeas and nays were ordered.

Vote on Motion to Waive the Budget Act

The PRESIDING OFFICER. The question occurs on the motion to waive the
Budget Act. The yeas and nays have been ordered. The clerk will call
the roll.
The legislative clerk called the roll.
The yeas and nays resulted-- yeas 57, nays 43, as follows:

[Rollcall Vote No. 145 Leg.]

YEAS--57

Abraham
Allard
Ashcroft
Bennett
Bond
Brownback
Burns
Campbell
Chafee
Coats
Cochran
Collins
Coverdell
Craig
D'Amato
DeWine
Domenici
Enzi
Faircloth
Frist
Gorton
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Jeffords
Kempthorne
Kohl
Kyl
Lott
Lugar
Mack
McCain
McConnell
Murkowski
Nickles
Robb
Roberts
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Specter
Stevens
Thomas
Thompson
Thurmond
Warner

NAYS--43

Akaka
Baucus
Biden
Bingaman
Boxer
Breaux
Bryan
Bumpers
Byrd
Cleland
Conrad
Daschle
Dodd
Dorgan
Durbin
Feingold
Feinstein
Ford
Glenn
Graham
Harkin
Hollings
Inouye
Johnson
Kennedy
Kerrey
Kerry
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Mikulski
Moseley-Braun
Moynihan
Murray
Reed
Reid
Rockefeller
Sarbanes
Torricelli
Wellstone
Wyden
The PRESIDING OFFICER. On this vote, the yeas are 57, the nays are
43. Three-fifths of the Senators duly chosen and sworn not having voted
in the affirmative, the motion is not agreed to. The point of order is
sustained and the amendment falls.
Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
Mr. LOTT. I move to lay that motion on the table.
The motion to lay on the table was agreed to.

Amendment No. 571

(Purpose: To establish an enforcement mechanism in the Senate to ensure
a balanced budget beginning with fiscal year 2002 and to require the
President to submit balanced budgets)

The PRESIDING OFFICER. Under the previous order, the Senator from
Tennessee is recognized to offer an amendment on which there is 2
minutes of debate equally divided.
May we have order in the Senate so we may proceed with the business
of the day.
The clerk will report the amendment.
The assistant legislative clerk read as follows:

The Senator from Tennessee [Mr. Frist], for himself, Mr.
Conrad, Mr. Abraham, and Mr. Sessions, proposes an amendment
numbered 571.

Mr. FRIST. Mr. President, I ask unanimous consent that reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

At the appropriate place in the __, add the following:

SEC. . ENFORCEMENT OF BALANCED BUDGET.

(a) In the Senate.--Title III of the Congressional Budget
Act of 1974 is amended by adding at the end the following:

``enforcement of balanced budget in the senate

``Sec. 315. (a) Point of Order.--It shall not be in order
in the Senate to consider any resolution or bill (or
amendment, motion, or conference report on such resolution or
bill) that provides or would cause a deficit (as determined
for purposes of the Bipartisan Budget Agreement of May 16,
1997) for fiscal year 2002 or any fiscal year thereafter.
``(b) Waiver and Suspension.--This section may be waived or
suspended in the Senate only by the affirmative vote of
three-fifths of the Members, duly chosen and sworn. This
section shall be subject to the provisions of section 258 of
the Balanced Budget and Emergency Deficit Control Act of
1985.
``(c) Appeals.--Appeals in the Senate from the decisions of
the Chair relating to any provision of this section shall be
limited to 1 hour, to be equally divided between, and
controlled by, the appellant and the manager of the bill or
joint resolution, as the case may be. An affirmative vote of
three-fifths of the Members of the Senate, duly chosen and
sworn, shall be required in the Senate to sustain an appeal
of the ruling of the Chair on a point of order raised under
this section.
``(d) Determination of Budget Levels.--For purposes of this
section, the levels of new budget authority, outlays, and
revenues for a fiscal year shall be determined on the basis
of estimates made by the Committee on the Budget of the
Senate.''.
(b) President's Budget.--Section 1105(f) of title 31,
United States Code, is amended by adding at the end the
following: ``The budget shall also be prepared in a manner
that does not cause a deficit for fiscal year 2002 or any
fiscal year thereafter.''.

Mr. FRIST. Mr. President, this amendment, submitted on behalf of
Senators Conrad, Sessions, Abraham, and myself evolves from a simple
principle, that is, once we balance the budget, which we will do by
2002, let us keep it in balance thereafter. The amendment has two key
provisions. No. 1, establishes a 60-vote point of order against any
bill or resolution that will increase the deficit in the year 2002 or
any year thereafter, and, No. 2, requires the President to submit a
balanced budget every year in 2002 and thereafter.
The amendment does provide exceptions in the event of war or
recession. The amendment is consistent with the bipartisan balanced
budget agreement.
I reserve the remainder of my time.
Mr. LAUTENBERG addressed the Chair.
The PRESIDING OFFICER. The Senator from New Jersey.
Mr. LAUTENBERG. I am strongly opposed to this amendment. It creates a
60-vote point of order against any budget resolution that shows a
unified deficit after the year 2002. We are all committed to protecting
against the rising deficit. This amendment, however, means that next
year even a modest change in CBO's long-term economic forecast could
trigger the need for deep and hurtful cuts. It would be outrageous to
cut Medicare or Social Security just because CBO changes its guess
about what the economy will look like in 5 years. CBO cannot even
predict what the deficit is going to look like in the next 5 months,
never mind 5 years. Their recent record is absolutely abysmal. This
amendment

[[Page S6678]]

also requires that Social Security surpluses be used in calculating the
deficit and could make it impossible to use those surpluses in the
future to pay for Social Security benefits of retiring baby boomers.
The PRESIDING OFFICER. The Senator's time has expired
Mr. LAUTENBERG. I urge my colleagues to oppose this dangerous and
radical amendment and I raise a point of order----
The PRESIDING OFFICER. The point of order cannot be raised until the
Senator's time has been used up.
The Senator from Tennessee.
Mr. FRIST. Mr. President, I yield to Senator Domenici.
The PRESIDING OFFICER. The Senator from New Mexico.
Mr. DOMENICI. I think this is a very good idea. As a matter of fact,
if you look carefully at the agreement we entered into with the White
House, it clearly says we are not supposed to do anything that takes
the budget out of balance in the year 2002 and beyond. I think perhaps
the Senator is just helping us try to enforce that agreement.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. LAUTENBERG. I now, Mr. President, raise the point of order that
the amendment violates section 313(b)(1)(A) of the Congressional Budget
Act.
Mr. FRIST. I move to waive the Budget Act with respect to my
amendment. I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second? There is a
sufficient second.
The yeas and nays were ordered.

Vote on Motion to Waive the Budget Act

The PRESIDING OFFICER. The question is on agreeing to the motion to
waive the Budget Act. The yeas and nays have been ordered. The clerk
will call the roll.
The yeas and nays resulted--yeas 59, nays 41, as follows:

[Rollcall Vote No. 146 Leg.]

YEAS--59

Abraham
Allard
Ashcroft
Bennett
Bond
Brownback
Burns
Campbell
Chafee
Coats
Cochran
Collins
Conrad
Coverdell
Craig
D'Amato
DeWine
Domenici
Enzi
Faircloth
Feingold
Frist
Gorton
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Jeffords
Kempthorne
Kohl
Kyl
Lott
Lugar
Mack
McCain
McConnell
Murkowski
Nickles
Robb
Roberts
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Specter
Stevens
Thomas
Thompson
Thurmond
Warner

NAYS--41

Akaka
Baucus
Biden
Bingaman
Boxer
Breaux
Bryan
Bumpers
Byrd
Cleland
Daschle
Dodd
Dorgan
Durbin
Feinstein
Ford
Glenn
Graham
Harkin
Hollings
Inouye
Johnson
Kennedy
Kerrey
Kerry
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Mikulski
Moseley-Braun
Moynihan
Murray
Reed
Reid
Rockefeller
Sarbanes
Torricelli
Wellstone
Wyden
The PRESIDING OFFICER. On this vote the yeas are 59, the nays are 41.
Three-fifths of the Senators duly chosen and sworn not having voted in
the affirmative, the motion is rejected. The point of order is
sustained, and the amendment falls.
Mr. LAUTENBERG. Mr. President, I move to reconsider the vote.
Mr. MOYNIHAN. I move to lay that motion on the table.
The motion to lay on the table was agreed to.

Amendment No. 538

(Purpose: To ensure that future revenue windfalls to the federal
Treasury are reserved for tax or deficit reduction--not additional
spending)

The PRESIDING OFFICER. Under the previous order, the Senator from
Michigan is recognized to offer an amendment on which there is 2
minutes of debate, equally divided. We need to have order in the
Senate. The Senate will please come to order.
Mr. ABRAHAM. Mr. President, I call up my amendment No. 538.
The OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from Michigan [Mr. Abraham], for himself, Mr.
Brownback, Mr. Kyl, Mr. Sessions, Mr. Enzi, Mr. Inhofe, and
Mr. Grams, proposes an amendment numbered 538.

Mr. ABRAHAM. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

SEC. . ECONOMIC GROWTH PROTECTION.

Section 252 of the Balanced Budget and Emergency Deficit
Control Act of 1985 (2 U.S.C. 902) is amended by adding at
the end the following:
``(f) Economic Growth Protection.--
``(1) Estimate.--OMB shall, for any amount by which
revenues for a budget year and any out-years through fiscal
year 2002 exceed the revenue target absent growth, estimate
the excess and include such estimate as a separate entry in
the report prepared pursuant to subsection (d) at the same
time as the OMB sequestration preview report is issued.
``(2) Inclusion in scorecard.--OMB shall include the amount
of any change in revenues determined pursuant to paragraph
(1) as a deficit decrease under this part in the estimates
and reports required by subsection (b) of section 254 unless
such amount is offset by legislation enacted in compliance
with paragraph (3).
``(3) Use of adjustment.--An amount not to exceed the
amount of deficit decrease determined under paragraph (2) may
be offset by legislation decreasing revenues.
``(4) Revenue target absent growth.--For purposes of this
subsection, the revenue target absent growth is--
``(A) for fiscal year 1998, $1,601,800,000,000;
``(B) for fiscal year 1999, $1,664,200,000,000;
``(C) for fiscal year 2000, $1,728,100,000,000;
``(D) for fiscal year 2001, $1,805,100,000,000; and
``(E) for fiscal year 2002, $1,890,400,000,000.''

SEC. . CONGRESSIONAL PAY-AS-YOU-GO

Legislation decreasing revenues in compliance with section
252(f)(3) of the Balanced Budget and Emergency Deficit
Control Act of 1985, as added by section , shall be
considered to be in order for purposes of section 202 of
House Concurrent Resolution 67 (104th Congress).

Mr. ABRAHAM. This amendment is offered on behalf of myself, Senator
Brownback, Senator Enzi, Senator Inhofe, Senator Grams, and Senator
Sessions.
At this time our Nation's tax rate is the highest percentage of the
national income it has ever been in history. As we all know in this
Chamber, our national debt is too high. Recently it was discovered by
the Congressional Budget Office that they had underestimated the
revenues coming into our system by some $225 billion, and we promptly
spent a very substantial amount of those dollars on new Federal
programs.
This amendment is very simple. It says if the revenues which are
received by the Treasury in the next 5 years exceed those that are
projected, we ought to have a lockbox and those dollars ought to either
be spent on tax cuts or on reducing the deficit, and not new Federal
spending.
Mr. President, a coalition of taxpayer groups including the National
Taxpayer's Union, the National Tax Limitation Committee, Empower
America, Americans for Hope, Growth and Opportunity, and others have
endorsed my bill to require that any tax revenue windfall be used for
tax cuts or deficit reduction, not new government spending. I ask
unanimous consent that a statement by Al Cors, Jr., of the National
Taxpayer's Union be entered in the Record immediately following my
remarks:
There being no objection, the material was ordered to be printed in
the Record, as follows:

National Taxpayers Union,

Alexandria, VA, June 27, 1997.
Any amendment that would dedicate ``windfall'' revenue to
new spending, rather than to additional tax relief and/or
deficit reduction, will be scored heavily as an antitaxpayer
amendment on our annual NTU Rating of Congress.

Al Cors, Jr.,

Director, Government Relations,
National Taxpayers Union.
____

The National

Tax-Limitation Committee,

Washington, DC, June 25, 1997.

Pro-Taxpayer Groups Urge Congress to Act Now on Future Tax Cuts

Washington, DC.--The National Tax-Limitation Committee
joined by Empower America, National Taxpayers Union,
Americans for Hope, Growth, and Opportunity, Citizens for a
Sound Economy, and Citizens for Budget Reform sent a letter
to Congress urging action in the budget legislation to
reserve future revenue windfalls for tax cuts for all
Americans. The text of the letter follows:
You have a great opportunity to act right now to secure the
first down-payment on further tax relief for the American
people. You can do this simply by enacting a firm rule during
budget reconciliation that sets aside, or ``sequesters'', any
revenues above the FY 1998 budget resolution projections for
further tax relief for all Americans. While some of these
``windfall'' revenues might possibly be

[[Page S6679]]

applied to faster deficit reduction, it is vitally important
that the bulk of them go directly to taxpayers, and never get
within the grasp of the big-government spending machine.
There are a lot of good ideas floating around on how to do
this, but the key is to look out for the interests of the
taxpayer first, last, and always. We have plenty of time to
think about the best ways to provide for future debt
repayment, additional tax cuts, and major tax reform in the
next millenium. But our immediate and urgent goal must be to
unambiguously lock in any ``bonus'' revenues to help the
hard-pressed taxpayer.
We are concerned that some proposals being considered
merely put the taxpayer a distant third, delay their effects
for many years, and create a built-in bias towards higher
taxes, not lower (such as requiring revenue growth to
outstrip spending growth on a year-to-year basis). The last
thing the Federal government needs is yet another incentive
to raise taxes. Furthermore attempting to build up special
trust funds within the government rather than provide tax
relief merely gives those ``trust'' accounts protected status
in the fiscal policy debate--not sound fiscal policy, and
certainly not pro-taxpayer.
The pending tax bill represents an honorable and diligent
effort to give taxpayers a first installment of tax relief,
and start moving right now to ratchet down the percent of
family income consumed by taxes. We know that this budget
process has been a difficult one, and we want to work with
you as it continues to unfold, particularly in what promises
to be a very tough ``end-game'' negotiation. We want the best
possible deal for the American taxpayer, and we want to
ensure that this is a true ``taxpayer relief act''. Seizing
this unique opportunity to point the way to future tax relief
is one of the best possible ways to do that.
Jack Kemp, Empower America; Lewis K. Uhler, National Tax
Limitation Committee; David Keating, National Taxpayers
Union; Steve Forbes, Americans for Hope, Growth, and
Opportunity; Matt Kibbe, Citizens for a Sound Economy;
Harrison Fox, Citizens for Budget Reform.

Mr. ABRAHAM. I yield to the Senator from Minnesota to comment further
on this legislation.
Mr. GRAMS. Mr. President, I rise to strongly support the amendment
offered by Senator Abraham. After all, if the revenues do increase, it
is going to come because of the hard work of the American people. While
spending levels on Federal programs have already been set, it only
makes sense, if the revenues increase, they should go either to tax
relief to those hard-working American families or to deficit reduction.
They should not go to enlarge the size of Government. The era of big
Government is far from over. This amendment would help protect future
taxpayers.
Mr. ABRAHAM. Mr. President, I ask unanimous consent that my op-ed
article in today's Journal of Commerce on the economic growth dividend
protection amendment be printed at this point in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

[From the Journal of Commerce, June 27, 1997]

America Needs a Tax Cut

(By Spencer Abraham)

It is always easier to spend other people's money than to
give it back, and that's the lesson of the budget agreement
between Congress and the Clinton administration. It is also
the major obstacle confronting those of us who advocate
reducing the record tax burden shouldered by American
taxpayers.
After four months of negotiations, and literally just hours
before a self-imposed deadline, the Congressional Budget
Office provided budget negotiators with a gift of sorts. It
found that the federal deficit in 1997 would be much less
than previously reported. Instead of $112 billion, the
deficit would be closer to $67 billion. Moreover, the CBO
suggested that this $45 billion windfall would extend over
the next five years, reducing the total deficit by $245
billion.
This ``windfall'' is a mixed blessing. The economy's
continued strong performance means more jobs and
opportunities for Americans--as well as additional revenues
to the government. But it brought renewed administration
demands for even higher levels of spending in 1998 and
beyond. Apparently, all sorts of spending issues that had
previously been closed were reopened following the CBO's
surprise announcement.
One issue that remained closed, however, was that of tax
cuts. While spending for numerous programs was increased
following the CBO's announcement, the net tax cut remained
fixed at $85 billion. The result was a budget plan that would
increase federal spending by 17 percent over the next five
years, yet reduce tax collections by less than 1 percent of
the total tax burden over that time.
Along with a number of my colleagues, I have proposed
legislation to improve this deal. It would reserve any
unexpected increase in tax revenues for tax cuts and/or
deficit reduction. To the extent tax revenues under this
budget agreement exceed projections by the Joint Committee on
Taxation, those revenues should go to the people, not
additional government spending.
This is not an idle suggestion. For years, tax cut
advocates like me have argued that federal revenue estimates
ignore the dynamic effects that pro-growth tax reforms have
on the economy and the budget. Incentives for economic growth
and job creation--such as reduced capital gains taxes and
increased allowable IRAs--will bring higher economic growth
over the next five years and increase, not decrease, revenues
to the federal treasury.
History is on our side in this debate. For example, between
1978 and 1985, while the top marginal rate on capital gains
was cut almost in half--from 35% to 20%--total annual federal
receipts from the tax almost tripled. They rose from $9.1
billion to $26.5 billion annually. Conversely, when Congress
raised the capital gains rate in 1986, revenues from that tax
actually fell.
Economists across the board predict that cutting the
capital gains rate will bring a revenue windfall for the
Treasury. Economic expert Larry Kudlow predicts that another
broad capital gains tax cut could produce a $90 billion tax
dividend next year, assuming only 15% of investors realize
their stock market gains from three years ago. These
windfalls should be given back to the taxpayers.
As John F. Kennedy noted, ``It is a paradoxical truth that
tax rates are too high today and tax revenues are too low,
and the soundest way to raise the revenues in the long run is
to cut taxes now.''
Why do Americans need a tax cut? The President's own
economists report that the tax burden on Americans is the
highest ever--31.7%. According to the National Taxpayer
Union, the average American family now pays almost 40% of its
income in state, local and federal taxes. And while we
address the tax burden in a small, incremental way with this
budget resolution. I believe we need to tilt the playing
field away from more spending and toward more tax reduction.
How does this proposal work? First, it locks the expected
revenue estimates into law. Then it requires the Office of
Management and Budget to compare its new revenue estimates
each year to those included in the agreement. If the budget
agreement estimates are accurate, nothing happens. But if the
progrowth tax cuts we adopt later this year result in higher
than expected revenues, those revenues are reserved for tax
cut legislation--legislation which is exempt from all the
budget points of order and other obstacles that currently
stand between American families and tax cuts. If Congress
chooses not to reduce revenues, then the windfall is reserved
for deficit reduction.
The Senate gave this proposal its preliminary approval on
May 23 by voting for my Sense of the Senate amendment to the
budget. We should now put into effect the rules that will
help make tax cuts a reality.
The budget agreement takes a small, $85 billion step down
the long road toward reducing the tax burden on American
families. This cut should be just the beginning.

The PRESIDING OFFICER. The Senator from New Jersey.
Mr. LAUTENBERG. Mr. President, this amendment says that if revenues
exceed current projections, all the savings can only be plowed into
more tax breaks; if you have a surplus, back into the tax breaks, not
defense, not education, only more tax breaks. Even if the deficit were
actually going up due to increased spending, we would still be able to
use all unexpected revenues only for more tax breaks.
That is fiscally irresponsible. It removes power and flexibility from
the congressional majority and it is terrible policy. I urge my
colleagues to oppose the amendment.
Mr. President, I raise a point of order that the pending amendment is
extraneous and violates section 313(b)(1)(A) of the Congressional
Budget Act.
Mr. ABRAHAM. Mr. President, I move to waive the Budget Act with
respect to this amendment.
Mr. President, I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.

Vote on Motion to Waive the Budget Act

The PRESIDING OFFICER. The question occurs on agreeing to the motion
to waive.
The yeas and nays have been ordered.
The clerk will call the roll.
The legislative clerk called the roll.
The yeas and nays resulted, yeas 53, nays 47, as follows:

[Rollcall Vote No. 147 Leg.]

YEAS--53

Abraham
Allard
Ashcroft
Bennett
Bond
Brownback
Burns
Campbell
Coats
Cochran
Collins
Coverdell
Craig
D'Amato
DeWine

[[Page S6680]]

Domenici
Enzi
Faircloth
Frist
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Jeffords
Kempthorne
Kyl
Lott
Lugar
Mack
McCain
McConnell
Murkowski
Nickles
Roberts
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Specter
Stevens
Thomas
Thompson
Thurmond
Warner

NAYS--47

Akaka
Baucus
Biden
Bingaman
Boxer
Breaux
Bryan
Bumpers
Byrd
Chafee
Cleland
Conrad
Daschle
Dodd
Dorgan
Durbin
Feingold
Feinstein
Ford
Glenn
Gorton
Graham
Harkin
Hollings
Inouye
Johnson
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Mikulski
Moseley-Braun
Moynihan
Murray
Reed
Reid
Robb
Rockefeller
Sarbanes
Torricelli
Wellstone
Wyden
The PRESIDING OFFICER. On this vote, the yeas are 53, the nays are
47. Three-fifths of the Senators duly chosen and sworn not having voted
in the affirmative, the motion is rejected. The point of order is
sustained, and the amendment falls.
Mr. ROTH. Mr. President, I move to reconsider the vote by which the
motion was rejected.
Mr. MOYNIHAN. I move to lay that motion on the table.
The motion to lay on the table was agreed to.

Amendment No. 572

(Purpose: To extend the number of hours for debate on a reconciliation
bill and make other improvements)

The PRESIDING OFFICER. Under the previous order, the Senator from
West Virginia is recognized to offer an amendment on which there is 2
minutes of debate equally divided.
The Senator from West Virginia.
Mr. BYRD. I thank the Chair. I send to the desk an amendment, and I
ask that the amendment be read. I hope that Senators will pay close
attention.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from West Virginia [Mr. Byrd] proposes an
amendment numbered 572.

The amendment is as follows:

At the appropriate place, insert the following:

SEC. . DEBATE ON A RECONCILIATION BILL.

Section 310(e)(2) of the Congressional Budget Act of 1974
is amended to read as follows:
``(2) For purposes of consideration of any reconciliation
bill reported under subsection (b)--
``(A) debate, and all amendments thereto and debatable
motions and appeals in connection therewith, shall be limited
to not more than 30 hours;
``(B) time on the bill may only be yielded back by consent
and a motion to further limit debate shall be debatable with
debate limited to \1/2\ hour equally divided;
``(C) time on amendments shall be limited to 30 minutes to
be equally divided in the usual form and on any second degree
amendment or motion to 20 minutes to be equally divided in
the usual form, except that after the 15th hour of
consideration of a bill, time on all amendments or motions
shall be limited to 20 minutes;
``(D) no first degree amendment may be proposed after the
15th hour of consideration of a bill unless it has been
submitted to the Journal Clerk prior to the expiration of the
15th hour;
``(E) no second degree amendment may be proposed after the
20th hour of consideration of a bill unless it has been
submitted to the Journal Clerk prior to the expiration of the
20th hour; and
``(F) After no more than thirty hours of consideration of
the measure, the Senate shall proceed, without any further
debate on any question, to vote on the final disposition
thereof to the exclusion of all amendments not then actually
pending before the Senate at that time and to the exclusion
of all motions, except a motion to table, or to reconsider
and one quorum call on demand to establish the presence of a
quorum (and motions required to establish a quorum)
immediately before the final vote begins.''.

The PRESIDING OFFICER. The Senator from West Virginia.
Mr. BYRD. Mr. President, the distinguished Senator from New York, Mr.
Moynihan, wrote a book titled ``Pandemonium.'' Milton, in ``Paradise
Lost,'' designated the Palace of Satan as pandemonium. Mr. President,
what we have seen going on here is pandemonium, and in light of what I
have just said, Senators can draw their own conclusion as to what I
mean by that word.
This is a very important amendment to the reconciliation process. It
extends the overall time from 20 hours to 30 hours. It reduces the time
on any amendment in the first degree to 30 minutes. It reduces the time
on any second-degree amendment to 20 minutes. May I proceed for an
additional 2 minutes?
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BYRD. After the first 15 hours have expired, time on amendments
in the first degree and in the second degree will be limited to 20
minutes each. The amendment provides for 30 minutes equally divided for
debate on a motion to reduce the time, which can be done now without
any debate. It requires unanimous consent for managers of a
reconciliation measure to yield back any time. At the present time,
they may yield time back without unanimous consent.
Now comes probably the most important provision in the proposal. If
Senators will turn to page 19 in their rule books. I will read the
language from the cloture rule:

After no more than thirty hours of consideration of the
measure, motion, or other matter on which cloture has been
invoked, the Senate shall proceed, without any further debate
on any question, to vote on the final disposition thereof to
the exclusion of all amendments not then actually pending
before the Senate at that time and to the exclusion of all
motions, except a motion to table. . .
Mr. DOMENICI. May we have order, Mr. President?
Mr. BYRD. Mr. President, I ask unanimous consent that I may again
read what I have just read, without the time's being charged.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BYRD. I repeat:

After no more than thirty hours of consideration--

I am reading from the present cloture rule--

Meaning the final disposition of the reconciliation bill--

to the exclusion of all amendments not then actually pending
before the Senate at that time and to the exclusion of all
motions, except a motion to table, or to reconsider and one
quorum call on demand to establish the presence of a quorum
(and motions required to establish a quorum) immediately
before the final vote begins.

Therefore, Mr. President, we do away with this situation in which
pandemonium reigns supreme and where scores of amendments remain to be
acted upon after the expiration of the time on the reconciliation bill
and people want to call those up--and they have a right to call them up
and get a vote thereon.
This amendment encourages Senators, if they want time to debate their
amendments, to call them up at the beginning of the debate, call them
up early, when they will have time to explain their amendments. But
when we reach that final 30th hour, under this amendment language,
which is already tried and true--it is in the cloture rule--we close
all debate, all voting on amendments to the reconciliation bill with
the exception of any amendment in the first degree and any amendment in
the second degree which may be then pending. That is it. No more of
this vote-o-rama.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. DOMENICI addressed the Chair.
The PRESIDING OFFICER. The Senator from New Mexico.
Mr. DOMENICI. Mr. President, we have been discussing this proposal
with the distinguished Senator from West Virginia, ``we'' being Senator
Lott and others. And I assume Senator Lott will speak in a moment to it
however long he would like.
But I say to the Senate, and as long as Senator Byrd understands that
we take this to conference with the idea that we will have to make
sure--and I think he would agree--that it deserves some careful
consideration.
I had one thought that came to my mind, I say to Senator Byrd, as you
proposed it. I was talking to Senator Gramm about it. I guess I am
concerned that there might be a controversial amendment that is well-
known that by design could be precluded from ever getting offered. And
I think we ought to make sure that cannot happen. I do not know how to
do

[[Page S6681]]

that. I do not propose that this is not a valid and good approach. But
I do think that is an interesting issue. I was just speaking with
Senator Gramm a moment ago.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. DOMENICI. I ask unanimous consent for one additional minute.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DOMENICI. I think there would have to be a lot of getting
together of both sides of the aisle to preclude that amendment from
coming up, but it might happen. So from my standpoint, I say to
Senators, I think this is a dramatic improvement, provided that the
Senator understands that we have to look at it carefully if it is
accepted here today.
Mr. BYRD. I do understand. I hope that the Members who go to
conference with the House will try to make it clear to the House that
we Senators expect to decide on the amendments and the rules of the
Senate.
Mr. MOYNIHAN. Yes, sir.
Mr. LOTT addressed the Chair.
The PRESIDING OFFICER. The majority leader is recognized.
Mr. LOTT. Mr. President, I yield myself leader time so I may speak
briefly on this. It will be briefly.
I have been talking to Senator Daschle about this and working with
Senator Byrd. I think we had a good start last night on how to address
this problem, and it has been improved today. I think we are close to
having something that would really make this process fairer and better.
I suggest that we accept this on a voice vote, and we go to
conference with it and continue to make sure we have thought through
every possible exigency of this change. I think it is real progress.
And I suggest we accept it and take it to conference.
Mr. DASCHLE addressed the Chair.
The PRESIDING OFFICER. The minority leader.
Mr. DASCHLE. Mr. President, I will be very brief with my leader time.
I congratulate the Senator from West Virginia. No one knows the
process and the rules better than he does. And he has worked with all
of us in an effort to try to accommodate the concerns that we have
raised over the last couple of days. He has done that. This may not be
the final product, but it puts us in a position to achieve a final
product.
I hope that we can take the advice and recommendation of the majority
leader, pass it on a voice vote, and allow this process to continue.
Mr. McCAIN. I object.
The PRESIDING OFFICER. There is an objection.
Mr. McCAIN. I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on agreeing to the amendment.
The yeas and nays have been ordered. The clerk will call the roll.
The legislative clerk called the roll.
The result was announced--yeas 92, nays 8, as follows:

[Rollcall Vote No. 148 Leg.]

YEAS--92

Abraham
Akaka
Baucus
Bennett
Biden
Bingaman
Bond
Boxer
Breaux
Bryan
Bumpers
Burns
Byrd
Campbell
Chafee
Cleland
Coats
Cochran
Collins
Conrad
Coverdell
D'Amato
Daschle
DeWine
Dodd
Domenici
Dorgan
Durbin
Enzi
Faircloth
Feingold
Feinstein
Ford
Frist
Glenn
Gorton
Graham
Grams
Grassley
Gregg
Hagel
Harkin
Hatch
Helms
Hollings
Hutchinson
Hutchison
Inhofe
Inouye
Jeffords
Johnson
Kempthorne
Kennedy
Kerrey
Kerry
Kohl
Kyl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lott
Lugar
Mack
McConnell
Mikulski
Moseley-Braun
Moynihan
Murkowski
Murray
Nickles
Reed
Reid
Robb
Roberts
Rockefeller
Roth
Sarbanes
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Specter
Stevens
Thomas
Thompson
Thurmond
Torricelli
Warner
Wyden

NAYS--8

Allard
Ashcroft
Brownback
Craig
Gramm
McCain
Santorum
Wellstone
The amendment (No. 572) was agreed to.
Mr. ROTH. I move to reconsider the vote.
Mr. MOYNIHAN. I move to lay it on the table.
The motion to lay on the table was agreed to.

Amendment No. 522, as Modified

(Purpose: To provide for a trust fund for District of Columbia school
renovations)

Mr. ROTH. Mr. President, I ask that the Senate resume consideration
of Jeffords amendment No. 522. On behalf of the Senator from Vermont, I
send a modification to the desk which we are prepared to accept.
The PRESIDING OFFICER. The regular order is the recognition of the
Senator from Massachusetts. Is there objection?
Mr. NICKLES. That is not correct.
Parliamentary inquiry. I think the Senator sent an amendment from the
Senator from Vermont. It has not been disposed of.
Mr. ROTH. The amendment deals with the subject of D.C. schools.
The PRESIDING OFFICER. Is there objection? Without objection, it is
so ordered.
The amendment (No. 522), as modified, is as follows:
On page 164, in the matter between lines 16 and 17, insert
after the item relating to section 1400B the following:

``Sec. 1400C. Trust Fund for DC schools.''

On page 173, line 10, strike ``$75,000,000'' and insert
``$60,000,000''.
On page 174, strike lines 21 through 23, and insert:
``(a) Exclusion.--
``(1) In general.--Gross income shall not include qualified
capital gain from the sale or exchange of any DC asset held
for more than 5 years.
``(2) Special 10 percent rate for dc assets acquired in
1998.--
``(A) In general.--In the case of any DC asset acquired
during calendar year 1998--
``(i) paragraph (1) shall not apply to any qualified
capital gain from the sale or exchange of such asset, and
``(ii) the qualified capital gain described in clause (i)
shall be treated as adjusted net capital gain described in
section 1(h)(1)(D) for the taxable year of the sale or
exchange (and the amount under section 1(h)(1)(D)(i) for such
taxable year shall be increased by the amount of such gain).
``(B) Special rule.--For purposes of subparagraph (A), any
DC asset the basis of which is determined in whole or in part
by reference to the basis of an asset to which subparagraph
(A) applies shall be treated as a DC asset acquired during
calendar year 1998.
On page 181, between lines 5 and 6, insert the following:

``SEC. 1400C. TRUST FOR DC SCHOOLS.

``(a) Creation of Fund.--There is established in the
Treasury of the United States a trust fund to be known as the
`Trust Fund for DC Schools', consisting of such amounts as
may be appropriated or credited to the Fund as provided in
this section.
``(b) Transfer to Trust Fund of Amounts Equivalent to
Certain Taxes.--
``(1) In general.--There are hereby appropriated to the
Trust Fund for DC Schools amounts equivalent to the
applicable percentage of revenues received in the Treasury
from income taxes imposed by this chapter for any taxable
year beginning after December 31, 1997, and before January 1,
2008, on individual taxpayers who are residents of the
District of Columbia as of the last day of such taxable year.
``(2) Applicable percentage.--For purposes of paragraph
(1), the term `applicable percentage' means the percentage
which the Secretary determines necessary to result in
$5,000,000 being appropriated to the Trust Fund under
paragraph (1) for each of the calendar years 1998 through
2007.
``(3) Transfer of amounts.--The amounts appropriated by
paragraph (1) shall be transferred at least monthly from the
general fund of the Treasury to the Trust Fund for DC Schools
on the basis of estimates made by the Secretary of the
amounts referred to in such paragraph. Proper adjustments
shall be made in the amounts subsequently transferred to the
extent prior estimates were in excess of or less than the
amounts required to be transferred.
``(c) Expenditures From Fund.--
``(1) In general.--Amounts in the Trust Fund for DC Schools
are hereby appropriated, and shall be available without
fiscal year limitation, for payment by the Secretary of debt
service on qualified DC school bonds.
``(2) Qualified dc school bonds.--The term `qualified DC
school bonds' means bonds which--
``(A) are issued after March 31, 1998, by the District of
Columbia to finance the construction, rehabilitation, and
repair of schools under the jurisdiction of the government of
the District of Columbia, and
``(B) are certified by the District of Columbia Control
Board as meeting the requirements of subparagraph (A) after
giving 60 days notice of any proposed certification to the
Subcommittees on the District of Columbia of the Committees
on Appropriations of the House of Representatives and the
Senate.
``(d) Report.--It shall be the duty of the Secretary to
hold the Trust Fund for DC

[[Page S6682]]

Schools and to report to the Congress each year on the
financial condition and the results of the operations of such
Fund during the preceding fiscal year and on its expected
condition and operations during the next fiscal year. Such
report shall be printed as a House document of the session of
the Congress to which the report is made.
``(e) Investment.--
``(1) In general.--It shall be the duty of the Secretary to
invest such portion of the Trust Fund for DC Schools as is
not, in the Secretary's judgment, required to meet current
withdrawals. Such investments may be made only in interest-
bearing obligations of the United States. For such purpose,
such obligations may be acquired--
``(A) on original issue at the issue price, or
``(B) by purchase of outstanding obligations at the market
price.
``(2) Sale of obligations.--Any obligation acquired by the
Trust Fund for DC Schools may be sold by the Secretary at the
market price.
``(3) Interest on certain proceeds.--The interest on, and
the proceeds from the sale or redemption of, any obligations
held in the Trust Fund for DC Schools shall be credited to
and form a part of the Trust Fund for DC Schools.''

The PRESIDING OFFICER. The question is on agreeing to the amendment
numbered 522.
The amendment (No. 522), as modified, was agreed to.
Mr. ROTH. I move to reconsider the vote.
Mr. MOYNIHAN. I move to lay it on the table.
The motion to lay on the table was agreed to.

Amendment No. 573

(Purpose: To increase the excise tax on cigarettes by 43 cents per pack
and increase the tax on other tobacco products by a proportionate
amount, and direct $12,000,000,000 of the resulting revenues be applied
to the children's health initiative)

The PRESIDING OFFICER. Under the previous order, the Senator from
Massachusetts is recognized to offer an amendment on which there are 2
minutes of debate equally divided.
Mr. KENNEDY. Mr. President, I call up my amendment, which is
cosponsored by Senator Daschle.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from Massachusetts [Mr. Kennedy], for himself
and Mr. Daschle, proposes an amendment numbered 573.

