[Congressional Record Volume 144, Number 131 (Saturday, September 26, 1998)]
[House]
[Pages H8934-H8973]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      TAXPAYER RELIEF ACT OF 1998

  The SPEAKER pro tempore. The unfinished business is the further 
consideration of the bill (H.R. 4579) to provide tax relief for 
individuals, families, and farming and other small businesses, to 
provide tax incentives for education, to extend certain expiring 
provisions, and for other purposes.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore. When proceedings were postponed on Friday, 
September 25, 1998, 30 minutes of debate remained on the bill.
  Pursuant to the order of the House of that day, the gentleman from 
Texas (Mr. Archer) and the gentleman from New York (Mr. Rangel), each 
have 15 minutes of debate remaining on the bill.
  The Chair recognizes the gentleman from Texas (Mr. Archer).
  Mr. ARCHER. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Virginia (Mr. Bliley), respected chairman of the 
Committee on Commerce.
  (Mr. BLILEY asked and was given permission to revise and extend his 
remarks.)
  Mr. BLILEY. Mr. Speaker, I rise in support of the legislation.
  Mr. Speaker, today we vote to address a simple question: Whether we 
are going to let our constitutents keep more of their hard earned money 
or whether this money will go to the Federal bureaucrats and to 
additional Clinton big government programs. While some of my Democratic 
colleagues on the other side of the aisle may struggle with this 
question, to me, the answer is crystal clear. Americans deserve to keep 
more of what they earn. Americans deserve a tax cut now.
  The Taxpayer Relief Act will let Americans who go to work everyday to 
keep more and save more of what they earn. Under this legislation, 
Americans will see Congress return 80 billion dollars of the people's 
money to the people who earned it.
  At the same time, the responsible legislation we passed yesterday 
upholds Congress' duty to preserve and protect Social Security by 
setting aside 90 percent of the budget surplus--approximately 1.4 
trillion dollars--to save Social Security.
  Mr. Speaker, the Taxpayer Relief Act is even-handed and responsible, 
providing tax relief to a broad range of Americans.
  For example, middle income Americans will see relief from one of the 
most unfair and ill conceived taxes--the marriage penalty tax. In my 
home state, nearly 1.2 million Virginians will see an average of 243 
dollars per person returned to them as a result of relief from the 
marriage penalty tax. That is 243 dollars which the government had 
penalized them--simply for living in wedlock--before the passage of 
this act.
  The Taxpayer Relief Act also gives the self-employed something which 
everyone agrees is needed--affordable health care. Self-employed 
workers, including farmers, may decuct 100 percent of their health care 
costs under this legislation. In the end, this will be good for the 
strength of American business and good for the health of American 
families.
  Upon passage of this legislation, Virginians will receive 
approximately 617 dollars per tax filer. $617 of their money. $617 to 
spend on food, $617 to save for the future, or $617 to put toward their 
children's education.
  Mr. Speaker, this is their money. Americans deserve a tax cut and I 
urge my colleagues to support the Taxpayer Relief Act.
  Mr. ARCHER. Mr. Speaker, I yield 2 minutes to the gentleman from 
Texas (Mr. Sam Johnson), one of America's great heroes, a member of the 
Committee on Ways and Means.
  (Mr. SAM JOHNSON of Texas asked and was given permission to revise 
and extend his remarks.)
  Mr. SAM JOHNSON of Texas. Mr. Speaker, Americans are tired of being 
overtaxed just for being married, for staying healthy, for saving, for 
starting their own business or for producing food at our tables. I 
agree, the government has no right to take so much from hard-working 
people. That is why this bill is so important. It returns $80 billion 
to the rightful owners, the American people.
  This bill gives 48 million taxpayers relief from the marriage 
penalty. Millions of families will not be taxed on their savings. 
Farmers and the self-employed will be able to deduct 100 percent of 
their health insurance costs. Seniors can continue to lead productive 
lives without being penalized and, guess what, several tax forms are 
going to be eliminated.
  The Democrats are wrong in this instance. They say these very people 
that do not deserve any of the surplus that you, the American people, 
created. Democrats say government should keep it and spend it to create 
new government programs. It is time to reward the American taxpayers. 
The truth must be told and scare tactics need to end.
  Social Security will be protected. Americans want, need and deserve 
tax relief. After all, it is their own money.
  Let us give some of it back to them.
  Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume.
  I want to set an atmosphere here. Yesterday, the President of the 
United

[[Page H8935]]

States charged this Congress with being a do-nothing Congress. I would 
like to set the record straight because, clearly, the President was 
unaware that it was this Congress that changed the name of the 
Washington National Airport to the Ronald Reagan Airport. The President 
was probably unaware of the fact that this Congress has deep-sixed the 
Internal Revenue Code in the year 2002. The Congress also, for 
education, made it possible for poor folks to save $2,000 and not pay 
interest on it for education. And, even now, the Congress is picking up 
some good, sound Democratic tax cut provisions. Unfortunately, they are 
raiding the Social Security trust fund, but at least they are half 
right in the direction in which they are going.
  So I just want to say that if we can find some way to pay for these 
tax cuts, we might be able to come together even on this floor.
  Now, some Republicans have signs that they pull up from time to time, 
and I do not think we ought to see this sign anymore, which says that 
Ms. Chesser, from the Social Security Commission, said that this tax 
cut would not affect the Social Security fund.
  Let me tell my colleagues, no Republican or Democrat is going to pull 
that sign up again today. Because Ms. Chesser said that she answered 
no, but then she concluded her remarks in a letter that she sent here, 
which is in the transcript which the gentleman from Texas (Mr. Archer) 
and I picked up on CNN during her testimony. So the gentleman from 
Texas (Mr. Archer) went to CNN. We went to CNN, and we got her full 
remarks.
  And so she concludes by saying then, as now, ``The fact that the 
Federal Government has produced a surplus for the first time in 
generations provides a unique opportunity to solve Social Security's 
long-term shortfall. Until long-term solvency is resolved, draining 
away any part of the surplus would negatively impact our chance to find 
a bipartisan solution to Social Security's long-term outlook.''
  That does not mean that you should not raid the Social Security fund 
because you may think that what you are doing for election time is more 
important than the solvency, the long-term solvency of the fund. But 
having said that, and recognizing that you also raised fast track, I 
hope that maybe we can get together and see whether we can agree on 
something so that the President does not allow us to go into this 
election mode saying that we did not do anything. We have done a lot of 
things. Some of them were dumb, but we still have time to work together 
in a bipartisan way to see whether we can give a tax cut but pay for it 
rather than use the Social Security trust fund.
  Mr. Speaker, I yield 3 minutes to the gentleman from Maryland (Mr. 
Cardin).
  (Mr. CARDIN asked and was given permission to revise and extend his 
remarks.)
  Mr. CARDIN. Mr. Speaker, first, let me compliment the chairman of the 
Committee on Ways and Means for bringing out a bill that its provisions 
on tax relief are very good. The marriage penalty relief is a good 
provision. The extenders of our expiring tax provisions, that is very 
good to help small investors. I agree with all those provisions. I 
think most of the Members of this body agree with those changes.
  The problem is that the budget deficit next year, excluding Social 
Security, will be $37 billion. We do not have a surplus.
  If we pass this bill, the budget deficit will be $44 billion, adding 
to the deficit on budget, if we do not count Social Security. The year 
after, the budget deficit is projected to be $46 billion. With this 
bill, it will be $65 billion. The year after, it is projected to be a 
$45 billion deficit. And with this bill, it will be a $63 billion 
deficit. We are adding to the deficit of this country. We are not 
paying for the tax bill. We are raiding Social Security.
  That is wrong. This bill will be vetoed if it is passed in its 
current form. It cannot become law. The votes are not here to do that. 
Thank goodness.
  The reason is quite simple. We know that the passage of this bill 
will make solving the Social Security problem more difficult, plain and 
simple. Without Social Security, we have no surplus, pure and simple.
  But there is a way that we can get these good provisions enacted into 
law and help the taxpayers of this country. We have the Rangel 
substitute that we will have an opportunity to vote for a little bit 
later. I hope my colleagues will keep this issue alive. Support the 
Rangel substitute. Let us work together and figure out a way that we 
can pay for these very worthwhile tax provisions so that they can 
become law without raiding Social Security.
  Let us work together in a bipartisan way so that we can really help 
the taxpayers of this country and we can preserve our Social Security 
system. It can only work if we work together in a bipartisan way.
  Mr. ARCHER. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Iowa (Mr. Nussle).
  (Mr. NUSSLE asked and was given permission to revise and extend his 
remarks.)
  Mr. NUSSLE. Mr. Speaker, I rise in support of the tax bill.
  Mr. Speaker, I rise today in support of Chairman Archer's plan to 
deposit the budget surplus into a special Treasury account to save 
Social Security, while returning a small portion of future surpluses to 
the hard-working taxpayers to whom it belongs.
  The current budget surplus is the result of hard work and hard 
decisions. As a result, this year we made a historic net down payment 
of $84 billion on the national debt, and now we are now in a position 
to begin repaying the Social Security Trust Fund from years of 
congressional borrowing. However, there is currently little protection 
to ensure that surplus funds go to Social Security and are not used for 
increased government spending. Passage of this bill is the first 
important step towards preventing further looting of the Trust Fund and 
shoring up the Social Security system before the baby boom generation's 
retirement.
  Additionally, I commend the efforts in this bill to provide tax 
relief to those who need it most. America's farmers are experiencing 
economic hardships from low commodity and livestock prices due, in 
part, to decreased exports caused by the world financial crisis. The 
tax bill we are considering will provide relief for farmers in the form 
of permanent income averaging, increasing the net operating loss 
carryback period and clarifying the rules for taxing market transition 
payments.
  America's families desperately need to keep more of what they make. 
They will receive this tax relief in the form of eliminating the 
marriage penalty tax, and allowing them to avoid taxes on a portion of 
interest and dividend income they receive. Small business owners need 
tax relief to defray the costs of their health insurance, which is also 
included in this bill.
  The United States is currently enjoying the first balanced budget in 
30 years. A feat that has not been accomplished since Neil Armstrong 
walked on the moon. This achievement would not have been possible 
without the sacrifices the American people have made over the past 
decade, when they have paid a higher percentage in taxes than at 
anytime since World War II. It is right and fitting that the Committee 
and the Congress return a portion of their taxes to farmers, families 
and small businesses. I remind our Members that Deputy Commissioner 
Judy Chesser from the Social Security Administration testified that 
this plan will not negatively impact the Social Security Trust Fund.
  Mr. Speaker, I want to preserve Social Security for those in my 
grandmothers' generation, those in my parents' generation, those in my 
generation and those in my childrens' generation. I fear that if we 
don't take this step to protect surplus money for Social Security, 
Congress will do what it has done so many times before and spend the 
surplus money away little by little on what may seem like good 
policies. This legislation protects Social Security in a responsible 
manner, and I urge every member of this body to support it.
  Mr. ARCHER. Mr. Speaker, I yield 2 minutes to the gentleman from 
Arizona (Mr. Hayworth), a respected member of the Committee on Ways and 
Means.
  Mr. HAYWORTH. Mr. Speaker, I thank my colleague, the chairman of the 
Committee on Ways and Means from Texas, for this time.
  It has been very enlightening already this morning. Already this 
morning, twice, we have heard the term ``raid,'' ``raiding'' the Social 
Security fund. How enlightening. How enlightening for my colleagues on 
the left to employ and embrace wholeheartedly the politics of fear.
  Congratulations, Mr. Speaker, to my colleagues on the left who will 
do anything and everything to stand in the way of the American people 
and the chance for working Americans to hold on to more of their hard-
earned money. That is what we are seeing here today.

[[Page H8936]]

  But moreover, Mr. Speaker, it is very interesting. They cite 
arguments from the President of the United States. They cite arguments 
of what they would call responsible tax cuts. And we are aware, in the 
current climate in Washington, D.C., that definitions can change in a 
nanosecond. But to follow their logic, last year when they joined us on 
tax relief and tax cuts that were long overdue, they did so in a 
climate of deficit. And now here we have the hope and the policies of 
surplus.
  And, yesterday, Mr. Speaker, we set aside $1.4 trillion to supplement 
Social Security, $1.4 trillion, when the left had set aside nothing 
over 40 years of control. And here we stand today, standing up for 
working families by providing relief from the marriage penalty; 
standing up for the self-employed by giving them deductibility of their 
health insurance costs; standing up for seniors by relaxing some of the 
limits on their ability to earn money past the age of retirement.
  The answer is clear, Mr. Speaker: Stand with the majority for tax 
relief. That is the truth.
  Mr. RANGEL. Mr. Speaker, I yield 3 minutes to the gentleman from 
Massachusetts (Mr. Neal).
  (Mr. NEAL of Massachusetts asked and was given permission to revise 
and extend his remarks.)
  Mr. NEAL of Massachusetts. Mr. Speaker, let me try to clear up what 
was just stated by the gentleman from Arizona. This is as clear and 
concise an argument as I have witnessed in the House of Representatives 
during the 10 years that I have been here. We are being told by the 
Republican majority that the best way to save Social Security is to 
take 10 percent of it for tax cuts.

                              {time}  0945

  That as I stated yesterday was not only a misguided vote, it was 
Orwellian philosophy, that the best way to save Social Security is to 
take 10 percent of it out six weeks before the national elections and 
provide a tax cut that nobody in Washington believes is ever going to 
happen. And we are accused of demagoguing the issue.
  There are many seductive proposals in this tax bill, most of them 
Democratic proposals that we would gladly vote for. You talk about a 
turn of events, the Democrats standing up for fiscal responsibility and 
saying, ``Save Social Security first.''
  My friend from Arizona said that this is about politics. Now, who 
among us in America today would measure that argument when we are 
offering here in this proposal tax cuts six weeks before an election?
  We had from January to discuss these things. But on the eve of the 
national election, we are going to talk about $80 billion worth of tax 
cuts, we are not going to talk about saving Social Security first, and 
the argument the Democratic minority makes today is simply this: Do not 
touch the Social Security trust fund until we decide that we have 
permanently fixed this issue for the American people.
  Mr. Roosevelt offered a contract with the American people in 1935. We 
stand with it today. We are witnessing here the slow erosion of the 
Social Security surplus for the purpose of providing tax cuts to the 
American people who, by the way, the wealthiest among us are not asking 
for these tax cuts. They want fiscal stability. George Bush in 1991 and 
Bill Clinton in 1993 with minimal or no hope from the other side gave 
us the fiscal picture that we have today. It is one of responsibility. 
Leave the Social Security trust fund alone and let us have a 
substantive debate about its future.
  Mr. Speaker, I include the following for the Record:

                                National Council For Adoption,

                                   Washington, DC, Sept. 25, 1998.
     Hon. Newt Gingrich,
     Speaker, House of Representatives,
     Washington, DC.
       Dear Speaker Gingrich: I am writing in support of the 
     provisions of H.R. 4579 and H.R. 4611, which would help 
     adoptive families by providing them with adoption tax 
     credits, credits many of them need to help them adopt. With 
     more than 110,000 children in the foster care system alone 
     waiting for adoption in the United States, every effort to 
     assist in qualifying families must be pursued with utmost 
     urgency.
       These provisions in these bills would provide a temporary 
     solution to the problem caused by the minimum tax liability 
     as it affects tax credits that benefit families. They would 
     provide stop-gap help for families qualifying to use the 
     adoption tax credit. While H.R. 4579 would provide both 
     immediate and long-term remedies for the minimum tax 
     liability problem, its fate is uncertain given a threatened 
     Presidential veto of that bill.
       Should a veto threat prevent passage of H.R. 4579, we urge 
     you to attach the provisions in H.R. 4611 to a scaled down 
     bill of tax extenders.
       We strongly support any action that would at this time make 
     the adoption tax credit work as effectively as possible, for 
     as many children and families as possible, as soon as 
     possible.
       We deeply appreciate the hard work you have done in the 
     past on behalf of a variety of adoption issues, including 
     your support for the adoption tax credit.
           Sincerely,
                                            William Pierce, Ph.D.,
     President.
                                  ____



                                National Council For Adoption,

                               Washington, DC, September 25, 1998.
     Representative Charles Rangel (D-NY),
     Ranking Member, Committee on Ways and Means, House of 
         Representatives, Washington, DC.
       Dear Mr. Rangel: I am writing in support of the provisions 
     of H.R. 4579 and H.R. 4611, which would help adoptive 
     families by providing them with adoption tax credits, credits 
     many of them need to help them adopt. With more than 110,000 
     children in the foster care system alone waiting for adoption 
     in the United States, every effort to assist in qualifying 
     families must be pursued with utmost urgency.
       These provisions in these bills would provide a temporary 
     solution to the problem caused by the minimum tax liability 
     as it affects tax credits that benefit families. They would 
     provide stop-gap help for families qualifying to use the 
     adoptive tax credit. While H.R. 4579 would provide both 
     immediate and long-term remedies for the minimum tax 
     liability problem, its fate is uncertain given a threatened 
     Presidential veto of that bill.
       Should a veto threat prevent passage of H.R. 4579, we urge 
     you to attach the provisions in H.R. 4611 to a scaled down 
     bill of tax extenders.
       We strongly support any action that would at this time make 
     the adoption tax credit work as effectively as possible, for 
     as many children and families as possible, as soon as 
     possible.
       We deeply appreciate the hard work you and the Committee 
     have done in the past on behalf of a variety of adoption 
     issues, including your support for the adoption tax credit.
       Please have your staff contact me, or Matt Parrott, to let 
     us know how we can help you make your interest in tax 
     assistance for adoptive families a reality this Congress.
           Sincerely,
                                            William Pierce, Ph.D.,
     President.
                                  ____



                                National Council For Adoption,

                               Washington, DC, September 25, 1998.
     Representative Bill Archer, (R-TX),
     Chairman, Committee on Ways and Means, House of 
         Representatives, Washington, DC.
       Dear Chairman Archer: I am writing in support of the 
     provisions of H.R. 4579 and H.R. 4611, which would help 
     adoptive families by providing them with adoption tax 
     credits, credits many of them need to help them adopt. With 
     more than 110,000 children in the foster care system alone 
     waiting for adoption in the United States, every effort to 
     assist in qualifying families must be pursued with utmost 
     urgency.
       The provisions in these bills would provide a temporary 
     solution to the problem caused by the minimum tax liability 
     as it affects tax credits that benefit families. They would 
     provide stop-gap help for families qualifying to use the 
     adoption tax credit. While H.R. 4579 would provide both 
     immediate and long-term remedies for the minimum tax 
     liability problem, its fate is uncertain given a threatened 
     Presidential veto of that bill.
       Should a veto threat prevent passage of H.R. 4579, we urge 
     you to attach the provisions in H.R. 4611 to a scaled down 
     bill of tax extenders.
       We strongly support any action that would at this time make 
     the adoption tax credit work as effectively as possible, for 
     as many children and families as possible, as soon as 
     possible.
       We deeply appreciate the hard work you and your Committee 
     have done in the past on behalf of a variety of adoption 
     issues, including your support for the adoption tax credit.
       Please have your staff contact me, or Matt Parrott, to let 
     us know how we can help you make your interest in tax 
     assistance for adoptive families a reality this Congress.
           Sincerely,
                                           William Pierce, Ph. D.,
                                                        President.

  Mr. NEAL of Massachusetts. Mr. Speaker, we are now debating the 
second part of the ``90/10 Plan''. Earlier in a misguided vote the 
House decided to lock up 90 percent and not 100 percent of the 
projected surplus to save Social Security. Now, we are considering the 
10 percent part of the plan.
  I have to admit that the 10 percent part of the plan is quite 
attractive. It is a package of modest tax cuts which are mostly 
targeted to the middle class and it include many tax cuts that 
Democrats have offered in the past and it includes a provision that I 
have worked on this past year.

