[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--

       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--

  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.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.

  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. 

                          ____________________