Mr. KENNEDY. I ask unanimous consent that the reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
On page 337, beginning with line 14, strike all through
page 339, line 15, and insert the following:
(a) Cigarettes.--Section 5701(b) of the Internal Revenue
Code of 1986 is amended--
(1) in paragraph (1), by striking ``$12 per thousand ($10
per thousand on cigarettes removed during 1991 or 1992)'' and
inserting ``$33.50 per thousand'', and
(2) in paragraph (2), by striking ``$25.20 per thousand
($21 per thousand on cigarettes removed during 1991 or
1992)'' and inserting ``$70.35 per thousand''.
(b) Cigars.--Section 5701(a) of the Internal Revenue Code
of 1986 is amended--
(1) in paragraph (1), by striking ``$1.125 cents per
thousand (93.75 cents per thousand on cigars removed during
1991 or 1992)'' and inserting ``$3.141 cents per thousand'',
and
(2) by striking ``equal to'' and all that follows in
paragraph (2) and inserting ``equal to 35.59 percent of the
price for which sold but not more than $83.75 per thousand.''
(c) Cigarette Papers.--Section 5701(c) of the Internal
Revenue Code of 1986 is amended by striking ``0.75 cent
(0.625 cent on cigarette papers removed during 1991 or
1992)'' and inserting ``2.09 cents''.
(d) Cigarette Tubes.--Section 5701(d) of the Internal
Revenue Code of 1986 is amended by striking ``1.5 cents (1.25
cents on cigarette tubes removed during 1991 or 1992)'' and
inserting ``4.18 cents''.
(e) Smokeless Tobacco.--Section 5701(e) of the Internal
Revenue Code of 1986 is amended--
(1) in paragraph (1), by striking ``36 cents (30 cents on
snuff removed during 1991 or 1992)'' and inserting ``$1.00'',
and
(2) by striking ``12 cents (10 cents on chewing tobacco
removed during 1991 or 1992)'' in paragraph (2) and inserting
``33.5 cents''.
(f) Pipe Tobacco.--Section 5701(f) of the Internal Revenue
Code of 1986 is amended by striking ``67.5 cents (56.25 cents
on pipe tobacco removed during 1991 or 1992)'' and inserting
``$1.88''.
(g) Imposition of Excise Tax on Manufacture or Importation
of Roll-Your-Own Tobacco.--
(1) In general.--Section 5701 (relating to rate of tax) is
amended by redesignating subsection (g) as subsection (h) and
by inserting after subsection (f) the following new
subsection:
``(g) Roll-Your-Own Tobacco.--On roll-your-own tobacco,
manufactured in or imported into the United States, there
shall be imposed a tax of $1.74 cents per pound (and a
proportionate tax at the like rate on all fractional parts of
a pound).''
On page 349, between lines 2 and 3, insert the following:
(k) Appropriation of Portion of Resulting Revenues From
Increase in Taxes on Tobacco Products to Children's Health
Insurance Initiatives.--In addition to any amounts otherwise
appropriated for the purpose of carrying out title XXI of the
Social Security Act (relating to children's health insurance
initiatives), there is appropriated from the increase in
revenues resulting from the amendments made by this section
$2,400,000,000 for each of the fiscal years 1998 through
2002.

Mr. KENNEDY. Mr. President, this amendment adds $12 billion to the
child health insurance program. It is financed by an additional 23-
cents-a-pack increase in the tobacco tax. This amount is necessary to
ensure that all children not eligible for Medicare, but not able to
afford private insurance, will have access the health coverage.
CBO says that the current bill, a proposal that is before the Senate,
will not do the job. The administration strongly supports the
amendment. So do 72 percent of the American people.
I will just take 15 seconds to read a letter from the American
Academy of Pediatrics:

53,000 primary care pediatricians, pediatric medical
subspecialists, pediatric surgeons and specialists dedicated
to the health, safety, and well-being of infants, children,
adolescents and young adults strongly support your amendment
to increase the tax by 23 cents for use in financing the
children's health care legislation.

I hope that with this amendment we will be able to complete the job
for working families in this country that are unable to afford
insurance today.
Mr. NICKLES. Mr. President, I urge my colleagues to vote no on
Senator Kennedy's amendment. I am bothered by the amendment to some
extent. I heard the Senator say the administration supports the
amendment. The administration agreed to $16 billion for the so-called
KIDCARE Program. That was the agreement. And then to see a letter by
the administration that says now they support this amendment, that is
ridiculous.
The Finance Committee increased from $16 billion to $24 billion, more
than I think is necessary for the program. The Finance Committee said,
``That is all we will do.'' Now we see the administration say they
support this. When is a deal a deal? We can't trust this administration
any more than a day. That is beyond belief.
So now we have a program. Senator Kennedy introduced it as a $20
billion program. We are now financing it at $24 billion, 120 percent of
what he originally asked for. He should say, ``Hey, we won,'' and now
he comes back and says he wants another $12 billion, to make it $36
billion. The administration agreed to $16 billion. Now they are trying
to make it $36 billion. Taxpayers cannot afford it.
Finally, the net tax cut, if this amendment is passed, will be 60,
not 85. It will be 60.
The PRESIDING OFFICER. The Senator from New Mexico.
Mr. DOMENICI. Did you say the administration favors this?
The PRESIDING OFFICER. All time has expired.
Mr. DOMENICI. I ask for 30 seconds, and the Senator can have 30
seconds.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DOMENICI. Let me say to the White House, if there are too many
more like this where you support amendments that you did not agree to,
and you actually agreed we did not have to do, then I am sending you a
signal right now I am going to conference and I don't know if Senator
Domenici is going to be bound by that agreement.
I make a point of order that this violates the Budget Act.
Mr. KENNEDY. Mr. President, the Republican leadership has been
willing to accept a tobacco tax which the Republican leadership said
was going to violate the budget agreement which the President
previously supported. Now the President and the Republican leadership
have accepted a 20 cent tobacco tax. The only trouble with the Senator
from Oklahoma's mathematics is he does not include the $14 billion that
they were instructed to reduce Medicaid.
So, this is necessary, according to the Republican's own CBO. This is
necessary to cover insurance. Let's turn our backs on big tobacco and
put our faith in little children.

[[Page S6683]]

Mr. President, this amendment reduces the deficit, and I move to
waive the Budget Act.
Mr. KENNEDY. I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.

Vote on Motion to Waive the Budget Act

The PRESIDING OFFICER. The question is on the motion to waive the
Budget Act. The yeas and nays have been ordered.
The clerk will call the roll.
The bill clerk proceeded to call the roll.
The yeas and nays resulted--yeas 30, nays 70, as follows:

[Rollcall Vote No. 149 Leg.]

YEAS--30

Akaka
Biden
Bingaman
Boxer
Bumpers
Cleland
Daschle
Dodd
Dorgan
Durbin
Feingold
Feinstein
Glenn
Harkin
Johnson
Kennedy
Kerry
Kohl
Lautenberg
Leahy
Levin
Lieberman
Mikulski
Murray
Reed
Reid
Sarbanes
Torricelli
Wellstone
Wyden

NAYS--70

Abraham
Allard
Ashcroft
Baucus
Bennett
Bond
Breaux
Brownback
Bryan
Burns
Byrd
Campbell
Chafee
Coats
Cochran
Collins
Conrad
Coverdell
Craig
D'Amato
DeWine
Domenici
Enzi
Faircloth
Ford
Frist
Gorton
Graham
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hollings
Hutchinson
Hutchison
Inhofe
Inouye
Jeffords
Kempthorne
Kerrey
Kyl
Landrieu
Lott
Lugar
Mack
McCain
McConnell
Moseley-Braun
Moynihan
Murkowski
Nickles
Robb
Roberts
Rockefeller
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Specter
Stevens
Thomas
Thompson
Thurmond
Warner
The PRESIDING OFFICER. On this vote, the yeas are 30, the nays are
70. Three-fifths of the Senators duly chosen and sworn not having voted
in the affirmative, the motion is rejected. The point of order is
sustained, and the amendment falls.
Mr. ROTH. Mr. President, I move to reconsider the vote.
Mr. MOYNIHAN. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
The PRESIDING OFFICER. The amendment violates section 302(f) of the
Budget Act by causing the Finance Committee to exceed its outlay
allocation. The point of order is sustained.
Mr. COVERDELL addressed the Chair.
Mr. ROTH. Senator Coverdell is next in the line of amendments.
The PRESIDING OFFICER. Under the previous order, the Senator from
Georgia is recognized to offer an amendment on which there are 2
minutes of debate equally divided.

Amendment No. 574

(Purpose: To allow tax-free expenditures from an education individual
retirement account for elementary and secondary school expenses and to
adjust the modifications to the minimum tax)

Mr. COVERDELL. Mr. President, I send an amendment to the desk and ask
for its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Georgia [Mr. Coverdell], for himself, Mr.
Abraham, Mr. Coats, Mr. Craig, Mr. Santorum, and Mr.
Ashcroft, proposes an amendment numbered 574.

Mr. COVERDELL. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
On page 19, between lines 14 and 15, insert:
``(D) Adjustment.--The Secretary shall reduce the dollar
amounts otherwise in effect under this paragraph for any
calendar year to the extent necessary to increase Federal
revenues by the amount the Secretary estimates Federal
revenues will be reduced by reason of allowing distributions
from education individual retirement accounts under section
530 to be used for qualified elementary and secondary
education expenses described in section 530(b)(2)(A)(ii).''
On page 64, beginning with line 8, strike all through page
67, line 15, and insert:
``(1) Education individual retirement account.--The term
`education individual retirement account' means a trust
created or organized in the United States exclusively for the
purpose of paying the qualified education expenses of the
account holder, but only if the written governing instrument
creating the trust meets the following requirements:
``(A) No contribution will be accepted--
``(i) unless it is in cash,
``(ii) after the date on which the account holder attains
age 18, or
``(iii) except in the case of rollover contributions, if
such contribution would result in aggregate contributions for
the taxable year exceeding the sum of--
``(I) $2,000, plus
``(II) the amount of the credit allowable under section 25A
for the taxable year for 1 qualifying child.
``(B) The trustee is a bank (as defined in section 408(n))
or another person who demonstrates to the satisfaction of the
Secretary that the manner in which that person will
administer the trust will be consistent with the requirements
of this section.
``(C) No part of the trust assets will be invested in life
insurance contracts.
``(D) The assets of the trust shall not be commingled with
other property except in a common trust fund or common
investment fund.
``(E) Upon the death of the account holder, any balance in
the account will be distributed as required under section
529(b)(8) (as if such account were a qualified tuition
program).
``(F) The account becomes an IRA Plus as of the date the
account holder attains age 30 (and meets all requirements for
an IRA Plus on and after such date), unless the account
holder elects to have sections 529(b)(8) apply as of such
date (as if such account were a qualified tuition program).
``(2) Qualified education expenses.--
``(A) In general.--The term `qualified education expenses'
means--
``(i) qualified higher education expenses (as defined in
section 529(e)(3), and
``(ii) in the case of taxable years beginning after
December 31, 2000, qualified elementary and secondary
education expenses (as defined in paragraph (5)).
``(B) Qualified tuition programs.--Such term shall include
amounts paid or incurred to purchase tuition credits or
certificates, or to make contributions to an account, under a
qualified tuition program (as defined in section 529(b)) for
the benefit of the account holder.
``(3) Eligible educational institution.--The term `eligible
education institution' has the meaning given such term by
section 529(e)(5).
``(4) Account holder.--The term `account holder' means the
individual for whose benefit the education individual
retirement account is established.
``(5) Qualified elementary and secondary education
expenses.--
``(A) In general.--The term `qualified elementary and
secondary education expenses' means tuition, fees, tutoring,
special needs services, books, supplies, equipment,
transportation, and supplementary expenses required for the
enrollment or attendance at a public, private, or sectarian
school of any dependent of the taxpayer with respect to whom
the taxpayer is allowed a deduction under section 151.
``(B) Special rule for homeschooling.--Such term shall
include expenses described in subparagraph (A) required for
education provided for homeschooling if the requirements of
any applicable State or local law are met with respect to
such education.
``(C) School.--The term `school' means any school which
provides elementary education or secondary education (through
grade 12), as determined under State law.
``(c) Tax Treatment of Distributions.--
``(1) In general.--Any amount paid or distributed shall be
includable in gross income to the extent required by section
529(c)(3) (determined as if such account were a qualified
tuition program and as if qualified higher education expenses
include qualified education expenses).
``(2) Special rules for applying estate and gift taxes with
respect to account.--Rules similar to the rules of paragraphs
(2), (4), and (5) of section 529(c) shall apply for purposes
of this section.
``(3) Additional tax for distributions not used for
educational expenses.--
``(A) In general.--The tax imposed by section 529(f) shall
apply to payments and distributions from an education
individual retirement account in the same manner as such tax
applies to qualified tuition programs (as defined in section
529), except that section 529(f) shall be applied by
reference to qualified education expenses.

Mr. COVERDELL. Mr. President, I wonder if we could bring the Senate
to order.
The PRESIDING OFFICER. The Senate will please come to order.
The Senator from Georgia.
Mr. COVERDELL. Mr. President, the bill currently provides an
education IRA for college expenses only. But, of course, not every
child goes to college. Every child does, however, attend elementary and
secondary school.
This amendment expands the education IRA to allow parents to use it
for any education expenses, including tuition from kindergarten through
high school. I am pleased to be joined on this amendment by Senators
Abraham, Coats, Craig, Santorum, and Ashcroft.

[[Page S6684]]

Mr. President, it is important to help parents cope with the cost of
college, but that is not where the crisis is. The crisis in our schools
is in elementary and secondary schools that are riddled with drugs and
violence. Let's do something to help those parents, too.
I reserve the remainder of my time.
The PRESIDING OFFICER. Who yields time on the opposite side?
Mr. COVERDELL. Mr. President, I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. Is all time yielded back?
Mr. DASCHLE. Mr. President, this is tantamount to providing vouchers
for private education. That is in essence what this amendment does. For
that reason, we oppose it.
Mr. COVERDELL. Mr. President, how much of my time remains?
The PRESIDING OFFICER. The Senator has 13 seconds.
Mr. COVERDELL. Mr. President, this is their own money. This involves
no tax money. This belongs to the taxpayer. They ought to be able to
use it wherever they decide.
The PRESIDING OFFICER. The question is on agreeing to the amendment.
The clerk will call the roll.
The assistant legislative clerk called the roll.
The PRESIDING OFFICER (Mr. Coats). Are there any other Senators in
the Chamber desiring to vote?
The result was announced--yeas 59, nays 41, as follows:

[Rollcall Vote No. 150 Leg.]

YEAS--59

Abraham
Allard
Ashcroft
Bennett
Biden
Bond
Breaux
Brownback
Burns
Campbell
Coats
Cochran
Coverdell
Craig
D'Amato
DeWine
Domenici
Enzi
Faircloth
Frist
Gorton
Gramm
Grams
Grassley
Gregg
Hagel
Harkin
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Kempthorne
Kohl
Kyl
Landrieu
Leahy
Lieberman
Lott
Lugar
Mack
McCain
McConnell
Murkowski
Nickles
Roberts
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Specter
Stevens
Thomas
Thompson
Thurmond
Torricelli
Warner

NAYS--41

Akaka
Baucus
Bingaman
Boxer
Bryan
Bumpers
Byrd
Chafee
Cleland
Collins
Conrad
Daschle
Dodd
Dorgan
Durbin
Feingold
Feinstein
Ford
Glenn
Graham
Hollings
Inouye
Jeffords
Johnson
Kennedy
Kerrey
Kerry
Lautenberg
Levin
Mikulski
Moseley-Braun
Moynihan
Murray
Reed
Reid
Robb
Rockefeller
Sarbanes
Snowe
Wellstone
Wyden
The amendment (No. 574) was agreed to.

Change Of Vote

Mr. BOND. Mr. President, on rollcall No. 150, on which I voted
``no,'' it was my intention to vote ``aye.'' Since it will in no way
change the outcome of the vote, I ask unanimous consent that I be
recorded as an ``aye.''
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ROTH. Mr. President, I move to reconsider the vote by which the
amendment was agreed to.
Mr. MOYNIHAN. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. BINGAMAN addressed the Chair.
The PRESIDING OFFICER. The Senator from New Mexico.

Amendment No. 541

Mr. BINGAMAN. Mr. President, I call up amendment No. 541 which is at
the desk.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from New Mexico [Mr. Bingaman], for himself,
and Mr. Conrad, proposes an amendment numbered legislative
541.

(The amendment is printed in the Record of Thursday, June 26, 1997.)
Mr. BINGAMAN. Mr. President, this amendment is being offered on
behalf of myself and Senator Conrad.
Mr. President, we all understand what regular IRA's are about and how
those work where a person can put up to $2,000 into an IRA. It
accumulates earnings over a career, and then when you retire you go
ahead and pay tax on it.
What we have in this bill is something different than a regular IRA.
We have an IRA Plus. The IRA Plus differs in a very important way. What
this chart shows is it essentially says if you agree to pay the tax
that is due on your existing IRA up through the end of next year, the
1st of January 1998, it will give you the time that this budget
agreement covers to pay all of that tax in. And then the earnings from
that money in that IRA Plus account are never going to be taxed the
rest of your life.
That is what the provision is. It is a back-loaded IRA which means it
is specifically for people who are not eligible for the other types of
IRA's. So if you have over $100,000 and you already have a retirement
account, then you can have an IRA Plus. The earnings from the funds in
that IRA Plus will never be taxed.
I urge the Senate to adopt our amendment.
Mr. ROTH. Mr. President, we need to do something about our savings
rates. Americans are saving less now than they did than at almost any
time since World War II. The universal IRA Plus is our best bet to
bolster our fledgling savings rate. In fact, expanding IRA's is the
only prosaving provision in the budget. The universal IRA Plus account
compliments the tax deductible IRA because it offers a long-term
predictable savings program for millions of families with fluctuating
incomes, and who do not have employer retirement plans.
Senator Bingaman's chart is misleading because the taxpayer must be
at least 59\1/2\ years old before withdrawals are tax free. It is
particularly important for the self-employed like farmers and young
families who hopefully will be successful and grow out of the tax-
deductible IRA into the IRA Plus. With all these advantages, the
backloaded IRA must be included in the budget bill. Fifty-one Senators
have cosponsored my super-IRA legislation and agree with me.
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. ROTH. I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second? There is a
sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on agreeing to the amendment.
The yeas and nays have been ordered. The clerk will call the roll.
The legislative clerk called the roll.
The result was announced--yeas 33, nays 67, as follows:

[Rollcall Vote No. 151 Leg.]

YEAS--33

Akaka
Bingaman
Boxer
Bumpers
Byrd
Cleland
Collins
Conrad
Daschle
Dodd
Dorgan
Durbin
Feingold
Feinstein
Ford
Glenn
Harkin
Hollings
Inouye
Jeffords
Johnson
Kennedy
Kerry
Lautenberg
Leahy
Levin
Murray
Reed
Reid
Robb
Sarbanes
Snowe
Wellstone

NAYS--67

Abraham
Allard
Ashcroft
Baucus
Bennett
Biden
Bond
Breaux
Brownback
Bryan
Burns
Campbell
Chafee
Coats
Cochran
Coverdell
Craig
D'Amato
DeWine
Domenici
Enzi
Faircloth
Frist
Gorton
Graham
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Kempthorne
Kerrey
Kohl
Kyl
Landrieu
Lieberman
Lott
Lugar
Mack
McCain
McConnell
Mikulski
Moseley-Braun
Moynihan
Murkowski
Nickles
Roberts
Rockefeller
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Specter
Stevens
Thomas
Thompson
Thurmond
Torricelli
Warner
Wyden
The amendment (No. 541) was rejected.
Mr. ROTH. Mr. President, I move to reconsider the vote.
Mr. MOYNIHAN. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. DORGAN addressed the Chair.
The PRESIDING OFFICER. If we could get attention of Senators and if
conversations could be taken to the cloakroom.
The Senator from North Dakota.

Amendments Nos. 515 and 516 Withdrawn

Mr. DORGAN. I ask unanimous consent to withdraw amendments Nos. 515
and 516 at the desk.

[[Page S6685]]

The PRESIDING OFFICER. Is there objection? Without objection, it is
so ordered.
The amendments (Nos. 515 and 516) were withdrawn.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. Mr. President, I think the next one is Mr. Kohl.
The PRESIDING OFFICER. The Senator from Wisconsin will suspend until
we can get the attention of the Chamber.
Mr. ROTH. It is my understanding the next one on the list is an
amendment by Senator Kohl.
The PRESIDING OFFICER. The Senator from Wisconsin is recognized.

Amendment No. 575

(Purpose: To provide a credit against tax for employers who provide
child care assistance for dependents of their employees)

Mr. KOHL. Mr. President, I send an amendment to the desk.
The PRESIDING OFFICER (Mr. Coats). The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Wisconsin [Mr. Kohl], for himself, Mr.
Hatch, Mr. Daschle, Mr. D'Amato, Ms. Moseley-Braun, Mr.
Abraham, Mr. Specter, Ms. Snowe, Mrs. Boxer, Mr. DeWine, Mrs.
Murray, and Mr. Johnson, proposes an amendment numbered 575.

Mr. KOHL. Mr. President, I ask unanimous consent that reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The text of the amendment is printed in today's Record under
``Amendments Submitted.'')
Mr. KOHL. This amendment provides a tax incentive for companies that
provide quality child care for the children of their employees. The
amendment is cosponsored by Senators Hatch, Daschle, DeWine, Boxer,
D'Amato, Specter, Snowe, Johnson, Abraham, Moseley-Braun, and Murray.
This amendment creates a tax credit limited to 50 percent of $150,000
per company per year for 3 years for those companies that invest in
quality child care on or near site. The credit is offset by authorizing
the antifraud program that will keep parents who do not have custody of
their children from unlawfully claiming child-related tax benefits.
We know child care is an investment that is good for children, good
for business, good for States and good for our Nation. We need to
involve every level of government and private communities and private
businesses in building a quality child care system for our youngest
that is the best in the world. This amendment is the first essential
and deficit-neutral step toward that end.
I urge my colleagues to support it.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. Mr. President, while I am sympathetic to my colleague's
effort to provide quality child care, I regret I must oppose his
amendment. This bill already contains meaningful child care tax relief
for families. This proposal would give that tax relief to employers.
For this reason I must oppose this amendment. I point out the
amendment is not germane and, with all time yielded back, I make a
point of order of germaneness. I therefore raise a point of order
against the amendment under section 305(b)(2) of the Budget Act.
The PRESIDING OFFICER. The Senator from Wisconsin.
Mr. KOHL. I move to waive the Budget Act for my amendment.
Mr. President, I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.

Vote on Motion to Waive the Budget Act

The PRESIDING OFFICER. The question is on agreeing to the motion. The
yeas and nays are ordered. The clerk will call the roll.
The legislative clerk called the roll.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
who desire to vote?
The yeas and nays resulted, yeas 72, nays 28, as follows:

[Rollcall Vote No. 152 Leg.]

YEAS--72

Abraham
Akaka
Allard
Ashcroft
Baucus
Biden
Bingaman
Boxer
Brownback
Bryan
Bumpers
Campbell
Cleland
Coats
Collins
Conrad
Coverdell
D'Amato
Daschle
DeWine
Dodd
Domenici
Dorgan
Durbin
Feingold
Feinstein
Ford
Frist
Glenn
Graham
Grams
Grassley
Gregg
Harkin
Hatch
Hollings
Hutchison
Inouye
Jeffords
Johnson
Kempthorne
Kennedy
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lugar
McCain
McConnell
Mikulski
Murray
Reed
Reid
Robb
Roberts
Rockefeller
Santorum
Sarbanes
Smith (NH)
Smith (OR)
Snowe
Specter
Stevens
Thompson
Thurmond
Torricelli
Warner
Wellstone
Wyden

NAYS--28

Bennett
Bond
Breaux
Burns
Byrd
Chafee
Cochran
Craig
Enzi
Faircloth
Gorton
Gramm
Hagel
Helms
Hutchinson
Inhofe
Kerrey
Kyl
Lott
Mack
Moseley-Braun
Moynihan
Murkowski
Nickles
Roth
Sessions
Shelby
Thomas
The PRESIDING OFFICER. On this vote the yeas are 72, the nays are 28.
Three-fifths of the Senators duly chosen and sworn having voted in the
affirmative, the motion is agreed to.
The question is now on agreeing to the underlying amendment.
The amendment (No. 575) was agreed to.
Mr. MOYNIHAN. Mr. President, I move to reconsider the vote by which
the amendment was agreed to.
Mr. FORD. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. Mr. President, Senator Jeffords is next on the list to
offer an amendment.
The PRESIDING OFFICER (Mr. Hagel). The Senator from Vermont.

Amendment No. 555

(Purpose: To encourage improvements in child care services and options
for meeting employment-related child care needs)

Mr. JEFFORDS. Mr. President, I have a child care amendment at the
desk.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from Vermont [Mr. Jeffords], for himself, Mr.
Dodd, Mr. Roberts, Mr. Johnson, Mr. Kohl, Ms. Snowe, Ms.
Landrieu, Mr. Chafee, Mr. D'Amato, Ms. Collins, Mr. Smith of
Oregon, Mr. Campbell, Mr. Kennedy, Mr. Enzi, Mr. Allard, Mr.
Stevens, Mr. Grassley, Ms. Mikulski, Mr. Kerry, and Mr.
Graham, proposes an amendment numbered 555.

Mr. JEFFORDS. Mr. President, I ask unanimous consent that the reading
of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The text of the amendment is printed in the June 26, 1997, edition
of the Record.)
Mr. JEFFORDS. Mr. President, this is a natural follow-on to the
previous amendment. We are all aware of the need for good child care.
There are more than 12 million children who are in child care. At least
15 percent are in care that is so bad that their health and safety are
threatened; 40 percent of the infants in child care are in very risky
situations.
For the many parents who would change their child care if they could
find and afford better, this amendment provides tax relief through the
child care tax credits, and it helps business meet the child care needs
of their employees through the business tax credits and deductions.
We expand choices for parents, because if you can't afford the child
care you find, you don't have much choice. Representatives of the
religious and for-profit child care providers worked with us on the
language related to accreditation and credentialing.
I ask unanimous consent that the following Members be added as
cosponsors: Senators Dodd, Roberts, Kohl, Landrieu, Snowe, Johnson,
Chafee, D'Amato, Collins, Gordon Smith, Campbell, Kennedy, Enzi,
Allard, Stevens, Grassley, Mikulski, Kerry, and Graham.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. JEFFORDS. I reserve the remainder of my time, if I have any left.
The PRESIDING OFFICER. The Senator's time has expired. There is 1
minute in opposition. The Senator from Indiana.
Mr. COATS. Mr. President, we all want to improve quality care for
child care. We spend nearly $1 billion now

[[Page S6686]]

doing that. As chairman of the Children and Family Subcommittee I am
committed to that. I commend Senator Jeffords, Senator Dodd, and others
for work in that area.
The reason I oppose this particular amendment is, first of all,
because it is an amorphous amendment. It brings a number of things
together. There is one in here we tried to work out. I think we ought
to oppose it, take it back to committee, bring it through, and bring a
true quality child care amendment forward.
This forces grandparents, neighbors, and family day-care providers
who already comply with State child care laws to meet now an additional
standard, certified by a State-recognized agency or entity to submit to
additional monitoring in order to have the care that they provide
qualify for this additional tax credit.
We should not provide a preference tax credit for those who provide
care outside the State certification. There are mothers and neighbors
and relatives who do that who provide what they think is quality care
and, more important, what the mothers and parents of children think is
quality care.
I yield whatever time I have left to the Senator from Oklahoma.
The PRESIDING OFFICER. All time has expired.
Mr. ROTH. Mr. President, the pending amendment is not germane to the
provisions of the reconciliation measure. I, therefore, raise a point
of order against the amendment under section 305(b)(2) of the Budget
Act.
Mr. JEFFORDS. Mr. President, I understand this is a germaneness
objection. I move to waive the Budget Act and ask for the yeas and
nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.

Vote on Motion to Waive the Budget Act

The PRESIDING OFFICER. The question is on agreeing to the motion to
waive the Budget Act. The yeas and nays have been ordered. The clerk
will call the roll.
Mr. FORD. I announce that the Senator from South Carolina [Mr.
Hollings] is necessarily absent.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The yeas and nays resulted--yeas 57, nays 42, as follows:

[Rollcall Vote No. 153 Leg.]

YEAS--57

Akaka
Allard
Baucus
Biden
Bingaman
Boxer
Breaux
Bryan
Bumpers
Campbell
Chafee
Cleland
Conrad
Coverdell
D'Amato
Daschle
Dodd
Dorgan
Durbin
Enzi
Feingold
Feinstein
Ford
Glenn
Graham
Harkin
Hutchison
Inouye
Jeffords
Johnson
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Mack
Mikulski
Moseley-Braun
Murray
Reed
Reid
Robb
Roberts
Rockefeller
Sarbanes
Smith (OR)
Snowe
Specter
Stevens
Torricelli
Warner
Wellstone
Wyden

NAYS--42

Abraham
Ashcroft
Bennett
Bond
Brownback
Burns
Byrd
Coats
Cochran
Collins
Craig
DeWine
Domenici
Faircloth
Frist
Gorton
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hutchinson
Inhofe
Kempthorne
Kyl
Lott
Lugar
McCain
McConnell
Moynihan
Murkowski
Nickles
Roth
Santorum
Sessions
Shelby
Smith (NH)
Thomas
Thompson
Thurmond

NOT VOTING--1

Hollings

The PRESIDING OFFICER. On this vote the yeas are 57, the nays are 42.
Three-fifths of the Senators duly chosen and sworn not having voted in
the affirmative, the motion is rejected. The point of order is
sustained, and the amendment falls.
Mr. ROTH. I move to reconsider the vote.
Mr. MOYNIHAN. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. TORRICELLI addressed the Chair.
The PRESIDING OFFICER (Mr. Enzi). The Chair recognizes the Senator
from New Jersey.

Amendment No. 578

(Purpose: To exclude certain severance payment amounts from income and
to modify the time periods for carryback and carryforward of unused
credits)

Mr. TORRICELLI. Mr. President, I have an amendment, and I ask for its
immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from New Jersey [Mr. Torricelli], for himself
and Ms. Landrieu, proposes an amendment numbered 578.

Mr. TORRICELLI. Mr. President, I ask unanimous consent that further
reading of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

On page 267, between lines 15 and 16, insert the following:

SEC. . EXCLUSION FROM INCOME OF SEVERANCE PAYMENT AMOUNTS;
TIME PERIODS FOR CARRYBACK AND CARRYFORWARD OF
UNUSED CREDITS.

(a) Exclusion From Income of Severance Payment Amounts.--
Part III of subchapter B of chapter 1 (relating to items
specifically excluded from gross income) is amended by
redesignating section 138 as section 139 and by inserting
after section 137 the following new section:

``SEC. 138. SEVERANCE PAYMENTS.

``(a) In General.--In the case of an individual, gross
income shall not include any qualified severance payment.
``(b) Limitation.--The amount to which the exclusion under
subsection (a) applies shall not exceed $2,000 with respect
to any separation from employment.
``(c) Qualified Severance Payment.--For purposes of this
section--
``(1) In general.--The term `qualified severance payment'
means any payment received by an individual if--
``(A) such payment was paid by such individual's employer
on account of such individual's separation from employment,
``(B) such separation was in connection with a reduction in
the work force of the employer, and
``(C) such individual does not attain employment within 6
months of the date of such separation in which the amount of
compensation is equal to or greater than 95 percent of the
amount of compensation for the employment that is related to
such payment.
``(2) Limitation.--Such term shall not include any payment
received by an individual if the aggregate payments received
with respect to the separation from employment exceed
$125,000.''
(b) Time Periods for Carryback and Carryforward of Unused
Credits.--Section 39(a) (relating to unused credits) is
amended--
(1) in paragraph (1), by striking ``3'' each place it
appears and inserting ``1'' and by striking ``15'' each place
it appears and inserting ``20''; and
(2) in paragraph (2), by striking ``18'' each place it
appears and inserting ``22'' and by striking ``17'' each
place it appears and inserting ``21''.
(c) Clerical Amendment.--The table of sections for part III
of subchapter B of chapter 1 is amended by striking the time
relating to section 138 and inserting the following new
items:

``Sec. 138. Severance payments.
``Sec. 139. Cross references to other Acts.''

(d) Effective Dates.--
(1) In general.--The amendments made by subsections (a) and
(c) shall apply to taxable years beginning after December 31,
1997, and before July 1, 2002.
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to the carryback and carryforward of credits
arising in taxable years beginning after December 31, 1997.

Mr. TORRICELLI. Mr. President, as the Senate has considered tax
relief for people of means to encourage them to invest in a growing
economy and people of more modest means to help with their education, I
offer an amendment to deal with a different group of Americans, people
not of high or medium income, but people of no income.
Even in good economic times, through no fault of their own, through
mergers, acquisitions, downsizing, or foreign competition, companies
need to sometimes reduce their work force. And corporate America is
responding responsibly by offering severance pay.
My amendment simply takes the first $3,000 of severance pay offered
to any American who loses their job through downsizing and makes that
$3,000 tax free. It is offset. It is responsible. It is an appropriate
Government response to a corporate policy which is the right way to
help Americans to adjust to start their own businesses or retirement.
I urge the adoption of the amendment.
The PRESIDING OFFICER. The Senator's time has expired.
There is 1 minute in opposition.
Who seeks recognition?
Mr. MOYNIHAN. Mr. President, I do not believe there is any
opposition. It is an excellent proposal.

[[Page S6687]]

Mr. ROTH. We are ready and willing to accept it by voice vote.
Mr. TORRICELLI. Mr. President, I thank the Chairman.
The PRESIDING OFFICER. Without objection, the amendment is agreed to.
The amendment (No. 578) was agreed to.
Mr. MOYNIHAN. I move to reconsider the vote.
Mr. ROTH. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. HARKIN addressed the Chair.
The PRESIDING OFFICER. The Senator from Iowa.

Amendment No. 579

(Purpose: To improve health care quality and reduce health care costs
by establishing a National Fund for Health Research that would
significantly expand the Nation's investment in medical research)

Mr. HARKIN. I send my amendment to the desk.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from Iowa [Mr. Harkin], for himself, Mr.
D'Amato, Mr. Mack, and Mr. Specter, proposes an amendment
numbered 579.

Mr. HARKIN. I ask unanimous consent reading of the amendment be
dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

On page 1027, between lines 7 and 8, insert the following:

Subtitle N--National Fund for Health Research

SEC. 5995. SHORT TITLE.

This subtitle may be cited as the ``National Fund for
Health Research Act''.

SEC. 5996. FINDINGS.

Congress makes the following findings:
(1) Nearly 4 of 5 peer reviewed research projects deemed
worthy of funding by the National Institutes of Health are
not funded.
(2) Less than 3 percent of the nearly one trillion dollars
our Nation spends on health care is devoted to health
research, while the defense industry spends 15 percent of its
budget on research and development.
(3) Public opinion surveys have shown that Americans want
more Federal resources put into health research and are
willing to pay for it.
(4) Ample evidence exists to demonstrate that health
research has improved the quality of health care in the
United States. Advances such as the development of vaccines,
the cure of many childhood cancers, drugs that effectively
treat a host of diseases and disorders, a process to protect
our Nation's blood supply from the HIV virus, progress
against cardiovascular disease including heart attack and
stroke, and new strategies for the early detection and
treatment of diseases such as colon, breast, and prostate
cancer clearly demonstrates the benefits of health research.
(5) Health research which holds the promise of prevention
of intentional and unintentional injury and cure and
prevention of disease and disability, is critical to holding
down health care costs in the long term.
(6) Expanded medical research is also critical to holding
down the long-term costs of the medicare program under title
XVIII of the Social Security Act. For example, recent
research has demonstrated that delaying the onset of
debilitating and costly conditions like Alzheimer's disease
could reduce general health care and medicare costs by
billions of dollars annually.
(7) The state of our Nation's research facilities at the
National Institutes of Health and at universities is
deteriorating significantly. Renovation and repair of these
facilities are badly needed to maintain and improve the
quality of research.
(8) Because discretionary spending is likely to decline in
real terms over the next 5 years, the Nation's investment in
health research through the National Institutes of Health is
likely to decline in real terms unless corrective legislative
action is taken.
(9) A health research fund is needed to maintain our
Nation's commitment to health research and to increase the
percentage of approved projects which receive funding at the
National Institutes of Health.

SEC. 5997. ESTABLISHMENT OF FUND.