[[Page H8937]]

  We should not be spending the Social Security trust fund surplus. We 
have to deal in budget realities, even though it is very politically 
enticing to vote for a tax cut right before the elections. However, I 
believe we were elected to make hard choices.
  The hard choice before us today is voting against very likable tax 
cuts in order to protect Social Security. There is not surplus right 
now except for the surplus in the Social Security trust fund. Without 
Social Security's temporary surplus, there would be a $137 billion 
deficit over the next five years so we should not be spending $80 
billion that we do not have today.
  The Democratic substitute is responsible. It still provides tax 
relief, but not until effective until the Social Security trust fund is 
solvent for 75 years.
  The bill before us today includes a provision which I think is 
extremely important and should be in addressed before Congress 
adjourns. Recently, I introduced H.R. 4611 which provides a temporary 
waiver for taxable year 1998 of the minimum tax rules that deny many 
families the nonrefundable personal credits, pending enactment of 
permanent legislation to address this inequity.
  Also, I have introduced H.R. 4489 which provides a permanent solution 
to address this inequity by allowing nonrefundable personal credits to 
offset both the individual's regular income tax liability and the 
minimum tax liability and repeal the rule that reduces the additional 
child credit for families with three or more children by the amount of 
minimum tax liability.
  I am pleased that the ``Taxpayer Relief Act of 1998'' includes a 
permanent solution and a temporary solution. However, this bill will 
receive a Presidential veto if even it makes it that far. This is an 
issue that we need to address before we adjorun.
  Under current law, the total allowable amount of nonrefundable 
personal credits may not exceed the amount by which the individual's 
regular income tax liability exceed the individual's tentative minimum 
tax. This results in all taxpayers who claim the child credit with 
incomes above $45,000 for joint filers and $33,750 for single filers to 
make at least a rudimentary minimum tax calculation.
  Without addressing this problem, many taxpayers will have to fill out 
the minimum tax form. Not only is the minimum tax complicated, it can 
penalize middle-income taxpayers who claim some of the new tax credits 
such as the child tax credit and the Hope Scholarship credit.
  The Department of Treasury estimates that in 1998, the alternative 
minimum tax will deny 800,000 taxpayers who are entitled to both the 
child tax credit and the education tax credits, the full benefits of 
these credits. Without enactment of legislation to address this issue, 
taxpayers who are planning to claim the child credit should be warned 
that the computation of their taxes will be difficult, time consuming, 
and unnecessarily complex. Without simplifying the child tax credit, 
the child tax credit form will be required on next year's form is a 
nightmare.
  The complexity of the forms is the result of deliberate decisions 
last year by the Republican majority in Congress. Today, they decided 
to fix a problem that they knowingly created last year. The interaction 
between the minimum tax and the child tax credits was in the original 
chairman's mark. They did not want to spend revenue on this provision. 
Remember, last year's tax bill was offset, not like this year's bill 
which uses the projected surplus as an offset.
  If we do not address the interaction of the minimum tax with 
nonrefundable personal credits, many families will be cheated of the 
full credits that were promised. We need to address this issue to 
prevent the average family from having to pay a tax return preparer in 
order to fill out the forms for the new credits.
  We should address this issue and include a temporary solution in 
revenue neutral legislation to extend the expiring provisions and 
continue to work on a permanent solution. The Joint Committee on 
Taxation estimates that a one year solution for the taxable year 1998 
would cost $474 million.
  I urge my colleagues to vote against this bill today. It is time for 
us to get back to our real work.
  Mr. ARCHER. Mr. Speaker, I yield myself such time as I may consume. 
Once again to try to bring the element of truth into this debate, we 
clearly are not touching any of the money in the Social Security trust 
fund. We clearly are not touching any payroll taxes, not one penny. As 
much as I respect the gentleman from Massachusetts personally, he knows 
that is not true. The record should be set straight. We can use all 
kinds of political rhetoric to try to serve ourselves one way or 
another, but we should try to stick to those enunciations which are 
supportable by fact.
  Mr. Speaker, I yield 2 minutes to the respected gentleman from Oregon 
(Mr. Smith), the chairman of the Committee on Agriculture.
  Mr. SMITH of Oregon. Mr. Speaker, I thank the gentleman for yielding 
this time. We have been discussing farm policy in this body for many 
years. We have been discussing philosophy of agriculture. This year we 
witnessed a horrible downturn in agriculture due to weather and some to 
revenue reduction. We have disaster programs designed to help 
momentarily agriculture. But nothing, nothing that we have done in farm 
policy or in disaster programs can even touch what the gentleman from 
Texas (Mr. Archer) and the Committee on Ways and Means has done for 
agriculture for the long term. They cannot even touch it. Here is what 
agriculture has been dreaming about for these many, many years.
  Listen to this. Income averaging which is essential when you have 
hills and valleys in income as agriculture does. Reach-back provisions 
for five years so that if we were making money five years ago, we can 
average that against losses today which we are certainly experiencing. 
Expense allowance to $25,000 for agriculture and small business. 
Exemption raised to $1 million for death taxes.
  What does that mean to agriculture? It means today that as a result 
of this, two-thirds of the families in America on farms and ranches 
will be able to retain them and turn them over to their children 
without the government taking them away through death taxes. Capital 
gains relief. Full deductibility of health insurance. These are dreams 
of agricultural people for years.
  This is the strongest package for agriculture bar none that this body 
has ever passed. Let us pass it today.
  Mr. Speaker, I rise today in wholehearted support of H.R. 4579, the 
Taxpayer Relief Act of 1998. I commend Chairman Archer and the Ways and 
Means Committee for bringing a tax measure to the House floor that 
American agriculture can readily endorse.
  Providing a full tax deduction for health insurance to the self-
employed is a lifeline to American farm families. This will ensure that 
farm families have the health protection they need at an affordable 
price.
  Income averaging is another essential tool that will stabilize an 
otherwise volatile income stream of many of our farmers and ranchers. 
As we are seeing now, farm livelihoods are vulnerable to weather 
disasters and economic uncertainty, and this provision will assist them 
in dealing with those uncertainties.
  The estate tax provision contained in the bill will mean that two-
thirds of the Nation's farmers and ranchers who now face constant 
pressures to keep their assets within the current threshold exemption 
can rest easy knowing the economic legacy they have built will not be 
taken away from their children.
  As small businessmen, farmers and ranchers also will benefit from the 
business expensing provision in the bill. Using this provision, farmers 
may replace expensive farm equipment and gain an upfront tax savings 
that is superior to the benefits afforded through a depreciation 
schedule.
  For too long, Mr. Speaker, the Congress has discussed the pros and 
cons of federal farm policy--the policy effects of commodity programs, 
while we have left tax matters to another day, Today, Chairman Archer 
has changed all that. I believe we have a solid, and, in my view, 
unchallengeable tax package for American farmers and ranchers.
  Mr. RANGEL. Mr. Speaker, I yield 3 minutes to the gentleman from 
Maryland (Mr. Hoyer).
  Mr. HOYER. Mr. Speaker, I thank the gentleman for yielding time. I 
rise today to oppose the Republican tax cut package and to support the 
alternative to be offered by the gentleman from New York (Mr. Rangel). 
The discussion today is not a debate about tax cuts. It is a debate 
about the future of Social Security. The tax cuts in both packages are 
identical. However, the Republican tax cuts would be paid for by a 
Social Security surplus. That is irrefutable, notwithstanding what the 
chairman just said. A surplus that I tell my friends on the other side 
of the aisle we have not yet even realized. Without playing politics 
with America's fiscal future, the tax cuts in the Democratic 
alternative would not become effective until the Social Security 
trustees certify that the trust funds are solvent for the next 75 
years.
  It would be irresponsible, Mr. Speaker, of me to support a bill 
without considering how the tax cuts are financed. The Republican bill 
does in fact raid the Social Security trust fund which provides funds 
often referred to as the ``budget surplus.'' I believe our first

[[Page H8938]]

duty must be to solve the long-term solvency problems of Social 
Security while remaining committed to fiscal responsibility.
  While I find it quite interesting that the tax bill that Republicans 
put forward embraces mostly Democratic ideas for tax cuts for middle 
America, the poison bill in this bill is the way in which it is 
financed.
  I would remind my colleagues, in fact, just a year ago, Democrats 
supported a $100 billion tax cut similar to the one the Republican 
leadership has brought to the floor today. But there was a significant 
difference. Our bill was fully offset with real spending cuts that did 
not dismantle or put at risk the future of Social Security, a future in 
which as the 1998 report of the Social Security trustees found that 
none of the Social Security trust funds will have sufficient income to 
be able to pay benefits over the next 75 years. Today it is the main 
source of income for two-thirds of the seniors in this country. 
Seventy-six million baby boomers will begin retiring in 2010. By 2025, 
most baby boomers will be 65 or older. We cannot put our desire for 
politically-driven, irresponsibly-financed tax cuts before our 
overwhelming need and responsibility to ensure that Social Security is 
viable into the next century. To do that, the Democratic alternative 
creates a lock box. It takes 100 percent of the Social Security surplus 
and ensures that it will be used only for Social Security purposes. 
This creates a real protection for the Social Security surplus and the 
overall integrity of the system.
  I would remind my colleagues that just a few weeks ago, the chairman 
of the Committee on the Budget, the gentleman from Ohio (Mr. Kasich) 
suggested a 700 to $800 billion tax cut. I remind my friends, that 
would be 50 percent of the Social Security surplus. Where do we go next 
year?
  Save Social Security. Oppose this bill. Support the Democratic 
alternative.
  Mr. ARCHER. Mr. Speaker, I yield 2 minutes to the gentleman from 
Kentucky (Mr. Bunning), the chairman of the Subcommittee on Social 
Security.
  (Mr. BUNNING asked and was given permission to revise and extend his 
remarks.)
  Mr. BUNNING. I thank the gentleman for yielding me this time. Mr. 
Speaker, I rise in strong support of the Taxpayer Relief Act and 
targeted tax relief for the middle-class families of this country.
  Fifty-five percent of this tax cut goes to hard-working American 
families making less than $75,000, the folks who need it most.
  Marriage penalty relief for 48 million taxpayers, an average of $243 
per couple.
  One hundred percent deductibility of health insurance costs for self-
employed people, over 100,000 just in my State, for small farmers, 
small business owners that pay for their premiums that are not paid for 
presently.
  $24 billion in relief for farmers and small business as the chairman 
of the Committee on Agriculture just before me so well described. Tax 
relief for farmers who have carried the loss forward for five years. 
AMT relief and income-averaging, permanent income-averaging for 
farmers, five years. And we cut the death tax even further.
  Mr. Speaker, we must remember that the budget surpluses do not belong 
to the government. It belongs to the American people. It is their tax 
dollars that make up the surplus. We should let them keep more of their 
own money, because they know how to spend it better than the government 
does.
  Yesterday we protected Social Security by devoting 90 percent of the 
surplus to it. Never before had that been done in the history of this 
great republic. We should do the right thing and give some of the money 
back to the people that pay it. I urge support for the bill.
  Mr. ARCHER. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Michigan (Mr. Camp).
  (Mr. CAMP asked and was given permission to revise and extend his 
remarks.)
  Mr. CAMP. Mr. Speaker, I rise in support of the Taxpayer Relief Act.
  Mr. Speaker, one thing is absolutely sure in this debate--taxes are 
too high. We're facing the highest peacetime tax burden in our Nation's 
history--21 percent of G.D.P. If taxes today were at the same level as 
1950, the average American household today would be twice as rich. 
American families pay 38 percent of their income in taxes, up from 26 
percent back in 1955--the Federal Government is taking too much from 
the American taxpayer.
  So the bill before us today cuts taxes--and it does so in a 
responsible, restrained and fair manner. Our tax relief is focused 
squarely on middle and lower income taxpayers--exactly those who need 
it the most. Husbands and wives--farmers and ranchers--small business 
owners and senior citizens. Democrats said it couldn't be done.
  For 30 years, they controlled Congress and never balanced the budget! 
Instead they used the Social Security trust funds on programs like 
midnight basketball and other pork-barrel spending.
  Now the G.O.P. comes in, and not only balances the budget and 
preserves Social Security, but also provides sweeping tax relief. When 
was the last time the Democrats balanced the budget? And more 
importantly, when was the last time they paid $1.4 trillion back to 
Social Security--instead of spending the trust funds?
  This debate is about Social Security, and we make a significant 
payment to our Nation's seniors. We also allow the American taxpayer to 
reap the rewards of their hard work in the form of reduced taxes.
  Who is complaining about our tax relief bill? Mr. Speaker, it's the 
same people who buried us under a mountain of debt and saddled our 
children with the burden of paying it off. Some on the other side 
believe we need to keep that surplus in Washington--but it's your 
money. And hard-working Americans deserve a break.
  Our opponents say that it's not enough to wall off $1.4 trillion 
dollars to save Social Security and both save Social Security and 
reduce taxes. But I believe we can. I urge support for the Taxpayer 
Relief Act.
  Mr. ARCHER. Mr. Speaker, I yield 2 minutes to the gentleman from 
California (Mr. Herger), another respected member of the Committee on 
Ways and Means.
  Mr. HERGER. Mr. Speaker, today we have a choice. We can stand with 
those who think that Washington knows best or we can stand with our 
Nation's husbands and wives who are punished by the marriage penalty, 
with our farmers and ranchers who are hard hit by the death tax, with 
our Nation's small businesses which today cannot fully deduct the cost 
of their health insurance, and with our Nation's seniors who see their 
Social Security benefits reduced just for earning outside income. In 
short, we can stand with those who defend today's record high tax 
burden or we can stand with the hard-working middle class.
  Mr. Speaker, to vote ``no'' on this bill is to deny 48 million 
married taxpayers relief from the marriage penalty. I remind my 
colleagues that when a couple stands at the altar and says ``I do,'' 
they are not agreeing to higher taxes.
  To vote ``no'' on this bill is to deny farmers and ranchers much-
needed relief from the death tax, to vote ``no'' on this bill is to 
deny our small businesses the opportunity to deduct 100 percent of the 
cost of their health insurance, and to vote ``no'' on this bill is to 
deny seniors a chance to earn a little more outside income without 
facing the loss of their Social Security benefits.
  Today we can vote to do all of this while, at the same time, setting 
aside 90 percent of our surplus until we save Social Security. I would 
urge all of my colleagues on both sides of the aisle, do not turn your 
backs on the middle class. Support this crucially important 
legislation.
  Mr. RANGEL. Mr. Speaker, I yield 3 minutes to the gentleman from 
Michigan (Mr. Levin) from the Committee on Ways and Means.
  (Mr. LEVIN asked and was given permission to revise and extend his 
remarks.)
  Mr. LEVIN. Mr. Speaker, I quote:

       The solution is simple: formally wall off Social Security 
     from the rest of the budget to prevent continued thievery 
     from the trust fund.

  I know the majority is sensitive to references to stealing from 
Social Security, but the above quote is not from Democrats but from a 
leading official at the conservative Cato Institute. Surely the 
Republicans are proposing the diversion of Social Security moneys. 
Unlike in past years when the overall deficit was so huge, we are now 
at a point where we can undertake the difficult but vital task of 
assuring the long-term soundness of Social Security. This means putting 
Social Security first, and then a tax cut. Being a 90 percenter, 
diverting 10 percent of Social Security funds, is wrong.
  This bill also erodes the fiscal discipline that we fought so hard 
for in

[[Page H8939]]

1990 and 1993. In 1997, we passed a tax cut. I voted for it and would 
do so again. We paid for it with program cuts deep enough that they 
caused many to vote against the bill. Today the majority turns its back 
on that hard-won fiscal discipline. They pay for this cut from the 
budget surplus, Social Security's surplus, waiving the budget rules.
  This Nation has benefited from fiscal discipline. We who voted for it 
in 1990 and 1993 were right. So the better course is to save Social 
Security first and then act on a tax cut for American families. The 
majority puts the cart before the horse, trampling both on Social 
Security and on fiscal discipline.

                              {time}  1000

  We should do neither. Pass the democratic substitute.
  Mr. ARCHER. Mr. Speaker, I yield three minutes to the gentleman from 
California (Mr. Thomas), who is such an articulate member of the 
Committee on Ways and Means.
  Mr. THOMAS. Mr. Speaker, I thank the gentleman for yielding me time.
  Mr. Speaker, I am sure some people are a little bit confused about 
this debate, and I will try to explain why. It is kind of like in 
physics, where what we are discovering simply cannot be explained in 
the language that physicists now have.
  For example, you talk about matter, but because of the way the world 
works, they have to talk about antimatter, and it just does not seem to 
make sense, matter, antimatter.
  We just had the gentleman from Michigan in the well being forced to 
quote a conservative in support of what they were talking about. It is 
because the Democrats in their rhetoric just cannot deal with the world 
that the majority of Republicans have created, and that is a budget 
surplus.
  The Democrats are now arguing that it makes no sense whatsoever to 
adjust the Tax Code in any way until the Social Security trust fund is 
sound. For how long? Seventy-five years. How long was the trust fund 
sound every year they were in the majority, and they made tax 
adjustments? The answer is simple: Never.
  They are having difficulty dealing with a world in which the budget 
structure provides a surplus in which we can lay aside $1.4 trillion 
this year, more next year, more the year after, to save Social Security 
and provide people with a reasonable tax cut.
  The other problem they are having is criticizing our tax cut. Usually 
it is ``tax cuts for the rich.'' The gentleman from Maryland was in the 
well having to smile at the kind of tax cut Republicans are providing.
  People between zero and $75,000 income, that is couples, a man and a 
wife, say each one earns $35,000, I would not exactly call those folks 
rich, get 55 percent of our proposal. They are a majority of those who 
file taxes, but they are only about 34 percent of the revenue 
collected. Interestingly enough, about 34 percent of the revenue 
collected comes from individuals who make more than $200,000. They are 
getting 4 percent.
  So if you back away from all the particulars in this bill, which is 
certainly a bill for the various particular groups, sometimes we get 
too close to the painting and all we can see are brush strokes. Take a 
couple of steps back and, by and large, look what we are doing.
  We are moving 1 million people from having to file income taxes at 
all. We are moving more than 10 million people from having to fill out 
all of the deductions and the itemizations necessary to maximize your 
ability to pay fewer dollars. More than 10 million people can now move 
to the 1040-EZ form, one page, because we have simplified. This is not 
only relief to middle income, it is simplification of the Tax Code.
  Listen to the rhetoric. They cannot deal with the new world. Just 
vote yes on the chairman's proposal.
  Mr. ARCHER. Mr. Speaker, I yield two minutes to the gentleman from 
Florida (Mr. Shaw), the chairman of the Subcommittee on Human Resources 
of the Committee on Ways and Means.
  Mr. SHAW. Mr. Speaker, I thank the chairman for yielding me time.
  Mr. Speaker, sitting here listening to some of the rhetoric coming 
from the other side, accusing the Republicans for raiding--raiding--the 
Social Security trust fund, reminds me of a lot of the rhetoric that is 
going on in Washington today when we talk about whether the President 
lied to the American people.
  I would ask anybody that is watching this debate today to take with a 
grain of salt and be very cautious about any Member who gets up and 
says that any other Member on either side of the aisle is guilty of 
raiding the Social Security trust fund. It just simply is not true. It 
is a bald-face lie.
  The question is coming down as to whether or not the Social Security 
trust fund should be legislatively adjusted before the American people 
are given any tax relief whatsoever. That is the debate, and that is 
where there is an honest difference of opinion.
  The President, when he stood right before us in this very hall and 
said ``We are going to save Social Security, save Social Security 
first,'' and then went on with all his big plans for spending the 
surplus, he got a standing ovation from both sides of the aisle. We are 
still waiting for his plan to save Social Security.
  We are going to have to bite the bullet and make some tough political 
decisions on both sides of the aisle in order to accomplish what all of 
us want, and that is to leave Social Security in a solvent position for 
75 years and even beyond that. And that is important, and that is a 
responsibility of this body and something we should work on together. 
But let us not start out by lying to the American people. It just 
simply is not true.
  We are trying to make some adjustments and put some fairness in the 
tax law itself. The same Republicans that reformed welfare, that 
reformed the Internal Revenue Service, are going to lead the way in 
reforming Social Security. It is going to be tough, and we invite the 
Democrats to join us in this effort.
  Mr. RANGEL. I yield myself such time as I may consume to respond to 
my friend from Florida.
  Mr. Speaker, it is one thing to be robbing from the old folks; it is 
another thing to have to bring in the President of the United States' 
embarrassing political position. Now, the President has said he is 
sorry, and I hope before this debate is over, that some Republicans 
will say they are sorry for what they are doing to the Social Security 
trust fund.
  Mr. SHAW. Mr. Speaker, will the gentleman yield?
  Mr. RANGEL. I would like to yield as to why the gentleman had to 
bring the President of the United States into the debate.
  Mr. SHAW. Mr. Speaker, I simply was talking about the question of 
lying to the American people is very much on the minds of the American 
people.
  Mr. RANGEL. Mr. Speaker, reclaiming my time, I said why did the 
gentleman bring the President of the United States into this debate?