(a) Establishment.--There is established in the Treasury of
the United States a fund, to be known as the ``National Fund
for Health Research'' (hereafter in this section referred to
as the ``Fund''), consisting of such amounts as are
transferred to the Fund under subsection (b), any sums
specifically designated for such purpose by future acts of
Congress, and any interest earned on investment of amounts in
the Fund.
(b) Transfers to Fund.--
(1) In general.--The Secretary of the Treasury shall
transfer to the Fund amounts equivalent to one half the
amounts for each of the fiscal years 1998 through 2002
derived for each such fiscal year under Section 311 through
Section 314 of this act that exceeds the amount of Federal
revenues estimated by the Joint Tax Committee as of the date
of enactment of this act, to be gained from enactment of
Section 311 through Section 314 for each such fiscal year.
(B) Determination by secretary.--Not later than 6 months
after the end of each of the fiscal years described in
subparagraph (A), the Secretary of the Treasury shall--
(i) make a determination as to the amount to be transferred
to the Fund for the fiscal year involved under this
subsection; and
(ii) subject to subsection (d), transfer such amount to the
Fund.
(C) Fund administered by health and human services.--The
Secretary of Health and Human Services shall administer funds
transferred into the Fund.
(D) Cap on transfer.--Amounts transferred to the Fund under
this subsection for any year in the 5-fiscal year period
beginning on October 1, 1997, shall not in combination with
the appropriated sum exceed an amount equal to the amount
appropriated for the National Institutes of Health for fiscal
year 1997 multiplied by 2.
(c) Obligations From Fund.--
(1) In general.--Subject to the provisions of paragraph
(4), with respect to the amounts made available in the Fund
in a fiscal year, the Secretary of Health and Human Services
shall distribute--
(A) 2 percent of such amounts during any fiscal year to the
Office of the Director of the National Institutes of Health
to be allocated for the following activities:
(i) for carrying out the responsibilities of the Office of
the Director, including the Office of Research on Women's
Health and the Office of Research on Minority Health, the
Office of Alternative Medicine, the Office of Rare Disease
Research, the Office of Behavioral and Social Sciences
Research (for use for efforts to reduce tobacco use), the
Office of Dietary Supplements, and the Office for Disease
Prevention; and
(ii) for construction and acquisition of equipment for or
facilities of or used by the National Institutes of Health;
(B) 2 percent of such amounts for transfer to the National
Center for Research Resources to carry out section 1502 of
the National Institutes of Health Revitalization Act of 1993
concerning Biomedical and Behavioral Research Facilities;
(C) 1 percent of such amounts during any fiscal year for
carrying out section 301 and part D of title IV of the Public
Health Service Act with respect to health information
communications; and
(D) the remainder of such amounts during any fiscal year to
member institutes and centers, including the Office of AIDS
Research, of the National Institutes of Health in the same
proportion to the total amount received under this section,
as the amount of annual appropriations under appropriations
Acts for each member institute and Centers for the fiscal
year bears to the total amount of appropriations under
appropriations Acts for all member institutes and Centers of
the National Institutes of Health for the fiscal year.
(2) Plans of allocation.--The amounts transferred under
paragraph (1)(D) shall be allocated by the Director of the
National Institutes of Health or the various directors of the
institutes and centers, as the case may be, pursuant to
allocation plans developed by the various advisory councils
to such directors, after consultation with such directors.
(3) Grants and contracts fully funded in first year.--With
respect to any grant or contract funded by amounts
distributed under paragraph (1), the full amount of the total
obligation of such grant or contract shall be funded in the
first year of such grant or contract, and shall remain
available until expended.
(4) Trigger and release of monies.
(A) Trigger and release.--No expenditure shall be made
under paragraph (1) during any fiscal year in which the
annual amount appropriated for the National Institutes of
Health is less than the amount so appropriated for the prior
fiscal year.
(d) Required Appropriation.--No transfer may be made for a
fiscal year under subsection (b) unless an appropriations Act
providing for such a transfer has been enacted with respect
to such fiscal year.
Mr. HARKIN. Mr. President, in this morning's paper, researchers were
able to identify a gene that plays a role in Parkinson's disease. We
need more funds for biomedical research.
What this amendment says, on behalf of Senators D'Amato, Specter,
Mack, and myself, is that we take the excess savings that will come in
because of the capital gains tax cut. Half of that will go for deficit
reduction; the other half will go to NIH for biomedical research.
I yield the remainder of my time first to Senator D'Amato and then
Senator Specter.
Mr. D'AMATO. Mr. President, a number of recent studies have
demonstrated that investments in medical research can lower health care
costs through the development of more cost-effective treatments.
Greater funding for research will also increase our ability to combat
diseases which are very costly to our Nation's health care system. We
voted on May 21, 1997, 98 to 0, to double the amount of funding for NIH
so we can advance our biomedical research capabilities. This impressive
show of support from this body will help reduce health care costs and
increase the quality of health for all of our citizens.

[[Page S6688]]

Voting to increase funding was easy. Now comes the hard part. Where
do we get the money? We must not take money from other vital programs
such as food stamps or senior citizen benefits. Can we afford to give
more money for breast cancer research and take away money from programs
for children? There would be no end to the debate on which is more
worthy of our priorities.
There is a better way to get funds for biomedical research without
cutting from other programs. I suggest that each year the Secretary of
the Treasury determine whether the actual revenue impact of the capital
gains provisions of this bill are more positive--more revenues gained
or less lost--than levels called for in revenue scoring of this
provision. If the impact is more positive, half of the revenues will be
put toward deficit reduction. We could then take the other half and
deposit it into a National Fund for Health Research. This fund will
expand support for medical research through the National Institutes of
Health [NIH].
I believe that if we acquire the money for the fund in this way we
can avoid hurting other programs. Using money when there is a more
positive revenue will keep us within the bounds of the balanced budget
agreement. I don't believe there is a better place to put this excess
money than in the research fund.
Mr. President, every one of us, the entire Senate called for an
increase in funding for biomedical research. Again, I suggest that
there is no better place to put the more positive revenue than in this
fund. I believe that the establishment of this trust fund should be
made in the same cooperative spirit that brought the entire Senate to
agree to increase funding on May 21. We can then go home feeling proud
that we did all we could to further advance our country's medical
capabilities and in time reduce the costs of our entire health care
system.
Mr. President, we voted 98 to 0 to do this. This is a matter which
we can prove that we meant it. Any additional moneys will go to deficit
reduction and to NIH.
Mr. SPECTER. Mr. President, the Senate voted 98 to 0 in a sense of
the Senate, but turned down $1.1 billion of real money, 67 to 37.
This is a chance for those 63 Senators to redeem themselves, to
redeem their promise for NIH funding.
The PRESIDING OFFICER. There is 1 minute in opposition.
Mr. ROTH. I yield to the Senator from Pennsylvania.
Mr. SANTORUM. If this amendment is adopted, there is no money for tax
cuts, if that money was available from extra funds.
I do not think that is a good idea. I think it hamstrings Congress.
If there is extra money, we should give it back to the people who paid
it here. We should not be putting it into more Government spending.
No. 1, my understanding is that this violates the Budget Act and is
subject to a point of order.
Mr. NICKLES. I make the point of order that the amendment is not
relevant under the Budget Act, subject to germaneness.
Mr. HARKIN. I move to waive the point of order and ask for the yeas
and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.

Vote on Motion to Waive the Budget Act

The PRESIDING OFFICER. The question is on agreeing to the motion to
waive the Budget Act. The yeas and nays have been ordered.
The clerk will call the roll.
The bill clerk called the roll.
Mr. FORD. I announce that the Senator from South Carolina. [Mr.
Hollings] is necessarily absent.
The yeas and nays resulted--yeas 51, nays 48, as follows:

[Rollcall Vote No. 154 Leg.]

YEAS--51

Akaka
Biden
Boxer
Bryan
Bumpers
Burns
Cleland
Collins
Conrad
D'Amato
Daschle
DeWine
Dodd
Dorgan
Durbin
Feinstein
Frist
Glenn
Graham
Grassley
Harkin
Hutchison
Inouye
Jeffords
Johnson
Kennedy
Kerrey
Kerry
Kohl
Lautenberg
Leahy
Levin
Lieberman
Mack
McCain
Mikulski
Moseley-Braun
Moynihan
Murray
Reed
Reid
Robb
Rockefeller
Sarbanes
Snowe
Specter
Stevens
Thompson
Torricelli
Wellstone
Wyden

NAYS--48

Abraham
Allard
Ashcroft
Baucus
Bennett
Bingaman
Bond
Breaux
Brownback
Byrd
Campbell
Chafee
Coats
Cochran
Coverdell
Craig
Domenici
Enzi
Faircloth
Feingold
Ford
Gorton
Gramm
Grams
Gregg
Hagel
Hatch
Helms
Hutchinson
Inhofe
Kempthorne
Kyl
Landrieu
Lott
Lugar
McConnell
Murkowski
Nickles
Roberts
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Thomas
Thurmond
Warner

NOT VOTING--1

Hollings

The PRESIDING OFFICER. On this vote, the yeas are 51, the nays are
48. Three-fifths of the Senators duly chosen and sworn not having voted
in the affirmative, the motion is rejected. The point of order is
sustained, and the amendment falls.
Mr. ROTH. Mr. President, I move to reconsider the vote.
Mr. MOYNIHAN. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. ROTH. Mr. President, Senator Moseley-Braun is the next Senator on
the list to offer an amendment.
The PRESIDING OFFICER. The Senator from Illinois is recognized.

Amendment No. 581

(Purpose: To provide for a tax credit for public elementary and
secondary school construction, and for other purposes)

Ms. MOSELEY-BRAUN. Mr. President, I send an amendment to the desk and
ask for its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from Illinois [Ms. Moseley-Braun], for herself,
Mr. Kennedy, and Mr. Wellstone, proposes an amendment
numbered 581.

Ms. MOSELEY-BRAUN. Mr. President, I ask unanimous consent that
reading of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The text of the amendment is printed in today's Record under
``Amendments Submitted.'')
Ms. MOSELEY-BRAUN. Mr. President, this amendment says that if our
economy does better than we today expect that it will, we will devote
some of that increased revenue to help rebuild our Nation's crumbling
schools.
The General Accounting Office makes it very clear that we have at
least 112 billion dollars' worth of unmet needs with school facilities
around the country. State and local governments cannot go to the
property tax to meet that 112 billion dollars' worth of need. So, I say
to my colleagues, in the interest of the 14 million American children
who, every day, go to schools that are unfit for human habitation and
which are not suitable environments for learning, I ask support for
this amendment. The funds from the tax credit would only be made
available if actual revenue in the Federal Treasury exceeded CBO's
annual revenue projections, and up to $1 billion above and beyond CBO
revenue estimates will be deposited into a school infrastructure trust
fund. It would be distributed to the States in allocable tax credits.
This is a problem that will not go away. It will only get worse if we
don't address it now. Thank you.
Mr. NICKLES addressed the Chair.
The PRESIDING OFFICER. The Senator from Oklahoma is recognized.
Mr. NICKLES. Mr. President, I urge my colleagues to vote no on this
amendment. I understand there will be a voice vote. Mr. President, this
proposal is, in essence, converting an education infrastructure grant
program into a tax credit. In my opinion, that is not a good idea. The
administration, while they originally proposed having the $5 billion
for schools, during the negotiation they dropped that. That wasn't part
of the agreed-upon package. I might also mention that the Department of
Education said, ``The Department recommends that Congress rescind the
1995 appropriations for this program and provide no funding for 1996.''
That was the infrastructure program.
So, Mr. President, I urge colleagues to vote no on this amendment.

[[Page S6689]]

The PRESIDING OFFICER. The question is on agreeing to the amendment.
The amendment (No. 581) was rejected.
Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
Mr. FORD. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. ROTH. Mr. President, I next yield to Senator McCain to offer an
amendment.

Amendment No. 548

(Purpose: To strike the provision relating to the extension and
modification of subsidies for alcohol fuels)

Mr. McCAIN. Mr. President, I send an amendment to the desk and ask
for its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from Arizona [Mr. McCain] proposes an amendment
numbered 548.

Mr. McCAIN. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

Strike section 707 of the bill.

Mr. McCAIN. Mr. President, I offer an amendment today to strike the
language in the bill that provides an additional $3.8 billion in
subsidies for the ethanol industry.
The amendment is very simple. It strikes in its entirety Section 707
of the bill, which would extend for an additional 7 years the tax
credits for ethanol and methanol producers. The value of these ethanol
subsidies is estimated by the Congressional Budget Office at $3.8
billion in lost revenues.
Mr. President, enough is enough. The American taxpayers have
subsidized the ethanol industry, with guaranteed loans and tax credits,
for more than 20 years. Since 1980, government subsidies for ethanol
have totaled more than $10 billion. Section 707 of the bill, if not
stricken, would give another $3.8 billion in tax breaks to ethanol
producers.
Current law provides tax credits for ethanol producers which are
estimated to cost the Treasury $770 million a year in lost revenue, and
the Congressional Research Service estimates that loss may increase to
$1 billion by the year 2000. These huge tax credits effectively
increase the tax burden on other businesses and individual taxpayers.
The current tax subsidies for ethanol are scheduled to expire in the
year 2000. This amendment does not change current law; it allows the
existing generous subsidies to continue through the year 2000. The
amendment merely ensures that the subsidies do expire and are not
extended for another 7 years.
Mr. President, let me just take a moment and try to explain why we
have such generous ethanol subsidies in law today. The rationale for
ethanol subsidies has changed over the years, but unfortunately,
ethanol has never lived up to the claims of any of its diverse
proponents.
In the late 1970's, during the energy crisis, ethanol was supposed to
help the U.S. lessen its reliance on oil. But ethanol use never took
off, even when gasoline prices were highest and lines were longest.
Then, in the early 1980's, ethanol subsidies were used to prop up
America's struggling corn farmers. Unfortunately, the usual trickle
down effect of agricultural subsidies is clearly evident. Beef and
dairy farmers, for example, have to pay a higher price for feed corn,
which is then passed on in the form of higher prices for meat and milk.
The average consumer ends up paying the cost of ethanol subsidies in
the grocery store.
By the late 1980's, ethanol became the environmentally correct
alternative fuel. Unfortunately, the Department of Energy has provided
statistics showing that it takes more energy to produce a gallon of
ethanol than the amount of energy that gallon of ethanol contains. In
addition, the Congressional Research Service, the Congressional Budget
Office, and the Department of Energy all acknowledge that the
environmental benefits of ethanol use, at least in terms of smog
reduction, are yet unproven.
In addition, ethanol is an inefficient, expensive fuel. Just look at
the 3- to 5-cent-per-gallon increase in gasoline prices during the
winter months in the Washington, D.C. area when ethanol is required to
be added to the fuel.
Finally, let me quote Stephen Moore, of the CATO Institute, who puts
it very succinctly in a recent paper:

* * * [V]irtually every independent assessment--by the U.S.
Department of Agriculture, the General Accounting Office, the
Congressional Budget Office, NBC News and several academic
journals--has concluded that ethanol subsidies have been a
costly boondoggle with almost no public benefit.

So why do we continue to subsidize the ethanol industry? I think
James Bovard of the CATO Institute put it best in a 1995 policy paper:

* * * [O]ne would be hard-pressed to find another industry
as artificially sustained as the ethanol industry. The
economics of ethanol are such that, for the industry to
survive at all, massive trade protection, tax loopholes,
contrived mandates for use, and production subsidies are
vitally necessary. Only by spooking the public with bogey-men
such as foreign oil sheiks, toxic air pollution, and the
threatened disappearance of the American farmer can attention
be deflected from the real costs of the ethanol house of
cards that consumes over a billion dollars annually.

Mr. President, the House Ways and Means Committee took a bold step
and included in its revenue reconciliation bill a phase-out of ethanol
subsidies. In the report accompanying the bill, the Committee stated:

[Ethanol tax subsidies] were assumed to be temporary
measures that would allow these fuels to become economical
without permanent Federal subsidies. Nearly 20 years have
passed since that enactment, and neither the projected prices
of oil nor the ability of ethanol to be a viable fuel without
Federal subsidies has been realized. The Committee
determined, therefore, that enactment of an orderly
termination of this Federal subsidy program is appropriate at
this time.

And what does the Senate Finance Committee say to support its
decision to extend the ethanol subsidies beyond their current
expiration date? Listen to this:

The Committee believes that continued assurance of tax
benefits for ethanol are [sic] an important signal to
encourage the use of alternative fuels.

I commend Chairman Bill Archer for his decision to try to phase out
ethanol subsidies. The provision in the House bill would have saved
almost $250 million in the next three years. Unfortunately, I
understand the provision will be removed from the House bill because of
opposition in the ethanol industry. I am very disappointed that the
House is taking this step back from ending ethanol subsidies.
Mr. President, we should end these subsidies. We cannot afford to
subsidize the ethanol industry at a time when we are struggling with
the dilemma of balancing the budget while maintaining our commitments
to our senior citizens, taking care of our poor and disadvantaged
citizens, and ensuring a healthy and secure future for our children.
Current law terminates ethanol subsidies after the year 2000. This
amendment would avoid the $3.8 billion cost of extending the ethanol
subsidies. I urge my colleagues to oppose changing current law and
adopt my amendment to strike Section 707 from the bill.
The PRESIDING OFFICER. Who seeks recognition?
Mr. KERREY. Mr. President, I will take 30 seconds and then yield to
the Senator from Iowa. This provision has worked and is creating jobs--
Mr. MOYNIHAN. Mr. President, we must have order.
Mr. KERREY. This provision has worked. I urge my colleagues to vote
against the motion to strike. It has created jobs and has been good for
the environment and promoted alternative fuel in the agriculture
community, and we have long-term contracts that individuals have taken
out to build the plants. I hope my colleagues vote against this
provision.
The PRESIDING OFFICER. The Senator from Iowa is recognized.
Mr. GRASSLEY. Mr. President, look at how wrong the argument of the
Senator from Arizona is, that when a consumer doesn't pay a gasoline
tax, it turns out to be a subsidy to an industry. How wrong that
argument can be. This is not a subsidy to any industry. If this
amendment passes, after the year 2000 the consumers of America are
going to pay more gas tax on that portion of their gasoline that is
ethanol. This is good for the environment and good for agriculture. It
is good for jobs in the cities--195,000 jobs. It is good for energy
independence and everything. It is good, good, good.

[[Page S6690]]

Mr. JOHNSON. Mr. President, I rise in opposition to Senator McCain's
amendment to the Revenue Reconciliation Act that would eliminate the
tax exemption for ethanol in the year 2000.
Mr. President, I am proud to stand in opposition of this amendment.
Over the past 3 years, we have been deluged with a deliberate
misinformation campaign regarding the impact of the domestic ethanol
industry. The partial excise tax exemption gasoline marketers receive
for blending their fuel with ethanol has been disparagingly labeled
corporate welfare. This label patently ignores the important public
benefits that result from the production and use of fuel ethanol. I
thought I would share some of the relevant facts.
Ethanol production stimulates the economy in rural America. As a
result of progressive policymakers, ethanol is now produced in 53
plants in 19 States. The production of fuel ethanol results in more
than 55,000 high-wage jobs, generates greater than $2.1 billion in
household income, and adds more than $7.2 billion to the economy every
year. Farmers will receive an additional $2.2 billion each year because
of ethanol production. Moreover, nearly all new expansion in the
ethanol industry has been completed by farmer-owned cooperatives. The
Department of Agriculture estimates that a 100 million gallon ethanol
plant will add 2,250 jobs to a community--enhancing rural development
and expansion. In short, the ethanol industry is an economic engine
driving investment and opportunities across rural America.
Ethanol promotes competition and reduces consumer gasoline costs.
Ethanol extends gasoline supplies, provides a valuable source of octane
for independent gasoline marketers, assures competition in the
oxygenate market for refiners trying to meet Clean Air Act standards,
and reduces consumer costs of gasoline. As noted by the Society of
Independent Gasoline Marketers of America:

The federal benefits afforded ethanol-blended fuels have
been an important, pro-competitive influence on the nation's
gasoline markets. By enhancing the ability of independent
marketers to price-compete with their integrated oil company
competitors, this program has increased independent
marketers' economic viability and reduced consumers' costs of
gasoline.

Recognizing the competitive benefits of fuel ethanol in the market,
Citizen Action, the Nation's largest consumer organization and strong
supporter of the ethanol tax incentive, recently stated:

The use of ethanol, a domestically produced, cleaner-
burning renewable fuel helps American consumers use less
polluting oil and reduces dependence on costly oil imports,
which are in part subsidized by huge foreign tax credits.

Ethanol improves the U.S. trade balance. Ethanol competes with MTBE,
a methanol-derived oxygenate, as an octane--oxygenate--additive.
Imports of MTBE have risen from just 30 million gallons in 1992 to more
than 700 million gallons last year, or about 25 percent of domestic
consumption. By displacing the demand for MTBE that would be necessary
without ethanol, the U.S. trade imbalance is reduced by approximately
$1.3 billion annually. But the trade implications of ethanol do not end
there. The majority of the coproducts of ethanol production--corn
gluten feed and corn gluten meal--are exported, further reducing the
trade deficit by earning over $800 million annually. The net effect is
a benefit to the U.S. trade imbalance of over $2 billion each year.
Ethanol helps reduce air pollution. Ethanol adds oxygen to gasoline
which reduces exhaust emissions of ozone-forming VOC's and carbon
monoxide. It is widely used in reformulated gasolines currently being
sold in ozone nonattainment areas across the country. Because ethanol
adds octane to gasoline, it also reduces the use of other highly toxic
petroleum-derived octanes, such as benzene, toluene and xylene.
Ethanol enhances our national security. This Nation spends billions
of dollars to protect our oil interests around the world. It is
considerably less costly to defend the corn fields of the Dakotas than
it is to defend foreign oil fields.
Ethanol is good for agriculture. It is good for rural America. It is
good for the environment. It reduces our dependance on foreign oil. The
bottom line is that the Federal tax structure for ethanol deserves our
continued support. I strongly oppose this amendment.
Mr. President, I ask unanimous consent that my remarks be inserted in
the appropriate place in the Congressional Record.
The PRESIDING OFFICER. The question is on agreeing to the amendment.
Mr. McCAIN. Mr. President, I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays are ordered and the clerk will call the roll.
The assistant legislative clerk called the roll.
Mr. FORD. I announce that the Senator from South Carolina [Mr.
Hollings] is necessarily absent.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The result was announced--yeas 30, nays 69, as follows:

[Rollcall Vote No. 155 Leg.]

YEAS--30

Byrd
Coats
Collins
Coverdell
Feingold
Frist
Gorton
Gregg
Hutchison
Inhofe
Kennedy
Kyl
Lautenberg
Leahy
Lieberman
McCain
Murray
Nickles
Robb
Rockefeller
Santorum
Sessions
Shelby
Smith (NH)
Snowe
Specter
Stevens
Thompson
Warner
Wyden

NAYS--69

Abraham
Akaka
Allard
Ashcroft
Baucus
Bennett
Biden
Bingaman
Bond
Boxer
Breaux
Brownback
Bryan
Bumpers
Burns
Campbell
Chafee
Cleland
Cochran
Conrad
Craig
D'Amato
Daschle
DeWine
Dodd
Domenici
Dorgan
Durbin
Enzi
Faircloth
Feinstein
Ford
Glenn
Graham
Gramm
Grams
Grassley
Hagel
Harkin
Hatch
Helms
Hutchinson
Inouye
Jeffords
Johnson
Kempthorne
Kerrey
Kerry
Kohl
Landrieu
Levin
Lott
Lugar
Mack
McConnell
Mikulski
Moseley-Braun
Moynihan
Murkowski
Reed
Reid
Roberts
Roth
Sarbanes
Smith (OR)
Thomas
Thurmond
Torricelli
Wellstone

NOT VOTING--1

Hollings

So the amendment (No. 548) was rejected.
Mr. ROTH. Mr. President, I move to reconsider the vote by which the
amendment was rejected.
Mr. MOYNIHAN. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. ROTH. Senator Landrieu is next on the list of offering
amendments.
The PRESIDING OFFICER. The Senator from Louisiana is recognized.

Amendment No. 532

(Purpose: To allow taxpayers with income tax liability to take the
child tax credit before the earned income tax credit, and for other
purposes)

Ms. LANDRIEU. Mr. President, I have an amendment at the desk.
The PRESIDING OFFICER. The clerk will report.
The bill clerk read as follows:

The Senator from Louisiana [Ms. Landrieu] proposes an
amendment numbered 532.

Ms. LANDRIEU. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

On page 13, beginning on line 9, strike all through page
17, line 23, and insert the following:
``(2) Limitation based on adjusted gross income.--
``(A) In general.--The $500 amount in subsection (a) shall
be reduced (but not below zero) by $25 for each $1,000 (or
fraction thereof) by which the taxpayer's modified adjusted
gross income exceeds the threshold amount. For purposes of
the preceding sentence, the term `modified adjusted gross
income' means adjusted gross income increased by any amount
excluded from gross income under section 911, 931, or 933.
``(B) Threshold amount.--For purposes of subparagraph (A),
the term `threshold amount' means--
``(i) $90,000 in the case of a joint return,
``(ii) $60,000 in the case of an individual who is not
married, and
``(iii) $45,000 in the case of a married individual filing
a separate return.
For purposes of this subparagraph, marital status shall be
determined under section 7703.
``(c) Qualifying Child.--For purposes of this section--

[[Page S6691]]

``(1) In general.--The term `qualifying child' means any
individual if--
``(A) the taxpayer is allowed a deduction under section 151
with respect to such individual for the taxable year,
``(B) such individual has not attained the age of 17 (age
of 18 in the case of taxable years beginning after 2002) as
of the close of the calendar year in which the taxable year
of the taxpayer begins, and
``(C) such individual bears a relationship to the taxpayer
described in section 32(c)(3)(B).
``(2) Exception for certain noncitizens.--
The term `qualifying child' shall not include any
individual who would not be a dependent if the first sentence
of section 152(b)(3) were applied without regard to all that
follows `resident of the United States'.
``(d) Taxable Year Must Be Full Taxable Year.--Except in
the case of a taxable year closed by reason of the death of
the taxpayer, no credit shall be allowable under this section
in the case of a taxable year covering a period of less than
12 months.
``(e) Recapture of Credit.--
``(1) In general.--If--
``(A) during any taxable year any amount is withdrawn from
a qualified tuition program or an education individual
retirement account maintained for the benefit of a
beneficiary and such amount is subject to tax under section
529(f) or 530(c)(3), and
``(B) the amount of the credit allowed under this section
for the prior taxable year was contingent on a contribution
being made to such a program or account for the benefit of
such beneficiary,

the taxpayer's tax imposed by this chapter for the taxable
year shall be increased by the lesser of the amount described
in subparagraph (A) or the credit described in subparagraph
(B).
``(2) No credits against tax, etc.--Any increase in tax
under this subsection shall not be treated as a tax imposed
by this chapter for purposes of determining--
``(A) the amount of any credit under this subpart or
subpart B or D of this part, and
``(B) the amount of the minimum tax imposed by section 55.
``(f) Other Definitions.--For purposes of this section, the
terms `qualified tuition program' and `education individual
retirement account' have the meanings given such terms by
section 529 and 530, respectively.
``(g) Phase in of Credit.--In the case of taxable years
beginning in 1997--
``(1) subsection (a)(1) shall be applied by substituting
`$250' for `$500', and
``(2) subsection (c)(1)(B) shall be applied by substituting
`age of 13' for `age of 17'.''
(b) Conforming Amendment.--The table of sections for
subpart A of part IV of subchapter A of chapter 1 is amended
by inserting after the item relating to section 23 the
following new item:

``Sec. 24. Child tax credit.''

Ms. LANDRIEU. Mr. President, I want to begin by thanking my
colleagues for their great patience. It has been a long day. I thank
our ranking member for his great attention to this matter.
I also want to thank Senators Kerry, Johnson, and Durbin for joining
me in cosponsoring this amendment.
Mr. President, this amendment would allow the $500 child tax credit
that we have talked so much about in the last few days to be available
to 20 million families in America that are working very hard.
Mr. President, under the current draft of the bill, these working
families only get to keep about half of this credit. In my State that
means 27 percent of the families in my State who are working very hard
will not be able to keep the full amount of this credit.
I know this has been considered carefully. But I feel compelled to
offer this amendment today. I know that in this bill we are giving tax
relief to many Americans. I believe that these Americans should have
the opportunity to keep the full $500 tax credit. I ask my colleagues
to give favorable consideration. It is budget neutral.
Mr. MOYNIHAN. Mr. President, I would hope that there would be no
opposition to this.
Mr. NICKLES addressed the Chair.
The PRESIDING OFFICER. The Senator's time has expired.
The Senator from Oklahoma.
Mr. NICKLES. Mr. President, much to my colleague's surprise, there is
very serious opposition.
I hope we can vote this down by a voice vote.
This amendment would add outlays and increase Uncle Sam's writing of
checks for the first 5 years of $9 billion and over 10 years of $19
billion. And this amendment would say that we stack these in order that
people get the income education credit, the wage credit, and the tax
credit that we are adding to the bill and the EIC. And on top of that,
for a family with two children already gets $3,680. Uncle Sam will
write the check. We would also give $1,000 on top of it.
I want to raise a point of order.
Mr. MOYNIHAN. Mr. President, I was simply going to say that this
matter will surely arise in conference, and there will be support for
it. The White House is very much in favor. I hope we can resolve it.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. NICKLES. Mr. President, I raise a point of order under section
302(f) of the Budget Act that the amendment results in the Finance
Committee exceeding its spending allocation under section 602 of the
Budget Act.
Ms. LANDRIEU addressed the Chair.
The PRESIDING OFFICER. The Senator from Louisiana.
Ms. LANDRIEU. Mr. President, I want to make a point that this is
budget neutral. Technically a point of order could be raised that this
is budget neutral in the amendment that I am offering. I would like to,
if I could, move to waive and ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.

Vote on Motion to Waive the Budget Act

The PRESIDING OFFICER. The question occurs on agreeing to the motion
to waive the Budget Act in relation to the Landrieu amendment No. 532.
The yeas and nays have been ordered, and the clerk will call the roll.
The bill clerk called the roll.
Mr. FORD. I announce that the Senator from South Carolina [Mr.
Hollings] and the Senator from Hawaii [Mr. Inouye], are necessarily
absent.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
who desire to vote?
The yeas and nays resulted--yeas 39, nays 59, as follows:

[Rollcall Vote No. 156 Leg.]

YEAS--39

Akaka
Biden
Bingaman
Boxer
Breaux
Bumpers
Cleland
Collins
D'Amato
Daschle
Dodd
Domenici
Dorgan
Durbin
Feingold
Feinstein
Ford
Glenn
Harkin
Johnson
Kennedy
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Mikulski
Murray
Reed
Reid
Robb
Sarbanes
Snowe
Specter
Torricelli
Wellstone
Wyden

NAYS--59

Abraham
Allard
Ashcroft
Baucus
Bennett
Bond
Brownback
Bryan
Burns
Byrd
Campbell
Chafee
Coats
Cochran
Conrad
Coverdell
Craig
DeWine
Enzi
Faircloth
Frist
Gorton
Graham
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Jeffords
Kempthorne
Kerrey
Kyl
Lott
Lugar
Mack
McCain
McConnell
Moseley-Braun
Moynihan
Murkowski
Nickles
Roberts
Rockefeller
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Stevens
Thomas
Thompson
Thurmond
Warner

NOT VOTING--2

Hollings
Inouye

The PRESIDING OFFICER. On this vote the yeas are 39, the nays are 59.
Three-fifths of the Senators duly chosen and sworn not having voted in
the affirmative, the motion is not agreed to. The point of order is
sustained, and the amendment falls.
Mr. ROTH. Mr. President, I move to reconsider the vote.
Mr. MOYNIHAN. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. ROTH. Senator McCain is next on the list.

Point of Order--Section 702(d)

Mr. McCAIN. Mr. President, I yield 30 seconds of my 1 minute to raise
a point of order to the Senator from Missouri.
The PRESIDING OFFICER. The Senator from Missouri.
Mr. BOND. Mr. President, in this budget agreement some of us thought
there was too much spending and not enough tax relief. We find that
there are even more spending proposals and less tax relief than we
thought. This point of order is directed at spending on Amtrak in
addition to other things. There is $2.3 billion being spent out of the
tax cut section going to Amtrak. I join my colleague from Arizona in
asking that these matters be referred to the authorization for Amtrak
and urge that the point of order be sustained.
Mr. McCAIN addressed the Chair.

[[Page S6692]]

The PRESIDING OFFICER. The Senator from Arizona.
Mr. McCAIN. Mr. President, as chairman of the oversight committee, I
want my colleagues to be clear about what is happening. This bill takes
$2.3 billion out of the tax relief promised the American people and
places it into a trust fund to further subsidize Amtrak. These funds
would be appropriated outside of the existing budget caps ensuring that
Amtrak would not have to compete with other transportation priorities
such as highways or aviation.
Mr. President, I raise the point of order that section 702(d) of the
bill violates section 313(b)(1)(A) of the Budget Act, and I ask for the
yeas and nays.
The PRESIDING OFFICER. There is nothing to ask for them on yet.
Mr. ROTH. Mr. President, at the completion of my remarks I yield 10
seconds to the distinguished Senator from New Mexico.
There is no truth that this has any impact on tax cuts. The important
point to understand is that this point of order is to kill Amtrak.
This is very important, both to Senator Moynihan and to myself.
Passenger rail is extremely important to the entire country. What we
have done is fully paid for. We do not ask for any special treatment.
The rail fund is consistent with the budget resolution agreed to by
both Chambers. It has the support of Senator Domenici and Senator
Lautenberg. GAO has testified that Amtrak will not survive past 1998
without this crucial funding.
We could not wait any longer. I first wanted to say, I therefore ask
for your votes to this point of order.
The PRESIDING OFFICER. The question is on the motion to waive.
Mr. DOMENICI. I was going to answer the McCain question, but he did
not have one. Let me just say this is provided for in the budget
resolution. The way it is handled, it is totally deficit-neutral. If
the money is not used for Amtrak, we are ahead of the game. If it is
used, it is totally neutral. We have done this about 10 times
heretofore in budget reconciliation and budget resolutions.
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. CHAFEE. Mr. President, I strongly support the provisions within
this bill establishing a Rail Trust Fund, and oppose this point of
order. Let me first state my view that these provisions do not violate
the spirit of the Byrd rule, which is intended to prevent unrelated
authorization bills from being brought into the reconciliation process.
Section 702 of this bill, which establishes an Intercity Passenger Rail
Fund, is primarily tax legislation, which most certainly belongs on
legislation entitled ``The Tax Fairness Bill''.
Establishment of a trust fund is a critical element in providing
passenger rail with a stable, predictable source of revenue so that
Amtrak can achieve financial viability and effectively serve millions
of Americans.
It is certainly no secret that Amtrak is in serious financial
trouble. Earlier this year, the GAO continued a regular series of
warnings in testifying to the Finance Committee on the precarious
financial condition of the railroad. Amtrak President Tom Downs also
confirmed to us that his railroad is in difficult shape. A number of
States and communities have already felt the brunt of the railroad's
financial predicament as often vital rail service has been
discontinued.
There are several factors contributing to Amtrak's condition, but
primarily it is a result of outdated laws governing Amtrak's operation,
as well as inadequate and inconsistent support from the Federal
Government. Whatever the cause, I think we can all agree that Amtrak
simply cannot continue to operate under the status quo.
Amtrak's financial predicament has resulted in calls to end all
Federal support for intercity passenger rail--there are those who would
just throw up our hands in frustration and walk away. Mr. President, I
am one who does not question the need for a Federal investment in
passenger rail. The absence of passenger rail would clog our highways
and airports--an additional 7,500 fully-booked 757's, or hundreds of
thousands of cars, would be needed between Washington, DC, and New York
every year.
All major industrialized nations provide subsidies to passenger rail,
usually to a greater extent than our Government's support for Amtrak.
In fact, Amtrak covers more of its operating costs--an estimated 84
percent--than any other passenger railroad in the world. Nonetheless,
Amtrak operates the only mode of transportation in the United States
which does not have a dedicated source of funding.
So the question before the Senate today is how best to provide needed
Federal support for Amtrak's critical capital investment needs. After
years of congressional hearings, GAO reports and strategic plans, I and
many of my colleagues have concluded that dedicating a portion of the
Federal gas tax to a Rail Trust Fund is the most appropriate and
reliable means of ensuring that passenger rail can continue to meet
America's transportation needs. Such a solution provides passenger rail
with the same type of Federal support for capital improvements that
other modes of transportation have enjoyed for years.
This bill's creation of an Intercity Passenger Rail Fund financed by
one-half cent of the gas tax, coupled with the needed operating reforms
contained within the Amtrak authorization bill introduced by the
Senator from Texas, will allow Amtrak to operate more like a business,
end its reliance on Federal operating subsidies, and thus better serve
America's transportation needs.
At least for the 3\1/2\ years that this Trust Fund is financed, we
will start on the path to financial stability and end the annual
financial roller coaster to which Amtrak is subjected. It would also
avoid a catastrophic shutdown of Amtrak, which has recently been
estimated to cost upwards of $5 billion dollars.
Mr. President, Amtrak has presented to Congress a responsible 6-year
strategic business plan which outlines how financial viability will be
restored to the railroad. Amtrak's President Tom Downs deserves our
praise for the monumental efforts he has undertaken to turn things
around at his company. Congress should do its part and join him by
providing a relatively modest Federal investment in passenger rail. I
urge my colleagues to support this motion to waive the Budget Act.
Mr. ROTH. I move this point of order be waived, both for now and for
the conference.
The PRESIDING OFFICER. The question is on the motion.
Mr. ROTH. Mr. President, I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.

Vote on Motion to Waive The Budget Act

The PRESIDING OFFICER. The question is on the motion to waive the
Budget Act. The yeas and nays have been ordered.
The clerk will call the roll.
The assistant legislative clerk called the roll.
Mr. FORD. I announce that the Senator from Hawaii [Mr. Inouye] and
the Senator from South Carolina [Mr. Hollings] are necessarily absent.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
who desire to vote?
The yeas and nays resulted, yeas 77, nays 21, as follows:

[Rollcall Vote No. 157 Leg.]

YEAS--77

Akaka
Baucus
Bennett
Biden
Bingaman
Boxer
Breaux
Bryan
Bumpers
Burns
Byrd
Campbell
Chafee
Cleland
Coats
Cochran
Collins
Conrad
D'Amato
Daschle
DeWine
Dodd
Domenici
Dorgan
Durbin
Enzi
Faircloth
Feingold
Feinstein
Ford
Graham
Grassley
Hagel
Harkin
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Jeffords
Johnson
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lott
Lugar
Mack
McConnell
Mikulski
Moseley-Braun
Moynihan
Murkowski
Murray
Nickles
Reed
Reid
Robb
Roberts
Rockefeller
Roth
Santorum
Sarbanes
Smith (OR)
Snowe
Specter
Stevens
Thomas
Thurmond
Torricelli
Wellstone
Wyden

NAYS--21

Abraham
Allard
Ashcroft
Bond
Brownback
Coverdell
Craig
Frist
Glenn
Gorton
Gramm
Grams
Gregg
Kempthorne
Kyl

[[Page S6693]]

McCain
Sessions
Shelby
Smith (NH)
Thompson
Warner

NOT VOTING--2

Hollings

Inouye

The PRESIDING OFFICER. On this vote, the yeas are 77, the nays are
21. Three-fifths of the Senators duly chosen and sworn having voted in
the affirmative, the motion is agreed to.
Mr. ROTH. Mr. President, I move to reconsider the vote by which the
motion was agreed to.
Mr. MOYNIHAN. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. ROTH. The next to be recognized is Senator Feingold.

Amendment No. 582

(Purpose: To eliminate the percentage depletion allowance for certain
minerals)

The PRESIDING OFFICER. The clerk will report the amendment.
The legislative clerk read as follows:

The Senator from Wisconsin [Mr. Feingold], for himself and
Mr. Bumpers, proposes an amendment numbered 582.

Mr. FEINGOLD. Mr. President, I ask unanimous consent that the reading
of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

On page 400, between lines 14 and 15, insert the following:

SEC. . CERTAIN MINERALS NOT ELIGIBLE FOR PERCENTAGE
DEPLETION.

(a) In General.--Section 613(b)(1) (relating to percentage
depletion rates) is amended--
(A) in subparagraph (A), by striking ``and uranium''; and
(B) in subparagraph (B), by striking ``asbestos,'',
``lead,'', and ``mercury,''.
(b) Conforming Amendments.--
(1) Section 613(b)(3)(A) is amended by inserting ``other
than lead, mercury, or uranium'' after ``metal mines''.
(2) Section 613(b)(4) is amended by striking ``asbestos (if
paragraph (1)(B) does not apply),''.
(3) Section 613(b)(7) 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 inserting
after subparagraph (C) the following:
``(D) mercury, uranium, lead, and asbestos.''
(4) Section 613(c)(4)(D) is amended by striking ``lead,''
and ``uranium,''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
1996.

The PRESIDING OFFICER. The Senator from Wisconsin.
Mr. FEINGOLD. Mr. President, this amendment eliminates percentage
depletion allowances for four mined substances--asbestos, lead,
mercury, and uranium--and it saves an estimated $83 million over 5
years.
Unlike depreciation or cost depletion, percentage depletion allows
companies to deduct far more than their actual costs. This results in a
generous loophole for the company and an expensive subsidy for the
taxpayer. But it gets worse, Mr. President.
While we spend millions subsidizing corporations to mine these toxic
substances, we spend even more on their downstream public health and
environmental consequences.
So, as the senior Senator from Arkansas says, this subsidy gives
corporate welfare a bad name.
Mr. President, I urge my colleagues to support this provision, and I
yield the remainder of my time in deference to the Senator from Nevada.
The PRESIDING OFFICER. Who seeks recognition in opposition? The
Senator from Texas.
Mr. GRAMM. Mr. President, it seems to me we have had enough fun now.
I think we ought to reject this amendment and get on with final passage
of this bill.
This is a tax cut. This is not a place to change the way we do
accounting for mining. If you go out and find a body of ore, you don't
have an investment you made in a piece of equipment. You have the asset
that you are depleting as you produce it.
Every developed nation in the world has depletion allowance, because
they want to produce the riches of their lands. This is a bad amendment
and ought to be rejected.
Mr. ROTH. Mr. President, the pending amendment is not germane to the
provisions of the reconciliation measure. I, therefore, raise a point
of order against the amendment under section 305(b)(2) of the Budget
Act.
Mr. FEINGOLD. Mr. President, I move to waive the Budget Act and ask
for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The PRESIDING OFFICER. The question is on agreeing to the motion to
waive the Budget Act.
Mr. NICKLES. There wasn't a second.
The PRESIDING OFFICER. Is there a sufficient second?
There is not a sufficient second.
Mr. FEINGOLD. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. NICKLES. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. FEINGOLD. I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.

Vote on Motion to Waive the Budget Act

The PRESIDING OFFICER. The question is on agreeing to the motion to
waive the Budget Act. The yeas and nays have been ordered. The clerk
will call the roll.
The legislative clerk called the roll.
Mr. FORD. I announce that the Senator from Hawaii [Mr. Inouye] and
the Senator from South Carolina [Mr. Hollings] are necessarily absent.
The yeas and nays resulted--yeas 37, nays 61, as follows:

[Rollcall Vote No. 158 Leg.]

YEAS--37

Akaka
Biden
Boxer
Bumpers
Coats
Collins
Daschle
Dodd
Durbin
Feingold
Feinstein
Glenn
Graham
Gregg
Harkin
Jeffords
Johnson
Kennedy
Kerrey
Kerry
Kohl
Lautenberg
Leahy
Levin
Lieberman
Mikulski
Moseley-Braun
Murray
Reed
Robb
Rockefeller
Sarbanes
Snowe
Specter
Torricelli
Wellstone
Wyden

NAYS--61

Abraham
Allard
Ashcroft
Baucus
Bennett
Bingaman
Bond
Breaux
Brownback
Bryan
Burns
Byrd
Campbell
Chafee
Cleland
Cochran
Conrad
Coverdell
Craig
D'Amato
DeWine
Domenici
Dorgan
Enzi
Faircloth
Ford
Frist
Gorton
Gramm
Grams
Grassley
Hagel
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Kempthorne
Kyl
Landrieu
Lott
Lugar
Mack
McCain
McConnell
Moynihan
Murkowski
Nickles
Reid
Roberts
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Stevens
Thomas
Thompson
Thurmond
Warner

NOT VOTING--2

Hollings
Inouye

The PRESIDING OFFICER. On this vote the yeas are 37, the nays are 61.
Three-fifths of the Senators duly chosen and sworn not having voted in
the affirmative, the motion is rejected. The point of order is
sustained, and the amendment falls.
Mr. ROTH. I move to reconsider the vote.
Mr. MOYNIHAN. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. BOND addressed the Chair.
The PRESIDING OFFICER. The Senator from Missouri.
Mr. BOND. I want to get a unanimous consent.
Mr. ROTH addressed the Chair.
The PRESIDING OFFICER. The Senator from Delaware.

Amendments Nos. 583, 584, 585, 586, 587, 588, and 589

Mr. ROTH. Mr. President, I ask unanimous consent to send the
following amendments to the desk, and I ask unanimous consent that they
be considered en bloc: Senator Graham, pension technicals; the second
one is Senators Nickles and Bond, sense of the Senate regarding self-
employment tax; the third is Senator Specter, penalty-free withdrawal
on adoption; the fourth is Senator Faircloth, tax-exempt bond
refunding; the fifth is Senator Gorton, bad debt reserve recapture; the
sixth is Senator Santorum, sense of the Senate on tax cuts; and the
final one is Burns, income averaging for farmers.
The PRESIDING OFFICER. Without objection, it is so ordered.
The clerk will report the amendments.
The legislative clerk read as follows:

[[Page S6694]]

The Senator from Delaware [Mr. Roth] proposes amendments
numbered 583, 584, 585, 586, 587, 588, and 589.

The amendments are as follows:

Amendment No. 583

(Purpose: To provide for various amendments)

On page 93, strike lines 13 through 25, and insert:
``(ii) a silver coin described in section 5112(e) of title
31. United States Code,
``(iii) a platinum coin described in section 5112(k) of
title 31. United States Code, or
``(iv) a coin issued under the laws of any State, or
``(B) any gold, silver, platinum, or palladium bullion of a
fineness equal to or exceeding the minimum fineness required
for metals which may be delivered in satisfaction of a
regulated futures contract subject to regulation by the
Commodity Futures Trading Commission under the Commodity
Exchange Act,
On page 205, before line 12, insert the following:
(c) Special Amortization Rule.--
(1) Code amendment.--Section 412(b)(2) is amended by
striking ``and'' at the end of subparagraph (C), by striking
the period at the end of subparagraph (D) and inserting ``,
and'', and by inserting after subparagraph (D) the following:
``(E) the amount necessary to amortize in equal annual
installments (until fully amortized) over a period of 20
years the contributions which would be required to be made
under the plan but for the provisions of subsection
(c)(7)(A)(i)(I).''.
(2) ERISA amendment.--Section 302(b)(2) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1082(b)(2))
is amended by striking ``and'' at the end of subparagraph
(C), by striking the period at the end of subparagraph (D)
and inserting ``, and'', and by inserting after subparagraph
(D) the following:
``(E) the amount necessary to amortize in equal annual
installments (until fully amortized) over a period of 20
years the contributions which would be required to be made
under the plan but for the provisions of subsection
(c)(7)(A)(i)(I).''.
(3) Conforming amendments.--
(A) Section 412(c)(7)(D) is amended by adding ``and'' at
the end of clause (i), by striking ``, and'' at the end of
clause (ii) and inserting a period, and by striking clause
(iii).
(B) Section 302(c)(7)(D) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1082(c)(7)(D)) is amended by
adding ``and'' at the end of clause (i), by striking ``,
and'' at the end of clause (ii) and inserting a period, and
by striking clause (iii).
(4) Effective dates.--
(A) In general.--The amendments made by this subsection
shall apply to plan years beginning after December 31, 1998.
(B) Special rule for 1999.--In the case of a plan's first
year beginning in 1999, there shall be added to the amount
required to be amortized under section 412(b)(2)(E) of the
Internal Revenue Code of 1986 and section 302(b)(2)(E) of the
Employee Retirement Income Security Act of 1974 (as added by
paragraphs (1) and (2)) over the 20-year period beginning
with such year, the unamortized balance (as of the close of
the preceding plan year) of any amount required to be
amortized under section 412(c)(7)(D)(iii) of such Code and
section 302(c)(7)(D)(iii) of such Act (as repealed by
paragraph (3)) for plan years beginning before 1999.
On page 639, between lines 11 and 12, insert:
(4) Amendments related to section 1461.--
(A) Section 415(e)(5)(A) is amended to read as follows:
``(A) Certain ministers may participate.--For purposes of
this part--
``(i) In general.--A duly ordained, commissioned, or
licensed minister of a church is described in paragraph
(3)(B) if, in connection with the exercise of their ministry,
the minister--
``(I) is a self-employed individual (within the meaning of
section 401(c)(1)(B), or
``(II) is employed by an organization other than an
organization which is described in section 501(c)(3) and with
respect to which the minister shares common religious bonds.
``(ii) Treatment as employer and employee.--For purposes of
sections 403(b)(1)(A) and 404(a)(10), a minister described in
clause (i)(I) shall be treated as employed by the minister's
own employer which is an organization described in section
501(c)(3) and exempt from tax under section 501(a).''
(B) Section 403(b)(1)(A) is amended by striking ``or'' at
the end of clause (i), by inserting ``or'' at the end of
clause (ii), and by adding at the end the following new
clause:
``(iii) for the minister described in section 415(e)(5)(A)
by the minister or by an employer,''.
____

AMENDMENT NO. 584

(Purpose: To express the sense of the Senate with respect to the
proposed regulations of the Internal Revenue Service with respect to
self-employment income for limited partners)

On page 212, between lines 11 and 12, insert the following:

SEC. . SENSE OF THE SENATE WITH RESPECT TO SELF-EMPLOYMENT
TAX OF LIMITED PARTNERS.

(a) Findings.--The Senate finds that--
(1) the Department of the Treasury issued Proposed
Regulation 1.1402(a)-2 in January 1997 relating to the
definition of a limited partner for self-employment tax
purposes under section 1402(a)(13) of the Internal Revenue
Code;
(2) since 1977, section 1402(a)(13) of such Code has
provided that--
(A) a limited partner's net earnings from self-employment
include only guaranteed payments made to the individual for
services actually rendered and do not include a limited
partner's distributive share of the income or loss of the
partnership, and
(B) a general partner's net earnings from self-employment
include the partner's distributive share;
(3) the proposed regulations provide generally--
(A) that a partner will not be treated as a limited partner
if the individual--
(i) has personal liability for partnership debts,
(ii) has authority to contract on behalf of the
partnership, or
(iii) participates in the partnership's trade or business
for more than 500 hours during the taxable year;
(B) that an individual meeting any one of these three
criteria will be treated as a general partner, and net
earnings from self-employment will include the partner's
distributive share of partnership income and loss, resulting
in substantial tax liability because there is a 15.3 percent
tax on self-employment income below $65,400 in 1997 and a 2.9
percent hospital insurance tax on self-employment income
above that amount;
(4) certain types of entities, such as limited liability
companies and limited liability partnerships, were not widely
used at the time the present rule relating to limited
partners was enacted, and that the proposed regulations
attempt to address owners of such entities;
(5) the Senate is concerned that the proposed change in the
treatment of individuals who are limited partners under
applicable State law exceeds the regulatory authority of the
Treasury Department and would effectively change the law
administratively without congressional action; and
(6) the proposed regulations address and raise significant
policy issues and the proposed definition of a limited
partner may have a substantial impact on the tax liability of
certain individuals and may also affect individuals'
entitlement to social security benefits.
(b) Sense of Senate.--It is the sense of the Senate that--
(1) the Department of the Treasury and the Internal Revenue
Service should withdraw Proposed Regulation 1.1402(a)-2 which
imposes a tax on limited partners; and
(2) Congress, not the Department of the Treasury or the
Internal Revenue Service, should determine the tax law
governing self-employment income for limited partners.
____

amendment no. 585

(Purpose: To allow penalty-free IRA withdrawals for adoption expenses)

On page 20, between lines 5 and 6, insert the following:

SEC. 105. ADOPTION EXPENSES.

(a) Distributions From Certain Plans May Be Used Without
Penalty To Pay Adoption Expenses.--
(1) In general.--Section 72(t)(2) (relating to exceptions
to 10-percent additional tax on early distributions from
qualified retirement plans) is amended by adding at the end
the following:
``(E) Distributions from certain plans for adoption
expenses.--Distributions to an individual from an individual
retirement plan of so much of the qualified adoption expenses
(as defined in section 23(d)(1)) of the individual as does
not exceed $2,000.''.
(2) Conforming amendment.--Section 72(t)(2)(B) is amended
by striking ``or (D)'' and inserting ``, (D) or (E)''.
(3) Effective date.--The amendments made by this subsection
shall apply to payments and distributions after December 31,
1996.
____

amendment no. 586

(Purpose: To permit the current refunding of certain tax-exempt bonds)

On page 267, between lines 15 and 16, insert the following:

SECTION . CURRENT REFUNDINGS OF CERTAIN TAX-EXEMPT BONDS.

(a) In General.--Subsection (c) of section 10632 of the
Revenue Act of 1987 (relating to bonds issued by Indian
tribal governments) is amended by adding at the end the
following new sentence: ``The amendments made by this section
shall not apply to any obligation issued after such date if--
``(1) such obligation is issued (or is part of a series of
obligations issued) to refund an obligation issued on or
before such date,
``(2) the average maturity date of the issue of which the
refunding obligation is a part is not later than the average
maturity date of the obligations to be refunded by such
issue,
``(3) the amount of the refunding obligation does not
exceed the outstanding amount of the refunded obligation, and
``(4) the net proceeds of the refunding obligation are used
to redeem the refunded obligation not later than 90 days
after the date of the issuance of the refunding obligation.

For purposes of paragraph (2), average maturity shall be
determined in accordance with section 147(b)(2)(A) of the
Internal Revenue Code of 1986.''
(b) Effective Date.--The amendment made by subsection (a)
shall apply to refunding obligations issued after the date of
the enactment of this Act.

[[Page S6695]]

CAROLINA MIRROR CO.

Mr. FAIRCLOTH. Mr. President, I rise to offer this amendment on
behalf of the Eastern Band of Cherokee Indians in my home state of
North Carolina.
In 1982, the Congress passed legislation to allow Indian tribes to
issue tax exempt bonds, just like other units of government. The
legislation recognized the rights of the tribes and confirmed their
parallel rights to States, counties, and cities.
The 1982 act thus acknowledged just what most of us knew: that Indian
tribes are legitimate units of government with wide-ranging
responsibilities.
Using the act, the Cherokee Indians in my State issued $31 million in
tax-exempt bonds to purchase the Carolina Mirror Co. The tribal
leadership viewed the purchase of Carolina Mirror Co. as a means to
promote jobs and economic development for their tribe and its members.
The Cherokee have faced some tough times over the years. The Carolina
Mirror Co. purchase was a way to invest in the future of their tribe
and their people.
Carolina Mirror today is the largest manufacturer of mirrors in the
Nation. It employees over 500 people. It is an economic engine. It
produces jobs and hope for a people that have seen little of both over
the years.
In 1986, however, the Congress passed new legislation that narrowed
the interpretation of the original 1982 act. It changed the act so that
tax-exempt bonds could only be used to finance ``essential government
functions.''
Mr. President, as you know, interest rates are at historically low
levels. I know that not enough of us have ever been in business and met
a payroll, as I have for the past 50 years. Well, interest rates are
the difference between profitability and bankruptcy, between jobs for
the community and a lock on the factory gate. Needless to say, the
Cherokees are eager to take advantage of lower interest rates and to
refinance these bonds.
The interest rate on these bonds is so high that the Carolina Mirror
Co. literally spends almost all of its profits on interest payments.
This is devastating for the company.
When the company attempted to reissue the bonds, however, some IRS
bureaucrat stepped away from the water cooler long enough to say
``no.'' The great minds at the IRS ruled that a refinancing constituted
a reissuance and stopped the tribe from its plans to refinance these
high interest bonds.
By reissuing bonds at a lower rate, the company could save nearly a
million dollars a year, but the IRS does not look at the situation. The
500 jobs do not matter. The investment of the Cherokees in the company
does not matter. No, all that matters is that we follow the mindless
dictate of an unelected, unaccountable bureaucrat holed up in a Federal
office building waiting for the 4 o'clock vanpool back to the suburbs.
The outside world is irrelevant. The real jobs of real people are
irrelevant.
The amendment that I offer today is a technical bill to allow Indian
tribes to refinance tax-exempt bonds issued on or before October 13,
1997. This bill has a very narrow application. In fact, I introduced
this bill last year as S. 1676. The Joint Committee on Taxation said
last year--and again this year--that this bill will have a ``negligible
effect on budget receipts.''
Let's do the right thing for the Cherokees. Let's tell the IRS that
American jobs matter and the Congress stands behind the working men and
women of this country.
I urge my colleagues to support the amendment.
Mr. HELMS. Mr. President, this amendment corrects a serious problem
Congress created in 1987 when the definition for ``essential government
functions'' was inadvertently changed relating to native American
tribes, thereby inhibiting the tribes' use of tax-exempt bonds. Prior
to 1987, the Cherokee Tribe and other tribes used tax-exempt bonds to
finance ``essential government functions.'' In 1986, the Eastern Band
of Cherokee Indians, in western North Carolina, used this provision to
purchase the Carolina Mirror Co. to ensure the Cherokee Tribe's long-
term economic development. The Cherokees worked hard and built Carolina
Mirror into the largest producer of mirrors in the United States.
Then, Congress changed the rules in the Omnibus Budget Reconciliation
Act of 1987, and narrowed the definition of ``essential government
functions'', and today Carolina Mirror is in default and may be forced
to close its Texas operation because of a staggering monthly obligation
of $300,000. This amendment would allow these hard-working native
Americans to refinance their current bonds at more competitive rates.
The Joint Committee on Taxation asserts that this purely technical
amendment will have a ``negligible effect on the Federal fiscal year
budget receipts.''

amendment no. 587

(Purpose: Relating to repeal of bad debt reserve method for thrift
savings associations)

At the end of title VII, insert:

SEC. . SPECIAL RULE FOR THRIFTS WHICH BECOME LARGE BANKS

(a) In General.--Section 593(g)(2) (defining applicable
excess reserves) is amended by adding at the end the
following new subparagraph:
``(C) Special rule for thrifts which became large banks in
1995.--
``(i) In general.--In the case of a bank (as defined in
section 581) which became a large bank (as defined in section
585(c)(2)) for its first taxable year beginning after
December 31, 1994, the balance taken into account under
subparagraph (A)(ii) shall not be less than the amount which
would be the balance of such reserves as of the close of its
last taxable year beginning before January 1, 1995, if the
additions to such reserves for all taxable years had been
determined under section 585(b)(2)(A).
``(ii) Application of cut-off method; etc.--In the case of
a taxpayer to which this subparagraph applies--
``(I) paragraph (5)(B) shall apply, and
``(II) this subparagraph shall not apply in determining the
amount taken into account by the taxpayer under subparagraph
(A)(ii) for purposes of paragraph (5) and (6) or subsection
(e)(1).''
(b) Effective Date.--The amendment made by this section
shall take effect as if included in the amendments made by
section 1616 of the Small Business Job Protection Act of
1996.

amendment no. 588

(Purpose: To express the sense of the Senate that America's middle-
class taxpayers shoulder the biggest tax burden and that only those who
pay Federal income taxes should benefit from the Federal income tax
cuts contained in the Revenue Reconciliation Act of 1997)

On page 267, between lines 15 and 16, insert the following:

SEC. . SENSE OF THE SENATE.

(a) Findings.--The Senate finds that--
(1) Congress has not provided a genuine tax cut for
America's middle-class families since 1981;
(2) President Clinton promised middle-class tax cuts in
1992;
(3) President Clinton raised taxes by $240,000,000,000 in
1993;
(4) President Clinton vetoed middle-class tax cuts in 1995;
(5) the middle-class American worker had to work until May
9 in order to earn enough money to pay all Federal, State,
and local taxes in 1997;
(6) the Joint Economic Committee reports that real total
Government taxes per household in 1994 totaled $18,600;
(7) more than 70 percent of the tax cuts in both the House
of Representatives and the Senate tax relief bills will go to
Americans earning less than $75,000 annually;
(8) the Joint Economic Committee estimates that a family of
4 earning $30,000 will receive 53 percent of the tax relief
under the reconciliation bill;
(9) the earned income tax credit was already expanded in
President Clinton's 1993 tax bill;
(10) the fiscal year 1998 budget resolution does not make
the $500-per-child tax credit refundable; and
(11) those who receive the earned income tax credit do not
pay Federal income taxes but receive a substantial cash
transfer from the Federal Government in the form of refund
checks above and beyond income tax rebates.
(b) Sense of the Senate.--It is the sense of the Senate
that America's middle-class taxpayers shoulder the biggest
tax burden and that only those who pay Federal income taxes
should benefit from the Federal income tax cuts contained in
the Revenue Reconciliation Act of 1997.
____

amendment no. 589

(Purpose: To allow farmers to income average over 3 years)

On page 267, between lines 15 and 16, insert the following:

SEC. 780. AVERAGING OF FARM INCOME OVER 3 YEARS.

(a) In General.--Subpart B of part II of subchapter E of
chapter 1 of the Internal Revenue Code of 1986 (relating to
taxable year for which items of gross income included) is
amended by adding the following new section:

``SEC. 460A. AVERAGING OF FARM INCOME.

``(a) In General.--At the election of a taxpayer engaged in
a farming business, the tax

[[Page S6696]]

imposed by section 1 for such taxable year shall be equal to
the sum of--
``(1) a tax computed under such section on taxable income
reduced by elected farm income, plus
``(2) the increase in tax which would result if taxable
income for the 3 prior taxable years were increased by the
elected farm income.
``(b) Definitions.--In this section--
``(1) Elected farm income.--
``(A) In general.--The term `elected farm income' means so
much of the taxable income for the taxable year--
``(i) which is attributable to any farming business; and
``(ii) which is specified in the election under subsection
(a).
``(B) Treatment of gains.--For purposes of subparagraph
(A), gain from the sale or other disposition of property
(other than land) regularly used by the taxpayer in a farming
business for a substantial period shall be treated as
attributable to a farming business.
``(2) Farming business.--The term `farming business' has
the meaning given such term by section 263A(e)(4).''
(b) Clerical Amendment.--The table of sections for such
subpart B is amended by adding at the end the following new
item:

``Sec. 460A. Averaging of farm income.''

(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act and before January 1, 2001.
Section 503 of the bill is amended on page 161, line 4 by
striking ``July 31, 1999'' and inserting ``May 31, 1999.''

Mr. ROTH. Mr. President, I move their adoption.
The PRESIDING OFFICER. Without objection, the amendments are agreed
to en bloc.
The amendments en bloc, were agreed to.
Mr. ALLARD addressed the Chair.
The PRESIDING OFFICER. The Senator from Colorado.

Amendment No. 577

[Purpose: To provide for the indexing of assets to determine capital
gain]

Mr. ALLARD. I have at the desk amendment No. 577. I ask that the
clerk call it up.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Colorado [Mr. Allard], for himself, Mr.
Brownback, and Mr. Abraham, proposes an amendment numbered
577.

Mr. ALLARD. Mr. President, I ask unanimous consent that further
reading of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The text of the amendment is printed in today's Record under
``Amendments Submitted.'')
Mr. ALLARD. Mr. President, let me briefly explain what this amendment
is all about. This is an amendment in which we address the indexing of
capital gains. When we index capital gains, what we are talking about
is protecting long-term investors from taxation on inflationary gains.
This helps the family business, the family farm, and the family ranch.
It is the family and the average American out there who owns a capital
asset.
Specifically, what the amendment does is--it is pretty much the same
indexing provision that was reported out of the House except that it
delays the implementation of it to 2002. The holding period of the
property would change from 3 to 5 years.
Just briefly, there are two other very important points that I would
like to make about this particular amendment.
It is revenue neutral over 10 years, as scored by the Joint Committee
on Taxation; and, No. 2, it is germane, and in fact it does blend
within the current language of the bill.
I yield back the remainder of my time.
The PRESIDING OFFICER. Who seeks recognition in opposition?
Mr. ROTH. Mr. President, I commend my friend from Colorado on
offering this amendment. It is unfortunate that I must vote against it.
The Senator may not be aware of this, but in 1993 I introduced a bill
that called for the indexing of capital assets. But today, we are not
only dealing with economic issues, President Clinton has said he will
veto any tax bill that includes indexing of capital gains.
I have an article from last Thursday's Wall Street Journal. The title
of the article is ``Clinton Rules Out Indexing of Capital Gains in Tax
Bill.'' The first paragraph says the President ``will not sign a tax
bill that includes indexing of capital gains for inflation.''
We have a historic opportunity today to deliver badly needed tax cuts
to Americans. I would like to provide greater tax relief, but we
cannot, and ``half a loaf'' is better than ``no loaf.''
So I urge my colleagues to vote against this amendment.
I ask for the yeas and nays.
The PRESIDING OFFICER. All time has expired.
Is there a sufficient second?
There appears to be a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on agreeing to the amendment.
The yeas and nays have been ordered. The Clerk will call the roll.
The assistant legislative clerk called the roll.
Mr. FORD. I announce that the Senator from South Carolina [Mr.
Hollings] and the Senator from Hawaii [Mr. Inouye] are necessarily
absent.
The result was announced--yeas 41, nays 57, as follows:

[Rollcall Vote No. 159 Leg.]

YEAS--41

Abraham
Allard
Ashcroft
Bond
Brownback
Burns
Campbell
Coats
Coverdell
Craig
DeWine
Enzi
Faircloth
Frist
Gramm
Grams
Gregg
Helms
Hutchinson
Hutchison
Inhofe
Kempthorne
Kyl
Lott
Mack
McCain
McConnell
Mikulski
Roberts
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Specter
Thomas
Thompson
Thurmond
Torricelli
Warner
Wyden

NAYS--57

Akaka
Baucus
Bennett
Biden
Bingaman
Boxer
Breaux
Bryan
Bumpers
Byrd
Chafee
Cleland
Cochran
Collins
Conrad
D'Amato
Daschle
Dodd
Domenici
Dorgan
Durbin
Feingold
Feinstein
Ford
Glenn
Gorton
Graham
Grassley
Hagel
Harkin
Hatch
Jeffords
Johnson
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lugar
Moseley-Braun
Moynihan
Murkowski
Murray
Nickles
Reed
Reid
Robb
Rockefeller
Roth
Sarbanes
Snowe
Stevens
Wellstone

NOT VOTING--2

Hollings
Inouye

The amendment (No. 577) was rejected.
Mr. ROTH. I move to reconsider the vote.
Mr. MOYNIHAN. I move to lay it on the table.
The motion to lay on the table was agreed to.

Amendment No. 590

(Purpose: To make the HOPE credit refundable, and for other purposes)

Mr. WELLSTONE. Mr. President, I send an amendment to the desk.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from Minnesota [Mr. Wellstone], for himself,
Mr. Bingaman, Mr. Kerry, Mr. Kennedy, Mr. Reed, Mr. Dodd, and
Mr. Daschle, proposes an amendment numbered 590.

Mr. WELLSTONE. I ask unanimous consent the reading of the amendment
be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The text of the amendment is printed in today's Record under
``Amendments Submitted.'')
Mr. WELLSTONE. This is about the HOPE scholarship program. If the tax
credits will work for working families, these should be refundable
credits. I ask for full support. The offset is responsible.
Everybody is under all this pressure. I ask for a voice vote.
The PRESIDING OFFICER. The question is on agreeing to the amendment.
The amendment (No. 590) was rejected.

Amendment No. 591

(Purpose: To allow non-Amtrak states to provide alternative intercity
transport assistance)

Mr. ROTH. On behalf of Senator Enzi, I ask unanimous consent to send
the following amendment to the desk, and I ask it be considered and
agreed to.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from Delaware [Mr. Roth], for Mr. Enzi,
proposes an amendment numbered 591.

[[Page S6697]]

Mr. ROTH. I ask unanimous consent that reading of the amendment be
dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

On page 190, line 1, strike ``(III)'' and insert ``(IV)''
and insert a new subparagraph (A)(ii)(III)--
``(VI) the upgrading and maintenance of intercity primary
and rural air service facilities, and the purchase of
intercity air service between primary and rural airports and
regional hubs; and''.

Mr. ROTH. This has been cleared on both sides of the aisle. The
amendment corrects a minor drafting error in the bill.
The PRESIDING OFFICER. The question is on agreeing to the amendment.
The amendment (No. 591) was agreed to.

QUALIFIED TUITION SAVINGS ACCOUNTS

Mr. McCONNELL. Mr. President, I have come to the floor today in
support of the tuition savings provision included in this bill. I
believe the Finance Committee has done a thorough job providing broad
incentives to help families save and provide for the education of their
children.
I commend Senator Roth and the Finance Committee for their efforts to
include many of the provisions in S. 594, the College Savings Act. The
Finance Committee has included language to make earnings in qualified
tuition savings plans exempt from taxation as well as expanding the
definition of qualified education costs to include room and board. Once
implemented this legislation will reward all families who plan ahead
and save for a child's education.
For the past several years, I have worked hard to make college more
affordable by helping families who save. In both the 103d and 104th
Congresses, I introduced legislation to make earnings invested in
State-sponsored tuition savings plans exempt from Federal taxation.
States have also recognized the needs of families and have provided
incentives for them to save or prepay their children's education. State
savings plans provide families a safe, affordable, and disciplined
means of paying for their children's education.
Last year, Congress took the first step in providing tax relief to
families investing in these programs. The provisions contained in the
Small Business Job Protection Act of 1996 clarified the tax treatment
of both the State-sponsored tuition savings plans and the participants'
investment. This measure put an end to the tax uncertainty that has
hampered the effectiveness of these State-sponsored programs and helped
families who are trying to save for their children's education.
Mr. President, this action is long overdue. We have ignored the needs
of middle-class families who have seen their income hold steady, while
tuition costs go through the roof. According to the GAO, tuition at a
4-year university rose 234 percent between 1980-94.
During this same period, median household income rose 84 percent and
the consumer price index rose a mere 74 percent. The College Board
reports that tuition costs for the 1996-97 school year will rise 5
percent while average room and board costs will rise between 4 to 6
percent. While education costs have moderated throughout the 1990's,
they continue to outstrip the gains in income. Tuition has now become
the greatest barrier to attendance.
Due to the rising cost of education, more and more families have come
to rely on financial aid to meet tuition costs. In fact, a majority of
all college students accept some amount of financial assistance. In
1995, $50 billion in financial aid was available to students from
Federal, State, and institutional sources. This was $3 billion higher
than the previous year. A majority of this increase has come in the
form of loans, which now make up the largest portion of the total
Federal-aid package at 57 percent. Grants, which a decade ago made up
49 percent of assistance, have been reduced to 42 percent. This shift
toward loans further burden students and families with additional
interest costs. It is important that we not forget that compound
interest cuts both ways. By saving, participants can keep pace with
tuition increases while putting a little away at a time. By borrowing,
students must bear added interest costs that add thousands to the total
cost of tuition.
State-sponsored tuition savings plans have pioneered efforts to
provide families with opportunities to save as a hedge against tuition
inflation. States have established affordable tuition investment plans
that guarantee parents a minimum level of investment return or
guarantee a future education at today's prices. Such guarantees offer
middle-class families the piece of mind that their children will be
able to meet the tuition obligation and reduce the need to take on
thousands of dollars in loans.
States like Michigan, Florida, Ohio, and Kentucky were the first
programs to be started in order to help families save for college.
Today, there are 15 States with programs in operation. An additional 4
States will implement their programs this year. Also, I am informed by
the college savings network that every other State, except Georgia,
which has implemented the HOPE Scholarship Program, is preparing
legislation or is studying a proposal to help their residents save for
college. Today, there are 730,000 participants contributing over $3.23
billion to education savings nationwide. By year end, the college
savings plan network estimates that they will have 1 million
participants. By 2006, they estimate that over $6 billion will be
invested in State-sponsored programs.
Kentucky established its plan in 1988 to provide residents with an
affordable means of saving for college. Today, 2,602 Kentucky
participants have contributed over $5 million toward their children's
education. I am confident with passage of this language these programs
will grow dramatically.
Many Kentuckians are drawn to this program because it offers a low-
cost, disciplined approach to savings. In fact, the average monthly
contribution in Kentucky is just $49. This proposal rewards those who
are serious about their future and are committed over the long-term to
the education of their children by exempting all interest earnings from
State taxes. It is also important to note that 58 percent of the
participants earn under $60,000 per year. Clearly, this benefits
middle-class families.
Mr. President, the Finance Committee has expanded the language to
permit private nonprofit colleges to establish their own tuition
savings plans as well as establishing education IRA's. This will ensure
that all families have an opportunity to save. This legislation also
allows individuals who invested in Savings Bonds to roll them over into
the qualified State plan. This is a commonsense provision that will
give those who are already saving the flexibility to invest in prepaid
plans if available.
It is in our best interest as a nation to maintain a quality and
affordable education system for everyone. We need to decide on how we
will spend our limited Federal resources to ensure that both access and
quality are maintained. It is unrealistic to assume that the Government
can afford to provide Federal assistance for everyone. However, at a
modest cost, we can help families help themselves by rewarding savings.
This reduces the cost of education and will not unnecessarily burden
future generations with thousands of dollars in loans.
Let me close by saying that I commend the work of Senator Graham and
his staff on the issue of tuition savings. His cooperation and hard
work have ensured that this issue enjoys bipartisan support. I would
also like to thank the chairman of the Finance Committee for all his
efforts in making education savings the cornerstone of this package.

extending the small blenders ethanol tax credit to farmer-owned
cooperatives

Mr. WELLSTONE. Mr. President, the tax bill before us includes
important tax incentives for the use of ethanol. These tax incentives
have been critical to the growth of the ethanol industry, which in my
State is monopolized by farmer-owned cooperatives. Farmer-owned coops
are now the leading producers of ethanol. They make up 60 percent of
the ethanol facilities around the country. By year's end, nine plants
will be in operation in Minnesota, producing 126 million gallons
annually and creating 500 new jobs. Overall, ethanol contributes
between $109 and $260 million yearly to the State's economy. Currently,
71 percent of the gas sold in Minnesota contains ethanol. By the end of
the year, 100 percent of the gas sold in Minnesota will be blended with
ethanol.