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore. Members should avoid personal references to 
the President of the United States.
  Mr. RANGEL. Mr. Speaker, the gentleman should apologize for what he 
has said.
  Mr. SHAW. Mr. Speaker, will the gentleman yield?
  Mr. RANGEL. I yield to the gentleman from Florida.
  Mr. SHAW. Mr. Speaker, I do not want anybody in this body to 
misunderstand me. I am not making any accusation as to whether the 
President lied or not. I am simply saying that the American people are 
demanding truth from their politicians, so let us get some truth in 
this debate.
  Mr. RANGEL. Mr. Speaker, reclaiming my time, I am simply saying that 
the American people demand fairness, and they will make the judgment in 
November.
  Mr. Speaker, I yield the balance of my time to the gentleman from 
Maine (Mr. Allen).
  The SPEAKER pro tempore. The gentleman from Maine is recognized for 
15 seconds.
  (Mr. ALLEN asked and was given permission to revise and extend his 
remarks.)
  Mr. ALLEN. I thank the gentleman for yielding me time.
  Mr. Speaker, I rise in opposition to the Republican tax bill. We 
should leave Social Security alone.
  I rise today very disappointed with the Republican majority. Their 
tax bill is both fiscally

[[Page H8940]]

irresponsible and socially bankrupt. It calls for $80 billion in tax 
cuts over the next five years by raiding projected Social Security 
surpluses. Surpluses that Congress designed to secure retirement 
benefits for current and future retirees. The long-term solvency of 
Social Security depends on sound policy choices and fiscal discipline. 
With an aging population and the onset of the baby-boom generation 
entering retirement years, tampering with Social Security is dangerous 
and irresponsible.
  I strongly support extending tax credits, such as work opportunity 
and research and development, and accelerating the self-employed health 
insurance deduction to 100%. I have cosponsored bills to do just that 
but with the belief that offsets would be real and fair. While I 
support these provisions and others in the Republican tax bill, the 
bill is clearly in violation of the pay-as-you-go budget rule this 
House championed for budget discipline.
  PAYGO has worked. We have offset spending and revenue proposals with 
real spending cuts or revenue increases. We have also shielded Social 
Security from budget gimmickry. We have promised not to use Social 
Security surpluses to mask the Federal deficit. Just as we balanced the 
Federal budget the Republican majority has turned its back on fiscal 
responsibility.
  Adoption of this tax bill will unravel the budget discipline by which 
we have operating in the last few years. With the adoption of President 
Clinton's deficit reduction and economic growth package in 1993, we 
have put our fiscal house in order. For the first time in thirty years 
we have balanced the Federal budget. We have made hard choices, and we 
have respected the PAYGO rule that proposals be budget neutral. 
Offsetting a tax bill with projected Social Security surpluses is 
irresponsible and wrong.
  I urge my colleagues to reject the Republican tax bill.
  Mr. FAZIO of California. Mr. Speaker, I rise in opposition to H.R. 
4579. Any major proposal that comes to the floor 40 days before an 
election deserves close scrutiny. And a major tax proposal which comes 
to the floor a few days before adjournment should leave Americans 
slightly suspicious.
  Even so, I would like to be able to say that I support this bill. In 
fact, I do support most of the tax cut proposals that are contained in 
this bill.
  The problem is the way the Republicans want to pay for it--on the 
backs of future Social Security recipients.
  American workers have invested in Social Security so that it will be 
there in the future when they need it most. It would be irresponsible 
to cut into our children's future for election year pandering.
  The Republican plan includes Democratic tax proposals like reducing 
the marriage penalty tax by allowing joint filers to double the 
standard deduction for single filers, allowing the full deductibility 
of healthcare costs for the self-employed, and renewing such business 
tax credits as the work opportunity tax credit and the research and 
experimentation tax credits. So they're on the right track.
  However, Republicans forget that unless the budget is balanced--
balanced without including the Social Security Trust Fund--any tax cut 
must be paid for by cutting entitlements or increasing other taxes. So 
where are these cuts coming from?
  While I am all in favor of giving the American people a tax cut, it 
is essential to look at what price we are actually paying for these tax 
cuts. A tax cut now will force us to delve into the projected budget 
surplus--to spend money now that we assume we will have in the future.
  The Congressional Budget Office (CBO) has projected that the budget 
will run a huge annual surplus for the next twenty years. But--and this 
is important--in the initial years the surplus is generated primarily 
from the Social Security Trust Fund. For example, next year, the CBO 
projects we will have an $80 billion dollar surplus. Great! That would 
easily pay for the tax cuts. However, a closer examination of that 
surplus shows that the Social Security Trust Fund's surplus of $117 
billion will be covering a projected $37 billion deficit in the general 
fund.
  I also want to emphasize that the budget projections are only that--
projections. They are based on assumptions about the future of the 
country's economy. While we should be optimistic about the budget 
outlook, we must also keep in mind the current economic turmoil in the 
rest of the world. If we have another recession comparable to the mild 
one in 1990-91, it could easily decrease the projected general fund 
balance by $100 billion in one year. The budget is extremely sensitive 
to the rise and fall of the economy. Some restraint must be shown.
  The Social Security Trust Fund is expected to be bankrupt by 2030 
because of the high number of baby boomers retiring. Every plan to 
protect against this would need every penny of the budget surplus--that 
of the general budget and that of the Social Security Trust Fund. 
Social Security is our nation's largest anti-poverty program. Half our 
nation's elderly, about eighteen million, including half of the 66,522 
Social Security recipients in my district, would live in poverty if 
this program did not exist. Thirty percent of the elderly depend on 
Social Security for one-half or more of their income. Since its 
beginning in 1940, this is a program that has proven its worth.
  I refuse to support tax cuts until we can pay for them with budget 
cuts or real surpluses without Social Security receipts. We have done 
this in the past. In fact I voted with a majority in this House, just 
last year, for the Taxpayer Relief Act, that provided the American 
people with tax cuts within the confines of the budget rules.
  That is why I support the alternative proposed by the Democrats. Our 
alternative would provide the exact same tax cuts with a major 
difference. The Democratic proposal includes a trigger mechanism to 
hold off a tax cut until the future of Social Security is ensured. 
Through our proposal, Social Security would be able to cope with the 
increasing number of Social Security recipients and be solvent beyond 
2032.
  We don't even have a budget for the next fiscal year--which begins 
this Thursday, the 1st of October--and Republicans want a tax cut. They 
are more worried about pre-election maneuvering and being re-elected 
than insuring that the government doesn't shut down, let alone the 
long-term solvency of Social Security.
  Without passage of the Democratic substitute, all this bill amounts 
to is an unconscionable raid on this country's retirement account. I 
would love nothing more than to be able to give America a tax cut. I am 
not against tax cuts. I agree with portions of the Republican proposal, 
because many of the provisions have already been proposed by Democrats. 
However, if we are going to be able to afford these tax cuts we must do 
so responsibly, we must provide for the future, we must save Social 
Security first--and vote down this bill.
  Mrs. MINK of Hawaii. Mr. Speaker, I rise in opposition to H.R. 4579, 
not because I oppose the bill's package of tax cuts, but because I 
oppose the majority party's plans to pay these tax cuts with the 
surplus in the Social Security trust fund.
  The majority party says it will use only 10 percent of the projected 
federal budget surplus to pay for H.R. 2579's tax cuts, but the 
majority fails to note that the surplus will be overwhelmingly Social 
Security-based surplus.
  To be more precise, if the large yet temporary surplus in the Social 
Security trust fund is excluded, there will be a Federal deficit of 
$137 billion over the 1999-2003 budget period and only a $31 billion 
Federal surplus over the 1999-2008 budget period. Accordingly, the 
majority's plan to set aside 10 percent of an almost exclusively Social 
Security-based federal budget surplus represents a raid on Social 
Security.
  The Democratic alternative provides for the very same tax cuts as 
H.R. 4579. However, unlike H.R. 4579, the Democratic alternative 
provides that the tax cuts take effect after a plan to secure Social 
Security long-term solvency has been agreed to.
  I urge my colleagues to oppose H.R. 4579, and to vote for the 
Democratic alternative.
  Mr. BEREUTER. Mr. Speaker, this Member rises today to express his 
support for H.R. 4579, which allows taxpayers nationwide to benefit 
from a Federal income tax cut. This bill is one of the most important 
measures that the House of Representatives has considered this year. It 
is highly desirable that the House pass this bill now to return a small 
additional amount of the economic benefits of the American people who 
earned them through a tax cut. Specifically, H.R. 4579 provides over 
$80 billion in tax relief provisions primarily targeted to married 
couples, farmers and ranchers, senior citizens, and small business 
owners.
  There has been enough exaggerated and false rhetoric by the opponents 
of H.R. 4579. It is important to note that the surplus is due to 
higher-than-projected Federal income tax receipts which resulted from 
the sweat equity and hard work of American taxpayers. This tax surplus 
is not the property of the Federal Government; this surplus rightfully 
belongs to the American taxpayer. The American taxpayers are entitled 
to this return--a $80 billion tax cut.
  House Resolution 4579, when passed in conjunction with H.R. 4578 (the 
Save Social Security Act) will provide an effective fiscally sound dual 
approach. We took the first step of this dual approach yesterday, when 
this House passed H.R. 4578. Today we consider the second step of this 
dual approach--H.R. 4579, which allocates that 10 percent of the 
surplus will be used for tax cuts over the next five.
  The legislation we are considering today (H.R. 4579) is so important 
because it provides comprehensive tax relief to so many middle-income 
and lower- middle-income American taxpayers. Specifically, the bill 
provides critical tax relief for the following six

[[Page H8941]]

classes of individuals; 1. Married couples; 2. Farmers and Ranchers; 3. 
Senior Citizens; 4. Parents; 5. Small Business Owners; 6. Savers and 
Investors; and, 7. Inheritors subject to Estate taxes.


                           1. married couples

  H.R. 4579 will allow married couples who file jointly to claim a 
standard deduction that is double the amount of the standard deduction 
for a single taxpayer in each taxable year beginning after December 31, 
1998. This provision will correct the current tax system which 
penalizes a couple for being married. This provision will provide tax 
penalty relief for approximately 48 million taxpayers.


                        2. Farmers and ranchers

  This Member is certainly concerned about the future of farming in the 
United States and Nebraska; therefore, this Member believes that all 
options or proposals should receive serious consideration and none 
rejected out of hand. Although the U.S. economy is generally healthy, 
it is clear that the agricultural sector is hurting. This Member 
believes that farmers and their families should be able to enjoy and 
adequate standard of living; therefore, this Member has taken a pro-
active approach to helping ensure that farmers received a fair price 
for their crops. One such approach to improve the viability of 
agriculture is provided in H.R. 4579 which has three provisions which 
directly benefit farmers and ranchers. These provisions will have a 
positive effect on this Member's constituency in the great State of 
Nebraska which has a strong agrarian element. Because of the low grain 
and livestock prices, which result in part from the Asian financial 
crisis and the subsequent decline in demand, farmers and ranchers are 
in need of agricultural tax relief as provided in the measure before us 
today.

  H.R. 4579 will accomplish the following things for farmers and 
ranchers:
  A. The income averaging for farm and ranch income which was set to 
expire in the Year 2000, will become permanent.
  B. The net operating loss carryback period for farmers and ranchers 
will be increased to 5 years from the general 2-year carryback period; 
and
  C. Farmers will not have to pay income taxes on the 1999 farm program 
payments until the year in which those payments are received.


                           3. Senior Citizens

  The Social Security earnings limit is increased for those individuals 
between full retirement age (currently age 65) and age 70 from $17,000 
in fiscal year 1999 to $39,750 in fiscal year 2008.


                               4. Parents

  Under H.R. 4579, parents will now be able to keep more of their hard-
earned dollars by protecting important tax credits, including credits 
for children, the elderly, adoption, dependent care, and education, 
from being reduced by the alternative minimum tax (AMT), which limits 
the amount of tax credits that taxpayers may take.


                        5. Small Business Owners

  A. The Health Insurance income tax deduction for the self-employed 
will be increased to 100 percent on January 1, 1999, instead of a 
phase-in of the 100 percent deduction under current law by January 1, 
2007. This deduction for the self-employed includes farmers and 
ranchers.
  B. A small business expensing deduction, in the amount of $25,000, 
will be immediately allowed.


                        6. savers and investors

  Taxpayers will be able to exclude the first $200 in interest and 
dividends they receive with filing an individual return.


                 7. Inheritors subject to Estate Taxes

  The current phase-in of the $1 million estate tax exemption will be 
accelerated to January 1, 1999, instead of January 1, 2006. The number 
of taxable estates under this accelerated phase-in provision will be 
reduced by approximately 50 percent. This estate tax change will 
especially have a propitious effect on farmers and ranchers.
  In closing, the intrinsic value of H.R. 4578 and H.R. 4579 is that 
both bills benefit a broad consensus of American taxpayers and at the 
same time take a step forward in ensuring Social Security for future 
beneficiaries. This Member encourages an ``aye'' vote for H.R. 4579.
  Mrs. LOWEY. Mr. Speaker, I rise in opposition to this bill and I want 
to make one thing very clear at the outset: I support the tax cuts in 
this bill. Many of these tax cuts are measures that Democrats have 
championed and that I fully support. But unless they are paid for 
without draining Social Security reserves, the only responsible thing 
to do is just say no.
  I want every American to be perfectly clear what this debate is all 
about: it's a choice between politically motivated, election year tax 
cuts and protecting Social Security. It's about spending now and paying 
later--and jeopardizing the retirement security of millions of 
Americans.
  No matter how you slice it, the fundamental fact remains: these tax 
cuts are being paid for by raiding Social Security.
  All of the surpluses CBO projects over the next 5 years--and 98 
percent of the surpluses CBO projects over the next decade--are trust 
funds that are needed to build up Social Security reserves. In fact, 
excluding the Social Security trust fund, the total budget surplus over 
the next decade will only be $31 billion, and that assumes that we 
won't have a downturn in the economy.
  As Alan Greenspan stated this week, ``the surplus may well be less 
than anticipated.'' According to CBO, if a recession began next year 
that was similar to the 1990-1991 recession, the $53 billion projected 
surplus in 2001 would become a $53 billion deficit.
  Let's be honest. This tax bill is election year politicking at its 
worst. If you don't believe me, listen to the experts.
  Earlier this week, Chairman Greenspan stated before the Senate 
Banking Committee that spending the Social Security surplus ``would be 
the worst outcome'' and that this tax bill ``would not be growth 
productive.''
  The Republican Chairman of the Senate Budget Committee, Senator 
Domenici, has stated that ``all the surplus belongs to the Social 
Security trust fund . . . I'm telling you there is no surplus.''
  Economist Herbert Stein, chairman of President Nixon's Council of 
Economic Advisors, stated earlier this year that those who want to 
``reduce our prospective surpluses should admit that in doing so they 
are impairing the incomes of our children and grandchildren.''
  Quite simply, this bill will make it harder to ensure Social 
Security's solvency when Baby Boomers began to retire in the next 
century. It violates the budget rules and abandons the fiscal 
discipline that has enabled us to eliminate the deficit and enjoy a 
booming economy.
  My colleagues, we cannot afford to impose a massive I.O.U. on the 
American people's retirement system. Defeat this measure and support 
the Democratic substitute.
  Mr. POMEROY. Mr. Speaker, I rise in opposition to H.R. 4579, a 
fiscally irresponsible bill that would spend Social Security trust 
funds on an election-year tax cut. I urge my colleagues to reject the 
bill and to support the alternative offered by the Ranking Minority 
Member Mr. Rangel to defer the tax bill until Congress and the 
President have agreed on legislation to protect the long-term future of 
Social Security.
  Earlier this year, when the country embarked on a two-year effort to 
reform Social Security, we appeared to have bipartisan agreement on 
reserving the entire federal budget surplus until Congress enacted a 
comprehensive plan to assure Social Security's future. This commitment 
made sense since, after all, the entire budget surplus came from 
surpluses building up within the Social Security system.
  If there is any lingering doubt on this front, I direct my colleagues 
to the August 1998 report of the Congressional Budget Office (CBO). 
According to CBO, every dollar of the projected surplus for the next 
five years comes from Social Security. In fact, without Social 
Security, the federal budget is in deficit by $137 billion. Despite 
this clear evidence as to where our present surplus comes from, the 
congressional majority today backs away from its bipartisan commitment 
to Social Security reform and moves to spend the surplus before 
Congress has met its responsibility to secure Social Security's future.
  This is simply irresponsible. Social Security faces a financing 
shortfall over the long-term, and it is our solemn responsibility to 
address this shortfall and secure the future of this program that has 
done so much to protect America's families, mine included. By spending 
the Social Security surplus, the congressional majority digs the 
financing hole deeper and makes the work of securing Social Security 
even more difficult. Plain and simple, this takes us in the wrong 
direction. Mr. Chairman, our first step in making Social Security sound 
for the long haul must not be a step backward. Unfortunately, that is 
precisely the step the congressional majority takes today.
  I support targeted tax cuts for working families, farmers, and senior 
citizens, and in fact I voted for such tax cuts last year. The 
difference is that the tax cuts enacted last year to help young people 
go to college, to help working families raise their children, and to 
help all Americans save for retirement were fully off-set by spending 
cuts. Tax cuts off-set by spending reductions or paid for out of 
general revenues is fiscally responsible and protects Social Security.
  While I object to the use of Social Security to pay for tax cuts, I 
strongly support many of the tax changes proposed in this bill. I 
introduced legislation to provide full deductibility of health 
insurance premiums for the self-employed on the first day of this 
Congress and my bill has more bipartisan cosponsors than any other 
self-employed deduction bill. I am a cosponsor of legislation to allow 
farmers to average their income and I am pleased the provision was 
included in the tax bill last year. I

[[Page H8942]]

strongly support estate tax relief for family farmers that was also 
addressed in last year's tax bill. I have cosponsored legislation to 
reduce the marriage penalty, and I support increasing the earnings 
limit for Social Security recipients.
  For members who support the tax provisions in this bill but who want 
to protect the long-term future of Social Security, I encourage your 
support for the Rangel alternative. Let us reserve the surplus until 
Congress and the President have agreed on legislation to protect Social 
Security and then enact well-earned tax cuts for the American people.
  Ms. HARMAN. Mr. Speaker, I take a back seat to no one on the need to 
balance the budget and to do so in a balanced way.
  I made the tough votes for the Clinton budget in 1993, for the Penny-
Kasich spending reduction package, for a deficit reduction lock box, 
and for other responsible procedural and substantive budget reforms 
that resulted in today's first-in-a-generation budget surplus.
  Moreover, with the support of the Blue Dogs, I led the effort to 
embrace the Boskin Commission recommendations to adjust the Consumer 
Price Index to more accurately reflect inflation--a move that would 
have assumed the removal of the Social Security Trust Fund from the 
budget calculations in 10 years and, as importantly, ensured the 
solvency of the Trust Fund for another two decades.
  But, balancing the budget and protecting Social Security are not just 
accounting exercises. Both are priorities, neither exclusive of the 
other. They require balanced choices about what to cut and what to 
invest.
  Tax reductions are also investments, depending on their cost and 
targeting. I am voting for today's tax cut bill because I believe its 
cost is reasonable and its impact appropriately targeted to benefit my 
constituents. The bill's investments in health care, school 
construction, affordable housing, and my State's farming families, and 
the elimination of the harshness of the marriage penalty on middle 
income Americans are important and will create jobs that generate 
revenue, including revenue into the Social Security Trust Fund.
  I am one hundred percent in favor of saving Social Security, and my 
votes over three Congresses demonstrate this. And, while I will vote 
for the alternative before the House offered by my friend from New 
York, the distinguished ranking member of the Ways and Means Committee, 
in fact it does little to advance the cause for saving Social Security. 
It leaves the difficult fashioning of a rescue plan to future 
Congresses and, knowing the politics such an effort entails, conditions 
much-needed tax relief on contingencies which may never come about.
  A better plan would have included the proposal put forward last year 
by the Blue Dogs. In our budget plan, tax cuts were conditioned on 
future surpluses calculated without counting Social Security Trust 
Fund.
  Today, however, we are presented with a different set of imperfect 
choices and I won't blindly support any tax cut, just as I won't 
support just any plan that purports to ``save'' Social Security. In 
both cases, I will only support proposals reflecting careful choices 
and balanced priorities within the context of a balanced budget. The 
modest tax relief bill before us is such a bill.
  Mr. CASTLE. Mr. Speaker, I rise today to express my opposition to 
H.R. 4579, the ``Taxpayer Relief Act of 1998.'' I support many of the 
tax cut proposals in this legislation, but I believe it is premature 
and not wise fiscal policy to pass a tax cut of this size that counts 
on unrealized future budget surpluses rather than traditional spending 
reductions to pay for its cost. Instead, we should try to craft a more 
manageable bill that does not jeopardize the great strides we have made 
in restoring good fiscal policies in Washington.
  It has only been a year since we passed the Balanced Budget Act of 
1997, which set us on course to balancing the federal budget and also 
contained a major tax cut that was fully paid for by savings in other 
programs. We are reaching our goal of a balanced budget this year, but 
that is no reason to turn on the spending and tax cut faucets. Yes, 
Americans would like to have another tax cut, but I think my 
constituents in Delaware and most Americans place a higher priority on 
reducing the national debt and enacting a long-term plan to preserve 
Social Security. Maintaining our focus on fiscal discipline is the best 
way we can meet these goals.
  This year's unified budget surplus of $63 billion, the first since 
1969, is the product of strong Republican leadership on fiscal matters, 
and a healthy economy. We have placed limits on government spending and 
the 1997 tax cuts were fully paid for. That is, for every dollar of tax 
cuts, we reduced spending by a like amount. If we abandon our fiscal 
restraint now, we could quickly lose this year's surplus or any 
anticipated surplus if the economy suddenly weakens. While that may be 
unlikely, the Congressional Budget Office recently released a report 
stating that a recession similar to the economic problems of the early 
1990's could eliminate any budget surplus and result in a unified 
budget deficit of $50 billion in two years. The recent volatility of 
world financial markets and economic declines in Japan and Russia is 
cause for caution, and could threaten to stunt our own economic growth. 
A sudden recession could cloud our budget forecast immediately.
  It is also important to point out that we do not yet have a true 
surplus in the federal budget without counting the surplus in the 
Social Security Trust Fund. In fact, without using Social Security tax 
receipts, we would have a $37 billion deficit this year, not a $63 
billion surplus. While I applaud the goal of H.R. 4579 to save 90 
percent of the budget surplus over the next five years for Social 
Security, the fact of the matter is that until we have a long-term plan 
in place to preserve and protect Social Security, the budget surplus 
should be held in reserve for Social Security and paying down the debt 
which complement each other and strengthen our economy. Simply put, we 
just do not know how much the transition costs will be to fully ensure 
the long-term solvency of Social Security. The only correct policy is 
to first and foremost preserve and protect Social Security, no pass tax 
cut that are not paid for.
  Frankly, I am concerned that the recent good news about projected 
budget surpluses may be causing people in both parties to lose their 
commitment to fiscal restraint. The President claims to want to 
preserve every penny of the surplus for Social Security, while at the 
same time he has been increasing his requests for ``emergency'' 
spending for operations in Bosnia, embassy upgrades, and to pay for the 
government's Year 2000 computer improvements. This emergency spending 
could subtract $20 billion from this year's surplus of $63 billion. The 
Administration is far too willing to designate all new spending as an 
emergency, while paying lip service to protecting the surplus for 
Social Security. The President is not being candid with the American 
people, but adding a large tax cut to this emergency spending just does 
not make sense.