[[Page S6698]]

My concern today is with the small blenders tax credit. This income
credit is available to ethanol producers who produce no more than 30
million gallons annually; and, it is applied to the first 15 million
gallons. That's great. Targeting the credit is what we should do.
Unfortunately, the credit works in such a way that cooperatives fail to
get any advantage from it.
I would like to ask that when the Senate Finance Committee and the
House Ways and Means Committee conference on the two tax bills, that
they give serious consideration to changing the way the credit is
structured so that cooperatives, like all other ethanol producers,
receive the intended benefits of the small blenders tax credit. I
appreciate the good efforts of my colleagues on this matter and hope
they will work with me to address this technical change in the small
blenders tax credit when the committees conference on the tax bills.
I see my colleague from Illinois and know her commitment to the role
of ethanol as an alternative fuel. I understand you have two farmer-
owned cooperatives proposed for construction in Illinois?
Ms. MOSELEY-BRAUN. The Senator is correct. The total investment is
$92 million for both facilities with an expected capacity of 42 million
gallons of ethanol annually. This is good for farmers and good for our
rural communities. I fully support extending the small blender's tax
credit to these cooperatives, and I will urge conferees to support
this.
Mr. KERREY. Mr. President, I would like to join my colleagues in
highlighting the importance of farmer-owned coops in the production of
ethanol, and thank the Senator from Minnesota for his continued
leadership on this issue. In Nebraska, two of the six ethanol
production facilities are owned by farmer-owned cooperatives. These
plants account for approximately one-third of the total amount of
ethanol produced in my State and directly employ over 300 Nebraskans.
By restructuring the small blenders credit, I am hopeful that not only
would we help the existing ethanol plants in Nebraska, but that we
would encourage other farmer-owned cooperatives to examine the
opportunities for rural economic development provided by ethanol
production.
Mr. WELLSTONE. I thank my colleagues for their words of support and
look forward to working with them in the coming days to make this
change happen.

Railroad Deficit Reduction Fuel Taxes

Mr. CHAFEE. Senator Roth, as I know you are aware, because of the
1990 and 1993 Reconciliation Acts, our important freight railroads are
forced to pay a 5.55 cents per gallon fuel tax into the General
Treasury for deficit reduction. All other modes of transportation--
highway, air, water--only pay 4.3 cents per gallon for this purpose.
This is an obvious inequity. While reducing the Federal budget deficit
is an important goal, if the transportation industry is to be singled
out, the burden of achieving a balanced budget should be shared equally
among all modes of transportation.
I am particularly concerned because S. 949 would transfer the deficit
reduction taxes paid by highway users, including truckers which compete
with the railroads, into the Highway Trust Fund. Placing additional
highway deficit reduction fuel taxes into the Highway Trust Fund for
highway improvements would exacerbate the already inequitable
situation, placing the railroad industry at an even more unfair
competitive disadvantage. In essence, the railroads would continue to
contribute to deficit reduction, while their competitors would instead
contribute to their own infrastructure.
The House has similarly proposed putting the aviation fuel taxes into
the Airport and Aviation Trust Fund for airport infrastructure
improvements as part of its tax reconciliation legislation.
This injustice against America's railroads must be remedied at our
earliest opportunity. I would ask the distinguished chairman of the
Finance Committee if he would be willing to seek a solution to this
railroad deficit reduction fuel tax problem during the conference with
the House on tax reconciliation legislation.
Mr. ROTH. I appreciate the distinguished Senator from Rhode Island
bringing this matter to the attention of the Senate, and yes I am aware
of this clear inequity to the railroads. This certainly should be
remedied at our earliest opportunity, and I will seek an appropriate
solution as we consider the treatment of deficit reduction fuel taxes
during the conference with the House on this tax legislation. If we are
unable to craft a solution to this problem on this bill, I will
certainly strive for a solution as part of the upcoming ISTEA
reauthorization legislation.
Mr. CHAFEE. I want to thank Senator Roth for his commitment to
expeditiously find a solution to this problem.

let us not forget about the u.s. citizens of puerto rico

Mr. MOYNIHAN. Mr. President, I am pleased to state, on behalf of
Senators Breaux, Graham, Kerrey, Chafee, and myself, that none of the
tax relief measures and growth incentives contained in this tax bill
will have a positive impact on the 3.8 million American citizens of
Puerto Rico. This result is unfair and should be corrected. The
Island's economy has paid dearly as a result of provisions in the tax
bills of 1993 and 1996, as revenue offsets from Puerto Rico in those
bills exceed $14 billion in the next few years. Yet those bills
provided no benefits to our Puerto Rican citizens.
Members from both sides of the aisle, Governors, national
organizations, business associations, Hispanic-American groups and the
entire Puerto Rican political community, have united forces in seeking
a sensible Federal economic development tool in section 30A. This would
provide viable pro growth tax incentives which will keep the Puerto
Rican economy on a path of sustained growth. We should expand and
extend this economic activity credit which is wage-based and promoted
jobs and investment. We would urge my colleagues to correct this
unfairness in Conference. If this is not possible, we will work to
include this measure in legislation that comes before us at the next
possible opportunity.

provide tax incentives to encourage property owners to preserve habitat
for species

Mr. KEMPTHORNE. Mr. President, it was my intention to introduce today
an amendment to provide three new tax incentives for private property
owners who want to conserve land for the preservation of endangered,
threatened, and other species. But the amendments were subject to
points of order because they did not have accompanying offsets. Rather
than have the amendments lose on a parliamentary procedure, I have
accepted Chairman Roth's offer to work on these issues in conference.
For too long, the Federal Government has relied almost exclusively on
regulatory mandates and enforcement to preserve habitat for endangered
species. That approach has failed to produce the kind of results we
want. If we're serious about preserving our rare and unique species,
and their habitat, we must make it easier for people to purchase and
set aside land for species.
The amendment would have consisted of three provisions. The first
provision would have provided an additional 25 percent exclusion from
capital gains associated with the sale of property so long as the
property is transferred to a qualified organization for conservation
purposes.
Mr. ROTH. I agree with Senator Kempthorne's philosophy that
conservation benefits us all as a nation. In fact, I included a
conservation easement provision in my chairman's mark.
Mr. KEMPTHORNE. The second incentive would have provided property
owners an exclusion from estate taxes for property that is set aside in
a conservation easement.
Over the past few years, as I've been working on legislation to
reauthorize the Endangered Species Act, I've met with a number of
farmers and ranchers and other property owners, many of whom own large
tracts of land that they are willing to set aside in conservation
easements to benefit species. But they are worried about the tax burden
that they will leave behind for their children if they do that.
Mr. ROTH. My chairman's mark includes a provision consistent with my
colleague's goals. The mark would allow a portion of the value of land

[[Page S6699]]

subject to a qualified conservation easement to be excluded from the
gross estate. This conservation easement is a step in the right
direction.
Mr. KEMPTHORNE. My amendment would have allowed property owners who
grant conservation easements to exclude the value of property from
estate tax. That would make it easier for families to keep their
property intact and at the same time will benefit endangered and other
species by preserving habitat for them.
My third incentive would have allowed property owners to donate land
for conservation purposes to take an enhanced deduction based on the
full market value of their property. This will provide an important
incentive for property owners who have land or water that provide
habitat for endangered and other species to preserve that habitat.
Over the past 3 years, I've met with many property owners who have
said, ``we would be happy to step forward and preserve habitat for
species and we would grant a conservation easement if there was an
incentive.'' Well, this will provide that incentive.
Mr. ROTH. Under our current tax law, a deduction is allowed for
contributions of a qualified conservation easement to a qualified
organization.
The goal of my colleagues' amendments are well taken and deserve this
Nation's serious consideration.
I will work with you in conference on these worthy goals because I
share your commitment to saving endangered species, and using
incentives to accomplish this goal.
Mr. KEMPTHORNE. I thank the chairman. I appreciate his willingness to
work with me on these important amendments to include them in the final
bill.
Mr. DODD. Mr. President, I rise today to express my support for the
Revenue Reconciliation Act of 1997. First, I would like to commend the
Finance Committee on the job it has done. Chairman Roth and Senator
Moynihan should be praised for their efforts to craft a bipartisan
bill, something that the House clearly failed to achieve in its tax-
writing committee.
The Finance bill contains many good measures, including a $500-per-
child tax credit, which brings much needed relief to working Americans.
This bill provides tax relief for higher education, making college more
accessible to millions of Americans. The underlying bill also expands
Individual Retirement Accounts helping many Americans to meet the
financial demands of raising a family and planning for retirement. The
bill before us today also recognizes the importance providing tax
relief for businesses by extending the research tax credit for 31
months, encouraging more investments in research and development.
In addition, the Finance bill provides funding for Amtrak, and
creates an inner-city passenger rail fund that would help finance
improvements in public transportation. This bill facilitates
environmental cleanup efforts in many urban and rural areas, helping to
make our country a healthier place to live.
While I appreciate the efforts of my colleagues who worked so hard to
craft a bipartisan tax relief bill, I am concerned that this measure
misses opportunities to provide meaningful tax relief for American
families. During Senate consideration, I voted for a number of
amendments to make this bill more equitable. Some of these amendments
succeeded. Many did not.
In particular, I was pleased when my colleagues accepted my amendment
concerning student loan forgiveness for people who choose a career in
community service and public sector work. This amendment will help us
to deal with the growing problem of student indebtedness.
I also supported the Nickles amendment to extend self-employment
health insurance deductibility to 100 percent. This measure will prove
extremely helpful to self-employed business men and women.
I was also pleased to support the Kohl amendment which creates a tax
incentive for businesses to provide child care for employees.
Each of these amendments make this bill better for American families.
Regrettably, other amendments that would have strengthened this bill
did not succeed.
Most notably, I, along with my colleague from Vermont Senator
Jeffords, offered an amendment that would have increased the child tax
credit for most families by making it refundable for the many low-
income families with little or no tax liability. It is a fair and
equitable measure, one that would have tremendously helped our working
families, and I am disappointed that this amendment failed.
In addition, the Daschle amendment would have invested an additional
$10 billion in education and more in the child tax credit.
Unfortunately, this amendment was defeated.
Finally, my colleague from Massachusetts Senator Kerry offered his
own amendment to make the $500-per-child tax credit refundable against
payroll taxes, a measure that would have brought much needed relief to
many working Americans struggling to raise a family. Once again, an
opportunity to make tax relief more equitable was defeated.
Despite my reservations about this bill, and my disappointment in the
failure of several amendments, I am encouraged by the fact that today,
on the floor of the United States Senate, we came together in a
bipartisan manner to enact tax relief to millions of American families.
I hope that the conference committee will report a bill that is both
fair and equitable, benefitting working families, small businesses and
family farms.
Finally, Mr. President, it is imperative that during the conference
negotiations, we remain committed to preserving the integrity of the
balanced budget agreement. The American people will not be served by a
budget that achieves balance briefly in 2002 and then veers back out of
balance afterward.
Mr. President, I am pleased to join a bipartisan group of Senators
today in supporting the Revenue Reconciliation Act of 1997. It brings
us much closer to enacting legislation easing the tax burden which
weighs heavily on too many Americans.

Pension Provisions

Mr. GRAHAM. Mr. President, today I rise to offer my support for the
pension provisions which are contained in the tax bill we are
considering today. As a result of the bipartisan cooperation which has
been demonstrated throughout this process, many American workers will
move closer to a secure retirement. These provisions help a broad
spectrum of workers and employers, and will contribute toward making
pensions more available, equitable, portable and simpler.
First, the provisions will expand coverage among workers at small
businesses.
The statistics concerning the lack of retirement coverage among small
business workers are astounding. According to the Small Business
Administration, only 13 percent of workers in businesses with less than
20 employees have pension plans and only 38 percent of workers in
businesses employing between 21 and 100 employees currently have plans.
Two provisions in this bill will address this problem. This bill will
encourage even the smallest of small businesses to help their employees
save for retirement through IRA payroll deductions. These payroll
deductions are the easiest way for workers to save for their
retirement. This bill clarifies that if a small business man or woman
permits IRA payroll deductions, they will not be threatened with
liability under ERISA.
Small businesses will also be encouraged to establish pension plans
by allowing partners and self-employed individuals to receive matching
contributions under the same rules applicable to incorporated
businesses. More small business owners will establish retirement plans
because of this change.
Second, this bill will help women. Although women are entering the
work force at a larger rate than ever before, 25 million working women
still do not have pension plans--this represents nearly 3 out of every
5 women who work in the private sector. Of these 25 million women, 12
million are employed by small businesses.
Unfortunately, many of these working women have no pension plan. Many
of these women would like to make contributions to an IRA, but cannot
because their husband participates in an employee-sponsored retirement
plan and tax law says that she cannot make

[[Page S6700]]

a deductible contribution to an IRA because his participation is
attributed to her.

The Finance Committee bill eliminates a spouse's participation from
the considerations relevant to contributing to a deductible IRA. With
this provision, all Americans--working women, working men, and
homemakers--will now have the opportunity to save, regardless of their
spouse's participation in a retirement plan.
Because of our bipartisan work on this issue, Susan Stratton of
Tallahassee, FL, will be able to begin contributing to her retirement
while her husband Charles continues contributing to his corporate plan.
Susan is the owner of Care Packages, Inc., and will be able to save
$2,000 per year in an IRA.
Similarly, John Pollack of Orange County, FL, will be able to begin
saving for his retirement because of this bill. As the owner of
Allrite-Foto, John has not made any IRA contributions due to his wife
Lorraine's corporate plan involvement. If this bill is enacted, John
will be able to save for retirement along with his wife.
As you can see by these two examples, this provision--championed by
Senator Roth and Senator Breaux for many years--will be beneficial for
both spouses.
Third, the pension provisions in this bill begin to address a
significant need in the pension area--portability. American workers are
changing jobs much more frequently than ever before. Over the course of
a 40-year career, the average worker will hold seven different jobs.
Yet only 50 percent of current 401k plans accept rollovers from other
plans.
As a result, it has become imperative that these workers be able to
transport their retirement plans when they change jobs.
This bill makes it more attractive for businesses to accept
rollovers. The bill provides that a plan will not be disqualified just
because funds rolled over from a new employee's previous job come from
a fund which has become disqualified.
Although this is a good step, I will in coming days be pushing for
more pension portability. Similar defined contribution plans should
also be able to roll into each other. Money in a retirement stream
should be kept there until retirement. Government plans should be able
to roll into private-sector plans. Private sector plans should be able
to roll into nonprofit plans and nonprofit plans should be able to roll
into Government plans.
Fourth, this bill will make pensions simpler to administer. One of
the main reasons employers cite for not establishing or expanding
pension coverage is red tape. The Finance Committee bill eliminates
some of the paperwork burden it now takes to administer a pension.
This bill asks that the Treasury Department and Department of Labor
issue guidance on the use of new forms of electronic pension
notification, and provides for the review of current rules to
accommodate new technology.
With the help of this new Internet and telecommunication technology,
pension information will be more readily available to workers and less
costly for employers to produce.
Finally, this bill enhances pension security. Both businesses and
workers will be helped by a provision phasing up the 150 percent of
current liability limit. Under current law, companies are limited in
the amount they can contribute to their employees' defined benefit
plan. I believe companies should be able to increase funding of their
pension plans in order to fully meet the needs of their future
retirees.
Companies can better budget if they have greater flexibility in what
they put in their plan--and workers are better off, because the more
companies contribute, the more secure their retirement. This bill gives
companies that flexibility.
Each of these provisions, as well as others I have not mentioned,
will improve our private pension system. It is not all we should do to
prepare for retirement in the 21st century, but it is a good start.
I have been honored to work closely with many of my colleagues in
bringing about these bipartisan pension changes. Senators Hatch,
Grassley, Jeffords, Breaux and Moseley-Braun have been instrumental in
bringing about these reforms, and I would like to commend them, and
others, on their efforts.
By finding this common ground on both sides of the political aisle,
we are working to ensure that the American workers of today will have a
more secure and prosperous retirement for tomorrow.

Aviation Excise Tax

Mr. McCAIN. Mr. President, I rise to express my concern about actions
taken in the reconciliation bills by the Senate Finance and the House
Ways and Means Committees to modify the current aviation excise tax
structure. Although somewhat different from each other, both of the
proposed modifications would increase taxes on airline passengers, and
represent significant changes in aviation policy.
Last year, Commerce Committee members worked closely with members of
the Ways and Means and Finance Committees, during consideration of the
Federal Aviation Reauthorization Act of 1996, to establish the National
Civil Aviation Review Commission. The members of this Commission have
dedicated themselves to developing a consensus within the aviation
industry regarding the appropriate financing mechanism for the Federal
Aviation Administration [FAA], and the important safety programs it
oversees. Together, the committees empaneled the Commission to consider
substantive policy changes to the aviation excise tax formula, and I
believe that the Commission should be given every opportunity to do so.
The reconciliation bill should not make substantive changes to the tax
formula without the benefit of the Commission s work.
Mr. LOTT. Mr. President, I would like to agree with the distinguished
chairman of the Commerce Committee, of which I am a member. The work of
the National Civil Aviation Review Commission could result in a unique
opportunity for an often divided aviation industry to reach a consensus
on important funding issues. Congress should not force its will on the
industry prematurely.
The Commission is in the process of developing legislative
recommendations, and plans to complete its work soon. Unfortunately,
the reconciliation process is moving faster than the ability of the
Commission to reach a comprehensive solution. The Commission recently
wrote to the leadership of both the Senate and House on this issue. We
should ensure that the reconciliation bill, or budget rules, do not
foreclose the ability to consider the commission recommendations in the
future. At that time, we will have a full and fair debate on the
recommendations themselves.
Mr. McCAIN. I thank the distinguished majority leader for his
insight. I plan to continue to work with him and other members of the
Commerce Committee to see that the budget reconciliation bill does not
foreclose the opportunity for Congress to implement the Commission
recommendations in the future. We must continue our efforts to ensure
an adequate and stable funding source for the FAA and the safety
programs it oversees.
Mr. DASCHLE. Mr. President, I would like to join my distinguished
colleagues, the majority leader, the chairman and ranking member of the
Commerce Committee, and the chairman and ranking member of the
subcommittee, in expressing concern about the reconciliation bill
preempting the work of the National Civil Aviation Review Commission. I
appointed two of its members, and I would not like to see its important
work undermined before it has had an opportunity to achieve a consensus
to a very important issue. I believe that after the recommendations of
the Commission have been submitted to Congress, we must give them every
consideration.

Mr. HOLLINGS. Mr. President, I, too, would like to join my
distinguished colleagues in this discussion. The leadership of the
Commerce Committee worked very hard in the Senate and during the
Senate-House conference to create this Commission. Congress even
provided a substantial appropriation to fund its activities. The work
of the Commission is extremely important. I know that my colleagues
share my concern that aviation monies are not being used for aviation
purposes, and we need to work to correct that. During our Commerce
Committee markup recently, I expressed my desire to treat

[[Page S6701]]

the Airport and Airways Trust Fund differently, and many members
indicated that we needed to do something different for aviation. The
GAO report on airport funding suggests that the airports are in need of
$10 billion, according to the airports, and $6.5 billion, according to
the FAA, depending upon the type of projects included. The Airport
Improvement Program is an important component of the work of the FAA.
We cannot meet future growth needs without expanding our airports and
modernizing the air traffic control system. The Commission work and
recommendations will help us in the debate in finding ways to meet our
future aviation system needs.
Mr. GORTON. Mr. President, as chairman of the Aviation Subcommittee,
I would like to associate myself with the remarks of the distinguished
chairman and ranking member of the Commerce Committee, as well as with
those of the majority and minority leaders. An efficient FAA will be
crucial if our country is to maintain its role as the world leader in
the aeronautical and aerospace industries. The FAA must have adequate
resources to transform itself into an efficient and productive agency.
The anticipated work of the Commission should provide the Congress with
valuable guidance in that respect. The proposed changes to the aviation
excise taxes in the reconciliation bill should not be a signal to the
commission that its ongoing work is meaningless. I intend to work with
the leadership of the Commerce Committee and Senate to ensure that the
future recommendations of the Commission are not prejudiced by any
actions taken in this reconciliation bill.
Mr. FORD. Mr. President, I would like to add to the thoughtful
remarks of my distinguished colleagues. We started the debate over how
to fund the FAA last Congress when we first proposed a fee system.
Senator McCain and I worked very hard on the bill and the entire
committee agreed that we needed a Commission to provide a blueprint for
how to fund the FAA. The FAA bill last year restructured the agency and
gave the FAA the ability to do some creative things. Now the Commission
must give us their best advice on how to meet the needs of the FAA, or
how to cut spending. Those are the dilemmas facing the Commission. I
know all of us share a desire to ensure that the work of the Commission
is debated and fully aired.

Mr. McCAIN. I would like to thank the distinguished gentlemen for
their remarks. The safety of the flying public and the health of an
essential, vital industry are at stake. We must give the Commission a
chance to fulfill its statutory mandate.

401(k) plans

Mrs. BOXER. Mr. President, I ask my colleagues from Oklahoma, Mr.
Nickles, and Delaware, Mr. Roth, if they would be willing to enter into
a colloquy with me about an amendment I offered last night which was
adopted by voice vote.
Mr. NICKLES. I would be pleased to answer any questions that the
Senator from California may have.
Mrs. BOXER. As the Senators are aware, the 401(k) has emerged as many
baby boomers primary pension plan. 401(k)s now cover more than 22
million employees and invest more than $675 billion in pension assets.
Many American workers now have more equity in their 401(k) plans than
in their homes.
Unfortunately, Federal law is currently less protective of 401(k)s
than traditional defined-benefit pension plans. A company sponsoring a
traditional plan is currently prohibited from investing more than 10
percent of its assets in company holdings, such as real property or
company stock. This reasonable limitation, however, does not apply to
401(k) plans.
The amendment I offered last night would extend this 10 percent
limitation to 401(k) plans, enhancing pension security for millions of
workers nationwide.
I want to thank both the chairman and the ranking member of the
Finance Committee for their assistance in clearing this important
amendment.
The amendment included a small change at the request of the Senator
from Oklahoma. The provision requested by the Senator from Oklahoma
would allow companies sponsoring 401(k) plans to require that 1 percent
of an employee's contribution be invested in qualified employer
securities.
Mr. NICKLES. The Senator has accurately described the change to her
amendment that I suggested. I believe that employers should be allowed
to require employees to contribute 1 percent of their 401(k)
contributions to company assets. However, as a member of the Finance
Committee and possible conferee on this bill, I will urge my colleagues
not to increase the 1-percent cap.
Mrs. BOXER. I certainly appreciate the support of the Senator from
Oklahoma. I would ask the Senator from Delaware if he, too, will work
to retain the Boxer amendment in conference.
I thank the distinguished chairman of the Finance Committee, the
assistant majority leader, and the ranking member of the committee for
all their hard work to guarantee pension security for America's working
men and women.

computer technology and equipment

Mrs. BOXER. I ask my colleagues from Delaware, Mr. Roth, and New
York, Mr. Moynihan, if they would be willing to enter into a colloquy
with me regarding providing an enhanced deduction for corporate
contributions of computer technology and equipment.
Mr. ROTH. I would be pleased to answer any questions the Senator from
California may have.
Mr. MOYNIHAN. I would be pleased to enter into a colloquy with my
friend from California.
Mrs. BOXER. As you know, the House-passed Tax Reconciliation Bill
included a provision which would provide an enhanced tax deduction for
corporate contributions of computer technology and equipment. This
provision, authored by Congressman Randy Cunningham, is very similar to
a bill Senator Chafee and I introduced earlier this year. Our bill, the
Computer Donation Incentive Act of 1977, provides an incentive for
companies to donate new and nearly new computers and software to
elementary and secondary schools.
The successful education of America's children is closely linked to
the use of innovative educational technologies, particularly computer-
based instruction and research. Unfortunately, however, far too many
elementary and secondary school classrooms lack the computers they need
to take advantage of these new educational technologies. I believe this
provision will provide America's schools with the technological
resources necessary to prepare both students and teachers for the
technologically advanced society in which we now live.
I know that the chairman and ranking member on the Committee on
Finance would like to have included the House provision in the Senate
tax reconciliation bill, but due to revenue considerations were unable
to do so. I hope, however, that my friend from Delaware and my friend
from New York would urge the adoption of this very important provision
in conference.
Mr. ROTH. I agree that this is a very important provision and I will
urge my colleagues to consider this proposal in conference.
Mr. MOYNIHAN. I agree with my friend from California and my friend
from Delaware, that this provision should be carefully considered and I
too will work to urge my colleagues to give this proposal careful
consideration.
Mrs. BOXER. I thank the distinguished chairman and ranking member of
the Committee on Finance for their support of my bill and of the House
provision.

supplemental enterprise zones and eligibility for brownfields benefits

Mrs. FEINSTEIN. Mr. President, I rise to ask if the chairman can
clarify for me whether this bill includes a provision that provides the
``brownfields'' benefits for supplemental empowerment zones.
As a former mayor, I am very committed to promoting economic growth
in our urban area. The ``brownfields'' provision will be significant in
the City of Los Angeles' effort to turn abandoned, vacant or
underutilized industrial or commercial properties back into productive
use. Can the chairman confirm that, under the Senate tax bill,
brownfields remediation incentives are also extended to supplemental
empowerment zones?

[[Page S6702]]

Mr. Roth. Yes, the committee bill extends the brownfields benefits to
supplemental zones as well. Section 768(c)(2) of the bill, entitled
``Expensing of Environmental Remediation Costs,'' extends the
brownfields benefits to supplemental zones designated after December
21, 1994, which confers the benefits to the supplemental zones of Los
Angeles and Cleveland, OH.
Mrs. FEINSTEIN. I thank the chairman for clarifying the provision and
thank the committee for its work on this issues.

computer access incentive

Mr. BAUCUS. Mr. President, I want to take this opportunity to repeat
my interest in including funding in the reconciliation bill which would
facilitate our schools' efforts to acquire computers and become
connected to the Internet.
If our students are going to be fully prepared to face the next
millennium with computer skills adequate to the task of competing in a
global economy, I believe we in the Federal Government have a
responsibility to ensure that our schools have every opportunity to
acquire computer equipment.
The House Ways and Means Committee reported a bill which includes
funds for an enhanced charitable deduction for those who donate
computer equipment to the schools. As you know, based on the experience
I have had helping schools in Montana acquire computer equipment, I
have been working on a somewhat different approach which provides a tax
credit for companies that give a price discount to schools purchasing
new equipment.
I ask the chairman to work with me during conference to evaluate the
House Ways and Means proposals and my proposals to increase schools'
access to the Internet.
Mr. ROTH. I look forward to working with the Senator.

EDUCATION INITIATIVES

Mr. GRAHAM. Mr. President, I would like to take this opportunity to
thank Chairman Roth for working on this tax legislation in a fair,
bipartisan manner. In particular, this bill includes several
educational initiatives that will have a positive impact not only on
the people of my home State of Florida but on the citizens--of every
income--in our Nation as a whole.
First, I applaud the chairman's provisions with respect to prepaid
college tuition plans. Currently, 16 States offer and manage college
savings programs, 5 States are in the process of implementing such
programs, and the other 29 States have legislation pending or are
studying the feasibility of creating these programs.
Last year, Congress clarified the tax treatment of participation in
prepaid college tuition plans. The 1996 Small Business Protection Act
provided that any prepaid or savings State entity is tax-exempt. The
act also clarified that earnings under prepaid programs are not taxed
until distribution, and--when distributed--earnings would be taxed to
the student beneficiary.
Under the proposal approved by the Finance Committee, distributions
from prepaid college tuition plans will be 100 percent tax-free. In
addition, the definition of qualified higher education expenses will be
expanded from current law. Under this legislation, tax-exempt benefits
will now include room and board, as well as tuition, fees, and related
expenses. Thus, families who plan ahead can lock in today's rates for
almost all expenses incurred in their children's education.
The legislation will have immeasurable benefits for our Nation's
families. For example, Barbara and Jack Alfonso, who live in Miami, FL,
have a 10-year-old son, Adrian. Back when Barbara finished high school,
her parents could not afford to send her to college. She decided to
take out loans to attend secretarial school. It took her 7 years to pay
off those loans, so Barbara knows what it's like to be burdened with
debt.
Barbara and Jack decided that they didn't want their son to be faced
with the same obstacles. So, when Adrian was 5, they invested in the
Florida Prepaid College Tuition Program. They will make their last
payment in October of this year.
Adrian is a good student, and he deserves the opportunity to further
his education. And because his parents chose to put aside money for his
future by participating in the State's tuition program, Adrian will
have this opportunity. Now Adrian can become one of the first college
graduates in the Alfonso family. He can rest assured that his hard work
will not have been in vain--that college is not a dream for him but a
reality.
As Barbara tells it: ``The best thing about this plan is that it
gives me peace of mind.'' Thanks to a prepaid college tuition plan,
Barbara knows that her son will be able to go to college. And thanks to
this program, two hard-working parents are able to give their child
what they never had. Their son will be better off than they were.
With this legislation, families throughout our Nation will be better
able to plan and save for their children's education. First, parents
can save for their children's education without paying taxes. Second,
parents can purchase tuition at today's rates and then withdraw this
money when their children begin school. Tomorrow's education can be
secured at today's prices.
I would also like to thank Chairman Roth for including a portion of
my school construction tax proposal, which would assist small and rural
school districts. The provision that was included in this bill will
positively impact issuers of small school construction bonds. These
issuers will be exempt from arbitrage rebate requirements up to $10
million. Currently, there is a $5-million limit which applies to all
bonds.
With this provision, we are specifically helping small school
districts to lower the cost of building new schools. I hope that this
legislation is just the beginning of much more which this Congress will
do to make a significant and substantial dent in the problem of school
construction and rehabilitation needs.
On behalf of all of our Nation's families, I would like to thank
Chairman Roth for his efforts regarding these education initiatives. I
think Barbara Alfonso says it best: ``We can't cut corners when it
comes to education.'' Barbara is right. This legislation will allow us
to invest in our most precious resource--our children--who are, of
course, ultimately our future.

rail fuel tax

Mr. BURNS. Would the esteemed chairman of the Finance Committee be
willing to enter a colloquy on the rail deficit reduction fuel tax?
Mr. ROTH. I would be happy to discuss this matter with my colleague
from Montana.
Mr. BURNS. As the chairman is aware, the 1990 and 1993 Budget
Reconciliation Acts imposed a 2.5-cent-per-gallon and a 4.3-cent-per-
gallon diesel fuel tax for deficit reduction on railroads and highway
users. Beginning October 1995, 2.5 cents of the trucking industry's
deficit reduction tax was directed to the Highway Trust Fund. The
remaining highway 4.3 cents remained in place for deficit reduction
purposes, while the rail rate was set at 5.55 cents per gallon, also
effective October 1995. As a result of these acts, the freight rail
industry currently pays 1.25 cents per gallon more for deficit
reduction than its primary competitors.
Mr. ROTH. The Senator is correct.
Mr. BURNS. While the Highway Trust Fund provides the financing for
construction and maintenance of public roads and bridges used by trucks
and automobiles, the railroad industry realizes no similar return on
its tax payments. Railroads currently expend more than $7 billion
annually in capital to build and maintain their own ``roads.'' These
private rights-of-ways are subject to more than $400 million annually
in local property taxes. While few Senators are more dedicated to the
goal of deficit reduction than I, it seems that the burden of reducing
the Federal deficit must be shared equally among competing modes of
transportation.
The Senate Finance Committee adopted an amendment to the chairman's
Mark which would transfer the 4.3-cent-per-gallon deficit reduction tax
paid by highway users to the Highway Trust Fund--minus the new half-
cent tax for the Intercity Rail Trust Fund--Amtrak. Additionally, the
House Ways and Means Committee transferred the 4.3-cent-per-gallon tax
paid by aviation users to the Aviation Trust Fund. Assuming that these
amendments remain in the bills, the rail industry will be paying 5.05
cents per gallon for deficit reduction while those in competing
industries will be paying nothing for deficit reduction.

[[Page S6703]]

Mr. ROTH. Again the Senator is correct in his assessment.
Mr. BURNS. Understanding the demands on the chairman, I would merely
like to encourage him to address this situation in conference. If a
solution can not be reached in this bill, I would encourage the
chairman to give careful consideration to and to work toward a remedy
of this situation in the tax title to the upcoming ISTEA
reauthorization.
Mr. ROTH. Rest assured that the committee will give every
consideration to the addressing the transportation excise tax equity
matters raised by my colleague from Montana.
Mr. BURNS. I greatly appreciate the time and consideration given to
me by the chairman of the Finance Committee.

PUBLIC SAFETY OFFICER SURVIVOR PENSIONS

Mr. BIDEN. Mr. President, I am pleased that the Senate has passed my
amendment to make a modest change in current law. A modest change, but
one which will make an enormous difference in the lives of some very
special Americans--the families of public safety officers--police
officers and firefighters--who have given their lives in the line of
duty.
This amendment would forgive Federal tax liability on the annuities
received by the families of these fallen heroes. The cost is modest--
about $25 million over the next 10 years.
I would also add that this tax treatment would be the same as that
for the families of fallen soldiers. In other words, my amendment gives
to those who fight and die in domestic battles to keep us safe the same
treatment we give to those who fight and die in keeping us safe from
foreign battles.
Mr. President, again, I welcome my colleagues support for my
amendment--we have stood with the cops, stood with the firefighters,
and stood with the paramedics who have given their lives in service to
all of us.

STATE-SPONSORED WORKERS' COMPENSATION FUNDS

Mr. BREAUX. I would like to ask a question of the distinguished
chairman of the Finance Committee concerning a provision in the tax
bill.
Mr. ROTH. I would be pleased to respond to the Senator from
Louisiana.
Mr. BREAUX. Section 761 of the bill provides standards that a State-
sponsored workers' compensation company must meet in order to be exempt
from Federal income tax for future years. As the chairman is aware, a
large number of the States, including Louisiana, have State-sponsored
workers' compensation companies that have been operating as tax-exempt
agencies for several years. It is my understanding that the standards
that we have proposed for the future are intended to codify the
standards that exist under present law and that a company, such as the
one established by the State of Louisiana, that met these standards in
prior years should be confident that it is, in fact, tax exempt under
current law. Is my understanding correct?
Mr. ROTH. The Senator is correct. The committee thought it was
appropriate to provide prospective application for the codification of
standards which must be met for tax exemption. However, the committee
expressly acknowledged the fact that a number of States had established
entities that were operating as tax exempt organizations. The
motivation for codifying the standards as part of the Internal Revenue
Code was to help these entities and the Internal Revenue Service more
easily apply the law. However, our report expressly states that tax
exemption may be available to many such State-sponsored entities under
present law and no interference was intended to be drawn from our
action that the income of those entities was not already tax-exempt.
Mrs. HUTCHISON. Mr. President, I strongly support the provision in
the bill that deals with tax-exempt status of State workers'
compensation funds. Senator Gramm and I ask unanimous consent to have
printed in the Record the text of a letter we received earlier this
month from the Governor of the State of Texas urging us to clarify the
Federal tax statutes to maintain the tax-exempt status of this fund in
light of the important role it plays in stabilizing the market for
workers' compensation insurance in Texas.
There being no objection, the text of the letter was ordered to be
printed in the Record, as follows:

State of Texas,

Office of the Governor,

June 5, 1997.
Hon. Phil Gramm,
U.S. Senate, Washington, DC.
Dear Senator Gramm: I understand that the Internal Revenue
Service is questioning the source of the Texas Workers'
Compensation Insurance Fund's tax exemption.
The Texas Legislature created the Fund in 1991 to resolve a
crisis in our workers' compensation insurance market. The
Fund carries out its statutory responsibility to ensure that
workers' compensation insurance is available for Texas
employers in even the smallest or riskiest of businesses.
Workers' compensation insurance is not mandatory for Texas
employers. Those businesses that choose to carry workers'
compensation coverage for their employees now have access to
a much broader variety of carriers, competitive premiums and
enhanced employee benefits.
I encourage you to consider clarification of the federal
tax statutes to resolve this issue. Arbitrarily and
retroactively changing the tax status of the Fund would
directly affect the small businesses that depend on the Fund
for workers' compensation coverage, and would needlessly
inject instability into what is now a healthy segment of the
Texas insurance market.
Sincerely,
George W. Bush.

Mr. GRAMM. Is it also the chairman's understanding that this
provision clarifies the tax-exempt status of these funds under current
law by codifying the existing standards?
Mr. ROTH. That is correct.
Mr. GRAMM. I thank the chairman.

aviation taxes

Mr. ABRAHAM. Mr. President, I was wondering if Senator Nickles and I
could engage the chairman of the Finance Committee in a colloquy
regarding the proposed tax on the domestic portion of international
journeys [DPIJ]. As I understand the new tax, it will impose a new 10-
percent tax on domestic legs of international flights. This tax hurts
domestic carriers because they typically have domestic stopovers on
their international flights, whereas international carriers have more
direct flights without stopovers in the United States. Since flights
without stopovers are not subject to the new 10-percent tax, the net
result is a competitive disadvantage for domestic carriers.
Mr. NICKLES. If the Senator from Michigan would yield, I want to echo
the concerns of my friend from Michigan. In fact we were prepared to
offer an amendment along with several other colleagues but out of
deference to the desire of the chairman to complete action on the bill,
we agreed to work with the chairman. It is my understanding that the
chairman of the Finance Committee is aware of these concerns and has
expressed his intention to resolve this controversy in conference.
Would the chairman confirm his intentions regarding the proposed tax on
the domestic portion of international journeys?
Mr. ROTH. I would like to assure my colleagues from Michigan and
Oklahoma that it is my intention to work with House and Senate
conferees to eliminate any competitive advantages that foreign carriers
may enjoy and resolve this controversy.

net operating losses

Mr. SPECTER. Mr. President, on behalf of Senator Santorum, I would
like to discuss an issue with the chairman and the ranking member of
the Finance Committee relating to operating losses of a business.
The tax bill extends the carry forward period for businesses with
operating losses for an additional 5 years. But the provision only
applies to operating losses incurred in future years.
We are less concerned about the tax impact of allowing existing
losses to expire than about the impact on companies for financial
accounting purposes. Under the accounting standards, if the operating
losses expire, some companies will see a major reduction in asset
value.
We would like for the chairman and the ranking member to consider
this issue in conference.
Mr. SANTORUM. I would like to associate myself with the comments of
my colleague, the senior Senator from Pennsylvania.
Mr. ROCKEFELLER. I understand the issue raised by the Senators from
Pennsylvania. I will be pleased to look at the issue in conference.
Mr. MOYNIHAN. I understand the issue raised by the two Senators from
Pennsylvania. I will be pleased to look at the issue in conference.
Mr. ROTH. I will also be pleased to look at the issue in conference.

[[Page S6704]]

for an additional tobacco tax increase

Mr. SPECTER. Mr. President, I have sought recognition to explain my
vote against waiving the Budget Act on the Kennedy amendment for an
additional tobacco tax increase. I have long been a leading supporter
of providing adequate health coverage to our Nation's children. On the
first day of the 105th Congress, I introduced legislation that would
provide coverage to the 4.2 million children of the working poor, who
are not eligible for Medicaid but whose parents cannot afford private
health insurance. During consideration of the budget for fiscal year
1998, the President and Congress reached an agreement to provide $16
billion for health care insurance to protect our Nation's uninsured
children. The Senate Finance Committee has added an additional $8
billion for children's health insurance from funds derived from a new
tax on tobacco. As a result, the budget reconciliation bill now
contains $24 billion for the vital purpose of providing health
insurance to America's uninsured children.
The Kennedy amendment would further increase the tobacco tax by an
additional 23 cents per pack. The amendment, however, did not specify
how this additional tax revenue would be spent. As a consequence, the
Senate could be given no assurance that any of the money generated by
this new tax would provide health insurance. I believe the American
taxpayer is willing to accept a reasonable level of taxation in order
to provide health insurance to our Nation's children. However, with the
money provided under the budget agreement and the additional funds
provided by the Senate Finance Committee, Congress is fairly addressing
this need.

ira withdrawals for k-12

Mr. SPECTER. Mr. President, I supported Senator Coverdell's amendment
to expand the bill's provisions to allow penalty-free withdrawals from
Individual Retirement Accounts for education expenses for children in
grades K-12 because I believe that parents should have the maximum
flexibility to spend their own money on their children's education.
I have consistently opposed the use of public funds to subsidize
private school tuition for K-12 educational expenses because I have
grave concerns about the constitutional issues of separation of church
and State raised in such policy and because I am an advocate of public
schools. As chairman of the Appropriations Subcommittee which funds the
Education Department, it is among my top priorities to continue to
provide increases in Federal support to the Nation's public schools.
However, there are many parents who feel that it is in the best
interest of their children to attend nonpublic elementary and secondary
schools for a variety of reasons and in a variety of settings. I
believe they should be free to spend their own resources on such
expenses as they see fit.

TAX RELIEF IS FINALLY AT HAND

Mr. KYL. Mr. President, hard-working American families have not seen
significant net tax relief since Ronald Reagan's first year in office
as President. That was 16 years ago, in 1981. Since then, their tax
burden has gone in just one direction--up. Higher payroll taxes, higher
taxes on gasoline and Social Security, higher taxes on capital gains
and air travel. If you manage to save something for your child's
education, the earnings are even taxed.
It is no wonder, then, that the typical American family feels
overwhelmed: it now pays more in taxes than it does for food, clothing,
and shelter combined. That is wrong, and it has got to change. It is
about to change.
Mr. President, there has really been a sea of change in Washington's
approach to taxing in recent years. Remember that it was not so long
ago, in 1993 to be exact, that President Clinton pushed through the
largest tax increase in the Nation's history. Everyone in the country
felt the bite of the Clinton gas-tax increase. Retirees even saw their
Social Security benefits taxed more. The debate back then was not
whether to raise taxes, but how much to raise them.
Two years ago, after Republicans gained control of both Houses of
Congress, the debate changed dramatically. The question no longer was
whether to raise taxes, or even whether to cut taxes. The question was
how much to cut them. The debate has changed so much that President
Clinton, who initiated that record-setting tax increase 4 years ago,
and who vetoed tax relief just 2 years ago, now tries to claim the tax-
cutting mantra as his own.
We began last year to make some incremental progress in offering tax
relief. The adoption tax credit, for example, was enacted, as was an
increase in the Social Security earnings limitation and new tax
incentives for the purchase of long-term health insurance. That was
after President Clinton vetoed a far more substantial tax-cut package
in December 1995.
The bill before us today takes yet another step in the right
direction. When signed into law, it will provide more tax relief than
any other bill in 16 years. And three-quarters of the total relief
provided by the bill will go to families with annual income of less
than $75,000. Again, that is families with income under $75,000 a year
that would benefit most.
Make no mistake, it provides nowhere near the level of relief that
American families need. The net tax cut of between $77 billion and $85
billion over 5 years represents just 1 percent of the amount that the
Treasury would otherwise collect over that period. But given the
constraints on tax relief that President Clinton imposed in this year's
budget agreement, it is probably the most we can do. It is, in my view,
merely a downpayment on the amount of tax relief that we will continue
to seek next year and the years after that.
Mr. President, I opposed the budget agreement a few weeks ago, in
large part because it so severely restricted the amount of tax relief
that we could provide this year. I believed that we should have held
out for a better deal for the taxpayers, but a majority of both Houses
disagreed, and therefore we have to find a way to live within the
constraints the deal imposed. I must say, however, that I believe the
Finance Committee has done a good job with the limited resources it had
to work with.

The bill includes a $500-per-child tax credit for families with
children under the age of 17. The credit would become fully effective
next year; it would be limited this year to $250 for every child under
the age of 13.
The bill also provides important help to parents who are struggling
to find a way to pay for their children's college education. It offers
a new $1,500 HOPE tax credit, new tax-preferred Education Savings
Accounts, and something that the budget agreement did not contemplate,
a new deduction for student-loan interest payments.
These provisions alone--the education-related and child tax credits--
make up 82 percent of the tax relief provided by this bill--82 percent.
An analysis by the accounting firm of Deloitte & Touche estimates that
a married couple with two children and a household income of $35,000 a
year would see its tax bill slashed by 40 percent--to $1,573 a year,
down from $2,625 now. If one child were in college, the tax relief
would rise to 78 percent.
The bill does some other good things as well. It reduces the capital-
gains tax rate to 10 percent for individuals in the 15 percent income-
tax bracket, and 20 percent for other taxpayers. It provides a capital-
gains exclusion for homeowners--up to $250,000 for single taxpayers,
$500,000 for married couples. Given that more than half of all
taxpayers reporting capital gains have incomes under $50,000--including
many seniors who depend upon income from their life-long investments to
support them in their golden years--we can be sure that the benefits of
these capital-gains reductions will flow to middle America.
And with history as a guide, we know that the Treasury will benefit
from a capital-gains tax cut as well. Between 1978 and 1985, for
example, the top marginal tax rate on capital gains was cut by almost
45 percent--from 35 percent to 20 percent--but total individual
capital-gains tax receipts nearly tripled--from $9.1 to $26.5 billion
annually.
When capital-gains tax rates are too high, people need only hold onto
their assets to avoid the tax indefinitely. No sale, no tax. But that
means less investment, fewer new businesses, and new jobs, and--as
historical records show--far less revenue to the Treasury than if
capital-gains taxes were set at

[[Page S6705]]

a lower level. Just as the Target store down the street does not lose
money on weekend sales--because volume more than makes up for lower
prices--lower capital-gains tax rates can encourage more economic
activity, and in turn, produce more revenue for the Government.
With that in mind, many of us believe that the capital-gains tax rate
should have been cut deeper--some wanted an earlier effective date,
too--but the die was cast against more capital-gains relief when the
budget agreement passed earlier this month. Still, even the modest
reduction in this bill will begin to unlock the sizable amount of
assets currently locked up in the economy because of high tax rates.
The American Council for Capital Formation estimates that it will lead
to the creation of as many as 150,000 new jobs a year.
The bill also enhances the ability of individuals to save for
retirement in IRA accounts. More Americans would be allowed to save in
traditional IRA's, including homemakers who have been precluded from
participating merely because their spouses are active participants in
employer-sponsored plans. Non-deductible contributions of up to $2,000
to new IRA plus accounts would be allowed for anyone; distributions
from the accounts would occur on a tax-free basis.

DEATH TAX RELIEF

The legislation includes modest death-tax relief--a phased increase
in the unified credit from $600,000 today to $1 million by 2006. An
additional $1 million exclusion is allowed for qualified family owned
businesses and farms.
Mr. President, although the death-tax provisions represent steps in
the right direction, they are totally inadequate to solve the problems
associated with the tax. The unified credit has not been adjusted since
1987, when it was set at $192,800, for an effective exemption of
$600,000. Had it merely kept pace with inflation, the exemption would
now amount to about $840,000. By the time the $1 million exemption is
fully phased in in 2006, inflation will have further eroded its value.
The family business exclusion is so complex and establishes so many
hurdles for families to meet before they could qualify for relief that
few families will likely see any relief at all.
And it is family owned businesses, particularly those owned by women
and minorities, that are in the greatest need of relief from death
taxes. Instead of being able to pass a hard-earned and successful
business on to the next generation, many families have to sell the
company in order to pay the death tax. The upward mobility of such
families is stopped in its tracks. Proponents of this tax say they want
to hinder concentrations of wealth. What the death tax really hinders
is new American success stories.
Yet, the death-tax provisions in the bill do not save Americans from
having to engage in costly estate-tax planning. They provide little in
the way of substantive relief. And they likely do little to promote
stronger economic growth.
I know that we are not going to be able to do enough this year given
the constraints of the budget agreement, so further progress with
respect to death-tax relief will have to wait until next year. But we
should commit now to seeking that relief when the next opportunity
arises.

DEPRECIATION RECAPTURE

There are two other parts of the bill that I hope we can correct this
year, hopefully before the bill emerges from the House-Senate
conference committee in a few weeks. The first deals with the tax
treatment of capital gains earned from the sale or exchange of
depreciable real property. Such gains would be taxed at a maximum rate
of 24 percent, compared to the lower tax rates that would be applied to
gains earned from nondepreciable real estate and other assets.
Most of us are well aware of the significant unlocking effect that a
capital-gains tax cut would have: Not only would it stimulate savings,
investment, and job creation, but, as I indicated before, historical
evidence shows that it would result in increased revenues to the
Treasury to assist with deficit reduction. The capital-gains relief
recommended in the tax bill mark is a step in the right direction. But
unless the reach of that relief is extended to depreciable real
property, we cannot ensure that the full benefit of a capital-gains tax
cut is realized throughout the economy.
Establishing disparate tax treatment for investment and business real
estate would provide little incentive for individuals to sell
investment properties, or to recapitalize and modernize multifamily
housing, industrial properties, office buildings, retail properties, or
single-family rental homes. It would provide little, if any,
stimulation in what amounts to a substantial sector of the Nation's
economy. Moreover, taxing such property at rates higher than for other
assets would establish a bias in the Tax Code that must be avoided.
I would note that the Finance Committee modified the bill to reduce
the tax rate, from the 26 percent originally recommended, to 24
percent. But we ought to make sure that by the time the bill reaches
the President's desk, depreciable real estate is on par with other
types of investments.

CHILDREN'S HEALTH INITIATIVE

Mr. President, I am also concerned about the tobacco-tax provisions
of this bill. I realize that the tax is intended in large part to raise
additional revenue for the children's health-insurance initiative. Yet,
most people recognize that an increased cigarette tax would lead to
lower cigarette consumption--in fact, discouraging smoking is one of
the prime objectives of a tax increase. But if smoking declines, so do
cigarette-tax revenues. The proposal thus creates an expensive new
program, the costs of which are likely to increase rapidly, and yet the
intended revenue stream is by its very nature designed to dry up. This
method of financing the children's health initiative will simply not
work over time.
My hope is that the financing mechanism will be modified in
conference. I am not prepared, however, to vote against the bill as
reported by the Finance Committee on account of that flaw and deny
millions of Americans the first significant tax relief they have seen
in 16 years.
Mr. President, this bill includes many good provisions: Education tax
credits, the family tax credit, IRA incentives, capital-gains, and
modest death-tax relief. It extends the work opportunity credit, the
research tax credit, and the exclusion for employer-provided
educational assistance. Although there are some flaws in the current
version, we ought to seize the opportunity to enact these provisions as
a downpayment toward the ideal tax package.
I support the bill as it came out of the Finance Committee.
Mr. ROBB. Mr. President, I rise to oppose the tax bill before the
Senate. Although I supported the budget resolution which allowed for
this bill to proceed, I did so to advance the spending cuts that I
voted for and the Senate passed earlier this week. I have consistently
stood for the proposition that we shouldn't be reducing revenues until
we balance the budget, and I will keep that commitment today.
While I have supported a number of amendments that I felt would make
this bill a better package, even if all those amendments had passed,
I'd still be opposed to cutting taxes while we still have a budget
deficit. Nonetheless, I understand that it is difficult for elected
legislators to resist the temptation of tax cuts, and I do not discount
the popular appeal of a number of the measures before us, nor do I
quarrel with the public demand for them. However, sound fiscal policy
compels me to oppose even the tax changes I might otherwise support
until such time as the Federal budget actually reaches balance.
By passing and enacting this tax bill, or any other, we
singlehandedly undo the hard work we did in 1993 to finally bring
annual budget deficits under control. We've made dramatic progress,
bringing down annual deficits from $290 billion in 1992 to an expected
$60 billion this year. Now, on the precipice of balancing the budget,
we are going to pass a tax cut bill which takes us in precisely the
opposite direction. While I understand that these tax cuts are provided
for in the context of a balanced budget plan, no one can argue that
they will increase the deficit and the debt between now and the year we
expect to get to a balanced budget, if we get there at all.
Not only will this bill increase the current deficit and the long-
term debt,

[[Page S6706]]

the out-year costs will come due at a time when the costs of our
entitlement programs begin to swell due to the retirement of the baby
boom generation. From now until 2030, the number of individuals who
will qualify for these programs will double, going from 35 million to
70 million. Even if we didn't enact this tax cut, all revenues we
collect would be needed just to fund entitlement programs and interest
on the debt by 2012, leaving only borrowing to cover defense and
discretionary investments in human and physical capital. Enacting a tax
cut which doubles in cost every 5 years hardly seems an appropriate
course to follow given the demographic challenges we confront early in
the next century.
This tax cut would not have been as damaging in the future were we
likely to make some of the long-term structural changes in our
entitlement programs that would have sufficiently restrained the growth
of these expenditures in the future. By abandoning a legislative change
for a more accurate measure of the cost-of-living adjustments and the
likely elimination of any eligibility changes in Medicare by the time
the spending measure becomes law, we compound our long-term fiscal
problems with this tax cut.
Mr. President, the truth is that even if we were in budget balance
today and for the forseeable future, I couldn't support this particular
tax bill. The fact of the matter is that the tax bill before us does
little or nothing to simplify the tax code, fails to adequately
encourage new savings and investment, and is structured in a way that
masks its long-term costs. Instead, it is largely driven more by
political payoffs to special interest groups and polling data, rather
than rational tax policy.
The child tax credit has been roundly denounced by economists as
doing little more than encouraging additional consumption, something we
clearly ought not to be encouraging at this point given our robust
economy. At least the Senate retained the provision that required that
the tax savings be saved for education expenses for those with children
between 13 and 16, and I commend my colleagues, including Senators
Breaux, Kerrey, and Lieberman, who have fought so hard to ensure that
the child tax credit provides some economic value by requiring that it
goes to savings and investment.
Many have claimed that both the capital gains provisions and new
individual retirement accounts will encourage additional savings and
investment, and I would like to believe that is the case. However, the
capital gains benefits fail to differentiate between those gains from
long-term investment and those from stock speculation, and the new
backloaded IRA's will likely result in simply a shift of existing
savings to a tax deferred vehicle, resulting in compounding revenue
losses over time.
Compounding revenue loss will also result from the structure of the
estate tax relief provisions in this bill. I understand the burden
these taxes cause for some families, particularly those with family
owned farms and businesses, but the slow phase-in of increases in the
current $600,000 exemption amount guarantee that the true cost of the
tax change won't show up until after 2007.
Mr. President, the most difficult part of opposing this tax bill for
me has to do with the education incentives included in this bill. From
my days as governor of the Commonwealth of Virginia, I've made
education my top priority, pumping over $1 billion of new funds into
education during my tenure as governor without a tax increase. I simply
believe that the education of our children is the most important
function of government at any level. Because of this commitment, I
applaud the President's effort to increase access to education.
I am not opposed to commiting additional resources to education, but
my concern about these tax provisions is that they are not likely to
encourage students to get a higher education. For the most part, they
would simply subsidize those who would have attended anyway. In
addition, most education experts believe these tax provisions could
result in an increase in tuition costs as institutions use the tax
savings to increase their costs, potentially making education expenses
even higher for students who can't qualify for these new tax benefits.
It also seems to me that those who benefit from these education
incentives ought to have some obligation of community service, a cause
I have long championed.
In summary, Mr. President, I voted earlier this week for the spending
cuts in the first Reconciliation bill because I believe that deficit
reduction should be our No. 1 priority. It is for this same reason that
I oppose this legislation on principle and for the substantive policy
reasons I have outlined. I understand that it is politically difficult
in our day and age to resist the siren song of tax cuts. But I hope
that those who intend to support this tax package will be prepared to
answer for their vote when the revenue losses begin to mount and
prevent our budget from staying in balance over the long term.
With that, Mr. President, I yield the floor.
Mr. KENNEDY. Mr. President, I oppose this bill, and I hope that it
will be vetoed by the President if it emerges from the House-Senate
conference in this unacceptable form. The last thing the American
people need is a trickle-down tax relief bill that offers plums to the
wealthiest individuals and corporations in our society, and crumbs for
everyone else.
Clearly, we need to give tax relief to families, we need to encourage
investment in education, we need to encourage investment in small
businesses, we need to grant relief from the hardships that are
sometimes caused by the estate tax.
The Republican plan takes each of these legitimate points and misuses
them as excuses to give enormous tax cuts to the well-heeled and the
powerful and it does so as far as the eye can see. This plan violates
the fundamental principles that any tax bill must meet: tax fairness
and fiscal responsibility.
The Republican bill claims that it will give fair tax relief to
families, but the Republican child credit is designed to exclude large
numbers of low- and middle-income working families. Forty-seven percent
of all American children would not be eligible for the child credit
under the Republican proposal. An additional 8 million children would
be eligible for only a partial benefit. Clearly, the Republicans have
gerrymandered their credit to save money by denying it to as many
working families as possible. Yet these are the families who need help
the most. Our Democratic proposal offers all of these families an
honest tax break. The Republican proposal is a let them eat cake tax
break.
I also oppose the education provisions of the Republican bill because
they are skewed toward the highest income taxpayers. These Republican
provisions clearly violate the firm commitment made under the budget
agreement on tax benefits for higher education. The letter signed by
Newt Gingrich and Trent Lott specifically states that tax relief of
``roughly $35 billion'' will be provided over 5 years for post-
secondary education, and that the education tax package ``should be
consistent with the objectives put forward in the HOPE scholarship and
tuition tax proposals contained in the administration's fiscal year
1998 budget to assist middle-class parents.''
The administration's proposal had two goals: to help middle-class
families during the critical years while students are in college, and
to encourage lifelong learning. Students and families across the Nation
are concerned about escalating tuition, and this bill does not do
enough to help them.
The Republican bill is flawed in another major respect in this area--
it utterly fails to address the need to help workers expand their
skills and education. We need to give a real benefit to teachers,
nurses, auto mechanics, and all others in jobs that need continual
upgrading of skills. The workplace depends more and more on highly
trained workers. To sustain a strong economy, we must invest in ongoing
education throughout life.
The bill also provides a disproportionate education benefit to high
income families. It contains three separate provisions to encourage
savings for college, at a total cost of over $7 billion over the next 5
years. Lower income families do not have the luxury to save as much as
higher income families do, and will not be able to take advantage of
these provisions.
I also strongly support funding for crumbling schools. The
deterioration of hundreds of schools across the United

[[Page S6707]]

States is a disgrace. But the Republican bill provides only token help.
It offers only Band-Aids to put over leaking roofs.
Similarly, the massive capital gains tax breaks and massive estate
tax breaks are also tilted heavily to the wealthy. Largely because of
these provisions, more of the benefits of the Republican plan go to the
top 1 percent of taxpayers than go to the bottom 60 percent of the
taxpayers. Under the Republican plan those who are already well-off are
given tens of billions of dollars in unwarranted tax breaks, while
those who are struggling are ignored.
Finally, the amount of the Republican tax cuts will explode in the
years after 2002, and the deficit will increase enormously. The Center
on Budget and Policy Priorities has estimated that the cost of the
Republican proposal will increase by between $500 and $600 billion in
the 10 years following the current budget period. It will be nearly
impossible to balance the budget in those years if this Republican tax
giveaway is enacted into law.
The Republican plan is a Trojan horse for giving tax breaks to the
wealthy. If we had no tax bill, it would be better than this trickle-
down bill.
Mr. FEINGOLD. Mr. President, I intend to vote against this tax bill.
Although I voted for the budget resolution which was designed to
bring us to a balanced budget within the next 5 years, I have
consistently said that we should actually achieve a balanced budget,
before enacting any sweeping new tax cuts. As attractive as new tax
cuts may be, I think our first fiscal obligation is to eliminate the
deficit. We shouldn't ask our children and grandchildren to foot the
bill for our program spending or our tax cuts.
Having said that, let me address several other issues. If we are
going to have tax cuts before the budget is actually balanced, then we
should focus on the kinds of cuts that at least have some potential to
help enhance economic productivity and increase revenues--tax changes
that arguably will increase income and resulting revenues will help
move us toward a balanced budget.
For these reasons, I have indicated that if we are to have tax cuts
before the budget is in balance, we should limit them to changes that
will stimulate economic growth. A number of my constituents have
presented me with strong arguments that some reductions in the capital
gains and estate taxes will enhance economic productivity and growth,
and I have been willing to support capital gains and estate tax changes
if crafted in ways that target the benefits so as to stimulate growth
and economic activity. For Wisconsin, this means, in particular, that
capital gains and estate tax changes should be targeted to help family
farms and other smaller family businesses that are passed down from one
generation to the next.
Arguments for certain types of education tax cuts and child tax
credits are not as persuasive. And they become less so when they are
not available to those families who might most need such relief. If we
are going to provide tax cuts to families with children, then we
shouldn't exclude millions of working families with lower and moderate
incomes. Over 565,000 kids in Wisconsin, nearly 40 percent, live in
families that will not receive the tax credit.
Altogether, as desirable as tax cuts might be, we need to keep our
focus on balancing the budget first, then consider tax cuts. American
families will benefit enormously by the Federal Government bringing
down the deficit and achieving a balanced budget. Anything that diverts
us from that course should be resisted until we have finished the job.
Finally, if we must have tax cut legislation as part of the budget
agreement, it ought to be both fiscally responsible and fair. This bill
fails on both counts. The tax cut bill is heavily back-loaded. While
costing $85 billion over the first 5 years, the plan will cost close to
$60 billion annually once it is fully in place. That kind of exploding
cost moves us away from a balanced budget, and puts us back on the
track to rising deficits. It is ironic that those who shout the loudest
about the need for a balanced budget amendment to our Constitution are
among the biggest supporters of a tax bill that is nothing less than a
budget buster.
The tax plan also fails the test of fairness. A package of tax cuts,
even one targeted toward economic development, need not be skewed to
the wealthiest. Unfortunately, this measure is. According to the tax
watchdog group Citizens for Tax Justice, over half the proposed tax
cuts in the bill go to the top 5 percent of all taxpayers. And while
the 40 percent of families with the lowest income receive no tax
benefit, the top 1 percent receive an average benefit of nearly
$16,000.
Mr. President, let me emphasize my firm belief that our highest
priority must be to balance our Federal budget before we cut taxes. We
have come too far and worked too hard to bring our deficit down to
jeopardize that effort with a fiscally irresponsible tax cut bill. I
support the bipartisan balanced budget agreement negotiated by the
congressional leadership and the White House, but this tax package is
not consistent with the spirit of that agreement, and needlessly risks
the progress we made in the reconciliation package we just passed.
Mr. HATCH. Mr. President, I rise today to speak in strong support of
the historic tax relief plan, the Revenue Reconciliation Act of 1997,
that is before the Senate today. Change has finally come to Washington
and the fruits of that change are beginning to be realized. Who would
have thought that 3 years ago that the American people would be
receiving a $85 billion tax cut today, especially after the huge $265
billion tax increase that President Clinton pushed through in 1993?
It is a proud day for this body and for the American people to
finally witness a Congress with the courage to enact a plan to restrain
Federal spending and balance the budget. Also very important is the
savings that will be passed on to the American people in the form of
tax relief. One thing we easily forget is that tax revenues belong to
the taxpayers. This historic bill will simply return the taxpayers' own
money back to them.
Mr. President, important to this debate is how this tax package is
being received and the work that has gone into making this bill a good
piece of legislation. This bill was reported out of the Finance
Committee with overwhelming bipartisan support, and I hope that there
is overwhelming bipartisan support for its final passage. I want to
commend my colleague and chairman of the Senate Finance Committee for
the balanced, bipartisan bill he spearheaded.
Mr. President, working families in this country do not take the
paying of taxes lightly. How could they? They pay payroll taxes, income
taxes, property taxes, and other taxes. In addition to the amount of
taxes taken out of every paycheck, families reconcile what income taxes
they owe to Uncle Sam every April 15, and millions must send a check to
the government for additional taxes. The American taxpayers understand
and realize that their tax payments go to providing needed Government
benefits and to support the freedoms we enjoy. However, enough is
enough. It is time to cut the fat out of Government and lower the
Federal tax burden. And, it is time to reduce the burden of budget
deficits on taxpayers, mortgage holders, small businessmen, students,
and all others having or needing loans. It is time to stop passing off
the burden of current spending onto our children and grandchildren.
Mr. President, this tax relief plan contains significant tax cuts in
a variety of areas. I will not take the time to comment on every
provision and change in the bill. However, I would like to comment on a
few of the main areas of tax relief which I have long advocated.
First, families with children will receive a $500 per child tax
credit. Raising children in today's world becomes more expensive each
year. This $500 credit will put more money in the hands of parents to
help them better afford the high cost of raising children. It's real
money back into the bank accounts of American families.

Second, this bill would provide a number of proposals to ease the
burden of paying for college. I hear again and again about the high
cost of colleges and universities. And, I have some personal knowledge
on this point, Mr. President. I not only put myself through both
college and law school, I have also, as a father, put my six children
through college. I know the sacrifices that are necessary.

[[Page S6708]]

This tax bill would provide a tax credit for tuition expenses, a
deduction for student loan interest, and an expansion of the current
pre-paid tuition programs. And, important to elementary and secondary
school teachers, the bill contains a provision to remove from the 2-
percent itemized deduction limitation educational expenses related to
furthering the skills of the teacher. Teachers have great influence
over our children. Well trained teachers are critical to preparing our
children for the challenges of the future.
Third, this bill contains important tax cuts to stimulate economic
growth and to further the creation of jobs. I have long been an
advocate of reducing the tax on capital gains. During debate this week,
we have heard a great deal of discussion about the rich versus the poor
and who gets what out of this tax bill. Let me make it clear that
everybody benefits when jobs are created through economic growth. A
capital gains tax cut creates jobs and economic growth. Government
investment is limited in what it can do to help people economically.
Encouraging private sector investment will foster the most efficient
and effective ways to better the economy. I firmly believe that the
capital gains tax relief in this bill is the most important thing we
can do for economic growth in this country.
Expanding an existing business, starting a new venture, or bringing a
new invention to market requires capital investment to make happen. Tax
policy has a tremendous impact on the amount of capital investment.
Under the current law, gains from capital investments are taxed twice,
once when the income is earned and again when that income is
distributed to the shareholders. Cutting the capital gains tax rate
will encourage more investment which will translate into the creation
of more jobs. This change is absolutely critical to maintaining a
strong economy well into the future.
I am also pleased to see relief from the death tax in this bill.
Nowhere is the damage of onerous taxation more evident than our current
estate tax. It is an inefficient tax that really should be abolished.
Families should not have to face a tax bill that forces the involuntary
sale of assets shortly after putting a loved one to rest. I hope that
we can increase exemption from this onerous tax as quickly as possible.
Mr. President, another critically important provision in this bill is
the $8 billion in additional money for children's health insurance.
This is important for the most vulnerable of our citizens--low-income
children. The future of this country lies with our children. We cannot
ignore the gap in our health care system that does not currently
provide vision or auditory screening, or other preventive health care.
The provisions adopted by the Finance Committee, and ratified by the
full Senate by an overwhelming vote, are significant and will help
address these yet unmet needs in a responsible manner. I applaud my
colleagues for their support of this important program.
Mr. President, there are a number of other tax relief provisions in
this bill and also many other tax simplification provisions that are
very important. I personally wish we could have done more in many of
these areas.
But, the fact that we are passing this legislation today, and the
promise of the President that he will sign it into law, means that the
bill has been a bipartisan effort. As such, it is a compromise and is
not perfect from any one Senator's point of view. If you polled all 100
Senators, I am sure each of us would mention provisions we would like
to have written differently.
There were a number of amendments offered to this bill that I support
and would have liked to vote for. However, when anyone participates in
a negotiation and becomes a party to an agreement, he or she cannot
willy-nilly support changes to that agreement just because you happened
to like someone else's idea better. It stands to reason that you cannot
persuade others to compromise if they cannot expect your adherence to
whatever agreement is reached. I gave my word to Chairman Roth and to
my colleagues on the Finance Committee to maintain the integrity of the
compromise bill that we passed out of the Finance Committee on a strong
bipartisan basis. I am also constrained from voting to further increase
the cigarette tax even though it could be used to finance laudable
objectives in childrens health or to increase the deduction for health
insurance premiums paid by those who are self-employed.
Of course, there are also some provisions in this bill that I am not
enthusiastic about and would cheerfully drop were they not part of the
agreement.
But, taken as a whole, this tax package is a good mix of tax relief
provisions that will go a long way to lower the average American
families' tax burden. This is an historic piece of legislation, and I
am proud to support its passage.
Mr. BINGAMAN. Mr. President, I rise today to comment on the tax bill
we are debating, S. 949, the Revenue Reconciliation Act of 1997. This
bill is not the bill I would have preferred if I had written all of the
details, but it has many redeeming sections which I think do benefit
New Mexico and the Nation as a whole.
I want very much for New Mexicans to get needed tax relief. We have a
strong economy and are within reach of a balanced budget. It does seem
to me that the tax burden of many New Mexicans and others is higher
than it needs to be--and while this is not structured the way I would
have preferred it--I will support final passage of S. 949 because it
does move us further in a positive direction, than it does negative.
This bill expands IRA's in a way in which nearly 90 percent of our
working population will be eligible for these accounts, in contrast to
just 70 percent today. Also, this bill provides both capital gains and
estate tax relief, phased in in incremental steps, but nonetheless
important to the overall investment climate of the Nation. I hope that
a great portion of that investment and economic activity gets directed
toward and takes place in New Mexico.
This bill contains about $32 billion in education provisions which
will be of benefit to many New Mexicans, particularly those who need
support for college tuition. In addition, over 45 percent of New
Mexico's families paying taxes of $1,500 or more will be eligible to
take advantage of the HOPE scholarship. And while I would have
preferred that this figure be far higher, approximately 51 percent of
dependent children in New Mexico will be eligible for some portion of
the per child tax credit. Another important accomplishment in this bill
is that it provides resources to help cover child health insurance for
the 10.5 million uninsured kids in America by raising the tobacco tax
by 20 cents per pack.
There are other provisions in S. 949 that are worthy of support
including permanent extension of the tax credit for employer provided
educational assistance which many New Mexican workers and firms have
very much wanted. This bill also provides for an exemption from the 2
percent miscellaneous work provision of the Tax Code for hard-working,
dedicated teachers who spend their own money on education technology
materials and who should be able to fully expense these costs on their
tax returns.
However, this bill is far from perfect. S. 949, which provides for an
$85 billion net tax decrease, does not provide for the kind of
distribution of benefits across our society that I would have
preferred. Although the Finance Committee did a far better job of
making the tax cuts fairer than did the House Ways and Means Committee,
I would have preferred the Democratic alternative which was offered
yesterday by Senator Daschle.
The bill we are passing today--and which I plan to support on final
passage--still hands the lion's share of tax relief to the wealthiest 1
percent of Americans, more than the combined lower 60 percent will
receive. By contrast, if we had passed the Daschle bill, working
families would have received almost twice the tax relief provided in
the Finance Committee plan.
Furthermore, the Democratic proposal had many targeted tax relief
measures which would have done much more for small businesses and small
farms than the Republican bill achieves. In education, the Democratic
amendment would have provided working families more opportunities to
help educate their children, rebuild schools and send their children to
college.
Perhaps most importantly, the Democratic bill was the more fiscally
responsible of the two alternatives.

[[Page S6709]]

One of my major concerns about S. 949 is that the backloading of
estate tax provisions, capital gains provisions, and particularly IRA
provisions will balloon the budget deficit enormously just after we
finally achieve the discipline to bring the Nation's spending and
income into balance.
Let me explain a bit about my concern about the IRA provisions. I
completely support the notion that the Nation needs more savings. This
will help generate more capital for long-term investment and growth.
But I object to allowing only the wealthiest in our society to have the
tax incentives and tax havens to save. We should provide incentives
across the board--and make sure that all sectors of our society are
getting some degree of retirement savings in place. This bill does not
do this. In fact, this legislation is a radical departure from our
current retirement savings policy which at least purports to establish
a level playing field for both high income and low income workers.
Unfortunately, the Finance Committee tax proposal contains two IRA
provisions which are at fundamental odds with each other and represent
the Cain and Abel of retirement savings policy. On one hand, the bill
makes an important contribution to strengthening the national savings
system by doubling the income eligibility for deductible IRA's. The
proposal makes deductible IRA eligibility available for 90 percent of
the population instead of the 70 percent now eligible.
Under this better side of the S. 949, deductible IRA's will be
available to everyone with less than $100,000, joint filers, of income.
And as is the case with current law, even those with incomes above
$100,000 can still make deductible IRA contributions, as long as they
have no other employer-sponsored pension plan.
It is also important to understand that under current law, people who
have employer-sponsored retirement plans can still make nondeductible
contributions to IRA accounts. These people can put an extra $2,000 a
year away so that this money can accrue and compound tax-free until
retirement. This tax-advantaged savings opportunity provides
significant benefits to those who make after tax IRA contributions. So
far so good.