  I have heard many of my colleagues argue that they are justified in 
passing tax cuts out of a surplus that includes the Social Security 
surplus because during the 40 years Democrats controlled Congress, they 
spent that same surplus on other government programs. Republicans argue 
that it is better to get the money out of Washington before Congress 
and the President spend it. We should certainly try to return every 
dollar we can to the taxpaying Americans who earned it. Last year, 
Republicans delivered a $95 billion tax cut and balanced the budget 
because we worked hard to find the offsets in a bloated Federal Budget. 
This same leadership and fiscal discipline is needed to continue to 
grow our economy, deliver larger tax cuts, and save Social Security 
into the next century.
  I have heard many of my other colleagues argue that the unified 
surplus is the result of increases in revenues from income taxes, not 
increases in revenues from the FICA (Social Security) tax. This is true 
in part, but it does not follow that we have a surplus without counting 
the Social Security surplus. In fact, according to the Congressional 
Budget Office, without counting the Social Security surplus, we will 
have a $137 billion deficit over the next five years. Obviously, 
cutting $80 billion in taxes over the next five years without finding 
offsets does diminish the amount that will go into the Social Security 
Trust Fund in the future and could make a long-term solution to 
preserving Social Security more difficult. I do not believe the 
citizens of Delaware, who understand they must balance their family 
budgets and are counting on the Federal government to honor its 
commitment to restore the Social Security Trust Fund to long-term 
actuarial soundness, would want a tax cut before we address the future 
of Social Security.
  Many of the tax provisions in the Taxpayer Relief Act of 1998 
accelerate the tax cuts initially approved in the Taxpayer Relief Act 
of 1997. Delawareans are wise and responsible people. They understand 
that good things come to those who wait and that there must be an 
accounting at the end of the day. I believe they have the discipline to 
balance the need for tax cuts with the need to restore soundness to the 
Social Security Trust Fund and to maintain a balanced federal budget. I 
am proud to represent them and I believe we should reconsider this 
legislation and develop a revised bill that provides for affordable tax 
cuts that meet a higher standard of fiscal responsibility.
  Mr. VENTO. Mr. Speaker, I rise in opposition to this election-year 
gimmick that jeopardizes Social Security to pay for a publicity driven 
tax bill on the eve of an election. To do this, Republicans have to 
waive the budget agreement enacted and agreed to just last year. The 
Republicans have to renege upon the statements made early this year 
when they were pledging ``me too'' in regards to saving Social Security 
first.
  Like Sisyphus, the Clinton Administration, Congress, and the working 
American taxpayer

[[Page H8943]]

have been pushing a deficit rock up the steep budget bill. It has heen 
a long struggle with sacrifices and tough decisions that have been 
borne by many. This hard work and effort has led to positive results 
and hope for a brighter future. Now that we have reached the end of the 
struggle and the pinnacle of that deficit hill, the Republican majority 
is poised to push us back down into the valley of deficit spending 
jeopardizing any surplus and the long-term solvency of the Social 
Security Insurance Trust Funds.
  Common sense economics, our own budget rules, economic projections in 
an unstable global market, the existing debt of over five trillion per 
day, as you go budget rules and the shift of money from Social Security 
Trust Funds all argue against this action. If the GOP wants to cut 
taxes and some of these changes are positive, it ought to earn that 
through positive savings policies, not projections and raiding Social 
Security.
  This debate is about Social Security Trust Funds. The very title 
implies the compact that the Social Security System represents between 
generations of Americans and between the American people and the 
federal government. Trust is a word Congress should honor and the 
Social Security System is based upon trust--trust will be there for 
retirees, future and current, for the disabled and for dependents who 
rely upon this insurance system.
  Today, the Republican majority is about to break that trust and dip 
into the Trust Fund. The Republicans in Congress propose to set aside 
90 percent of the Social Security Trust Funds, which I guess in their 
view is enough. They're not 100 percent against Social Security, but 
are they willing to tell every future and current Social Security 
insurnace recipient that they should take a 10 percent cut?
  I urge my colleagues to learn from our history and to reject the 
syren's call of unfunded tax cuts that could push us into the downward 
spiral of deficit spending. As Samual Taylor Coleridge wrote:

       If men could learn from history, what lessons it might 
     teach us. But passion and party blind our eyes, and the light 
     which experience gives is a lantern on the stern, which 
     shines only on the waves behind us.

  As we sail forward into the next century, let us do so with the 
history of unfunded tax cuts and deficit spending as a spotlight 
shining on the shoals ahead and not a lantern on the stern.
  Ms. ROYBAL-ALLARD. Mr. Speaker, I rise in strong opposition to the 
Republican tax cut plan.
  It is grossly irresponsible that the Republicans have paid for their 
tax cut, not with actual funds, but with a projected budget surplus 
that may never be realized.
  According to the Congressional Budget Office, a recession within the 
next few years could wipe out every penny of the predicted surplus, 
forcing us once again into deficit spending.
  And even more irresponsible is the fact that 98 percent of the 
projected budget surplus through 2008 comes from the Social Security 
trust fund--money that should be reserved for our seniors and future 
retirees.
  Mr. Speaker, I agree that American families deserve a tax break. 
However, no tax cut is worth jeopardizing the future solvency of Social 
Security.
  The Democratic Substitute saves Social Security first and then gives 
hard working American families a much needed tax cut.
  I urge my colleagues to reject the Republcians' irresponsible plan 
and vote in favor of the Democratic substitute.
  Mr. BLUMENAUER. Mr. Speaker, just weeks before the election, the 
Republican leadership has proposed an $80 billion bundle of tax breaks, 
and has asked the American people to pay for these breaks by dipping 
into future Social Security surpluses.
  I have worked my entire professional life to improve the fairness of 
the tax system--first in Oregon and now as a member of the U.S. House 
of Representatives. Unfortunately, the proposal before us today 
represents a scatter-shot collection of inefficient and poorly written 
tax breaks. For example, the so-called ``marriage penalty reduction'' 
gives further tax benefits to those married couples who currently pay 
less in taxes than they would as single taxpayers anyway. Yet other 
couples, who have lower incomes and do face a significant ``marriage 
penalty'' will get no relief at all. In total, this bill gives the top 
2 percent of all taxpayers an average tax cut $1,709 a year. The 160 
million taxpayers who represent the working poor to the upper-middle 
income (about 60 percent of taxpayers) will only receive, on average, a 
$34 cut. This is unacceptable.
  To make matters worse, rather than paying for the cuts as required 
under our budget law, the Republicans scheme targets the Social 
Security surplus. We know the baby-boomers' retirement is a serious 
threat to the federal budget and economy in the near future. We also 
know that we cannot assume our budget surpluses are going to last. If a 
recession occurs, our budget deficits would compound Social Security's 
long-term financing problems, putting in jeopardy our ability to 
provide for the millions of Americans who are counting on Social 
Security to be there when they retire.
  Perhaps we should not be surprised with the content and timing of 
this scheme. After all, this proposal is being put forth by the same 
people who vowed to scrap the entire tax code because it was too 
complex--only to add 285 entirely new sections of tax code through the 
passage of their 1997 Act. And, is it just coincidence we are 
considering this package five weeks before the November elections? 
Rather than continue to play these political games, it is time Congress 
made serious efforts to protect our Social Security system and make the 
tax system more fair, rather than just more complex.
  Mr. BARRETT of Nebraska. Mr. Speaker, building upon the success of 
last year's tax bill, we bring additional tax relief to farmers and 
ranchers.
  In addition to benefitting from general provisions increasing estate 
tax credits, the self-employed health insurance deduction, expensing, 
and limiting the marriage penalty, this bill targets needed tax relief 
for millions of farmers and their families.
  Specifically, the bill permanently extends 3-year income averaging--a 
popular accounting tool that is needed in today's volatile markets.
  The bill also extends net operating loss carryback provisions from 2 
years to 5 years, regardless of whether the producer resides in a 
Presidentially declared disaster area.
  And, finally, the bill clarifies that advanced contract payments will 
not be taxable until they are received. This should help producers 
requesting supplemental payments this year but do not receive them 
until next year.
  I'm pleased to add my support to this modest, yet important tax 
relief measure for America's farmers and ranchers.
  Mr. KOLBE. Mr. Speaker, today, I am pleased to support another piece 
of legislation which will let our constituents, especially our middle 
class constituents, keep more of their hard earned paychecks and 
savings. The money we take as taxes belongs to those who earn it, not 
to Congress. It is our duty to make sure that we take only that money 
absolutely necessary to carry out legitimate Federal Government 
activities. Our citizens know better how to spend their funds than 
Washington bureaucrats.
  This bill doesn't complete the job. It is just another down payment--
another bit of a piecemeal approach, but in my view, allowing those who 
earn the money to keep it is worthwhile whether it be piecemeal or a 
part of a comprehensive plan to reform the tax code which I hope we see 
on this floor in the near future.
  My Democrat colleagues are very disingenuous when they say we're 
raiding the Social Security trust fund to pay for these tax cuts. For 
40 years, they raided the trust fund to pay for new spending on 
programs that brought power and taxes to Washington. Now that 
Republicans have cut spending, given tax relief, built a booming 
economy and accumulated our first surplus in decades while still 
setting aside funds to shore up that trust fund, we hear them cry that 
we can't have tax cuts. Since when is putting 90 percent of the surplus 
to save Social Security and giving 10 percent of it back to the people 
who pay taxes a raid on Social Security?
  Mr. Speaker, I am pleased to support marriage penalty relief for 24 
million couples. I am pleased to let 68 million savers keep the first 
$200 in interest on their savings accounts. I am pleased to let 3.3 
million self employed individuals deduct their health insurance 
premiums just like big corporations. These steps are not nearly enough, 
but they are steps in the right direction. They are steps away from 
bigger government and more spending. I urge my colleagues to join me in 
supporting the Taxpayer Relief Act of 1998.
  Mr. GILMAN. Mr. Speaker, I rise today in strong support of H.R. 4578, 
the Save Social Security Act, and I urge my colleagues to support this 
worthy legislation.
  The intent of this legislation is to establish a new account in which 
surplus moneys from the Social Security trust fund will be deposited. 
In doing so, this will start to address the long-term solvency of the 
Social Security Program.
  This bill designates $1.4 trillion of the surplus to shoring up 
Social Security. This amounts to 90 percent of the projected surplus. 
The remaining 10 percent will be used for providing tax relief for 
middle-class Americans. The $1.4 trillion being set aside for Social 
Security is more than sufficient to both repay borrowed trust fund 
surpluses from previous years, as well as meet the demands that will be 
placed on the system in the coming decade.
  While Social Security has been an unparalleled success over the past 
60 years, its future is being driven by negative demographic trends. 
The Baby Boomer generation is nearing retirement and subsequent 
generations are not large enough to subsidize the boomers' projected 
demands on the Social Security system.

[[Page H8944]]

  Current projections show that the Social Security system will start 
paying out more in benefits than it receives in contributions by the 
year 2013. This incoming/outgoing ratio will gradually worsen until the 
program reaches insolvency in 2032.
  The problems facing Social Security are not immediate. However, the 
longer we wait to make reforms, the more painful those reforms will be.
  It is important to address this subject while our window of 
opportunity remains open. Furthermore, Congress needs to do this in a 
manner that is above politics. The subject of Social Security reform is 
far too important to be influenced by partisan politics.
  Accordingly, Mr. Speaker, Social Security has played a vital role in 
our Nation's success and prosperity this century. I urge my colleagues 
to support this worthy legislation to ensure that it continues to do so 
long into the future.
  Mr. DAVIS of Florida. Mr. Speaker, I rise today in opposition to H.R. 
4579, this year's Taxpayer Relief Act and in support of the Democratic 
alternative which includes all of the tax cuts in the Republican bill 
but which commits Congress to saving Social Security first.
  Today's debate is not about whether we support tax cuts. Most of the 
provisions in this bill are supported by a broad bi-partisan majority 
of this House. Rather, today we are debating whether this House is 
going to abandon the fiscal discipline which has been instrumental in 
balancing the budget and whether we are going to commit to reserving 
the projected surpluses until we have addressed the long-term solvency 
of Social Security.
  The rule adopted yesterday flies in the face of fiscal discipline by 
waiving the pay-as-you-go budget rule for this tax bill. PAYGO forces 
Congress to identify specific offsets for new spending or tax cut 
initiatives. PAYGO was adopted precisely because of the tremendous 
temptations that exist here in Washington to dole out election-year 
spending or tax cuts. We need only to look back to the days before 
PAYGO to see what happens when these temptations go unchecked--deficit 
spending and a massive Federal debt.
  Finally, this year, for the first time in 30 years, we have 
eliminated the budget deficit and have the first surplus in three 
decades. Now, before the ink is even dry, the Republicans are 
abandoning budget discipline and proposing tax cuts, just weeks before 
an election, paid for only with the projected budget surpluses which 
may or may not materialize. This is simply irresponsible.
  Yes, the tax cuts included in this package are popular and 
meritorious. I support reducing the marriage penalty in the Tax Code, 
increasing the deductibility of health insurance for the self-employed, 
raising the Social Security earnings limit, creating additional 
``renewal communities,'' raising the private activity bond cap, and 
many of the other provisions included in this package. There is, 
however, a right way and a wrong way to provide additional tax relief.
  Last year, as part of the bipartisan balanced budget agreement, we 
enacted tax cuts the right way. When we passed $149 billion of tax cuts 
in the Taxpayer Relief Act of 1997, which I voted for, we identified 
specific offsets including a combination of spending cuts and revenue 
raisers allowing us to provide responsible tax relief.
  This year, the Republicans have proposed tax cuts the wrong way. This 
$80 billion tax cut bill is not paid for and requires a special waiver 
from budget rules just to be brought up on the floor of the House. 
There are no offsets, no identified cuts, and instead Republicans 
propose using the projected surpluses which are comprised entirely of 
surpluses in the Social Security trust fund. On the other hand, the 
Democratic alternative, which I support, will enact each and every one 
of the tax cuts in this bill but will postpone enactment until after 
Congress has addressed the long-term solvency of Social Security.
  Today, Congress should be reaffirming its commitment to fiscal 
discipline. Unfortunately, this bill sends a signal to the world 
markets that Congress is perfectly willing to waive budget process 
rules and revert back to the days of fiscal irresponsibility. I urge 
all of my colleagues to vote against this unwise bill which undermines 
the budget process and sets a terrible precedent for the future.
  Mr. DAVIS of Florida. Mr. Speaker, I rise today in strong opposition 
to this rule which not only allows Congress to drain the first budget 
surplus in thirty years, but also, and perhaps more importantly, 
abandons the fiscal discipline which has been critical in achieving a 
balanced budget. This rule allows for the consideration of two bills 
addressing Social Security and tax cuts. While I will speak at greater 
length about the shortcomings of these two proposals, I want to focus 
my comments today on the procedure which I believe sets a dangerous 
precedent for this House.
  This rule flies in the face of the fiscal discipline which has been 
instrumental in bringing our budget into balance. The project surpluses 
in the unified budget, which exist solely because of the surpluses in 
the Social Security trust fund, are primarily the result of budget 
rules and budget discipline which has forced Congress to make tough 
decisions.
  We all know the temptations that exist to spend money up here in 
Washington. This year's massive transportation bill is a testament to 
the powers of the purse. I opposed the House version of that bill 
precisely because it did not identify adequate offsets for the new 
spending and threatened to drain a portion of the projected surplus.
  We also know how tempting it is to dole out tax cuts, particularly 
just two months before an election. While I support many of the tax 
cuts included in the bill brought up under this rule, as with the 
transportation bill, I will not support it until offsets are 
identified.
  To curb these temptations which, when left unchecked, led to massive 
deficits and a national debt of over $5 trillion, Congress enacted 
tough budget rules. Among these rules is the so-called Pay-As-You-Go 
rule or PAYGO which forces us to identify offsets for each new spending 
or tax cut proposal. The rule before us today waives this requirement 
and allows Congress to cut taxes using as an offset the projected 
surpluses which may or may not materialize.
  Given the growing uncertainties of the global economy, now is not the 
time to abandon fiscal responsibility. Instead, we should be building 
up the budget surpluses, retiring a portion of the massive federal 
debt, addressing the long-term solvency of Social Security, and 
conforming to the budget rules which were renewed just last year as 
part of the Balanced Budget Act.
  Today, Congress should be reaffirming its commitment to fiscal 
discipline. Unfortunately, this rule sends a signal to the world 
markets that Congress is perfectly willing to waive budget process 
rules and revert back to the days of fiscal irresponsibility. I urge 
all of my colleagues to vote against this unwise rule which undermines 
the budget process and sets a terrible precedent for the future.
  Mr. VISCLOSKY. Mr. Speaker, I rise today to give my support to 
protecting 100 percent of the Social Security Trust Fund and not using 
any of the projected surplus for tax cuts at this time. For over sixty 
years, Social Security has stood as one of our Nation's greatest 
success stories, providing all Americans with a basic level of 
retirement security.
  Social Security is a contract between the citizens of the U.S. and 
their government. The people in this country are entitled to know that 
in retirement they will have security, live in dignity, and be provided 
with health care. Today, two-thirds of retirees in this nation depend 
upon Social Security to provide over half of their annual income. Our 
constituents should know that we, as the leaders of this country, are 
looking out for not only their future, but the future of their 
children. A vital requirement for protecting that future is saving 
Social Security first. Our constituents should be able to trust that 
their contributions to the Social Security Trust Fund are being used as 
intended.
  I am opposed to cutting Social Security in order to provide tax cuts 
to those with higher incomes. As lawmakers, we owe it to the country to 
provide for the long-term fiscal health of Social Security and other 
Federal retirement programs, and to ensure that these programs are 
available to future generations of Americans without increasing the 
payroll tax.
  Some have suggested we should enact a series of major tax cuts in 
anticipation of the projected budget surplus. What these individuals 
neglect to point out is that almost all of the money to pay for their 
tax cuts would be drawn out of the Social Security Trust Fund and other 
Federal trust funds--trust funds that should be preserved for their 
intended uses. The best tax cut we can give to the American family is a 
truly balanced Federal budget. A balanced budget will lead to lower 
interest rates and strong economic growth. I am firmly committed to a 
balanced budget--a budget that protects Social Security for future 
generations.
  In closing, let me say that the question of how to approach any 
budget surplus is one of the most important issues facing this country. 
I believe we should resist calls to spend the projected surplus and 
consider our options very carefully. Balancing the Federal budget and 
keeping it balanced should continue to be one of this country's top 
priorities, and you can be assured that I remain absolutely committed 
to accomplishing these goals. We owe it to our constituents, our 
children, and ourselves to save Social Security.
  Mr. POSHARD. Mr. Speaker, I rise in opposition to H.R. 4579 today, 
despite the fact that it contains many provisions I have long 
supported. During our pursuit of a balanced budget I have advocated for 
accomplishing that goal, and then proceeding to consider possible tax 
cuts. I did vote for the Balanced Budget Act (BBA) of 1997, which 
included tax cuts, because it became obvious that if tax cuts

[[Page H8945]]

were not a part of that package we would have remained gridlocked. Now 
that we have leveled the books for this fiscal year, with a surplus 
that is yet to be determined, it is not the time to abandon the fiscal 
responsibility that got us to this point. I am for accelerating the 
estate tax relief in the BBA and other provisions to help our farmers. 
I am for the 100% deductibility of health insurance costs for the self-
employed. I am for incentives for community renewal in our urban areas, 
and for addressing the infrastructure needs of our schools. I will vote 
for them as part of the Rangel substitute, which I have cosponsored. 
But I will not vote for endangering the Social Security system. H.R. 
4579 is not a credible way to ensure that the money the citizens of 
this country are putting away for tomorrow is there when they need it. 
We see the letters in our offices everyday from our seniors and the 
family members that help care for them--protect social security. It is 
a principle worth defending.
  Last year we stood at a critical point in this institution's history. 
We came together in a bipartisan way to enact legislation that advanced 
goals that were dear to both sides. And overall, it has been a 
successful effort. We are at a similar point today. Let us be careful 
as to how we proceed. The Rangel substitute offers tax breaks and a 
solvent Social Security program. These area goals on which we should 
all agree. I urge my colleagues to support this legislation, and oppose 
H.R. 4579.
  Mr. CRANE. Mr. Speaker, I rise in support of the Taxpayer Relief Act 
of 1998.
  I am particularly proud of the fact that this tax cut measure is the 
first in our new era of surpluses in the federal budget. I have 
advocated that we in Congress use the budget surplus for debt reduction 
and tax relief, but not for more spending. The Taxpayer Relief Act of 
1998 and the accompanying Save Social Security Act do just that. While 
protecting the budget surplus from Washington's big spenders, we are 
using 10 percent of the surplus for valuable tax cuts now while 
reserving 90 percent to committing to the protection of Social Security 
for the future.
  While I would have preferred more tax relief for Americans, this 
modest bill packs a great deal of punch. For example, the bill centers 
on a proposal which begins our attack on the marriage tax penalty by 
increasing the standard deduction for married couples. America's 
seniors will also see benefits as this bill raises the Social Security 
earnings limit. Our military personnel will benefit from a provision 
which makes it easier for them to sell their home when they are forced 
to move in the course of their service to our country.
  This tax bill includes several proposals that I have advocated for 
years and that small businesses have been yearning for--including the 
ability for the self-employed to deduct 100 percent of their health 
insurance. The estate or death tax relief from last year's tax cut bill 
will be accelerated so that family-owned businesses can take advantage 
of this relief starting next year.
  The Taxpayer Relief Act begins the process of simplifying the tax 
code. By providing the marriage penalty relief, an exclusion from taxes 
on small amounts of interest and dividend income and by adjusting the 
alternative minimum tax rules, millions of Americans will have a much 
easier time filing their taxes.
  As Chairman of the Ways and Means Trade Subcommittee, I want to make 
particular mention of the extension of the Generalized System of 
Preferences or GSP made possible in this bill. GSP is a valuable 
program that assists developing countries with trade rather than 
foreign aid--a concept I heartily endorse.
  In contrast to the Republican plan of utilizing the budget surplus 
for debt reduction, tax relief and preserving Social Security, the 
Democrats want to spend the budget surplus now and postpone tax cuts 
for an indefinite time. The Democrat plan would prevent tax relief to 
married couples, small businesses and America's seniors. Their cries as 
protectors of the Social Security trust funds should ring hollow in 
light of their decades of fiscal irresponsibility when they controlled 
the House as the majority. I urge my colleagues to reject the Democrat 
plan.
  I commend Chairman Archer on his efforts in crafting this bill, look 
forward to providing more tax relief to Americans next year and urge my 
colleagues to support H.R. 4579.
  Mr. PACKARD. Mr. Speaker, I rise today in support of H.R. 4579, The 
Taxpayer Relief Act of 1998. This legislation will allow American 
families to keep more of their hardearned money.
  The Taxpayer Relief Act, or the ``90-10 Plan,'' will return 10 
percent of the anticipated budget surplus, which is currently projected 
at $1.5 trillion over the next five years, to the hardworking families 
of America, while automatically designating the remaining 90% to 
protect and strengthen Social Security. American taxpayers are already 
grossly overtaxed, Washington does not need more of their hard-earned 
money.
  The Taxpayer Relief Act is aimed at benefiting everyone who earns a 
paycheck. This legislation will provide relief from the marriage 
penalty tax, reduces taxes on savings, simplifies tax forms and 
eliminates penalties for military personnel whose call of duty often 
requires them to sell their homes and relocate.
  Mr. Speaker, the budget surplus belongs to the American taxpayer, not 
to Washington bureaucrats. Families have a right to keep their money, 
and H.R. 4579 will allow them to do just that. If we can't give 
Americans a tax break when we are running a $1.5 trillion surplus, then 
when can we? The time to cut taxes and save Social Security is now. I 
urge my colleagues to support H.R. 4579.
  Mr. COSTELLO. Mr. Speaker, I rise today in strong opposition to HR 
4579, the ``Taxpayer Relief Act''.
  The tax cut bill approved by the House Ways and Means Committee 
violates budget rules that bar the use of the expected budget surplus 
to fund tax cuts. It is irresponsible fiscal policy by the Republican 
leadership to propose using 10 percent of the Social Security Trust 
Fund for tax cuts.
  Mr. Speaker, it is unconscionable to provide a tax cut from the 
proposed surplus of which 98 percent is generated by payroll taxes from 
Social Security. A surplus that would not even be there without the 
Social Security Trust Fund! In fact, if it wasn't for Social Security, 
the federal budget would have an estimated deficit of $137 billion over 
the next 5 years.
  I have cosponsored and I support legislation to eliminate the 
marriage tax penalty, provide 100 percent deductibility for self-
employed insurance, and provide education and child care tax credits. 
However, this legislation is not the way to cut taxes. I want cuts to 
be made in a fair and equitable manner that will not adversely affect 
the Social Security Trust Fund.
  I urge my colleagues to vote against this legislation and instead 
support the Democratic Substitute which includes all of the tax cuts 
contained in the Republican bill without using the Social Security 
surplus.
  Mr. KNOLLENBERG. Mr. Speaker, with the federal government projected 
to run a budget surplus that exceeds $1.6 trillion over the next 10 
years, Congress has an historic opportunity to save Social Security and 
provide some much-needed tax relief.
  I urge my colleagues to support Chairman Archer's 90-10 proposal. 
Yesterday, we passed the Save Social Security Act which sets aside 90 
percent of the budget surplus to save Social Security. Today, we will 
return the additional 10% to hardworking taxpayers. We can do both.
  They are not mutually exclusive.
  With the average family still paying more in taxes than it spends on 
housing, food, and clothing combined, we have an obligation to cut 
taxes for working American families.
  The centerpiece of Chairman Archer's tax cut mirrors a provision I 
introduced last year that would increase the standard deduction for 
married couples so that it equals twice the amount of the standard 
deduction provided to single taxpayers.
  Mr. Speaker, the federal government should honor the institution of 
marriage, not penalize it by imposing higher taxes on married couples. 
This is a major step forward in the effort to eliminate the marriage 
penalty from the tax code.
  Chairman Archer's bill also includes tax relief for seniors and self-
employed workers. And it accelerates the estate tax relief we passed 
last year.
  Mr. Speaker, the same Republican Congress that balanced the budget, 
reformed welfare, saved Medicare, and provided the first tax cut since 
1981 is going to save Social Security and provide the American people 
with the additional tax relief they deserve.
  I urge my colleagues to stand up for overtaxed Americans and reject 
the misleading rhetoric emanating from those who want to increase the 
size and power of the federal government.
  Vote no on the Rangel substitute. Vote yes for the base bill.
  Mr. ETHERIDGE. Mr. Speaker, I rise in strong opposition to this 
Republican raid on Social Security.
  Millions of American families in my district and across the country 
depend on Social Security for their economic survival in their 
retirement years. Without Social Security, the majority of our older 
citizens would fall into poverty. This bill would imperil the Social 
Security Trust Fund, and I urge my colleagues to vote against it.
  Let me state clearly that I support tax relief. The burden of 
taxation on America's families and our country's businesses needs to be 
reduced substantially. The very first bill I introduced as a Member of 
this House provides relief from the inheritance tax for family farmers 
and small businesses, and I am tremendously proud that last year's 
bipartisan balanced budget included similar provisions. I also strongly 
support the bill's tax relief for America's families who are struggling 
to pay for college education, which holds the key to the

[[Page H8946]]

American dream. I have introduced legislation to provide tax credits to 
help local communities afford to build new schools to relieve 
overcrowding, reduce class sizes and improve education. And I support 
many of the specific tax cuts contained in this bill.
  But fiscal responsibility demands that we pay for any revenue losses, 
and this bill utterly fails to meet that standard. For thirty years, 
Washington politicians irresponsibly mortgaged our nation's future by 
running up a $5.5 trillion debt. I sought this office to help put our 
fiscal house in order and restore the promise of the future for working 
American families. Last year, this Congress finally stood up for 
America' values by balancing the budget for the first time in a 
generation. This bill violates those values and puts Social Security at 
risk to finance an election-eve tax cut.
  I urge my colleagues to exert the courage to oppose this political 
gimmick that threatens Social Security, our senior citizens and 
America's future prosperity.
  Mr. RAMSTAD. Mr. Speaker, yesterday we took steps to bank 90 percent 
of the budget surplus to save Social Security. Today we will give back 
a small portion to help people who gave us the surplus in the first 
place--American taxpayers.
  The marriage penalty tax relief will help 24 million American 
couples--875,000 people in my home state of Minnesota alone. Seniors 
will be able to earn more before the government confiscates their 
social security payments. Countless farmers and small busienss 
entrepreneurs need our help with estate taxes, health insurance costs 
and expensing. Farmers need the added relief of permanent income 
averaging, an expanded Net Operating Loss carryback period and market 
transition payment help.
  And aside from the tax relief in real dollar terms, we provide needed 
tax simplification. Fewer Americans will have to itemize because of the 
doubled standard deduction for married taxpayers. Millions of other 
Americans will be able to fill out a simple EZ form because of the 
small interest and dividend exemption--a provision that will help 1.4 
million Minnesotans keep more of their savings. And many more Amercians 
will be spared from paying death taxes and making the excruciating 
calculations required by the Alternative Minimum Tax.
  This bill also provides critical assistance for school districts and 
state and local governments through the school construction bond 
provisions and the increase in the private activity bonding cap. The 
community renewal provisions will provide hope to desperately hurting 
communities.
  We also extend expiring provisions crucial for American 
competitiveness, for charitable giving, and for moving Americans off 
welfare and into the workforce.
  Mr. Speaker, the government is taking more taxes from Americans today 
than at any time in U.S. history. Families know better what to do with 
their own money than the federal government. It's time to let the 
taxpayers who need it most to keep more of what they earn.
  Mr. STEARNS. Mr. Speaker, in the ``90-10 tax cut'' Mr. Archer uses 
10% of the projected surplus to provide relief to farmers, married 
couples, seniors, small businesses, savings account-holders, and 
students, while preserving 90% of the surplus of Social Security. 
Ideally, I would favor funding Mr. Archers's tax cuts by eliminating 
wasteful programs in the budget. They are money programs we could 
eliminate to reduce spending, such as: $3,500,000 for facilities at 
Delaware Water Gap National Recreation Area, $3,000,000 for the 
International Fertilizer Development Center (IFDC), and $250,000 for 
production of ammunition guides by the ATF.
  However, the 90/10 plan achieves and important goal--this bill 
eliminates oppressive tax code sections while preventing wasteful 
surplus spending.
  The surplus belongs to the taxpayers, not Washington. This money 
should be returned to Americans as Social Security funds and tax cuts.
  Twenty-one million Americans are slapped with an average of $1,400 in 
higher taxes every year because of the marriage penalty. H.R. 4579 
amends the tax code to make the schedule of standard deductions allowed 
for single and married taxpayers more equitable--and effectively ends 
the ``marriage penalty.''
  The bill supports community renewal by authorizing 20 tax incentives 
for communities. Tax incentives such as the Work Opportunity Tax Credit 
and the R&E Tax Credit would be extended. Military personnel would 
receive tax relief--it would be easier for them to qualify for the 
exclusion of gain on the sale of a home under the bill. Education and 
infrastructure would be improved with greater participation in 
privately pre-paid tuition plans, relaxing the arbitrage rebate, and 
increasing private activity bonds caps.
  Mr. Speaker, with all of these benefits going to deserving, hard-
working Americans, I support H.R. 4579. Americans want and deserve a 
break--let's give it to them.
  Mr. KLECZKA. Mr. Speaker, I rise in opposition to this irresponsible 
election year tax bill. An $80 billion tax cut that is not paid for 
with spending reductions and coming just 40 days before the election is 
a very transparent election year gimmick.
  While I certainly do not object to prudent reductions in taxes, I am 
opposed to tax cuts that are paid for with the projected budget 
surplus. In 1991, Congress and the Administration came together in a 
bipartisan manner to enact a set of tough, but fair, rules in order to 
bring the government's finances in order. Simply put, these rules 
require that any reduction in taxes must be paid for by an equal 
reduction in spending or increase in taxes. In an overwhelmingly 
bipartisan vote in last year's balanced budget legislation, Congress 
re-affirmed those rules. I supported the rules then, and I support them 
now.
  The bill before us today completely ignores those rules. Instead of 
making the tough choices by cutting wasteful spending or closing 
inappropriate loopholes in the tax code to pay for the tax cut, the 
Republican leadership has brought before us a bill that would 
recklessly spend a portion of the projected budget surplus on tax cuts.
  But first let me remind my colleagues that the surplus does not yet 
exist. The surplus is simply a result of complex economic assumptions 
that could change without notice. According to the Congressional Budget 
Office, a recession similar to the one our nation endured in 1990 and 
1991 would wipe out the projected surplus for years to come. A 
recession, combined with tax cuts that were not paid for, could very 
easily return our nation to a period of crippling deficits just when 
our government finances have been brought into order.
  Moreover, the projected budget surplus is almost completely a result 
of the surplus in Social Security. If the surplus in Social Security 
was excluded from the federal budget, our government would still have a 
deficit of $40 billion this year and would not have a period of 
prolonged surpluses until 2005. This fact was recently pointed out by 
the non-partisan budget watchdog group, the Concord Coalition, when 
they said, ``Without dipping into funds earmarked for Social Security, 
there is no budget surplus to spend.'' By spending 10 percent of the 
projected surplus on tax cuts, this legislation increases the amount of 
revenue we will need to ensure the solvency of Social Security.
  Before we rush to fritter away the projected surplus, it should be 
our top priority to ensure the long-term financial health of our 
nation's Social Security program. The alternative, which I support, 
would provide the very same tax cuts in the Republican bill. However, 
there is an important distinction in the alternative--the tax cuts 
would not go into effect until a long-term solution to Social Security 
is enacted.
  That is a reasonable solution. It is my hope that Congress and the 
Administration will act in a bipartisan manner early next year to 
ensure that Social Security is able to honor its obligations for future 
generations. If we can do that, Americans will have the best of both 
worlds--a secure financial future and tax cuts.
  Mr. Speaker, to enact a tax cut bill that is paid for with the 
projected surplus is a reckless and desperate election year gimmick by 
the Republican leadership. Our senior citizens know the value of Social 
Security--they have been through the Great Depression and they know the 
importance of saving for the future. The American public will see 
through this thinly-veiled election year sham. Let's save Social 
Security first!
  Mr. GILMAN. Mr. Speaker, I rise today in support of H.R. 4579, the 
Taxpayer Relief Act of 1998.
  On April 28, 1998, the President said ``Above all, let me say again, 
we must save every penny of any budget surplus of any size until we 
have strengthened Social Security * * * I will resist any proposals 
that would squander the budget surplus, whether on new spending 
programs or new tax cuts, until Social Security is strengthened for the 
long-term. Once more I will insist that we save Social Security 
first.''
  Yet, the President has failed to tell the American people that he has 
already agreed to spend the surplus on Bosnia, and has numerous new 
spending programs in his budget that are unpaid. In addition, the 
surplus at the time of his remarks was expected to run at about $600 
billion, instead of the now $1.6 trillion surplus.
  I agree with those who have called on the Congress to save Social 
Security and that is precisely why I supported H.R. 4578, a bill 
setting aside $1.4 trillion of the surplus, or more than twice the 
amount the President proposed to save, until Social Security can be 
saved.
  According to the Congressional Budget Office, the deficit has become 
a surplus because income taxes are up by $600 billion and Government 
spending is down by $700 billion, thanks to the 1997 balanced budget 
agreement, and the hard work of working American families.

[[Page H8947]]

  Isn't it about time that hard working American families get something 
back for their efforts in helping to attain this current surplus. After 
all the surplus is a direct result of increasing tax receipts, not from 
Social Security as some would have us believe.
  The Taxpayer Relief Act will amend the Tax Code to make the schedule 
of standard deductions allowed for single and married taxpayers more 
equitable, effectively ending the ``marriage penalty'' inherent in the 
current tax code; raises the earning limits for seniors who receive 
Social Security benefits and are between full retirement age and 70 
years of age to $39,750 in 2008; makes permanent current law provisions 
which allow farmers to combine their annual taxable income for three 
years, taking the average of that sum to compute their tax liability 
for a current tax year; reduces the ``death tax''; and important tax 
reductions aimed at the lower and middle class.
  The choice is simple. Allow the President and Congress to continue to 
spend the money of hard working Americans or give back the money that 
they have earned.
  If Congress and the President are unable to support allowing American 
families to keep the money they have earned now, during a $1.6 trillion 
surplus, then when can families expect Washington to do the right 
thing.
  Accordingly, I urge all of my colleagues to vote for the Taxpayer 
Relief Act of 1998.
  The SPEAKER pro tempore. All time for general debate has expired.


  Amendment No. 1 in the Nature of a Substitute Offered by Mr. Rangel

  Mr. RANGEL. Mr. Speaker, I offer Amendment No. 1 in the nature of a 
substitute, made in order under the rule.
  The SPEAKER pro tempore. The Clerk will designate the amendment in 
the nature of a substitute.
  The text of the amendment in the nature of a substitute is as 
follows:

       Amendment No. 1 in the nature of a substitute offered by 
     Mr. Rangel:
       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. SHORT TITLE, ETC.

       (a) Short Title.--This Act may be cited as the ``Taxpayer 
     Relief Act of 1998''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
       (c) Table of Contents.--

Sec. 1. Short title, etc.

    TITLE I--PROVISIONS PRIMARILY AFFECTING INDIVIDUALS AND FAMILIES

                     Subtitle A--General Provisions

Sec. 101. Elimination of marriage penalty in standard deduction.
Sec. 102. Exemption of certain interest and dividend income from tax.
Sec. 103. Nonrefundable personal credits allowed against alternative 
              minimum tax.
Sec. 104. 100 percent deduction for health insurance costs of self-
              employed individuals.
Sec. 105. Special rule for members of uniformed services and Foreign 
              Service in determining exclusion of gain from sale of 
              principal residence.
Sec. 106. $1,000,000 exemption from estate and gift taxes.

              Subtitle B--Provisions Relating to Education

Sec. 111. Eligible educational institutions permitted to maintain 
              qualified tuition programs.
Sec. 112. Modification of arbitrage rebate rules applicable to public 
              school construction bonds.

           Subtitle C--Provisions Relating to Social Security

Sec. 121. Increases in the social security earnings limit for 
              individuals who have attained retirement age.
Sec. 122. Recomputation of benefits after normal retirement age.

 TITLE II--PROVISIONS PRIMARILY AFFECTING FARMING AND OTHER BUSINESSES

     Subtitle A--Increase in Expense Treatment for Small Businesses

Sec. 201. Increase in expense treatment for small businesses.

               Subtitle B--Provisions Relating to Farmers

Sec. 211. Income averaging for farmers made permanent.
Sec. 212. 5-year net operating loss carryback for farming losses.
Sec. 213. Production flexibility contract payments.

      Subtitle C--Increase in Volume Cap on Private Activity Bonds

Sec. 221. Increase in volume cap on private activity bonds.

  TITLE III--EXTENSION AND MODIFICATION OF CERTAIN EXPIRING PROVISIONS

                       Subtitle A--Tax Provisions

Sec. 301. Research credit.
Sec. 302. Work opportunity credit.
Sec. 303. Welfare-to-work credit.
Sec. 304. Contributions of stock to private foundations; expanded 
              public inspection of private foundations' annual returns.
Sec. 305. Subpart F exemption for active financing income.

             Subtitle B--Generalized System of Preferences

Sec. 311. Extension of Generalized System of Preferences.

                        TITLE IV--REVENUE OFFSET

Sec. 401. Treatment of certain deductible liquidating distributions of 
              regulated investment companies and real estate investment 
              trusts.

                     TITLE V--TECHNICAL CORRECTIONS

Sec. 501. Definitions; coordination with other titles.
Sec. 502. Amendments related to Internal Revenue Service Restructuring 
              and Reform Act of 1998.
Sec. 503. Amendments related to Taxpayer Relief Act of 1997.
Sec. 504. Amendments related to Tax Reform Act of 1984.
Sec. 505. Other amendments.

            TITLE VI--AMERICAN COMMUNITY RENEWAL ACT OF 1998

Sec. 601. Short title.
Sec. 602. Designation of and tax incentives for renewal communities.
Sec. 603. Extension of expensing of environmental remediation costs to 
              renewal communities.
Sec. 604. Extension of work opportunity tax credit for renewal 
              communities
Sec. 605. Conforming and clerical amendments.
Sec. 606. Evaluation and reporting requirements.

     TITLE VII--TAX REDUCTIONS CONTINGENT ON SAVING SOCIAL SECURITY

Sec. 701. Tax reductions contingent on saving social security.