But Senator Roth's IRA Plus proposal, in contrast to the IRA
expansion provisions, is a bad step for us to take. A radical departure
from past retirement savings policy, IRA Plus overwhelmingly benefits
the rich. It also creates a slippery slope towards tax-free havens for
other retirement programs and blows a very large hole in the Federal
budget deficit in future years. The fact is that because tax advantages
in the other Roth provisions are available to both those under $100,000
income levels as well as those at any income level who don't have an
employer-sponsored pension plan, only those above $100,000 income
levels and who actually have employer-sponsored plans benefit from IRA
Plus.
Because all distributions from these IRA Plus accounts are tax free,
they provide a certain group of wealthy savers a home grown version of
a Swiss bank tax haven. If these IRA Plus accounts are established,
there is no doubt that they will be a terrific deal for those who
participate. But it's not fair and not good policy to provide a tax
windfall to the rich and do nothing for those who are struggling to
save smaller sums; those less wealthy taxpayers will continue to pay
tax on any distributions.
Furthermore, IRA Plus accounts create a troublesome benchmark vis a
vis other savings vehicles. It is reasonable to ask that if IRA Plus
accounts are tax free, then why not 401(k)'s or regular IRA's or the
Simple Plan or corporate defined benefit programs? It would be terrific
if all savings vehicles were tax free, but the fact is that the IRA
Plus program alone--given the tremendous backloading in it--will blow a
huge hole in the budget deficit in future years.
While the IRA provisions in the Finance Committee tax bill start out
costing just $3.3 billion in the first five years, the cost surges to
$20.5 billion in the next five years and then to an estimated $88.5
billion in the following ten years. Most of this backloading comes from
the establishment of IRA Plus
accounts. Furthermore, the irreversibility of this backloading will tie
the Nation's hands just as the crush of retiring baby boomers forces
very real costs on the Federal Government.
We should think very carefully about the consequences of setting up
these IRA Plus accounts. I very much hope that when this bill goes to
conference, the conferees will tread carefully and will reconsider this
very troublesome provision.
I have other concerns including the signals that I think are
being sent to hard-working New Mexican families that you have to have a
high level of income and children to fully qualify for the child tax
credit we are providing in this bill; 70 percent of New Mexico tax
filers report less than $30,000 in annual income, 45 percent have less
than $15,000 income. It is obvious that many, many New Mexico children
will not be able to benefit significantly from the child tax credit.

Many here attempted to offer amendments which I supported and which
would have made the $500 per child tax credit refundable against
payroll taxes; or in a different approach, would have allowed tax
filers to get their full EITC credit and then figure the per child
credit. Either of these would have ensured that millions more children
around the Nation and more than 250,000 New Mexico children would have
benefited from this provision.
Overall, S. 949 delivers a better package of education, health, and
child care spending initiatives and various tax relief provisions than
the House bill. I wish we had done better and hope that the conferees
will struggle to produce an even better bill than this, rather than
dumbing this down to many of the worst provisions in the House
companion bill. I yield the floor.
Mr. REED. Mr. President, I rise to express my concerns with the tax
bill passed by the Finance Committee, and to express my support for the
Democratic alternative. I believe the Finance Committee bill is
seriously flawed, and will put us on a path to exploding deficits,
rising inflation, and future economic hardship. In a time when we are
asking our seniors to absorb $115 billion in Medicare cuts, I think it
is irresponsible to enact the large, across-the-board tax cuts that are
contemplated in this legislation--tax cuts that will add to the pain of
balancing the budget by the year 2002.
Of particular concern is the fact that these tax cuts will
disproportionately benefit the wealthiest Americans who have already
benefited from the unprecedented performance of our economy and stock
market over the last several years. Specifically, 42.8 percent of the
tax cuts will go to the top 10 percent of income earners, those who
earn more than $120,000. Meanwhile, only 2.7 percent of the benefits
will go to the bottom 40 percent of hard-working Americans. To continue
this gravy train for the well-to-do, while ignoring the economic
anxieties faced by middle and lower income Americans, is unfair.
Nevertheless, the Finance Committee tax bill is loaded with breaks for
the wealthiest Americans, leaving the average taxpayer holding the bag.
Perhaps most illustrative of this point are three of the plan's
largest tax cuts--the capital gains, individual retirement accounts
[IRA's], and estate tax provisions. The Joint Tax Committee has
estimated that three-quarters of Americans receiving capital gains
income have household incomes over $100,000. Similarly, only 1.6
percent of estates are valued high enough to qualify for estate taxes.
Finally, increases in the IRA income limitations will benefit only the
top 30 percent of taxpayers. As laudable as some of these items are,
their combination, without targeting, skews this bill to favor the
affluent over middle-income Americans.
Beyond favoring the wealthy, the cost of these tax cuts will
ultimately threaten the progress we have made on reducing the deficit,
which is at its lowest point as a percentage of gross domestic product
[GDP] since 1974. This is because the costs of the tax cuts, which are
relatively low in the early years, will explode in later years outside
of the budget window. For example, from 1997 to 2002, the combined
revenue loss of the capital gains, estate tax, and IRA provisions is
$4.3 billion. However, the revenue loss from these provisions rises
dramatically between 2003 and 2007 to $68.7 billion. In 2007, the
combined costs of the capital gains, IRA, and estate tax provisions
grow to

[[Page S6710]]

$18.2 billion. This is 25 times the average annual cost of these
provisions of $720 million, as indicated in the Joint Tax Committee
distribution tables for 1997 through 2002 for the Republican tax bill.
In addition, cuts in the capital gains tax rate will likely generate
a flurry of unproductive economic activity that may produce an
unwelcome side effect--inflation. Because there are no requirements for
reinvestment, a significant share of the capital gains realized will
likely be consumed. This increased consumption will put upward pressure
on prices and fuel the fires of inflation that we have fought so hard
to extinguish.
I am supportive of the Democratic alternative because it contains
targeted capital gains tax cuts aimed at productive, long-term
investment and savings in areas that will best-serve our economy. For
example, the bill provides a capital gains reduction for owners of
small and startup businesses, which represent the most dynamic sector
of the American economy. In addition, the Democratic alternative
eliminates IRA provisions in the Finance Committee bill that will lead
to dramatic cost increases over time. Moreover, the Democratic bill
provides estate tax relief in a manner that will benefit true family-
owned businesses and farms that continue to be operated by family
members.

The child tax credit is yet another example of the distributional
unfairness of the Finance Committee legislation. Because the credit is
nonrefundable, many middle- and low-income Americans will be unable to
take advantage of the child tax credits. It has been estimated that
nationwide, 47 percent of all dependent children will be completely
ineligible for the $500 tax credit because their incomes are too low.
In my State of Rhode Island, almost 141,000 children, or 46 percent of
the dependent children in the State will be ineligible for the credit
according to Citizens for Tax Justice.
The fact that almost half of this Nation's children will be denied
the tax credit is of great concern, and further reinforces my support
for the Democratic tax alternative, which goes a long way toward
solving this problem. The Democratic alternative improves the overall
distribution of the tax cut by making the child credit refundable
against federal payroll taxes. This is significant because most of the
families that would otherwise be ineligible for the credit pay far more
in payroll taxes than they do in income taxes. The Democratic
alternative would also establish an income limitation on the tax credit
to target the benefits to low- and middle-income families that truly
need the assistance.
Mr. President, in these times of economic prosperity, we can afford
to, and indeed we have an obligation to invest in priorities such as
education that will have a positive impact on America's future. That is
why I have been a strong supporter of the HOPE scholarship tax credit
proposed by the President. While I applaud the committee for including
education tax credits in their bill, I am concerned about reductions
the committee has made in the size of the credit, which will limit its
usefulness to many students. For this reason, I believe we should look
to the Democratic alternative which allows for the full HOPE credit to
be used by students for the first $1,000 in tuition expenses.
Additionally, the Democratic alternative establishes a 20 percent
tuition deduction that can be used after a student ceases to be
eligible for the HOPE credit. Together, these tax credits provide the
type of meaningful assistance that many middle-class students will need
in order to meet the financial demands of postsecondary education.
Also, the Democratic alternative addresses the problem of crumbling
schools that threatens our education system at the most fundamental
level--elementary and secondary grades. It has been reported that in
order to repair the costs of this country's aging schools, we will have
to spend at least $4.8 billion. The Democratic alternative takes a step
toward addressing this problem by establishing a program to allocate
tax credits among the states for the purpose of repairing and
constructing school facilities. We cannot hope to improve access and
opportunity to higher education, without first ensuring that our
elementary and secondary schools provide a physical environment that is
conducive to learning.
Although hailed as the biggest tax cut since the Reagan era, the
Finance Committee bill is perhaps a prelude to the biggest tax increase
in our history. This is because the bill is loaded with gimmicks that
reduce its costs in the early years, and will result in an exponential
rise in costs beyond the 5 year budget window. Assuming that we reach a
balanced budget by 2002, this bill will make it virtually impossible to
keep our budget in balance, without raising taxes. In addition, the
bill assumes that the U.S. economy will remain strong in the future--an
assumption that flies in the face of the business cycle. An economic
downturn would dramatically increase the costs and eliminate the hope
of a balanced budget.
The Finance Committee bill will also help those Americans who are
least in need of help. The capital gains tax cuts, estate tax cuts, and
many of the changes to IRA's will benefit those Americans who have
shared most in the economic growth of recent years. I question how we
can afford to offer these tax cuts, while asking seniors to pay more
for Medicare.
Mr. President, as we debate this bill, I ask my colleagues to
consider the Democratic tax alternative. This amendment will provide
for a fair distribution of the tax cuts and benefit a greater number of
Americans. The amendment will eliminate the fiscal time bombs in the
Finance Committee bill that will explode after 2002 and threaten our
progress toward a balanced budget. Finally, the amendment rightly
focuses on the targeted investments necessary to keep our country
moving forward into the 21st century.
Mr. LIEBERMAN. Mr. President, I rise to discuss three provisions of
the Revenue Reconciliation Act of 1997. I begin by congratulating my
colleagues on the Senate Finance Committee for their efforts on this
bill. They have worked hard to craft legislation that is forward
looking and sensitive to the needs of our economy, working Americans,
and our children. For the next few minutes, I would like to highlight
several provisions of the bill that I believe are particularly
important to our national economy and my State of Connecticut and are
issues that I have supported and worked on over the years.

economic growth and u.s. competitiveness in a global economy

The Revenue Reconciliation Act of 1997 is a timely piece of tax
legislation. It comes at a moment when our economy is in the midst of a
transition to one that is more global and outward looking, more
competitive, and more innovative. American companies and workers,
whether they are in manufacturing, high-technology, or service
industries, are more dependent on the world economy than ever before.
It is with this assumption that we must consider our economic future.
Today in this new global economy, more Americans are taking part in
employee ownership programs than ever before. Employees increasingly
have a stake in the performance of their company and are sharing in its
growth. As a result, our workers are directly benefiting from the
dynamic economic expansion that is sweeping across our land. Our
economy is once again being driven by aspirations for a better living.
This bill represents an understanding of our new economy and the
aspirations of working Americans. It understands that education is the
key to social mobility and economic security; it understands that small
businesses are the backbone of our economy; it understands that
increased savings and investment means greater independence and growth;
and it understands that urban renovation means enlarged opportunity. It
is a bill that sets our economy on a sound footing for the next
millennium.

kidsave

Let me now turn to some of the specific provisions that I believe are
at the heart of this tax legislation and the reasons why I will support
this bill. First, I am pleased that my colleagues have included in the
Revenue Reconciliation Act of 1997 a child tax credit for children
under age 17. This provision is a modified version of a proposal
Senator Kerrey of Nebraska and I first discussed in the 104th Congress.
The inclusion of Kidsave reflects forward

[[Page S6711]]

thinking and, according to a recent New York Times editorial, ``a
clever way to convert a pro-consumption tax cut * * * into a pro-
savings tax cut.'' I congratulate Senators Kerrey and Breaux and their
colleagues from both sides of the aisle on the Finance Committee for
their work on this proposal.
The key word here is pro-savings. At a time when one of our greatest
challenges is how to create economic opportunity and wealth for the
working families of this country, I believe Kidsave helps us meet that
challenge in an affordable, responsible way. If there is going to be a
tax credit to help families with children, I believe there is no better
way to provide that help than to offer parents the opportunity to
ensure a sound financial future for their children.
One additional advantage of Kidsave should be noted, although it is
harder to quantify at this time. This is the effect of encouraging
Americans to save. The ethic of thriftiness seems to have been lost in
recent decades, replaced by a credit card mentality. We would compound
our problems if we pass such bad habits on to future generations.
Kidsave can help us turn the tide of indebtedness into a groundswell of
savings and can transform our whole attitude toward money and how to
use it to best advantage. That will yield incalculable dividends for
our nation down the road.
Kidsave will help our economy today by creating a pool of savings
available for investment. As you know, savings and investment rates in
the United States are at historic lows: our household savings rate is
4.6 percent of disposable income, compared to Japan's 14.8 percent and
Germany's 12.3 percent. Under the provisions of the bill, parents will
have the option of depositing $500 into an IRA-like account for
children from birth to age 13, and be required to direct $500 into an
IRA from age 13 to 16. This money will serve as an education fund for
individual children, as well as a long-term retirement account; it will
also provide investment capital for our economy. Most importantly,
unlike any other proposal that has come before, Kidsave gives our
children a tangible, financial head start on the rest of their lives.

capital gains

I am also encouraged that the drafters of the Revenue Reconciliation
Act of 1997 decided to include broad-based capital gains cuts and
targeted cuts directed toward small businesses. The bill calls for
reducing the top rate from 28 percent to 20 percent for the highest
earners and down to 10 percent for more modest household incomes. This
decision too reflects a forward-looking perspective on our economy. I
was pleased to cosponsor similar legislation with Senator Hatch earlier
this year.
In today's global economy, small businesses and start-ups must rely
on investors willing to take a risk on their venture. And in today's
financial markets, investors are not only the wealthy, but include all
working Americans. As a result, the benefits of this capital gains cut
will not flow just to people of wealth. Anyone who has stock, who has
money invested in a mutual fund, who owns a home, who has a stock
option plan at work, has a stake in capital gains tax relief. According
to the provisions included in this bill, homeowners will now be able to
exempt up to $500,000 in gains from the sale of their principal
residence. In addition, $1.5 million in assets of a family business
will be exempt from estate taxes. All of this means that millions and
millions of middle-class American families stand to benefit from this
bill.
Small businesses will also particularly benefit from the provision in
this bill. In a country where small businesses comprise a growing
percentage of GDP, it is critical that their economic growth is not
stifled by limited capital, but encouraged through greater investment.
The Revenue Reconciliation Act of 1997 increases the size of an
eligible corporation for additional favorable capital gains treatment.
It also cleans up some of the implementation problems from the 1993
capital gains legislation for smaller firms which I strongly supported
at that time. This means that the thousands of smaller companies and
start-ups will attract more investors and capital. This will be
especially helpful in the capital intensive high-technology and
biotechnology industries where much of the growth in our economy is
today.

brownfields

I am also pleased to see that there is a tax relief provision for
restoring brownfields, abandoned commercial and industrial properties
believed to be environmentally contaminated. The Revenue Reconciliation
Act will provide clear and consistent rules regarding the Federal tax
treatment of certain environmental remediation expenses. This too is an
issue that I have supported for some time. In fact, earlier this year,
I advocated the restoration of brownfields with Senators Abraham and
Moseley-Braun.
In a perfect world, I would like the clean-up of all brownfield sites
to begin tomorrow. However, revenue constraints preclude us from doing
so. But we do have to start somewhere and what better place to start
than Empowerment Zones and Enterprise Communities, areas that have been
designated as economically distressed. These are arguably the areas of
this country that are most in need of economic development. And that is
precisely what this brownfields tax incentive is designed to do--bring
economic development to the places that need it most. If this incentive
works in our most economically distressed areas, I hope this Chamber
will work to have this incentive cover a broader range of areas in the
future.

conclusion

In closing, I would like to encourage my colleagues to vote for the
Revenue Reconciliation Act of 1997. It is a fair and sensible bill that
is pro economic growth and pro-job creation. At a time when we are
facing many economic challenges, this bill helps our companies and
workers more effectively compete on the global economic stage. But more
importantly, it is a bill that will broaden educational opportunities
for our children and promote economic security for their retirement.
Mr. BRYAN. Mr. President, I supported this compromise legislation in
the Senate Finance Committee, and I intend to support its passage on
the floor as well. While there are many aspects of this legislation
which I believe could be improved, I applaud Chairman Roth for his
efforts to produce a bipartisan, consensus bill that the great majority
of the members of the committee could support.
One of the areas where I believe the bill does not go far enough in
correcting flaws in the House Ways and Means bill, however, relates to
the treatment of investment in real estate. Since 1963, so-called real
estate depreciation recapture resulting from straight line depreciation
has been provided the same tax rate as other forms of capital gains.
Under current law, this rate is 28 percent. Under the House Ways and
Means bill, however, an unfair differential is created between the
general capital gains rate, which is capped under the bill at 20
percent, and the tax rate applied to depreciation recapture, which is
set at 26 percent.
Many members of the Senate Finance Committee expressed serious
concerns with this inequitable treatment of real estate investment, and
significant efforts were made during the committee's consideration of
this bill to provide equal treatment for depreciation recapture.
Unfortunately, revenue concerns limited our ability to provide the 20
percent rate for depreciation recapture, and, in the end, the committee
agreed to lower the rate for depreciation recapture to 24 percent.
While a better result than the House Ways and Means Committee's 26-
percent rate, the 24-percent rate in the Senate Finance bill still does
not place real estate investments on an equal footing with other types
of investment.
I urge the leadership of both the Senate Finance Committee and the
House Ways and Means Committee to reconsider this issue, and, during
conference, to restore equal treatment for real estate investment. At a
minimum, I urge the conference committee to resist any effort to
increase the tax rate for depreciation recapture any higher than the 24
percent included in the Senate bill.
Mr. BAUCUS. Mr. President, I rise in support of the tax relief
legislation before the Senate.
This is a complex bill. Chairman Roth has done a superb job in
working with a vast range of issues and many different groups of
taxpayers to produce a generally good bill. And to explain why, I will
start by putting

[[Page S6712]]

numbers aside and reviewing the broad principles our tax policy should
reflect.
First, our tax policy should pay the bills.
Second, it should be simple and predictable.
Third, it should be fair.
Fourth, it should promote growth.
And fifth, it should be as low as possible.
Let's begin with the first. We need to pay the bills. To take
Alexander Hamilton's words from Federalist 30, government must:

raise troops, build and equip fleets * * * [and pay] for
support of the national civil list; for * * * debts
contracted, or that may be contracted; and, in general, for
all those matters which will call for disbursements out of
the national treasury.

These latter disbursements now include health insurance for seniors
and the poor. Social Security checks. Highways, education, veterans
benefits, scientific research, clean air, clean water, and more.
Essential services the people want and should have.
But we also need to pay for them. And in the past the government
hasn't entirely paid for them. In 1992, our budget deficit stood at
$290 billion. But in the past five years we've done much better. This
year, the deficit will be under $65 billion--a fall of nearly 80
percent.
And this bill will take us the rest of the way. By the year 2002, it
will balance the federal budget. It will pay the bills.
Second, it will help make our Tax Code fairer. One very important
example is our large cut in the estate and gift tax.
This tax is one of the prime causes of misery for farmers and small
businesses today. These businesses hold small Montana towns and rural
counties together across the generations. And by imposing very high-tax
rates and equating land or asset values with large cash inheritances,
the estate and gift tax often force families to sell them when an owner
dies.
To cite one particular example, let me quote from a letter I received
just last week from a veterinarian who runs a small clinic in
Kalispell. He fears that:

if I grow my business any more my heirs will have to sell
it to pay estate taxes.

That fear runs from Kalispell clinics to ranches in the Judith Basin
to small businesses in every Montana town. And it extends much further.
When small businesses, farms, and ranches leave the family, their
entire neighborhoods lose something very special. It is not right, and
it is not fair.
And this bill will help us put a stop to it. It will let Montana's
family-owned farms and businesses exclude up to $1 million in farm and
business assets from the estate tax, allow 20-year installment payments
for businesses with majority family ownership, and make other reforms
that help make sure that young men and women can keep their family
businesses in the family.
Third, with respect to simplicity, this bill will mean a much
improved Tax Code in one very important area. That is international
taxation.
Today, businesses are international. Agriculture is international.
Companies in air services, entertainment, high technology and basic
manufacturing are international. They comply with Tax Codes in other
countries. They hire people all over the world. They work with
suppliers and customers in different countries. And our international
tax laws, mostly drafted in the 1970's, don't recognize this.
At that time, trade made up only about 12 percent of the
American economy. Today it is over 30 percent and growing all the time.
And tax provisions which assume that international businesses are a
rarity don't make sense any longer. They often make American companies
less competitive, and sometimes even create perverse incentives that
push firms to avoid hiring American citizens in foreign operations.

This bill will help bring our Tax Code into the 21st century. Not all
the way, but part of the way. It changes the passive foreign investment
company provisions to eliminate overlaps with other tax provisions. And
it ensures that Foreign Sales Corporation treatment applies to software
as well as other copyright works.
But I must say with some regret that on the general principle of
simplicity, this bill is not an advance.
Our Tax Code today relies on several dozen different income taxes,
payroll taxes, excise taxes, Federal Reserve deposit interest receipts,
tariffs and Customs fees, corporate taxes and user fees to make up its
$1.5 trillion in revenue.
That is confusing and complicated enough. Then add in the 135 major
tax credits, deductions, exemptions, exclusions and deferrals, totaling
over $500 billion in tax expenditures last year. And it gets even
worse.
And this bill will not improve the situation. In fact, in some
respects it will worsen the problem by adding to the diversity of tax
provisions. That's a drawback--not serious enough to devalue the bill
as a whole--but one we must frankly admit and return to in coming
years.
Fourth, the bill will help promote growth.
How can we do that? First, by promoting investment for the future.
Helping companies create new technologies, new products and new
manufacturing processes. Providing some incentives to start firms and
create jobs. And improving our basic infrastructure.
With this legislation, we do all those things.
We extend the research and development tax credit for two and a half
years.
We use targeted capital gains tax cuts as an incentive for investment
in small businesses--the sector which presents the greatest risks and
rewards, and which creates the most new jobs.
And we will directly increase our essential public investment in
infrastructure by moving the 4.3 cents per gallon in Federal gas tax
revenues from general revenues to the Highway Trust Fund.
And most important of all, we will help educate our children. Give
them the chance for college. Help them work with new technologies. Make
sure the next generation of Americans has the highest level of skills
and education in the world.
With this bill, we create a $20 billion HOPE scholarship. We create a
new deduction for interest paid on student loans. Promote life-time
learning by making the exclusion for employer-provided educational
assistance permanent.
Our legislation is not perfect on education. I believe we can and
should go further on college opportunity. But it is much better than
the status quo.
And let me make a related point. That is, with this bill we help make
sure children are ready to learn. We do this by providing $24 billion
in this bill and the accompanying entitlement bill for children's
health. Today in Montana, about 27,000 have no health insurance at all.
Millions more around the country.
That is a moral scandal and a threat to our future. Today in Montana,
a typical health insurance plan for a family of four, with a $500
deductible and a partial dental benefit--costs $5,580 a year. That is
simply out of reach for many working families.
And we have put together a package with a lot of money for States to
insure more kids. Through Medicaid, through assistance for private
insurance, or other options that fit a State's circumstances. This is
will make our country stronger and healthier in the future, and it is
the right thing to do for our kids today.
Finally, the last principle. Taxes should be low.
And this bill will make taxes lower. Over the next 5 years, it will
reduce overall taxes by $85 billion.
Small businesses will get some more capital to help them invest and
grow.
Farmers and ranchers will find it easier to pass their land on to
their sons and daughters.
Families with young children will have some more money to spend at
the movies, or in bookstores, or in contributing to charities.
Parents will find it a bit easier to send the kids to college.
That's a good thing for everyone.
In conclusion, Mr. President, this bill lives up to the principles we
should expect of our tax policy.
It will pay the bills and balance the budget.
It will make taxation fairer.
In some ways, although it could be better, it will make taxation
simpler.
It will promote growth.
And it will make taxes lower.
On the whole, it is a solid, careful, bipartisan bill. And we should
be proud

[[Page S6713]]

of it. I congratulate the chairman for his work, and I hope this bill
will get the Senate's support.
Mr. LEVIN. Mr. President, it is with disappointment that I oppose the
reconciliation bill before the Senate today. I supported the budget
agreement entered into by the congressional leadership and the
President and I supported the budget resolution passed by the Congress
last month. Both of them provided the broad parameters for a tax
reduction package. I was hopeful at that time that the package of tax
reductions worked out by the Finance Committee would be targeted to
assist working families, particularly those with children. The package
before us, however, is too regressive. It does too little to assist
working families with education expenses, and it provides too large a
tax break to those who need it least, at the expense of those who need
it most. For that reason, I supported the Democratic alternative
offered by Senator Daschle which would have provided a much larger
proportion of its benefits, more than half of the tax cut, to middle-
income families, the lowest 60 percent of wage earners. Unfortunately,
that substitute for the committee's bill was defeated.
The legislation before us is out of balance. More than 42 percent of
the benefits of its tax cut provisions go to the top 10 percent of
income earners. By contrast the lowest 60 percent, middle-income
families and below, receive less than 14 percent of the benefits. In my
view this is not equitable.
The broad based capital gains tax cuts and the reductions in the
estate tax largely benefit those among us that need it least. In
contrast, I support the education tax cuts which the President has
proposed, a $500 per child tax credit adequate to provide tax relief to
middle-income families with children, and capital gains relief for
homeowners. Also, I believe that, if consistent with deficit reduction
goals arriving at a balanced budget, that targeted capital gains relief
for long-term investments and an incremental approach to estate tax
relief should be used.
Mr. President, I am also deeply concerned that this bill may result
in large deficits in the years beyond this decade. In 1981, I opposed
the Reagan tax cut because I was convinced that it would lead to huge
deficits. We have paid dearly for the debt which resulted from that
legislation. Only now, 16 years later, do we finally have a realistic
opportunity to balance the budget once again. In 1992, the deficit in
the Federal budget was $290 billion which represented 4.7 percent of
the gross domestic product. The most recent estimate of the deficit for
fiscal year 1997 is $67 billion, approximately eight-tenths of 1
percent of the gross domestic product.
Over the 5 years from 1993 to 1998, the deficit has been reduced by
about $1 trillion from the deficit for those 5 years projected at the
time. This remarkable progress has come about in large part as a result
of the deficit reduction package which President Clinton presented in
1993, and which this Senate passed, without a single Republican vote,
by a margin of one vote, the Vice President's. We should not now, by
passing a tax bill like the one before us, head back down the road
toward a new large future deficits. That is why, I supported the Dorgan
amendment to sunset elements of the tax cut, if deficit reduction
targets were not being met, and that is another important reason I
cannot support this bill.
I know that the Senate is about to pass this bill. I hope that the
conferees, the House and Senate leadership, and the President will
engage in future negotiations which will result in a final product
which is more equitable, which does more to invest in our children
through their education, and which does not risk large deficits in the
years after the turn of the century.
Mr. KERRY. Mr. President, if one looks back in our Nation's history,
one cannot help but see numerous examples of both the great strengths
and weaknesses of representative democratic government. Compared to
other nations and societies in the world, it is more difficult for us
to hide or camouflage our mistakes to a considerable degree. If we look
closely, we can identify indicators for which we in public service
should be watchful, lest we repeat our errors.
I fear we are repeating errors we have made in the past as the Senate
passes the Revenue Reconciliation Act of 1997, and the intimately
related budget reconciliation Bill that passed earlier this week.
For all of us who are politicians and who hold or seek elective
office, it is often difficult, Mr. President, to resist the temptation
to play to the gallery--to do the popular thing. And there are few
things that get political juices flowing more readily than cutting
taxes. If one looks only skin deep, a tax cut of almost any kind looks
appealing. After all, those who benefit will be pleased to accept the
benefit. And a tax cut does not directly take anything away from
others.
As is not infrequently the case, however, an honest analysis must
look beyond that kind of ``quick-and-dirty'' first appearance. Tax
policy has two dramatic effects on the Nation and its people. It
inescapably is the determinant of the resources the Federal Government
will have to meet national needs, ranging from defending our national
security to preserving the environment to ensuring health care is
available to those who need it to managing our national parks and
forests to deterring criminal acts and identifying, pursuing,
arresting, convicting, and incarcerating those who commit crimes
against society.
Mr. President, when the Senate took up the package of two bills
produced by the Senate Finance Committee to implement the so-called
budget deal that had been negotiated by the White House and the
congressional leadership, again and again I was brought back to two
stark conclusions.
First, I was terribly disappointed that, once again, the Congress
seemed to lose sight of the original objective. We started out on this
budget track with the objective of putting in place a fiscal plan that
would take us to a balanced budget in 5 years. We knew that, in order
to do that, we would have to obtain economies in many important
Government services and programs on which Americans in all walks of
life depend. Incongruously, somewhere along the way, the urge to take
the easy way to political popularity took over, and the effort to
develop the budget deal and then the legislation to implement the
budget deal was consumed by the passion of making huge tax cuts. At a
time when we have agreed that the route to a balanced budget is so
painful that we cannot accomplish that objective in less than 5 years,
those who developed the plan and the legislation insisted that we cut
taxes by $135 billion in gross and $85 billion in net over that period.
Mr. President, a student will not even be out of elementary school
mathematics before he or she has the capacity to know that tax cuts of
that magnitude represent movement in precisely the opposite direction
to the goal of obtaining a balanced budget while not hurting our
nation's ability to meet its national needs.
I want to emphasize immediately that I am not categorically opposed
to tax reductions. To the contrary, I favor targeted tax cuts of
reasonable dimensions designed not just to slash federal revenues but
to achieve purposes that are in the Nation's interest. I was a leader
in Democratic efforts here on the Senate floor to pass a tax reduction
package--a much fairer package than the one presented to the Senate by
the Finance Committee and a package that identified clear national
interest objectives and devoted its resources to meeting those
objectives. I will have more to say about that in a moment.

Second, I was terribly disappointed when I examined the specifics of
the budget proposals to see the extent to which its benefits were
skewed to those in the highest income brackets. The past several years
have been extremely kind to the well-off in our Nation. Those who
already possessed a disproportionate share of capability, capital, and
opportunity have prospered mightily. Those who crafted this budget
package provided the greatest share of its benefits to this privileged
portion of our population. Those at the other end of the economic
spectrum--those who struggle the hardest to make ends meet, and for
whom life is far more of a challenge--would receive virtually nothing,
or nothing at all, of its benefits. The word ``unfair'' is not
sufficiently stark to adequately describe the overall effect of this
package.
For those of us who, over time, have made the hard judicious,
moderate,

[[Page S6714]]

measured choices to bring the Federal budget into balance, there is
tremendous disappointment in this outcome. When this budget process
began this year, I enthusiastically wanted to participate in the
process and support its outcome. I have long called for our political
structure to demonstrate the fiscal discipline to balance the Federal
budget, and have insisted that we do so in a way that is fair, and in a
way that recognizes the Nation's fundamental needs and does not
emasculate our Government's ability to address them. I and many others
have worked arduously to break the spiraling deficits which plagued our
Nation for a decade and to provide a solid economic foundation for our
Nation as we move into the 21st century.
We made a very important installment payment toward this goal in
1993, when Democrats in the Congress, with the leadership of President
Clinton--and without a single Republican vote in either House--passed
legislation that dramatically cut the deficit and put us in striking
range of where we find ourselves today. I have long waited for the day
when the benefits of our hard work would be as obvious as they are
today. In the four years since that action in 1993, we have witnessed
prosperity unprecedented in recent years. In five years, we cut the
deficit from $290 billion to $67 billion. Interest rates are subdued.
We are seeing the lowest unemployment and inflation rates and the
largest drop in poverty rates in a generation. Consumer confidence has
shown the greatest improvement since the Eisenhower administation and
the value of the stock market has doubled since 1993--the fastest
growth since the Second World War.
By enactment of the 1993 budget legislation, Democrats proved that it
is possible to take a fiscally responsible course toward a balanced
budget and extend health care to children, provide broader educational
opportunities, ensure the future for our senior citizens, and safeguard
our environment. This certainly is not a picture which is without its
problems, and we must address those problems. But the overall picture
is a very appealing one, indeed.
Even the possibility of the legislation before us now--a conceptually
balanced budget with tax breaks--is testament to the application of
Democratic ideals to fiscal policy. We have been successful because,
since the Great Depression, our party has stuck by the fundamental
belief that sound economic and social policy go hand-in-glove, that our
Nation is stronger when all Americans have equivalent economic
opportunity. Thomas Jefferson taught us that ours is a n ation of the
common man and enshrined this belief in one of our most treasured
documents when he wrote of the self-evident truth that all men are
created equal. Andrew Jackson echoed this creed when he restated the
party's commitment to the ``humble members of our society--the farmers,
mechanics and laborers.'' That commitment, that core set of beliefs,
is, in fact, Mr. President, the essence of the American dream and the
foundation of what has become the greatest contribution this Nation has
provided to the world's social economic history--the growth of a
vibrant middle class.

Universal economic opportunity, sound fiscal policy based on
equitable distribution of benefits and assistance to those most in
need--those are the fundamentals of Democratic economic policy. That is
the goal of the program we put in place in 1993, and that is the end to
which our fiscal policies are directed. Franklin Roosevelt reminded us
of our commitment to expanding opportunity when he said: ``the spirit
of opportunity is the kind of spirit that has led us as a nation--not
as a small group but as a nation--to meet very great problems.''
Mr. President, as Democrats, we believe that deficit reduction is a
means to an end. We believe that tax breaks are a means to an end. But,
unlike the Republicans, we do not subscribe to the callow notion that
deficit reduction is an economic policy in and of itself or that tax
breaks are an end which justify any means. We do not believe that
cutting vital programs is a courageous or visionary act. We believe
that courage lies in advancing economic opportunity: this requires
wisdom, innovation, and conscience. It is chilling that this dichotomy
of political and economic philosophy remains as obviously demarcated
today as it was 100 years ago. Yesterday I re-read the cogent
description by William Jennings Bryan of the two opposing ideas of
government. He separated the parties into those who ``legislate to make
the well-to-do prosperous and wait for their prosperity to leak through
on those below, or those who legislate to make the masses prosperous
and ensuring that their prosperity will find its way up through every
class which rests upon them.''
Mr. President, as a U.S. Senator, I have an obligation to the
constituents who elected me to represent their interests, to act on
their behalf and to present their views to this body. I cannot turn
away from the long history which has shaped my core sense of fairness,
my overarching insistence on making Government work for the common good
and the needs of my constituents--all in order to satisfy the
parameters of a political deal. Mr. President, for that reason, I voted
against the tax portion of the reconciliation bill as I voted against
the spending portion.
The problem, when distilled to its essence, Mr. President, is that
this legislation, which has been called by some the Tax Fairness Act,
would be better called the Tax Unfairness Act.
Mr. President, I have great admiration for the work of the Senator
from Delaware, Senator Roth, who chairs the Finance Committee and my
friend from New York, Senator Moynihan, who serves as that committee's
ranking member. They produced a tax bill that is improved considerably
from the gravely flawed piece of legislation passed by the House of
Representatives. But, Mr. President, without additional improvements I
cannot support it or its companion spending programs reconciliation
bill.
During the course of debate this week, we attempted to shape the
legislation so it would address more of the problems of more Americans,
and thereby become a fairer piece of legislation, but time and again we
were rebuffed by the Republican majority.
Some of my colleagues, who share many of my concerns about the bill
and my judgment that, in its current form, it neither is fair nor will
in the long run prove beneficial to our Nation, chose today to vote for
the tax bill, hoping devoutly that with the President's active
involvement in the conference committee that will convene to resolve
differences between the Senate-passed bill and the bill the House
passed earlier, a better, fairer bill will emerge and will come back to
the Senate for its approval. But I believe that the product before us
today is so flawed in such critical respects that I could not vote for
it in its current form. I join my colleagues who hope for it to be
improved in conference committee. I want to be able to vote for a bill
that provides tax reductions that will benefit Americans fairly, and
will not concentrate its benefits on those who least need them while
totally excluding those hard-working, tax-paying Americans who most
need the additional assistance.