    TITLE I--PROVISIONS PRIMARILY AFFECTING INDIVIDUALS AND FAMILIES

                     Subtitle A--General Provisions

     SEC. 101. ELIMINATION OF MARRIAGE PENALTY IN STANDARD 
                   DEDUCTION.

       (a) In General.--Paragraph (2) of section 63(c) (relating 
     to standard deduction) is amended--
       (1) by striking ``$5,000'' in subparagraph (A) and 
     inserting ``twice the dollar amount in effect under 
     subparagraph (C) for the taxable year'',
       (2) by adding ``or'' at the end of subparagraph (B),
       (3) by striking ``in the case of'' and all that follows in 
     subparagraph (C) and inserting ``in any other case.'', and
       (4) by striking subparagraph (D).
       (b) Additional Standard Deduction for Aged and Blind To Be 
     the Same for Married and Unmarried Individuals.--
       (1) Paragraphs (1) and (2) of section 63(f) are each 
     amended by striking ``$600'' and inserting ``$750''.
       (2) Subsection (f) of section 63 is amended by striking 
     paragraph (3) and by redesignating paragraph (4) as paragraph 
     (3).
       (c) Technical Amendments.--
       (1) Subparagraph (B) of section 1(f)(6) is amended by 
     striking ``(other than with'' and all that follows through 
     ``shall be applied'' and inserting ``(other than with respect 
     to sections 63(c)(4) and 151(d)(4)(A)) shall be applied''.
       (2) Paragraph (4) of section 63(c) is amended by adding at 
     the end the following flush sentence:

     ``The preceding sentence shall not apply to the amount 
     referred to in paragraph (2)(A).''
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1998.

     SEC. 102. EXEMPTION OF CERTAIN INTEREST AND DIVIDEND INCOME 
                   FROM TAX.

       (a) In General.--Part III of subchapter B of chapter 1 
     (relating to amounts specifically excluded from gross income) 
     is amended by inserting after section 115 the following new 
     section:

     ``SEC. 116. PARTIAL EXCLUSION OF DIVIDENDS AND INTEREST 
                   RECEIVED BY INDIVIDUALS.

       ``(a) Exclusion From Gross Income.--Gross income does not 
     include dividends and interest received during the taxable 
     year by an individual.
       ``(b) Limitations.--
       ``(1) Maximum amount.--The aggregate amount excluded under 
     subsection (a) for any taxable year shall not exceed $200 
     ($400 in the case of a joint return).
       ``(2) Certain dividends excluded.--Subsection (a) shall not 
     apply to any dividend from a corporation which, for the 
     taxable year of the corporation in which the distribution is 
     made, or for the next preceding taxable year of the 
     corporation, is a corporation exempt from tax under section 
     501 (relating to certain charitable, etc., organization) or 
     section 521 (relating to farmers' cooperative associations).
       ``(c) Special Rules.--For purposes of this section--
       ``(1) Exclusion not to apply to capital gain dividends from 
     regulated investment companies and real estate investment 
     trusts.--

  ``For treatment of capital gain dividends, see sections 854(a) and 
857(c).


[[Page H8948]]


       ``(2) Certain nonresident aliens ineligible for 
     exclusion.--In the case of a nonresident alien individual, 
     subsection (a) shall apply only--
       ``(A) in determining the tax imposed for the taxable year 
     pursuant to section 871(b)(1) and only in respect of 
     dividends and interest which are effectively connected with 
     the conduct of a trade or business within the United States, 
     or
       ``(B) in determining the tax imposed for the taxable year 
     pursuant to section 877(b).
       ``(3) Dividends from employee stock ownership plans.--
     Subsection (a) shall not apply to any dividend described in 
     section 404(k).''
       (b) Conforming Amendments.--
       (1)(A) Subparagraph (A) of section 135(c)(4) is amended by 
     inserting ``116,'' before ``137''.
       (B) Subsection (d) of section 135 is amended by 
     redesignating paragraph (4) as paragraph (5) and by inserting 
     after paragraph (3) the following new paragraph:
       ``(4) Coordination with section 116.--This section shall be 
     applied before section 116.''
       (2) Paragraph (2) of section 265(a) is amended by inserting 
     before the period ``, or to purchase or carry obligations or 
     shares, or to make deposits, to the extent the interest 
     thereon is excludable from gross income under section 116''.
       (3) Subsection (c) of section 584 is amended by adding at 
     the end thereof the following new flush sentence:

     ``The proportionate share of each participant in the amount 
     of dividends or interest received by the common trust fund 
     and to which section 116 applies shall be considered for 
     purposes of such section as having been received by such 
     participant.''
       (4) Subsection (a) of section 643 is amended by 
     redesignating paragraph (7) as paragraph (8) and by inserting 
     after paragraph (6) the following new paragraph:
       ``(7) Dividends or interest.--There shall be included the 
     amount of any dividends or interest excluded from gross 
     income pursuant to section 116.''
       (5) Section 854(a) is amended by inserting ``section 116 
     (relating to partial exclusion of dividends and interest 
     received by individuals) and'' after ``For purposes of''.
       (6) Section 857(c) is amended to read as follows:
       ``(c) Restrictions Applicable to Dividends Received From 
     Real Estate Investment Trusts.--
       ``(1) Treatment for section 116.--For purposes of section 
     116 (relating to partial exclusion of dividends and interest 
     received by individuals), a capital gain dividend (as defined 
     in subsection (b)(3)(C)) received from a real estate 
     investment trust which meets the requirements of this part 
     shall not be considered as a dividend.
       ``(2) Treatment for section 243.--For purposes of section 
     243 (relating to deductions for dividends received by 
     corporations), a dividend received from a real estate 
     investment trust which meets the requirements of this part 
     shall not be considered as a dividend.''
       (7) The table of sections for part III of subchapter B of 
     chapter 1 is amended by inserting after the item relating to 
     section 115 the following new item:

``Sec. 116. Partial exclusion of dividends and interest received by 
              individuals.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1998.

     SEC. 103. NONREFUNDABLE PERSONAL CREDITS ALLOWED AGAINST 
                   ALTERNATIVE MINIMUM TAX.

       (a) In General.--Subsection (a) of section 26 is amended to 
     read as follows:
       ``(a) Limitation Based on Amount of Tax.--The aggregate 
     amount of credits allowed by this subpart for the taxable 
     year shall not exceed the sum of--
       ``(1) the taxpayer's regular tax liability for the taxable 
     year, and
       ``(2) the tax imposed for the taxable year by section 
     55(a).

     For purposes of applying the preceding sentence, paragraph 
     (2) shall be treated as being zero for any taxable year 
     beginning during 1998.''.
       (b) Conforming Amendments.--
       (1) Subsection (d) of section 24 is amended by striking 
     paragraph (2) and by redesignating paragraph (3) as paragraph 
     (2).
       (2) Section 32 is amended by striking subsection (h).
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1997.

     SEC. 104. 100 PERCENT DEDUCTION FOR HEALTH INSURANCE COSTS OF 
                   SELF-EMPLOYED INDIVIDUALS.

       (a) In General.--Paragraph (1) of section 162(l) (relating 
     to special rules for health insurance costs of self-employed 
     individuals) is amended to read as follows:
       ``(1) Allowance of deduction.--In the case of an individual 
     who is an employee within the meaning of section 401(c)(1), 
     there shall be allowed as a deduction under this section an 
     amount equal to 100 percent of the amount paid during the 
     taxable year for insurance which constitutes medical care for 
     the taxpayer, his spouse, and dependents.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1998.

     SEC. 105. SPECIAL RULE FOR MEMBERS OF UNIFORMED SERVICES AND 
                   FOREIGN SERVICE IN DETERMINING EXCLUSION OF 
                   GAIN FROM SALE OF PRINCIPAL RESIDENCE.

       (a) In General.--Subsection (d) of section 121 (relating to 
     exclusion of gain from sale of principal residence) is 
     amended by adding at the end the following new paragraph:
       ``(9) Members of uniformed services and foreign service.--
       ``(A) In general.--The running of the 5-year period 
     described in subsection (a) shall be suspended with respect 
     to an individual during any time that such individual or such 
     individual's spouse is serving on qualified official extended 
     duty as a member of the uniformed services or of the Foreign 
     Service.
       ``(B) Qualified official extended duty.--For purposes of 
     this paragraph--
       ``(i) In general.--The term `qualified official extended 
     duty' means any period of extended duty as a member of the 
     uniformed services or a member of the Foreign Service during 
     which the member serves at a duty station which is at least 
     50 miles from such property or is under Government orders to 
     reside in Government quarters.
       ``(ii) Uniformed services.--The term `uniformed services' 
     has the meaning given such term by section 101(a)(5) of title 
     10, United States Code, as in effect on the date of the 
     enactment of the Taxpayer Relief Act of 1998.
       ``(iii) Foreign service of the united states.--The term 
     `member of the Foreign Service' has the meaning given the 
     term `member of the Service' by paragraph (1), (2), (3), (4), 
     or (5) of section 103 of the Foreign Service Act of 1980, as 
     in effect on the date of the enactment of the Taxpayer Relief 
     Act of 1998.
       ``(iv) Extended duty.--The term `extended duty' means any 
     period of active duty pursuant to a call or order to such 
     duty for a period in excess of 90 days or for an indefinite 
     period.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to sales and exchanges after the date of the 
     enactment of this Act.

     SEC. 106. $1,000,000 EXEMPTION FROM ESTATE AND GIFT TAXES.

       (a) In General.--Subsection (c) of section 2010 (relating 
     to applicable credit amount) is amended to read as follows:
       ``(c) Applicable Credit Amount.--
       ``(1) In general.--For purposes of this section, the 
     applicable credit amount is $345,800.
       ``(2) Applicable exclusion amount.--For purposes of the 
     provisions of this title which refer to this subsection, the 
     applicable exclusion amount is $1,000,000.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to estates of decedents dying, and gifts made, 
     after December 31, 1998.

              Subtitle B--Provisions Relating to Education

     SEC. 111. ELIGIBLE EDUCATIONAL INSTITUTIONS PERMITTED TO 
                   MAINTAIN QUALIFIED TUITION PROGRAMS.

       (a) In General.--Paragraph (1) of section 529(b) (defining 
     qualified State tuition program) is amended by inserting ``or 
     by 1 or more eligible educational institutions'' after 
     ``maintained by a State or agency or instrumentality 
     thereof''.
       (b) Technical Amendments.--
       (1) The texts of sections 72(e)(9), 135(c)(2)(C), 
     135(d)(1)(D), 529, 530, and 4973(e)(1)(B) are each amended by 
     striking ``qualified State tuition program'' each place it 
     appears and inserting ``qualified tuition program''.
       (2) The paragraph heading for paragraph (9) of section 
     72(e) and the subparagraph heading for subparagraph (B) of 
     section 530(b)(2) are each amended by striking ``state''.
       (3) The subparagraph heading for subparagraph (C) of 
     section 135(c)(2) is amended by striking ``qualified state 
     tuition program'' and inserting ``qualified tuition 
     programs''.
       (4) Sections 529(c)(3)(D)(i) and 6693(a)(2)(C) are each 
     amended by striking ``qualified State tuition programs'' and 
     inserting ``qualified tuition programs''.
       (5)(A) The section heading of section 529 is amended to 
     read as follows:

     ``SEC. 529. QUALIFIED TUITION PROGRAMS.''.

       (B) The item relating to section 529 in the table of 
     sections for part VIII of subchapter F of chapter 1 is 
     amended by striking ``State''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 1999.

     SEC. 112. MODIFICATION OF ARBITRAGE REBATE RULES APPLICABLE 
                   TO PUBLIC SCHOOL CONSTRUCTION BONDS.

       (a) In General.--Subparagraph (C) of section 148(f)(4) is 
     amended by adding at the end the following new clause:
       ``(xviii) 4-year spending requirement for public school 
     construction issue.--

       ``(I) In general.--In the case of a public school 
     construction issue, the spending requirements of clause (ii) 
     shall be treated as met if at least 10 percent of the 
     available construction proceeds of the construction issue are 
     spent for the governmental purposes of the issue within the 
     1-year period beginning on the date the bonds are issued, 30 
     percent of such proceeds are spent for such purposes within 
     the 2-year period beginning on such date, 50 percent of such 
     proceeds are spent for such purposes within the 3-year period 
     beginning on such date, and 100 percent of such proceeds are 
     spent for such purposes within the 4-year period beginning on 
     such date.
       ``(II) Public school construction issue.--For purposes of 
     this clause, the term `public school construction issue' 
     means any construction issue if no bond which is part of such 
     issue is a private activity bond and all

[[Page H8949]]

     of the available construction proceeds of such issue are to 
     be used for the construction (as defined in clause (iv)) of 
     public school facilities to provide education or training 
     below the postsecondary level or for the acquisition of land 
     that is functionally related and subordinate to such 
     facilities.
       ``(III) Other rules to apply.--Rules similar to the rules 
     of the preceding provisions of this subparagraph which apply 
     to clause (ii) also apply to this clause.''

       (b) Effective Date.--The amendment made by this section 
     shall apply to obligations issued after December 31, 1998.

           Subtitle C--Provisions Relating to Social Security

     SEC. 121. INCREASES IN THE SOCIAL SECURITY EARNINGS LIMIT FOR 
                   INDIVIDUALS WHO HAVE ATTAINED RETIREMENT AGE.

       (a) In General.--Section 203(f)(8)(D) of the Social 
     Security Act (42 U.S.C. 403(f)(8)(D)) is amended by striking 
     clauses (iv) through (vii) and inserting the following new 
     clauses:
       ``(iv) for each month of any taxable year ending after 1998 
     and before 2000, $1,416.66\2/3\,
       ``(v) for each month of any taxable year ending after 1999 
     and before 2001, $1,541.66\2/3\,
       ``(vi) for each month of any taxable year ending after 2000 
     and before 2002, $2,166.66\2/3\,
       ``(vii) for each month of any taxable year ending after 
     2001 and before 2003, $2,500.00,
       ``(viii) for each month of any taxable year ending after 
     2002 and before 2004, $2,608.33\1/3\,
       ``(ix) for each month of any taxable year ending after 2003 
     and before 2005, $2,833.33\1/3\,
       ``(x) for each month of any taxable year ending after 2004 
     and before 2006, $2,950.00,
       ``(xi) for each month of any taxable year ending after 2005 
     and before 2007, $3,066.66\2/3\,
       ``(xii) for each month of any taxable year ending after 
     2006 and before 2008, $3,195.83\1/3\, and
       ``(xiii) for each month of any taxable year ending after 
     2007 and before 2009, $3,312.50.''.
       (b) Conforming Amendments.--
       (1) Section 203(f)(8)(B)(ii) of such Act (42 U.S.C. 
     403(f)(8)(B)(ii)) is amended--
       (A) by striking ``after 2001 and before 2003'' and 
     inserting ``after 2007 and before 2009''; and
       (B) in subclause (II), by striking ``2000'' and inserting 
     ``2006''.
       (2) The second sentence of section 223(d)(4)(A) of such Act 
     (42 U.S.C. 423(d)(4)(A)) is amended by inserting ``and 
     section 121 of the Taxpayer Relief Act of 1998'' after 
     ``1996''.
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to taxable years ending after 1998.

     SEC. 122. RECOMPUTATION OF BENEFITS AFTER NORMAL RETIREMENT 
                   AGE.

       (a) In General.--Section 215(f)(2)(D)(i) of the Social 
     Security Act (42 U.S.C. 415(f)(2)(D)(i)) is amended to read 
     as follows:
       ``(i) in the case of an individual who did not die in the 
     year with respect to which the recomputation is made, for 
     monthly benefits beginning with benefits for January of--
       ``(I) the second year following the year with respect to 
     which the recomputation is made, in any such case in which 
     the individual is entitled to old-age insurance benefits, the 
     individual has attained retirement age (as defined in section 
     216(l)) as of the end of the year preceding the year with 
     respect to which the recomputation is made, and the year with 
     respect to which the recomputation is made would not be 
     substituted in recomputation under this subsection for a 
     benefit computation year in which no wages or self-employment 
     income have been credited previously to such individual, or
       ``(II) the first year following the year with respect to 
     which the recomputation is made, in any other such case; 
     or''.
       (b) Conforming Amendments.--
       (1) Section 215(f)(7) of such Act (42 U.S.C. 415(f)(7)) is 
     amended by inserting ``, and as amended by section 122(b)(2) 
     of the Taxpayer Relief Act of 1998,'' after ``This subsection 
     as in effect in December 1978''.
       (2) Subparagraph (A) of section 215(f)(2) of the Social 
     Security Act as in effect in December 1978 and applied in 
     certain cases under the provisions of such Act as in effect 
     after December 1978 is amended--
       (A) by striking ``in the case of an individual who did not 
     die'' and all that follows and inserting ``in the case of an 
     individual who did not die in the year with respect to which 
     the recomputation is made, for monthly benefits beginning 
     with benefits for January of--''; and
       (B) by adding at the end the following:
       ``(i) the second year following the year with respect to 
     which the recomputation is made, in any such case in which 
     the individual is entitled to old-age insurance benefits, the 
     individual has attained age 65 as of the end of the year 
     preceding the year with respect to which the recomputation is 
     made, and the year with respect to which the recomputation is 
     made would not be substituted in recomputation under this 
     subsection for a benefit computation year in which no wages 
     or self-employment income have been credited previously to 
     such individual, or
       ``(ii) the first year following the year with respect to 
     which the recomputation is made, in any other such case; 
     or''.
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to recomputations of primary 
     insurance amounts based on wages paid and self employment 
     income derived after 1997 and with respect to benefits 
     payable after December 31, 1998.

 TITLE II--PROVISIONS PRIMARILY AFFECTING FARMING AND OTHER BUSINESSES

     Subtitle A--Increase in Expense Treatment for Small Businesses

     SEC. 201. INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES.

       (a) General Rule.--Paragraph (1) of section 179(b) 
     (relating to dollar limitation) is amended to read as 
     follows:
       ``(1) Dollar limitation.--The aggregate cost which may be 
     taken into account under subsection (a) for any taxable year 
     shall not exceed $25,000.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1998.

               Subtitle B--Provisions Relating to Farmers

     SEC. 211. INCOME AVERAGING FOR FARMERS MADE PERMANENT.

       Subsection (c) of section 933 of the Taxpayer Relief Act of 
     1997 is amended by striking ``, and before January 1, 2001''.

     SEC. 212. 5-YEAR NET OPERATING LOSS CARRYBACK FOR FARMING 
                   LOSSES.

       (a) In General.--Paragraph (1) of section 172(b) (relating 
     to net operating loss deduction) is amended by adding at the 
     end the following new subparagraph:
       ``(G) Farming losses.--In the case of a taxpayer which has 
     a farming loss (as defined in subsection (i)) for a taxable 
     year, such farming loss shall be a net operating loss 
     carryback to each of the 5 taxable years preceding the 
     taxable year of such loss.''
       (b) Farming loss.--Section 172 is amended by redesignating 
     subsection (i) as subsection (j) and by inserting after 
     subsection (h) the following new subsection:
       ``(i) Rules Relating to Farming Losses.--For purposes of 
     this section--
       ``(1) In general.--The term `farming loss' means the lesser 
     of--
       ``(A) the amount which would be the net operating loss for 
     the taxable year if only income and deductions attributable 
     to farming businesses (as defined in section 263A(e)(4)) are 
     taken into account, or
       ``(B) the amount of the net operating loss for such taxable 
     year.
       ``(2) Coordination with subsection (b)(2).--For purposes of 
     applying subsection (b)(2), a farming loss for any taxable 
     year shall be treated in a manner similar to the manner in 
     which a specified liability loss is treated.
       ``(3) Election.--Any taxpayer entitled to a 5-year 
     carryback under subsection (b)(1)(G) from any loss year may 
     elect to have the carryback period with respect to such loss 
     year determined without regard to subsection (b)(1)(G). Such 
     election shall be made in such manner as may be prescribed by 
     the Secretary and shall be made by the due date (including 
     extensions of time) for filing the taxpayer's return for the 
     taxable year of the net operating loss. Such election, once 
     made for any taxable year, shall be irrevocable for such 
     taxable year.''
       (c) Coordination With Farm Disaster Losses.--Clause (ii) of 
     section 172(b)(1)(F) is amended by adding at the end the 
     following flush sentence:

     ``Such term shall not include any farming loss (as defined in 
     subsection (i)).''
       (d) Effective Date.--The amendments made by this section 
     shall apply to net operating losses for taxable years 
     beginning after December 31, 1997.

     SEC. 213. PRODUCTION FLEXIBILITY CONTRACT PAYMENTS.

       The option under section 112(d)(3) of the Federal 
     Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 
     7212(d)(3)) shall be disregarded in determining the taxable 
     year for which the payment for fiscal year 1999 under a 
     production flexibility contract under subtitle B of title I 
     of such Act is properly includible in gross income for 
     purposes of the Internal Revenue Code of 1986.

      Subtitle C--Increase in Volume Cap on Private Activity Bonds

     SEC. 221. INCREASE IN VOLUME CAP ON PRIVATE ACTIVITY BONDS.

       (a) In General.--Subsection (d) of section 146 (relating to 
     volume cap) is amended by striking paragraph (2), by 
     redesignating paragraphs (3) and (4) as paragraphs (2) and 
     (3), respectively, and by striking paragraph (1) and 
     inserting the following new paragraph:
       ``(1) In general.--The State ceiling applicable to any 
     State for any calendar year shall be the greater of--
       ``(A) an amount equal to $75 multiplied by the State 
     population, or
       ``(B) $225,000,000.
     Subparagraph (B) shall not apply to any possession of the 
     United States.''
       (b) Conforming Amendment.--Sections 25(f)(3) and 
     42(h)(3)(E)(iii) are each amended by striking ``section 
     146(d)(3)(C)'' and inserting ``section 146(d)(2)(C)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to calendar years after 1998.

  TITLE III--EXTENSION AND MODIFICATION OF CERTAIN EXPIRING PROVISIONS

                       Subtitle A--Tax Provisions

     SEC. 301. RESEARCH CREDIT.

       (a) Temporary Extension.--
       (1) In general.--Paragraph (1) of section 41(h) (relating 
     to termination) is amended--
       (A) by striking ``June 30, 1998'' and inserting ``December 
     31, 1999'',
       (B) by striking ``24-month'' and inserting ``42-month'', 
     and
       (C) by striking ``24 months'' and inserting ``42 months''.
       (2) Technical amendment.--Subparagraph (D) of section 
     45C(b)(1) is amended by striking ``June 30, 1998'' and 
     inserting ``December 31, 1999''.

[[Page H8950]]

       (3) Effective date.--The amendments made by this subsection 
     shall apply to amounts paid or incurred after June 30, 1998.
       (b) Increase in Percentages Under Alternative Incremental 
     Credit.--
       (1) In general.--Subparagraph (A) of section 41(c)(4) is 
     amended--
       (A) by striking ``1.65 percent'' and inserting ``2.65 
     percent'',
       (B) by striking ``2.2 percent'' and inserting ``3.2 
     percent'', and
       (C) by striking ``2.75 percent'' and inserting ``3.75 
     percent''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after June 30, 1998.

     SEC. 302. WORK OPPORTUNITY CREDIT.

       (a) Temporary Extension.--Subparagraph (B) of section 
     51(c)(4) (relating to termination) is amended by striking 
     ``June 30, 1998'' and inserting ``December 31, 1999''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to individuals who begin work for the employer 
     after June 30, 1998.

     SEC. 303. WELFARE-TO-WORK CREDIT.

       Subsection (f) of section 51A (relating to termination) is 
     amended by striking ``April 30, 1999'' and inserting 
     ``December 31, 1999''.

     SEC. 304. CONTRIBUTIONS OF STOCK TO PRIVATE FOUNDATIONS; 
                   EXPANDED PUBLIC INSPECTION OF PRIVATE 
                   FOUNDATIONS' ANNUAL RETURNS.

       (a) Special Rule for Contributions of Stock Made 
     Permanent.--
       (1) In general.--Paragraph (5) of section 170(e) is amended 
     by striking subparagraph (D) (relating to termination).
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to contributions made after June 30, 1998.
       (b) Expanded Public Inspection of Private Foundations' 
     Annual Returns, Etc.--
       (1) In general.--Section 6104 (relating to publicity of 
     information required from certain exempt organizations and 
     certain trusts) is amended by striking subsections (d) and 
     (e) and inserting after subsection (c) the following new 
     subsection:
       ``(d) Public Inspection of Certain Annual Returns and 
     Applications for Exemption.--
       ``(1) In general.--In the case of an organization described 
     in subsection (c) or (d) of section 501 and exempt from 
     taxation under section 501(a)--
       ``(A) a copy of--
       ``(i) the annual return filed under section 6033 (relating 
     to returns by exempt organizations) by such organization, and
       ``(ii) if the organization filed an application for 
     recognition of exemption under section 501, the exempt status 
     application materials of such organization,

     shall be made available by such organization for inspection 
     during regular business hours by any individual at the 
     principal office of such organization and, if such 
     organization regularly maintains 1 or more regional or 
     district offices having 3 or more employees, at each such 
     regional or district office, and
       ``(B) upon request of an individual made at such principal 
     office or such a regional or district office, a copy of such 
     annual return and exempt status application materials shall 
     be provided to such individual without charge other than a 
     reasonable fee for any reproduction and mailing costs.

     The request described in subparagraph (B) must be made in 
     person or in writing. If such request is made in person, such 
     copy shall be provided immediately and, if made in writing, 
     shall be provided within 30 days.
       ``(2) 3-year limitation on inspection of returns.--
     Paragraph (1) shall apply to an annual return filed under 
     section 6033 only during the 3-year period beginning on the 
     last day prescribed for filing such return (determined with 
     regard to any extension of time for filing).
       ``(3) Exceptions from disclosure requirement.--
       ``(A) Nondisclosure of contributors, etc.--Paragraph (1) 
     shall not require the disclosure of the name or address of 
     any contributor to the organization. In the case of an 
     organization described in section 501(d), subparagraph (A) 
     shall not require the disclosure of the copies referred to in 
     section 6031(b) with respect to such organization.
       ``(B) Nondisclosure of certain other information.--
     Paragraph (1) shall not require the disclosure of any 
     information if the Secretary withheld such information from 
     public inspection under subsection (a)(1)(D).
       ``(4) Limitation on providing copies.--Paragraph (1)(B) 
     shall not apply to any request if, in accordance with 
     regulations promulgated by the Secretary, the organization 
     has made the requested documents widely available, or the 
     Secretary determines, upon application by an organization, 
     that such request is part of a harassment campaign and that 
     compliance with such request is not in the public interest.
       ``(5) Exempt status application materials.--For purposes of 
     paragraph (1), the term `exempt status applicable materials' 
     means the application for recognition of exemption under 
     section 501 and any papers submitted in support of such 
     application and any letter or other document issued by the 
     Internal Revenue Service with respect to such application.''
       (2) Conforming amendments.--
       (A) Subsection (c) of section 6033 is amended by adding 
     ``and'' at the end of paragraph (1), by striking paragraph 
     (2), and by redesignating paragraph (3) as paragraph (2).
       (B) Subparagraph (C) of section 6652(c)(1) is amended by 
     striking ``subsection (d) or (e)(1) of section 6104 (relating 
     to public inspection of annual returns)'' and inserting 
     ``section 6104(d) with respect to any annual return''.
       (C) Subparagraph (D) of section 6652(c)(1) is amended by 
     striking ``section 6104(e)(2) (relating to public inspection 
     of applications for exemption)'' and inserting ``section 
     6104(d) with respect to any exempt status application 
     materials (as defined in such section)''.
       (D) Section 6685 is amended by striking ``or (e)''.
       (E) Section 7207 is amended by striking ``or (e)''.
       (3) Effective date.--
       (A) In general.--Except as provided in subparagraph (B), 
     the amendments made by this subsection shall apply to 
     requests made after the later of December 31, 1998, or the 
     60th day after the Secretary of the Treasury first issues the 
     regulations referred to such section 6104(d)(4) of the 
     Internal Revenue Code of 1986, as amended by this section.
       (B) Publication of annual returns.--Section 6104(d) of such 
     Code, as in effect before the amendments made by this 
     subsection, shall not apply to any return the due date for 
     which is after the date such amendments take effect under 
     subparagraph (A).

     SEC. 305. SUBPART F EXEMPTION FOR ACTIVE FINANCING INCOME.

       (a) Income Derived From Banking, Financing or Similar 
     Businesses.--Section 954(h) (relating to income derived in 
     the active conduct of banking, financing, or similar 
     businesses) is amended to read as follows:
       ``(h) Special Rule for Income Derived in the Active Conduct 
     of Banking, Financing, or Similar Businesses.--
       ``(1) In general.--For purposes of subsection (c)(1), 
     foreign personal holding company income shall not include 
     qualified banking or financing income of an eligible 
     controlled foreign corporation.
       ``(2) Eligible controlled foreign corporation.--For 
     purposes of this subsection--
       ``(A) In general.--The term `eligible controlled foreign 
     corporation' means a controlled foreign corporation which--
       ``(i) is predominantly engaged in the active conduct of a 
     banking, financing, or similar business, and
       ``(ii) conducts substantial activity with respect to such 
     business.
       ``(B) Predominantly engaged.--A controlled foreign 
     corporation shall be treated as predominantly engaged in the 
     active conduct of a banking, financing, or similar business 
     if--
       ``(i) more than 70 percent of the gross income of the 
     controlled foreign corporation is derived directly from the 
     active and regular conduct of a lending or finance business 
     from transactions with customers which are not related 
     persons,
       ``(ii) it is engaged in the active conduct of a banking 
     business and is an institution licensed to do business as a 
     bank in the United States (or is any other corporation not so 
     licensed which is specified by the Secretary in regulations), 
     or
       ``(iii) it is engaged in the active conduct of a securities 
     business and is registered as a securities broker or dealer 
     under section 15(a) of the Securities Exchange Act of 1934 or 
     is registered as a Government securities broker or dealer 
     under section 15C(a) of such Act (or is any other corporation 
     not so registered which is specified by the Secretary in 
     regulations).
       ``(3) Qualified banking or financing income.--For purposes 
     of this subsection--
       ``(A) In general.--The term `qualified banking or financing 
     income' means income of an eligible controlled foreign 
     corporation which--
       ``(i) is derived in the active conduct of a banking, 
     financing, or similar business by--

       ``(I) such eligible controlled foreign corporation, or
       ``(II) a qualified business unit of such eligible 
     controlled foreign corporation,

       ``(ii) is derived from 1 or more transactions--

       ``(I) with customers located in a country other than the 
     United States, and
       ``(II) substantially all of the activities in connection 
     with which are conducted directly by the corporation or unit 
     in its home country, and

       ``(iii) is treated as earned by such corporation or unit in 
     its home country for purposes of such country's tax laws.
       ``(B) Limitation on nonbanking and nonsecurities 
     businesses.--No income of an eligible controlled foreign 
     corporation not described in clause (ii) or (iii) of 
     paragraph (2)(B) (or of a qualified business unit of such 
     corporation) shall be treated as qualified banking or 
     financing income unless more than 30 percent of such 
     corporation's or unit's gross income is derived directly from 
     the active and regular conduct of a lending or finance 
     business from transactions with customers which are not 
     related persons and which are located within such 
     corporation's or unit's home country.
       ``(C) Substantial activity requirement for cross border 
     income.--The term `qualified banking or financing income' 
     shall not include income derived from 1 or more transactions 
     with customers located in a country other than the home 
     country of the eligible controlled foreign corporation or a 
     qualified business unit of such corporation unless such 
     corporation or unit conducts substantial activity with 
     respect to a banking, financing, or similar business in its 
     home country.
       ``(D) Determinations made separately.--For purposes of this 
     paragraph, the qualified banking or financing income of an 
     eligible controlled foreign corporation and each

[[Page H8951]]

     qualified business unit of such corporation shall be 
     determined separately for such corporation and each such unit 
     by taking into account--
       ``(i) in the case of the eligible controlled foreign 
     corporation, only items of income, deduction, gain, or loss 
     and activities of such corporation not properly allocable or 
     attributable to any qualified business unit of such 
     corporation, and
       ``(ii) in the case of a qualified business unit, only items 
     of income, deduction, gain, or loss and activities properly 
     allocable or attributable to such unit.
       ``(4) Lending or finance business.--For purposes of this 
     subsection, the term `lending or finance business' means the 
     business of--
       ``(A) making loans,
       ``(B) purchasing or discounting accounts receivable, notes, 
     or installment obligations,
       ``(C) engaging in leasing (including entering into leases 
     and purchasing, servicing, and disposing of leases and leased 
     assets),
       ``(D) issuing letters of credit or providing guarantees,
       ``(E) providing charge and credit card services, or
       ``(F) rendering services or making facilities available in 
     connection with activities described in subparagraphs (A) 
     through (E) carried on by--
       ``(i) the corporation (or qualified business unit) 
     rendering services or making facilities available, or
       ``(ii) another corporation (or qualified business unit of a 
     corporation) which is a member of the same affiliated group 
     (as defined in section 1504, but determined without regard to 
     section 1504(b)(3)).
       ``(5) Other definitions.--For purposes of this subsection--
       ``(A) Customer.--The term `customer' means, with respect to 
     any controlled foreign corporation or qualified business 
     unit, any person which has a customer relationship with such 
     corporation or unit and which is acting in its capacity as 
     such.
       ``(B) Home country.--Except as provided in regulations--
       ``(i) Controlled foreign corporation.--The term `home 
     country' means, with respect to any controlled foreign 
     corporation, the country under the laws of which the 
     corporation was created or organized.
       ``(ii) Qualified business unit.--The term `home country' 
     means, with respect to any qualified business unit, the 
     country in which such unit maintains its principal office.
       ``(C) Located.--The determination of where a customer is 
     located shall be made under rules prescribed by the 
     Secretary.
       ``(D) Qualified business unit.--The term `qualified 
     business unit' has the meaning given such term by section 
     989(a).
       ``(E) Related person.--The term `related person' has the 
     meaning given such term by subsection (d)(3).
       ``(6) Coordination with exception for dealers.--Paragraph 
     (1) shall not apply to income described in subsection 
     (c)(2)(C)(ii) of a dealer in securities (within the meaning 
     of section 475) which is an eligible controlled foreign 
     corporation described in paragraph (2)(B)(iii).
       ``(7) Anti-abuse rules.--For purposes of applying this 
     subsection and subsection (c)(2)(C)(ii)--
       ``(A) there shall be disregarded any item of income, gain, 
     loss, or deduction with respect to any transaction or series 
     of transactions one of the principal purposes of which is 
     qualifying income or gain for the exclusion under this 
     section, including any transaction or series of transactions 
     a principal purpose of which is the acceleration or deferral 
     of any item in order to claim the benefits of such exclusion 
     through the application of this subsection,
       ``(B) there shall be disregarded any item of income, gain, 
     loss, or deduction of an entity which is not engaged in 
     regular and continuous transactions with customers which are 
     not related persons,
       ``(C) there shall be disregarded any item of income, gain, 
     loss, or deduction with respect to any transaction or series 
     of transactions utilizing, or doing business with--
       ``(i) one or more entities in order to satisfy any home 
     country requirement under this subsection, or
       ``(ii) a special purpose entity or arrangement, including a 
     securitization, financing, or similar entity or arrangement,

     if one of the principal purposes of such transaction or 
     series of transactions is qualifying income or gain for the 
     exclusion under this subsection, and
       ``(D) a related person, an officer, a director, or an 
     employee with respect to any controlled foreign corporation 
     (or qualified business unit) which would otherwise be treated 
     as a customer of such corporation or unit with respect to any 
     transaction shall not be so treated if a principal purpose of 
     such transaction is to satisfy any requirement of this 
     subsection.
       ``(8) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this subsection, subsection (c)(1)(B)(i), 
     subsection (c)(2)(C)(ii), and the last sentence of subsection 
     (e)(2).
       ``(9) Application.--This subsection, subsection 
     (c)(2)(C)(ii), and the last sentence of subsection (e)(2) 
     shall apply only to the first taxable year of a foreign 
     corporation beginning after December 31, 1998, and before 
     January 1, 2000, and to taxable years of United States 
     shareholders with or within which such taxable year of such 
     foreign corporation ends.''
       (b) Income Derived From Insurance Business.--
       (1) Income attributable to issuance or reinsurance.--
       (A) In general.--Section 953(a) (defining insurance income) 
     is amended to read as follows:
       ``(a) Insurance Income.--
       ``(1) In general.--For purposes of section 952(a)(1), the 
     term `insurance income' means any income which--
       ``(A) is attributable to the issuing (or reinsuring) of an 
     insurance or annuity contract, and
       ``(B) would (subject to the modifications provided by 
     subsection (b)) be taxed under subchapter L of this chapter 
     if such income were the income of a domestic insurance 
     company.
       ``(2) Exception.--Such term shall not include any exempt 
     insurance income (as defined in subsection (e)).''
       (B) Exempt insurance income.--Section 953 (relating to 
     insurance income) is amended by adding at the end the 
     following new subsection:
       ``(e) Exempt Insurance Income.--For purposes of this 
     section--
       ``(1) Exempt insurance income defined.--
       ``(A) In general.--The term `exempt insurance income' means 
     income derived by a qualifying insurance company which--
       ``(i) is attributable to the issuing (or reinsuring) of an 
     exempt contract by such company or a qualifying insurance 
     company branch of such company, and
       ``(ii) is treated as earned by such company or branch in 
     its home country for purposes of such country's tax laws.
       ``(B) Exception for certain arrangements.--Such term shall 
     not include income attributable to the issuing (or 
     reinsuring) of an exempt contract as the result of any 
     arrangement whereby another corporation receives a 
     substantially equal amount of premiums or other consideration 
     in respect of issuing (or reinsuring) a contract which is not 
     an exempt contract.
       ``(C) Determinations made separately.--For purposes of this 
     subsection and section 954(i), the exempt insurance income 
     and exempt contracts of a qualifying insurance company or any 
     qualifying insurance company branch of such company shall be 
     determined separately for such company and each such branch 
     by taking into account--
       ``(i) in the case of the qualifying insurance company, only 
     items of income, deduction, gain, or loss, and activities of 
     such company not properly allocable or attributable to any 
     qualifying insurance company branch of such company, and
       ``(ii) in the case of a qualifying insurance company 
     branch, only items of income, deduction, gain, or loss and 
     activities properly allocable or attributable to such unit.
       ``(2) Exempt contract.--
       ``(A) In general.--The term `exempt contract' means an 
     insurance or annuity contract issued or reinsured by a 
     qualifying insurance company or qualifying insurance company 
     branch in connection with property in, liability arising out 
     of activity in, or the lives or health of residents of, a 
     country other than the United States.
       ``(B) Minimum home country income required.--
       ``(i) In general.--No contract of a qualifying insurance 
     company or of a qualifying insurance company branch shall be 
     treated as an exempt contract unless such company or branch 
     derives more than 30 percent of its net written premiums from 
     exempt contracts (determined without regard to this 
     subparagraph)--

       ``(I) which cover applicable home country risks, and
       ``(II) with respect to which no policyholder, insured, 
     annuitant, or beneficiary is a related person (as defined in 
     section 954(d)(3)).