The Democratic alternative to the Finance Committee's bill which I
joined the Democratic leader and other Democratic Senators in offering
yesterday was designed so that our education tax breaks, our capital
gains and estate tax reductions and our child credit corrected the
basic inequity found in the Finance Committee proposal: the flow of
benefits chiefly to the wealthiest Americans.
In the committee's package, nearly 43 percent of the breaks go to the
wealthiest 10 percent of Americans--those who earn more than $120,000.
In its plan, Mr. President, 60 percent of hard-working poor and middle
class Americans get only 12.7 percent of the tax breaks, while the
richest 1 percent of Americans get 13 percent of the benefits. Mr.
President, in the Finance Committee proposal, the poorest 60 percent
get only as much in aggregate as the richest 1 percent. This is a new
standard of unfairness. This is anathema to the party of Jefferson and
Jackson and Truman and Roosevelt.
During the course of the debate, I heard some of my colleagues on the
other side of the aisle justify this counterintuitive distribution by
arguing that since the rich make the most money, the rich will
necessarily benefit the most from a tax cut. But this skewed
distribution is not necessary. In our alternative, Democrats showed

[[Page S6715]]

that it is indeed possible to craft a tax package which is targeted to
those who need help and not lavish more on the rich. We designed tax
breaks which are affordable and which meet a common-sense and economic
test of basic fairness.
In the Democratic alternative, the poorest 60 percent of Americans
would have received 46 percent of the tax cuts. These are the same
Americans who receive only 13 percent of the breaks in the Finance
Committee's plan. In the Finance Committee proposal, middle class
Americans--those earning between $30,000 and $85,000--receive a scant
30 percent of the benefits. Under our plan, these middle class
Americans would have done twice as well: 57 percent of the benefits in
our plan go to hard-working, middle class Americans.
The Democratic alternative would have helped those who actually need
a tax break to raise a child, to go to college, to start a business, to
generate high-wage 21st century jobs and to grow our economy. Our
alternative was based on principles which have guided our party for two
centuries, and followed the basic economic philosophy which has served
our Nation so well since 1993.
Another feature of the Finance Committee's plan troubles me
immensely, and I believe it should trouble all Americans. According to
the computations of the Joint Tax Committee and other reputable
projections, the cost of the tax cut explodes in future years--it is a
fiscal timebomb. In the first 5 years, the cost of these inequitable
cuts is $85 billion. I believe we can afford a cut of that size and
have stated so publicly--if it is carefully structured, usefully
targeted to need and social benefit, and fairly distributed. But, Mr.
President, in the second 5 years of the Finance Committee's plan, the
cost of these cuts will escalate to $250 billion. And, in the 10 years
after that--when baby boomers will be retiring and straining Medicare
and Social Security coffers--the cost will be between $650 to $700
billion. That is exactly the type of fiscal irresponsibility we avoided
in our alternative.

I was not here in 1981 when the Congress passed a large tax reduction
bill, Mr. President. But the entire time I have served here--since
1984--the Congress has struggled to deal with the history-making
deficits and resulting all-time-high national debt that resulted from
that irresponsible tax cut. I cannot support legislation that, even if
of a lesser magnitude as this bill surely is, will have an out-years
explosive effect that will saddle Americans in future years, and their
elected representatives, with a recurrence of the deficit and debt
problems that have beset us for nearly two decades. Most destructively,
this explosion will occur just as the baby boomers are reaching
retirement age and beginning to place an unprecedented demand on
retirement and medical programs and other governmental services. It is
a looming problem universally acknowledged. Yet instead of doing
everything in our power to reduce its severity and to take gradual
steps to resolve it, we are considering and passing legislation that
will dramatically increase its dimensions, narrow the range of
solutions, and complicate the task of addressing it. That is not
leadership, Mr. President. That is folly.
In the Democratic alternative tax proposal, we attempted to reduce
the capital gains taxes in a measured way. In the past, broad capital
gains tax cuts have been used to spur economic growth when the economy
was lagging. In the past, across-the-board capital gains cuts have been
used to encourage the movement of capital into investment that would
create jobs because unemployment was high. In the past, broad capital
gains tax cuts have served as a shot of adrenaline for an ailing
economic system. But today, such emergency measures are neither needed
nor appropriate.
Mr. President, as a question of fundamental economics, there is no
justification for broad capital gains tax cuts at this time. There is
no need to expend precious budget resources to reward the wealthiest
American families for the sale of art work or Persian rugs or luxury
goods they have held for a generation.
Again, Mr. President, I am not saying that we cannot afford a capital
gains tax cut. For years, I have believed that a targeted tax break can
shape economic policy and can display economic vision. But, I ask, what
is the benefit to our economy if a wealthy American only has to pay 20
percent instead of 28 percent on the gains he accrues from selling his
yacht? Where is the economic vision in that kind of a Tax Code change?
Mr. President, there are ways to aim a capital gains tax cut--
targeted, sensible ways--to use taxation of capital to leverage growth
and job creation in those areas. That is a tax policy with vision, with
a goal, with an economic priority. The economic priority, Mr.
President, is not an across-the-board capital gains cut such as the one
presented by the Finance Committee.
The priority is a targeted tax cut in areas which could use the added
economic stimulus, such as emerging small businesses, or start-up
companies, or parts of the inner cities and rural areas which could use
the jobs. That is what we Democrats included in our tax proposal. And
that is a policy which I have fought for--along with the senior Senator
from Arkansas, Senator Bumpers and other Senators--for nearly a decade.
Mr. President, our plan would have improved on a provision we passed in
1993 by allowing a 50-percent exclusion for capital gains on qualified
small business stock held for at least 5 years. Qualified small
businesses under this proposal would be defined as having $100 million
in assets and would be start-up, small, high-technology ventures.

Our plan would have cost $10 billion--it did not break the budget in
the future like the capital gains provision in the Finance Committee
plan. Mr. President, more than 90 percent of the cost of the Republican
capital gains plan comes after 2002. To use computer terminology, Mr.
President, this is a latent virus--it will emerge full blown in later
years to exact a terrible toll on those who at that point will have the
responsbility for delivering essential services to Americans while
operating a balanced Federal budget.
Mr. President, while the Finance Committee plan does a great deal to
help wealthy Americans in its capital gains and estate tax cuts, it
does not extend the same broad-based cuts to help hard-working middle
class families raising children. Our alternative would have done more
for precisely those families who can use the help the most. And those
are the families--young families with young children--who will be doing
the most for our country in the future.
Today, Mr. President, I attempted to correct this basic inequity by
offering an amendment which would have improved the bill by
transforming the child tax credit so that it would be refundable
against payroll taxes paid by all working families. Most Americans pay
more in payroll taxes than income taxes. Income taxes have remained
stable for most Americans in the past 10 years while payroll taxes have
increased 17 percent. Allowing Americans to offset the credit against
these payroll taxes would have broadened its application to many
additional American families--hard-working families at the lower end of
the economic spectrum. This is in distinct contrast with the Finance
Committee plan under which nearly 40 percent of America's children are
excluded from the tax credit. Those 40 percent are the children of the
poorest families in the Nation.
The judgment I reached on Wednesday about the reconciliation bill
that applies to mandatory spending programs was similar and related,
Mr. President. It is painfully apparent that we must take prudent, fair
steps to restrain the growth of some of our so-called entitlement
programs so that they do not rage out of control and threaten our
ability not only to meet the needs they are designed to meet but the
host of other critical national needs to which discretionary programs
are addressed. But the objective was lost in the stampede to provide a
huge tax cut to upper-income Americans. The spending programs
reconciliation bill cut far more deeply into critical programs like
Medicare and Medicaid than was required to achieve necessary savings.
And for what purpose? To provide the cushion enabling Republicans to
increase the size of the tax cut to the wealthy by scores of billions
of dollars.
The worst part of this spending bill is the increase in the Medicare
eligibility age from 65 to 67. This will cause the

[[Page S6716]]

number of uninsured older Americans to increase substantially, moving
the United States even further away from the goal of universal health
coverage. For many seniors age 65 to 67, this will make purchasing
private health insurance unaffordable--especially those who have pre-
existing conditions. Private policies cost seniors approximately $6,000
a year, and more than $10,000 if they have any pre-existing
conditions--if they are able to get insurance coverage at all.
Mr. President, raising the eligibility age is bad policy because most
seniors do not have access to employer-provided private health
insurance now and the problem is getting worse: according to a recent
Commonwealth Fund study, the number of retirees with health insurance
from a previous employer decreased from 44 percent in 1988 to 30
percent in 1994.

Although some argue that this increase in the eligibility age is
similar to the increase in the age for Social Security eligibility that
is being phased in, Social Security still provides early retirement
benefits at age 62. Medicare, on the other hand, will not provide an
option for health care coverage for early retirees, many of whom have
not retired voluntarily. Finally, businesses correctly oppose this
provision because they realize the huge cost it will impose upon them.
Eighty major corporations and the National Association of Manufacturers
recently wrote to the Senate to ask it not to raise the eligibility
age.
I am also opposed to the $5 home health visit co-payment which was
not part of the balanced budget agreement with the President. This co-
payment will primarily hurt elderly women who need this help the most:
over half of the group who would no longer be able to afford home
health services are women age 75 and older who have incomes below
$15,000. I am also concerned that increasing the cost of home health
visits is not cost-effective because many poor seniors will be forced
into institutions at much greater public cost than continuing to stay
at home.
I also oppose the Medical Savings Accounts [MSAs] provisions in the
bill. Although the number of MSA enrollees would be limited to 100,000,
there is no reason to test MSAs beyond the study begun in the
Kassebaum-Kennedy bill. We are spending $1.5 billion through that bill
and at the very least we should wait to see the results from that study
before we authorize more demonstrations.
I am also deeply concerned about the cuts in the Medicaid Program
which is the bedrock health program for children, disabled people, and
poor seniors. The spending bill would cut $13.6 billion from the
program, the bulk of which comes from cutting payments to hospitals
that treat a large number of uninsured patients. These payments, called
Disproportionate Share Hospital [DSH] payments, are essential to many
hospitals across this country that provide health care to our poorest
citizens. Although it may be necessary to more effectively target these
funds, this funding has enabled hospitals to continue their role as an
institutional safety net for those with no other access to health care.
Mr. President, there unquestionably are some sound provisions in
these two bills. There are provisions I strongly support. But my job as
the Senator elected by the people of Massachusetts is to examine the
overall effects of the legislation the Senate considers and to
determine if, on balance, it serves the interests of the Commonwealth
and its citizens, and the people across our United States and their
interests.
I would like to support a budget package that will reach balance in
2002 since I have long advocated such a step. I would like to support a
bill that achieves economies in mandatory spending programs to put us
on a pathway toward balance. I would like to support a tax bill that
targets tax reductions to Americans who need them and that will help
create jobs and extend our current situation of economic strength. I
still hold out hope that I will be able to do so when these bills
return from conference committee.
But, sadly, they did not pass that test as they came before the
Senate for final passage, and I was constrained to vote against them.

CAPITAL GAINS

Mr. GRAHAM. Mr. President, this tax legislation, as passed by the
Senate Finance Committee, goes a long way toward assisting our Nation's
families. For example, reducing the capital gains tax rate from 28
percent to 20 percent will stimulate savings and investment. This
increased investment will, in turn, foster economic growth.
In particular, I would like to draw your attention to a provision
that will have considerable impact on our Nation's families: the
capital gains exclusion for homeowners who sell their primary
residence. Under current law, capital gains from the sale of principal
residences is subject to taxation, with two limited exceptions. First,
under the rollover provision, taxpayers can rollover gains from the
sale of a principal residence into a new residence. They can then defer
any capital gains tax--but only if the purchase price of the new home
exceeds the adjusted sales price of the old one. And to restrict this
even more, the new residence must be purchased within 2 years of the
sale of the first home.
A second exemption ties the capital gains tax to age. At age 55, a
taxpayer can exclude up to $125,000 of any accumulated gain from the
sale of a principal residence. And this is a one-time-only opportunity.
Worse yet, even this is restricted. To qualify for the exclusion, the
taxpayer must have owned the residence and used it as a principal
residence for at least 3 years during the five years before the sale.
Also, a taxpayer is eligible for the exclusion only if neither the
taxpayer nor the taxpayer's spouse has previously benefitted from the
exclusion.
Unfortunately, the very provisions which are supposed to relieve
homeowners from taxation often prevent them from making the soundest
financial decisions. Under current law, to avoid being taxed, most
people wait until they are eligible for the one-time exclusion, or they
make what may be imprudent decisions regarding the sale of their homes.
For example, many families, after their children have moved out,
would like to sell their home and buy a less expensive one. However,
the rollover provision means that they will have to pay taxes on the
difference between the profit gained on the sale of their old home and
the cost of their new home. As a result, these families often choose to
buy more expensive homes or not to sell their home at all. Mr.
President, that is not right. People should be able to move when and
where they want to, not when the tax code makes it financially
possible.
Under the legislation passed by the Finance Committee, taxpayers of
any age could exclude gain on the sale of a principal residence of up
to $500,000 for married couples filing a joint return, and up to
$250,000 for single taxpayers. To be eligible, the taxpayer must have
owned and used the home as the principal residence for at least two of
the last 5 years prior to the sale. The exclusion will generally be
available once every 2 years.
This legislation will give our Nation's families more freedom in
deciding where to live. This decision can be based on family
circumstances rather than on the Tax Code. The bill would also relieve
nearly all families of the burdensome record-keeping requirements and
constraints on decision making under current law. The impact on our
Nation's families will be tremendous, and I look forward to the
enactment of this legislation.
This bill will significantly impact our Nation's families. It will
promote investment and boost long-term economic growth. And a healthy
economy translates to increased opportunities for American families to
secure their future. Our Nation's taxpayers work hard to provide for
their families. This legislation is a chance for us to lend them a
helping hand in that task.
I thank the Chair.
Mr. BYRD. Mr. President, the halls of the Capitol have been filled
recently with cheers and rejoicings for the balanced-budget agreement
reached between President Clinton and the Congressional leadership in
May of this year. We have been told time and time again that balancing
the budget is crucial to the future of our Nation and that enacting
this budget agreement will eliminate the Federal deficit. Well, Mr.
President, I find it interesting that the reconciliation legislation
before the Senate today has nothing to do with balancing the budget.
Rather, S.

[[Page S6717]]

949, the Revenue Reconciliation Act of 1997, will bring us farther away
from our collective goal of balancing the budget by reducing revenues
some $76 billion below what they would otherwise be over the next five
years.
Mr. President, the Senate has already approved legislation this week
to balance the Federal budget. On Wednesday, June 25, the Senate
approved S. 947, the Balanced Budget Reconciliation Act of 1997.
Despite its deficiencies, that legislation provides for some $127
billion in deficit reduction over the next five years. These savings,
coupled with the $96 billion in discretionary savings provided in the
Budget Resolution, will likely produce a balanced budget in the next
five years. While I had intended to support passage of the first
reconciliation bill, I became deeply concerned about a provision in the
bill emanating from the Finance Committee that would raise the
eligibility age for Medicare from sixty-five to sixty-seven years. As
reported, the bill already included a provision to create a National
Bipartisan Commission on the Future of Medicare to study ways to
preserve and protect the Medicare program for future generations. If
the bill thus created a commission to study and propose recommendations
to protect Medicare in the future, why was the aforementioned increase
in the eligibility age included in this bill? Is that not why we are
creating the commission in the first place? Mr. President, the
important and controversial issue of raising the eligibility age for
Medicare beneficiaries should be decided by a national debate--not in
the opaque cloaking of a reconciliation bill. Thus, because of my deep
concerns about this provision on both substantive and procedural
grounds--and my general frustration with the haste and confusion with
which the Senate was considering the overall measure--I decided not to
support passage of the first reconciliation bill. However, let me
affirm that my vote against this measure in no way reflects any
unwillingness on my part to pass spending cuts to balance the budget.
Mr. President, let me now turn back to the pending matter, the
Revenue Reconciliation Act of 1997. All Senators should be aware that,
on the heels of approving a deficit-reduction plan to balance the
budget, we are about to approve subsequent legislation to weaken--and
possibly undermine--that very balanced-budget plan. I have not kept
secret my fervent opposition to this foolish idea of cutting taxes
while simultaneously trying to balance the budget. Doing so is simply
so illogical that a third-grade student, with just a pencil, paper, and
a modest knowledge of the fundamentals of mathematics, would be
sufficiently equipped to reach the same conclusion that tax cuts and
deficit reduction do not mix. I am confident that such a student would
choose, like this Senator chooses, not to include such tax cuts in a
plan to balance the budget.

Mr. President, as I stated in my remarks on the Budget Resolution
approved last month, by including these tax cuts in this balanced-
budget plan, we are with one hand digging deeper the very hole our
other hand is trying so hard to fill. We should not rely on such
ambidexterity to balance the budget. We should shelve all tax cuts
until after we firmly erase the budget deficits that have so plagued
our nation in recent years. Tax cuts were, after all, the primary
culprit for the rapid escalation in the federal budget deficit in the
1980's. It is all too easy to enact tax cuts and save the pain for
later. We have done it before, and the lessons learned from that
exercise should instruct us not to do it again.
Mr. President, traditionally, one of the most powerful arguments in
favor of tax cuts has been that they spur economic growth. I do
recognize that properly constructed tax cuts can produce some positive
economic results in certain circumstances. However, no matter how
strongly one believes that tax cuts stimulate economic growth--and
there are some in this body who unequivocally adhere to the supply-side
dogma--there can be no sound argument made now that tax cuts are
necessary to boost the economy at this time. We are currently in our
sixth consecutive year of economic growth, the stock market continues
to reach record high after record high, unemployment has just dipped
below five percent, and inflation has remained in check. Mr. President,
such a performance hardly bolsters the case that tax relief is
necessary to inject new life into our economy.
If anything, Mr. President, our current economic situation should
reinforce the notion that reducing the deficit is more conducive to
economic growth than cutting taxes. To illustrate this point, let me
remind all Senators what actions have led to four straight years of
declining deficits and to one of the healthiest American economies in
the last thirty years. According to the Congressional Budget Office,
the FY 1997 budget deficit will be approximately $67 billion, or less
than one percent of Gross Domestic Product (GDP). Just five years ago,
we were facing a budget deficit of $290 billion, or about 4.7 percent
of GDP. This considerable improvement in the fiscal order of our nation
did not occur by accident. Rather, it can be traced directly to the
passage in 1993 of the Omnibus Budget and Reconciliation Act (OBRA-93)
by the 103rd Congress and its subsequent signing by President Clinton.
That legislation combined responsible spending cuts and revenue
increases to begin the painful--but necessary--process of eliminating
the deficit. There can be no doubt of the success of OBRA-93 in
bringing down the deficit and stimulating economic growth. OBRA-93
achieved such positive economic results not by cutting taxes, but
rather by convincing financial markets that we were serious about
reducing the deficit. These markets drove interest rates downward and
consequently rewarded American taxpayers with lower interest payments
on the federal debt, as well as lower interest payments for the
purchase of a home, car, or an education.

Mr. President, even if I were convinced that we must cut taxes before
balancing the budget, I would also hope that any such proposal would
not explode revenue losses in the long term. Unfortunately, S. 949 is
flawed when judged by this standard. As reported, this legislation
includes a significant backloading of many of its tax cuts to mask
their true cost. As such, while the bill purports to reduce taxes by no
more than $85 billion over the next five years, I suspect that these
tax cuts will cost considerably more in the out years than we are being
led to believe. The Joint Committee on Taxation's estimates reveal that
the annual cost of these tax cuts would more than double between the
years 2002 and 2007--thus reducing federal revenues at the same time
our nation is preparing to face the rising entitlement costs that will
stem from the retirement of the so-called ``Baby Boomers.'' I defy
anyone to explain to me the flawed logic inherent in this proposal.
Finally, Mr. President, let me explain my views on the Democratic
alternative amendment that was offered by the distinguished Minority
Leader. In looking at the Senator's proposal, I saw that he had made a
considerable effort to ensure that these tax cuts are more fairly
distributed and that the cuts do not explode in the long term. For this
improvement, I applaud Senator Daschle and the other Members who have
worked on this proposal, which is, in this Senator's opinion, an
improvement over the pending legislation. However, I was unable to
support his amendment to this legislation because it also provided for
tax cuts prior to balancing the budget--a notion that I cannot
philosophically accept. I hope that my vote against this proposal is
not misconstrued as anything else but a determined, unyielding
opposition to tax cuts at this time.
In conclusion, Mr. President, despite my unequivocal opposition to
this pending reconciliation bill, I would like to commend the members
of the majority and minority leadership, and the Budget and Finance
Committees, who have been able to bridge the gap between the White
House and both parties in Congress to forge the budget compromise that
we have considered this week. I know how difficult such compromise can
be to reach, and, more importantly, to sustain. Nevertheless, I would
much prefer not to have seen these tax cuts being debated at this time
on the Senate floor. Such a debate is akin to arguing with your mother
on whether or not you can eat dessert before finishing your broccoli.
We may all want to eat the sweet and leave the vegetable, but we should
know better--and our mothers would surely remind

[[Page S6718]]

us so. I fear that the Senate will come to regret the action it takes
on this legislation, though only the passage of time can be the final
arbiter in this debate.
Mr. President, I yield the floor.
Mr. LOTT. Mr. President, the vote we're about to take will be one of
the most important any of us will ever cast.
The decision before us is as important as our families and as large
as the American future.
If this is not an historic moment, then it is as close to it as most
of us will ever come.
Several weeks ago, when we first reached the broad outlines of an
agreement with the President, I called it a victory, not for a party or
a person, but for the American people.
We can reaffirm that today. We listened to the American people. We
knew what they wanted us to do.
And somehow, by the grace of God and the endurance of Pete Domenici
and Bill Roth, we did it.
We set out to lower the tax burden on the American people. We did so.
In this bill, more than 75 percent of the tax breaks go to people with
incomes under $75,000.
We set out to make the Tax Code family-friendly. We did so. After far
too many years of talking about a tax credit for children, we're
finally approving one. In addition, we're making it easier for families
to save for the costs of education.
On top of that, we're expanding the availability of IRA's to
virtually all homemakers in the country. And we're easing the death tax
on family farms and businesses.
This bill rides in tandem with the Balanced Budget Act the Senate
passed 2 days ago.
That marks a turning point in the way Congress deals with the
entitlement programs that have driven our country to the depths of
indebtedness.
Even more important, it fulfills our commitment to strengthen and
preserve Medicare, not only for today's beneficiaries but for those who
will depend on that program in the years ahead.
Taken together, what the Senate and House have done this week gives
the American people the assurance of something they have not had in
three decades: a long-term balanced budget.
That, of course, is more than an end in itself. It is the surest way
to touch off a dynamic economic expansion that will make the first
years of the new century an opportunity decade.
What we have done this week, and what we do today, is more than an
exercise in bookkeeping. It is a commitment of the heart to an America
where every willing worker can find a good job, where industry and
thrift are rewarded, and where every family can aspire to a better
life.
And yet, this is not a perfect bill. I wish we could have reduced
taxes more, just as I wanted to reduce spending more in the Balanced
Budget Act.
But we had to craft both pieces of legislation through compromise and
consensus. If the American people understood everything we were up
against these last few weeks, they would be amazed that we were able to
do for them as much as we did.
This is not the end of the story. We have one hurdle left, and that
is the highest of them all.
After passing this bill, we will go to conference with the House. I
will do all I can to make that conference quick and productive.
Our hurdle--our challenge--will be to preserve the historic work of
the Senate and the House in the face of opposition, and perhaps veto
threats, from the administration.
On behalf of our entire Republican leadership, and all Senators who
will be our conferees, I want to give this pledge to the American
people:
We will go the extra mile to advance this legislation that is so
vital to you. We will do our utmost to work out disagreements with the
President.
But by the same token, we will not agree to any settlement that
denies your tax cuts or turns them into the kind of tax fiddling that
does nothing to advance opportunity and job creation.
So as we prepare the conference report on these two bills, we will
listen in good faith to anyone who speaks in good faith.
We will share credit, take blame, and let others have the spotlight.
But we are not going to yield on matters of principle.
With that in mind, Mr. President, I urge the passage of the Taxpayers
Relief Act as the Senate's Independence Day salute to the taxpayers of
America.

byrd rule list

Mr. DOMENICI. Mr. President, pursuant to section 313(b)(1)(C) of the
Congressional Budget Act, I submit a list on behalf of the Committee on
the Budget of the extraneous material in S. 949, the Revenue
Reconciliation Act of 1997, as reported.
There being no objection, the list was ordered to be printed in the
Record, as follows:

FINANCE--REVENUES
------------------------------------------------------------------------
Provision Comments/Violation
------------------------------------------------------------------------
Senate

Sec. 702.......................... Establishment of Intercity Passenger
Rail Fund. Byrd rule (b)(1)(A):
Produces no change in outlays or
revenues.
Sec. 704.......................... Deposit general revenue portion of
highway motor fuels taxes into
highway trust fund. Byrd rule
(b)(1)(A): Produces no change in
outlays or revenues.
Sec. 706.......................... Require study of feasibility of
moving collection point for
distilled spirits excise tax. Byrd
rule (b)(1)(A): Produces no change
in outlays or revenues.
Sec. 708.......................... Codify BATF regulations on wine
labeling. Byrd rule (b)(1)(A):
Produces no change in outlays or
revenues.
Sec. 731.......................... Delay penalties for failure to make
payments through EFTPS until after
6/30/98. Byrd rule (b)(1)(A):
Produces no change in outlays or
revenues.
Sec. 769.......................... Combined employment tax reporting
five-year demonstration project for
Montana. Byrd rule (b)(1)(A):
Produces no change in outlays or
revenues.
Sec. 772.......................... Safety net for marginal oil and gas
production when crude oil reference
price is below $14. Byrd rule
(b)(1)(A): Produces no change in
outlays or revenues.
Sec. 777.......................... Modification to eligibility criteria
for designation of future
enterprise zones in Alaska or
Hawaii. Byrd rule (b)(1)(A):
Produces no change in outlays or
revenues.
Following provisions are from the Simplification section of S. 949
Sec. 1023......................... Due date for furnishing information
to partners of large partnerships.
Byrd rule (b)(1)(A): Produces no
change in outlays or revenues.
Sec. 1025......................... Treatment of partnership items of
individual retirement accounts.
Byrd rule (b)(1)(A): Produces no
change in outlays or revenues.
Sec. 1083......................... Repeal of authority to disclose
whether prospective juror has been
audited. Byrd rule (b)(1)(A):
Produces no change in outlays or
revenues.
Sec. 1084......................... Clarification of statute of
limitations. Byrd rule (b)(1)(A):
Produces no change in outlays or
revenues.
Sec. 1109......................... Adjustments for certain gifts made
within three years of decedent's
death. Byrd rule (b)(1)(A):
Produces no change in outlays or
revenues.
Sec. 1113......................... Authority to waive requirement of
United States trustee for qualified
domestic trusts. Byrd rule
(b)(1)(A): Produces no change in
outlays or revenues.
Sec. 1212......................... Authority to cancel or credit export
bonds without submission of
records. Byrd rule (b)(1)(A):
Produces no change in outlays or
revenues.
Sec. 1213......................... Repeal of required maintenance of
records on premises of distilled
spirits plant. Byrd rule (b)(1)(A):
Produces no change in outlays or
revenues.
Sec. 1215......................... Repeal of requirement for wholesale
dealers in liquor to post sign.
Byrd rule (b)(1)(A): Produces no
change in outlays or revenues.
Sec. 1217......................... Use of additional ameliorating
material in certain wines. Byrd
rule (b)(1)(A): Produces no change
in outlays or revenues.
Sec. 1220......................... Authority to allow drawback on
exported beer without submission of
records. Byrd rule (b)(1)(A):
Produces no change in outlays or
revenues.
Sec. 1231......................... Authority for IRS to grant
exemptions from excise tax
registration requirements. Byrd
rule (b)(1)(A): Produces no change
in outlays or revenues.
Sec. 1232......................... Repeal of expired provisions. Byrd
rule (b)(1)(A): Produces no change
in outlays or revenues.
Sec. 1244......................... Repeal of expired provisions. Byrd
rule (b)(1)(A): Produces no change
in outlays or revenues.
Sec. 1252......................... Redetermination of interest pursuant
to motion. Byrd rule (b)(1)(A):
Produces no change in outlays or
revenues.
Sec. 1305......................... Elimination of paperwork burdens on
plans. Byrd rule (b)(1)(A):
Produces no change in outlays or
revenues.
Sec. 1307......................... New technologies in retirement
plans. Byrd rule (b)(1)(A):
Produces no change in outlays or
revenues.
------------------------------------------------------------------------

Mr. LOTT. Mr. President, the next vote will be final passage. It will
be the last vote of the week before the Senate adjourns today. I will
file cloture on the motion on the DOD authorization bill. That cloture
vote will occur on Tuesday, July 8, at 2:15. That will be the next
vote. Senators that have amendments to submit are urged to do so by
Monday, July 7.
Once again, I want to thank all the Senators for their cooperation. I
think this has been a historic week. I appreciate the leadership from
the chairman of the committee and the ranking member. Thank you all
very much.
Mr. ROTH. Third reading.
The PRESIDING OFFICER. The question is on the engrossment and third
reading of the bill.
The bill was ordered to be engrossed for a third reading and was read
the third time.
Mr. ROTH. I ask unanimous consent that the Senate proceed to the
House companion bill, H.R. 2014, and all after the enacting clause be
stricken, the text of the Senate amendment be inserted, which includes
amendment 449 which was inadvertently dropped, the bill be advanced to
third reading, and the Senate proceed to passage of H.R. 2014, as
amended.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ROTH. I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.

[[Page S6719]]

The PRESIDING OFFICER. The question is, Shall the bill pass?
The yeas and nays have been ordered.
The clerk will call the roll.
The legislative clerk called the roll.
Mr. FORD. I announce that the Senator from Hawaii [Mr. Inouye] and
the Senator from South Carolina [Mr. Hollings] are necessarily absent.
I further announce that, if present and voting, the Senator from
Hawaii [Mr. Inouye] would vote ``aye.''
I further announce that, if present and voting, the Senator from
South Carolina [Mr. Hollings] would vote ``no.''
The result was announced--yeas 80, nays 18, as follows:

[Rollcall Vote No. 160 Leg.]

YEAS--80

Abraham
Akaka
Allard
Ashcroft
Baucus
Bennett
Biden
Bingaman
Bond
Boxer
Breaux
Brownback
Bryan
Burns
Campbell
Chafee
Cleland
Coats
Cochran
Collins
Conrad
Coverdell
Craig
D'Amato
Daschle
DeWine
Dodd
Domenici
Dorgan
Enzi
Feinstein
Frist
Gorton
Graham
Grassley
Gregg
Hagel
Hatch
Hutchinson
Hutchison
Inhofe
Jeffords
Johnson
Kempthorne
Kerrey
Kohl
Kyl
Landrieu
Lautenberg
Leahy
Lieberman
Lott
Lugar
Mack
McCain
McConnell
Mikulski
Moseley-Braun
Moynihan
Murkowski
Murray
Nickles
Reid
Roberts
Rockefeller
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Specter
Stevens
Thomas
Thompson
Thurmond
Torricelli
Warner
Wyden

NAYS--18

Bumpers
Byrd
Durbin
Faircloth
Feingold
Ford
Glenn
Gramm
Grams
Harkin
Helms
Kennedy
Kerry
Levin
Reed
Robb
Sarbanes
Wellstone

NOT VOTING--2

Hollings
Inouye

The bill (H.R. 2014), as amended, was passed, as follows:
[H.R. 2014, as amended and passed, can be found at the end of the
Senate proceedings for today.]
Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
Mr. ROTH. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. LOTT addressed the Chair.
The PRESIDING OFFICER. The majority leader is recognized.

ORDER FOR MORNING BUSINESS

Mr. LOTT. Mr. President, I ask unanimous consent that following the
wrap-up of the chairman and ranking member, there be a period for the
transaction of morning business with Senators permitted to speak
therein for up to 5 minutes each. I know there are some Senators here
wishing to speak. I don't know if the Senators have any wrap-up that
they need to do from the Finance Committee. But once that is done, we
can continue on to the 5-minute order for morning business.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ROTH. Mr. President, I would like to express my sincere gratitude
to my colleagues and good friends who have been instrumental to the
successful culmination of this important budget reconciliation process.
I am gratified by the results. I think we have indeed made history. We
have passed a reconciliation package that balances the budget, while
offering American families their first real tax cut in 16 years.
I am happy to say that we have done it in a bipartisan way. It never
could have happened, in my humble judgment, without the good will,
cooperation, and intelligence of the many Members who have contributed
to this important piece of legislation.
In the process, Mr. President, we have made significant progress in
our ongoing efforts to preserve and strengthen the Medicare Program, a
program of critical importance to our senior citizens, and to give
State governments greater voice and authority in the administration of
Medicaid. We have increased the ability of families and individuals to
save their money, to become more self-reliant, and to invest in the
future of America. We have passed significant proposals to help our
youth and their families with their education. And we have saved who
knows how many family small businesses and farms from extinction
wrought by death taxes.
We can go home during this Independent Day recess with our heads held
high. We have done what our constituents sent us here to do. As I said,
we have accomplished these important objectives in a bipartisan spirit.
Mr. President, the Senate's success of the last few days would not
have been possible without the leadership and example of my
distinguished colleague and close friend, Senator Moynihan. He is a
scholar, a statesman and--perhaps, most important--a gentleman and
trusted friend.
I appreciate the other Members of the Senate Finance Committee. It
was interesting to watch the process as the cooperative spirit on that
committee worked to refine and build rather than denigrate and destroy.
The cream indeed rose to the top through our days, weeks, even months
of hearings, conferences, meetings, and debates. I am proud of every
member and, if time permitted, I would give specific examples of how
each one of them rose to the challenge that has resulted in the success
we produced today.
Mr. President, I would like to thank, again, the many professional
staff members whose work and expertise made this possible. No one
appreciates these men and women more than those of us who watch their
tireless efforts and depend on their support. Our gratitude to them as
individuals, and for their work, is perhaps best demonstrated by the
incredible trust we place in their judgment and by the way we depend on
their advice and support.
Particularly, Mr. President, among our professional staff, I would
like to thank: Lindy Paull, Frank Polk, Mark Prater, Rosemary Becchi,
Doug Fisher, Brig Gulya, Sam Olyck, Tom Roesser, Joan Woodward, Ashley
Miller, Mark Patterson, Nick Giordano, Patricia McClanahan, Maury
Passman, Bill Fant, David Podoff, and also Ken Kies and his capable
staff at Joint Tax.

These men and women, along with the leadership of the members on the
Finance Committee, share in the tremendous success, a success for which
I give them my most sincere thanks and a success, Mr. President, that
will bless the lives of all Americans.
Mr. MOYNIHAN addressed the Chair.
The PRESIDING OFFICER. The Senator from New York is recognized.
Mr. MOYNIHAN. Mr. President, it is characteristic of our revered
chairman that he would spend this precious moment at the end of a
triumphant legislative process thanking others. It is the part of him
that brings us together and brought us together to an extraordinary 80
to 18 vote. I would presume to speak for every member of the committee,
and certainly for the Democratic members who have been unanimous on
both of these measures in committee, and on the floor today, in
expressing our profound appreciation to him, our profound admiration,
and our conviction that we will now go on to a successful conference
and write some history in our Nation this year.
We shall have a balanced budget. We shall have a health care program
for adults and children. And not least, we have had in fact 77 votes in
favor of a successful and permanent Amtrak program in this country, a
matter of particular concern to him, but both attributable to him. And
I thank him.
Again, I thank the Chair, and I yield the floor.
(At the request of Mr. Daschle, the following statement was ordered
to be printed in the Record.)
Mr. HOLLINGS. Mr. President, I rise today in opposition of S.
949, the Revenue Reconciliation Act of 1997. I was necessarily absent
and unable to vote on the final passage of the bill, but I would like
my statement to be recorded in the Record.
There has been a great deal of congratulations about how this is the
first major tax cut since the Kemp-Roth tax cuts in 1981. I would like
to remind everyone of the consequences of that particular measure.
Since 1981, our deficits have exploded, growing to as high as $403
billion. Our national debt has soared from under $1 trillion in 1980 to
$5.4 trillion this year. The interest costs on this debt have
skyrocketed during that period from $74.8 billion to $360 billion,
representing spending of $1 billion a day. This money does not go to
purchase any new bridges, roads, airports, or any other public good.
Instead, it is wasted on servicing this debt. These interest payments,
in essence, represent a mammoth tax on the American people which will
continue

[[Page S6720]]

to rise until we can get our fiscal house in order.
Since 1993, we have made substantial progress toward reducing our
deficit. Despite the opposition of every Republican in the Senate, we
passed a tough deficit reduction bill which included unpopular tax
increases and spending cuts. The results have been clear. Our deficit
has fallen for 5 years in a row, unemployment is at a 24 year low,
inflation is minimal, interest rates are down, 12.1 million new jobs
have been created, and business investment is at a post-war high. Yet,
instead of building on this progress, we have chosen to abandon ship
and engage in the political temptation of tax cuts.
Mr. President, our Nation is experiencing a period of prosperity,
partially because we were courageous enough to make the right choice in
1993 and begin to reduce our deficit. We should stay on this course
until we truly balance our books. Instead, this year's budget deal
engages in the same old trickery of back loaded tax cuts, borrowed
trust funds, and unrealistic economic assumptions. Rather than doing
what is right for the American people, we have chosen to do what is
right to get us past the next election. I fear, however, that the
results of this measure will be felt long after then.

____________________