       ``(ii) Applicable home country risks.--The term `applicable 
     home country risks' means risks in connection with property 
     in, liability arising out of activity in, or the lives or 
     health of residents of, the home country of the qualifying 
     insurance company or qualifying insurance company branch, as 
     the case may be, issuing or reinsuring the contract covering 
     the risks.
       ``(C) Substantial activity requirements for cross border 
     risks.--A contract issued by a qualifying insurance company 
     or qualifying insurance company branch which covers risks 
     other than applicable home country risks (as defined in 
     subparagraph (B)(ii)) shall not be treated as an exempt 
     contract unless such company or branch, as the case may be--
       ``(i) conducts substantial activity with respect to an 
     insurance business in its home country, and
       ``(ii) performs in its home country substantially all of 
     the activities necessary to give rise to the income generated 
     by such contract.
       ``(3) Qualifying insurance company.--The term `qualifying 
     insurance company' means any controlled foreign corporation 
     which--
       ``(A) is subject to regulation as an insurance (or 
     reinsurance) company by its home country, and is licensed, 
     authorized, or regulated by the applicable insurance 
     regulatory body for its home country to sell insurance, 
     reinsurance, or annuity contracts to persons other than 
     related persons (within the meaning of section 954(d)(3)) in 
     such home country,
       ``(B) derives more than 50 percent of its aggregate net 
     written premiums from the issuance or reinsurance by such 
     controlled

[[Page H8952]]

     foreign corporation and each of its qualifying insurance 
     company branches of contracts--
       ``(i) covering applicable home country risks (as defined in 
     paragraph (2)) of such corporation or branch, as the case may 
     be, and
       ``(ii) with respect to which no policyholder, insured, 
     annuitant, or beneficiary is a related person (as defined in 
     section 954(d)(3)),

     except that in the case of a branch, such premiums shall only 
     be taken into account to the extent such premiums are treated 
     as earned by such branch in its home country for purposes of 
     such country's tax laws, and
       ``(C) is engaged in the insurance business and would be 
     subject to tax under subchapter L if it were a domestic 
     corporation.
       ``(4) Qualifying insurance company branch.--The term 
     `qualifying insurance company branch' means a qualified 
     business unit (within the meaning of section 989(a)) of a 
     controlled foreign corporation if--
       ``(A) such unit is licensed, authorized, or regulated by 
     the applicable insurance regulatory body for its home country 
     to sell insurance, reinsurance, or annuity contracts to 
     persons other than related persons (within the meaning of 
     section 954(d)(3)) in such home country, and
       ``(B) such controlled foreign corporation is a qualifying 
     insurance company, determined under paragraph (3) as if such 
     unit were a qualifying insurance company branch.
       ``(5) Life insurance or annuity contract.--For purposes of 
     this section and section 954, the determination of whether a 
     contract issued by a controlled foreign corporation or a 
     qualified business unit (within the meaning of section 
     989(a)) is a life insurance contract or an annuity contract 
     shall be made without regard to sections 72(s), 101(f), 
     817(h), and 7702 if--
       ``(A) such contract is regulated as a life insurance or 
     annuity contract by the corporation's or unit's home country, 
     and
       ``(B) no policyholder, insured, annuitant, or beneficiary 
     with respect to the contract is a United States person.
       ``(6) Home country.--For purposes of this subsection, 
     except as provided in regulations--
       ``(A) Controlled foreign corporation.--The term `home 
     country' means, with respect to a controlled foreign 
     corporation, the country in which such corporation is created 
     or organized.
       ``(B) Qualified business unit.--The term `home country' 
     means, with respect to a qualified business unit (as defined 
     in section 989(a)), the country in which the principal office 
     of such unit is located and in which such unit is licensed, 
     authorized, or regulated by the applicable insurance 
     regulatory body to sell insurance, reinsurance, or annuity 
     contracts to persons other than related persons (as defined 
     in section 954(d)(3)) in such country.
       ``(7) Anti-abuse rules.--For purposes of applying this 
     subsection and section 954(i)--
       ``(A) the rules of section 954(h)(7) (other than 
     subparagraph (B) thereof) shall apply,
       ``(B) there shall be disregarded any item of income, gain, 
     loss, or deduction of, or derived from, an entity which is 
     not engaged in regular and continuous transactions with 
     persons which are not related persons,
       ``(C) there shall be disregarded any change in the method 
     of computing reserves a principal purpose of which is the 
     acceleration or deferral of any item in order to claim the 
     benefits of this subsection or section 954(i),
       ``(D) a contract of insurance or reinsurance shall not be 
     treated as an exempt contract (and premiums from such 
     contract shall not be taken into account for purposes of 
     paragraph (2)(B) or (3)) if--
       ``(i) any policyholder, insured, annuitant, or beneficiary 
     is a resident of the United States and such contract was 
     marketed to such resident and was written to cover a risk 
     outside the United States, or
       ``(ii) the contract covers risks located within and without 
     the United States and the qualifying insurance company or 
     qualifying insurance company branch does not maintain such 
     contemporaneous records, and file such reports, with respect 
     to such contract as the Secretary may require,
       ``(E) the Secretary may prescribe rules for the allocation 
     of contracts (and income from contracts) among 2 or more 
     qualifying insurance company branches of a qualifying 
     insurance company in order to clearly reflect the income of 
     such branches, and
       ``(F) premiums from a contract shall not be taken into 
     account for purposes of paragraph (2)(B) or (3) if such 
     contract reinsures a contract issued or reinsured by a 
     related person (as defined in section 954(d)(3)).

     For purposes of subparagraph (D), the determination of where 
     risks are located shall be made under the principles of 
     section 953.
       ``(8) Coordination with subsection (c).--In determining 
     insurance income for purposes of subsection (c), exempt 
     insurance income shall not include income derived from exempt 
     contracts which cover risks other than applicable home 
     country risks.
       ``(9) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this subsection and section 954(i).
       ``(10) Application.--This subsection and section 954(i) 
     shall apply only to the first taxable year of a foreign 
     corporation beginning after December 31, 1998, and before 
     January 1, 2000, and to taxable years of United States 
     shareholders with or within which such taxable year of such 
     foreign corporation ends.
       ``(11) Cross reference.--

  ``For income exempt from foreign personal holding company income, see 
section 954(i).''

       (2) Exemption from foreign personal holding company 
     income.--Section 954 (defining foreign base company income) 
     is amended by adding at the end the following new subsection:
       ``(i) Special Rule for Income Derived in the Active Conduct 
     of Insurance Business.--
       ``(1) In general.--For purposes of subsection (c)(1), 
     foreign personal holding company income shall not include 
     qualified insurance income of a qualifying insurance company.
       ``(2) Qualified insurance income.--The term `qualified 
     insurance income' means income of a qualifying insurance 
     company which is--
       ``(A) received from a person other than a related person 
     (within the meaning of subsection (d)(3)) and derived from 
     the investments made by a qualifying insurance company or a 
     qualifying insurance company branch of its reserves allocable 
     to exempt contracts or of 80 percent of its unearned premiums 
     from exempt contracts (as both are determined in the manner 
     prescribed under paragraph (4)), or
       ``(B) received from a person other than a related person 
     (within the meaning of subsection (d)(3)) and derived from 
     investments made by a qualifying insurance company or a 
     qualifying insurance company branch of an amount of its 
     assets allocable to exempt contracts equal to--
       ``(i) in the case of property, casualty, or health 
     insurance contracts, one-third of its premiums earned on such 
     insurance contracts during the taxable year (as defined in 
     section 832(b)(4)), and
       ``(ii) in the case of life insurance or annuity contracts, 
     10 percent of the reserves described in subparagraph (A) for 
     such contracts.
       ``(3) Principles for determining insurance income.--Except 
     as provided by the Secretary, for purposes of subparagraphs 
     (A) and (B) of paragraph (2)--
       ``(A) in the case of any contract which is a separate 
     account-type contract (including any variable contract not 
     meeting the requirements of section 817), income credited 
     under such contract shall be allocable only to such contract, 
     and
       ``(B) income not allocable under subparagraph (A) shall be 
     allocated ratably among contracts not described in 
     subparagraph (A).
       ``(4) Methods for determining unearned premiums and 
     reserves.--For purposes of paragraph (2)(A)--
       ``(A) Property and casualty contracts.--The unearned 
     premiums and reserves of a qualifying insurance company or a 
     qualifying insurance company branch with respect to property, 
     casualty, or health insurance contracts shall be determined 
     using the same methods and interest rates which would be used 
     if such company or branch were subject to tax under 
     subchapter L, except that--
       ``(i) the interest rate determined for the functional 
     currency of the company or branch, and which, except as 
     provided by the Secretary, is calculated in the same manner 
     as the Federal mid-term rate under section 1274(d), shall be 
     substituted for the applicable Federal interest rate, and
       ``(ii) such company or branch shall use the appropriate 
     foreign loss payment pattern.
       ``(B) Life insurance and annuity contracts.--The amount of 
     the reserve of a qualifying insurance company or qualifying 
     insurance company branch for any life insurance or annuity 
     contract shall be equal to the greater of--
       ``(i) the net surrender value of such contract (as defined 
     in section 807(e)(1)(A)), or
       ``(ii) the reserve determined under paragraph (5).
       ``(C) Limitation on reserves.--In no event shall the 
     reserve determined under this paragraph for any contract as 
     of any time exceed the amount which would be taken into 
     account with respect to such contract as of such time in 
     determining foreign statement reserves (less any catastrophe, 
     deficiency, equalization, or similar reserves).
       ``(5) Amount of reserve.--The amount of the reserve 
     determined under this paragraph with respect to any contract 
     shall be determined in the same manner as it would be 
     determined if the qualifying insurance company or qualifying 
     insurance company branch were subject to tax under subchapter 
     L, except that in applying such subchapter--
       ``(A) the interest rate determined for the functional 
     currency of the company or branch, and which, except as 
     provided by the Secretary, is calculated in the same manner 
     as the Federal mid-term rate under section 1274(d), shall be 
     substituted for the applicable Federal interest rate,
       ``(B) the highest assumed interest rate permitted to be 
     used in determining foreign statement reserves shall be 
     substituted for the prevailing State assumed interest rate, 
     and
       ``(C) tables for mortality and morbidity which reasonably 
     reflect the current mortality and morbidity risks in the 
     company's or branch's home country shall be substituted for 
     the mortality and morbidity tables otherwise used for such 
     subchapter.

     The Secretary may provide that the interest rate and 
     mortality and morbidity tables of a qualifying insurance 
     company may be used for 1 or more of its qualifying insurance 
     company branches when appropriate.

[[Page H8953]]

       ``(6) Definitions.--For purposes of this subsection, any 
     term used in this subsection which is also used in section 
     953(e) shall have the meaning given such term by section 
     953.''
       (3) Reserves.--Section 953(b) is amended by redesignating 
     paragraph (3) as paragraph (4) and by inserting after 
     paragraph (2) the following new paragraph:
       ``(3) Reserves for any insurance or annuity contract shall 
     be determined in the same manner as under section 954(i).''
       (c) Special Rules for Dealers.--Section 954(c)(2)(C) is 
     amended to read as follows:
       ``(C) Exception for dealers.--Except as provided by 
     regulations, in the case of a regular dealer in property 
     which is property described in paragraph (1)(B), forward 
     contracts, option contracts, or similar financial instruments 
     (including notional principal contracts and all instruments 
     referenced to commodities), there shall not be taken into 
     account in computing foreign personal holding company 
     income--
       ``(i) any item of income, gain, deduction, or loss (other 
     than any item described in subparagraph (A), (E), or (G) of 
     paragraph (1)) from any transaction (including hedging 
     transactions) entered into in the ordinary course of such 
     dealer's trade or business as such a dealer, and
       ``(ii) if such dealer is a dealer in securities (within the 
     meaning of section 475), any interest or dividend or 
     equivalent amount described in subparagraph (E) or (G) of 
     paragraph (1) from any transaction (including any hedging 
     transaction or transaction described in section 956(c)(2)(J)) 
     entered into in the ordinary course of such dealer's trade or 
     business as such a dealer in securities, but only if the 
     income from the transaction is attributable to activities of 
     the dealer in the country under the laws of which the dealer 
     is created or organized (or in the case of a qualified 
     business unit described in section 989(a), is attributable to 
     activities of the unit in the country in which the unit both 
     maintains its principal office and conducts substantial 
     business activity).''
       (d) Exemption From Foreign Base Company Services Income.--
     Paragraph (2) of section 954(e) is amended by inserting 
     ``or'' at the end of subparagraph (A), by striking ``, or'' 
     at the end of subparagraph (B) and inserting a period, by 
     striking subparagraph (C), and by adding at the end the 
     following new flush sentence:

     ``Paragraph (1) shall also not apply to income which is 
     exempt insurance income (as defined in section 953(e)) or 
     which is not treated as foreign personal holding income by 
     reason of subsection (c)(2)(C)(ii), (h), or (i).''
       (e) Exemption for Gain.--Section 954(c)(1)(B)(i) (relating 
     to net gains from certain property transactions) is amended 
     by inserting ``other than property which gives rise to income 
     not treated as foreign personal holding company income by 
     reason of subsection (h) or (i) for the taxable year'' before 
     the comma at the end.

             Subtitle B--Generalized System of Preferences

     SEC. 311. EXTENSION OF GENERALIZED SYSTEM OF PREFERENCES.

       (a) Extension of Duty-Free Treatment Under System.--Section 
     505 of the Trade Act of 1974 (29 U.S.C. 2465) is amended by 
     striking ``June 30, 1998'' and inserting ``December 31, 
     1999''.
       (b) Retroactive Application for Certain Liquidations and 
     Reliquidations.--
       (1) In general.--Notwithstanding section 514 of the Tariff 
     Act of 1930 or any other provision of law, and subject to 
     paragraph (2), any entry--
       (A) of an article to which duty-free treatment under title 
     V of the Trade Act of 1974 would have applied if such title 
     had been in effect during the period beginning on July 1, 
     1998, and ending on the day before the date of the enactment 
     of this Act, and
       (B) that was made after June 30, 1998, and before the date 
     of the enactment of this Act,

     shall be liquidated or reliquidated as free of duty, and the 
     Secretary of the Treasury shall refund any duty paid with 
     respect to such entry. As used in this subsection, the term 
     ``entry'' includes a withdrawal from warehouse for 
     consumption.
       (2) Requests.--Liquidation or reliquidation may be made 
     under paragraph (1) with respect to an entry only if a 
     request therefor is filed with the Customs Service, within 
     180 days after the date of the enactment of this Act, that 
     contains sufficient information to enable the Customs 
     Service--
       (A) to locate the entry; or
       (B) to reconstruct the entry if it cannot be located.

                        TITLE IV--REVENUE OFFSET

     SEC. 401. TREATMENT OF CERTAIN DEDUCTIBLE LIQUIDATING 
                   DISTRIBUTIONS OF REGULATED INVESTMENT COMPANIES 
                   AND REAL ESTATE INVESTMENT TRUSTS.

       (a) In General.--Section 332 (relating to complete 
     liquidations of subsidiaries) is amended by adding at the end 
     the following new subsection:
       ``(c) Deductible Liquidating Distributions of Regulated 
     Investment Companies and Real Estate Investment Trusts.--If a 
     corporation receives a distribution from a regulated 
     investment company or a real estate investment trust which is 
     considered under subsection (b) as being in complete 
     liquidation of such company or trust, then, notwithstanding 
     any other provision of this chapter, such corporation shall 
     recognize and treat as a dividend from such company or trust 
     an amount equal to the deduction for dividends paid allowable 
     to such company or trust by reason of such distribution.''.
       (b) Conforming Amendments.--
       (1) The material preceding paragraph (1) of section 332(b) 
     is amended by striking ``subsection (a)'' and inserting 
     ``this section''.
       (2) Paragraph (1) of section 334(b) is amended by striking 
     ``section 332(a)'' and inserting ``section 332''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions after May 21, 1998.

                     TITLE V--TECHNICAL CORRECTIONS

     SEC. 501. DEFINITIONS; COORDINATION WITH OTHER TITLES.

       (a) Definitions.--For purposes of this title--
       (1) 1986 code.--The term ``1986 Code'' means the Internal 
     Revenue Code of 1986.
       (2) 1998 act.--The term ``1998 Act'' means the Internal 
     Revenue Service Restructuring and Reform Act of 1998 (Public 
     Law 105-206).
       (3) 1997 act.--The term ``1997 Act'' means the Taxpayer 
     Relief Act of 1997 (Public Law 105-34).
       (b) Coordination With Other Titles.--For purposes of 
     applying the amendments made by any title of this Act other 
     than this title, the provisions of this title shall be 
     treated as having been enacted immediately before the 
     provisions of such other titles.

     SEC. 502. AMENDMENTS RELATED TO INTERNAL REVENUE SERVICE 
                   RESTRUCTURING AND REFORM ACT OF 1998.

       (a) Amendment Related to Section 1101 of 1998 Act.--
     Paragraph (5) of section 6103(h) of the 1986 Code, as added 
     by section 1101(b) of the 1998 Act, is redesignated as 
     paragraph (6).
       (b) Amendment Related to Section 3001 of 1998 Act.--
     Paragraph (2) of section 7491(a) of the 1986 Code is amended 
     by adding at the end the following flush sentence:

     ``Subparagraph (C) shall not apply to any qualified revocable 
     trust (as defined in section 645(b)(1)) with respect to 
     liability for tax for any taxable year ending after the date 
     of the decedent's death and before the applicable date (as 
     defined in section 645(b)(2)).''.
       (c) Amendments Related to Section 3201 of 1998 Act.--
       (1) Section 7421(a) of the 1986 Code is amended by striking 
     ``6015(d)'' and inserting ``6015(e)''.
       (2) Subparagraph (A) of section 6015(e)(3) is amended by 
     striking ``of this section'' and inserting ``of subsection 
     (b) or (f)''.
       (d) Amendment Related to Section 3301 of 1998 Act.--
     Paragraph (2) of section 3301(c) of the 1998 Act is amended 
     by striking ``The amendments'' and inserting ``Subject to any 
     applicable statute of limitation not having expired with 
     regard to either a tax underpayment or a tax overpayment, the 
     amendments''.
       (e) Amendment Related to Section 3401 of 1998 Act.--Section 
     3401(c) of the 1998 Act is amended--
       (1) in paragraph (1), by striking ``7443(b)'' and inserting 
     ``7443A(b)''; and
       (2) in paragraph (2), by striking ``7443(c)'' and inserting 
     ``7443A(c)''.
       (f) Amendment Related to Section 3433 of 1998 Act.--Section 
     7421(a) of the 1986 Code is amended by inserting ``6331(i),'' 
     after ``6246(b),''.
       (g) Amendment Related to Section 3708 of 1998 Act.--
     Subparagraph (A) of section 6103(p)(3) of the 1986 Code is 
     amended by inserting ``(f)(5),'' after ``(c), (e),''.
       (h) Amendment Related to Section 5001 of 1998 Act.--
       (1) Subparagraph (B) of section 1(h)(13) of the 1986 Code 
     is amended by striking ``paragraph (7)(A)'' and inserting 
     ``paragraph (7)(A)(i)''.
       (2)(A) Subparagraphs (A)(i)(II), (A)(ii)(II), and (B)(ii) 
     of section 1(h)(13) of the 1986 Code shall not apply to any 
     distribution after December 31, 1997, by a regulated 
     investment company or a real estate investment trust with 
     respect to--
       (i) gains and losses recognized directly by such company or 
     trust, and
       (ii) amounts properly taken into account by such company or 
     trust by reason of holding (directly or indirectly) an 
     interest in another such company or trust to the extent that 
     such subparagraphs did not apply to such other company or 
     trust with respect to such amounts.
       (B) Subparagraph (A) shall not apply to any distribution 
     which is treated under section 852(b)(7) or 857(b)(8) of the 
     1986 Code as received on December 31, 1997.
       (C) For purposes of subparagraph (A), any amount which is 
     includible in gross income of its shareholders under section 
     852(b)(3)(D) or 857(b)(3)(D) of the 1986 Code after December 
     31, 1997, shall be treated as distributed after such date.
       (D)(i) For purposes of subparagraph (A), in the case of a 
     qualified partnership with respect to which a regulated 
     investment company meets the holding requirement of clause 
     (iii)--
       (I) the subparagraphs referred to in subparagraph (A) shall 
     not apply to gains and losses recognized directly by such 
     partnership for purposes of determining such company's 
     distributive share of such gains and losses, and
       (II) such company's distributive share of such gains and 
     losses (as so determined) shall be treated as recognized 
     directly by such company.

     The preceding sentence shall apply only if the qualified 
     partnership provides the company with written documentation 
     of such distributive share as so determined.

[[Page H8954]]

       (ii) For purposes of clause (i), the term ``qualified 
     partnership'' means, with respect to a regulated investment 
     company, any partnership if--
       (I) the partnership is an investment company registered 
     under the Investment Company Act of 1940,
       (II) the regulated investment company is permitted to 
     invest in such partnership by reason of section 12(d)(1)(E) 
     of such Act or an exemptive order of the Securities and 
     Exchange Commission under such section, and
       (III) the regulated investment company and the partnership 
     have the same taxable year.
       (iii) A regulated investment company meets the holding 
     requirement of this clause with respect to a qualified 
     partnership if (as of January 1, 1998)--
       (I) the value of the interests of the regulated investment 
     company in such partnership is 35 percent or more of the 
     value of such company's total assets, or
       (II) the value of the interests of the regulated investment 
     company in such partnership and all other qualified 
     partnerships is 90 percent or more of the value of such 
     company's total assets.
       (i) Effective Date.--The amendments made by this section 
     shall take effect as if included in the provisions of the 
     1998 Act to which they relate.

     SEC. 503. AMENDMENTS RELATED TO TAXPAYER RELIEF ACT OF 1997.

       (a) Amendment Related to Section 202 of 1997 Act.--
     Paragraph (2) of section 163(h) of the 1986 Code is amended 
     by striking ``and'' at the end of subparagraph (D), by 
     striking the period at the end of subparagraph (E) and 
     inserting ``, and'', and by adding at the end the following 
     new subparagraph:
       ``(F) any interest allowable as a deduction under section 
     221 (relating to interest on educational loans).''
       (b) Provision Related to Section 311 of 1997 Act.--In the 
     case of any capital gain distribution made after 1997 by a 
     trust to which section 664 of the 1986 Code applies with 
     respect to amounts properly taken into account by such trust 
     during 1997, paragraphs (5)(A)(i)(I), (5)(A)(ii)(I), and 
     (13)(A) of section 1(h) of the 1986 Code (as in effect for 
     taxable years ending on December 31, 1997) shall not apply.
       (c) Amendment Related to Section 506 of 1997 Act.--
       (1) Section 2001(f)(2) of the 1986 Code is amended by 
     adding at the end the following:

     ``For purposes of subparagraph (A), the value of an item 
     shall be treated as shown on a return if the item is 
     disclosed in the return, or in a statement attached to the 
     return, in a manner adequate to apprise the Secretary of the 
     nature of such item.''.
       (2) Paragraph (9) of section 6501(c) of the 1986 Code is 
     amended by striking the last sentence.
       (d) Amendments Related to Section 904 of 1997 Act.--
       (1) Paragraph (1) of section 9510(c) of the 1986 Code is 
     amended to read as follows:
       ``(1) In general.--Amounts in the Vaccine Injury 
     Compensation Trust Fund shall be available, as provided in 
     appropriation Acts, only for--
       ``(A) the payment of compensation under subtitle 2 of title 
     XXI of the Public Health Service Act (as in effect on August 
     5, 1997) for vaccine-related injury or death with respect to 
     any vaccine--
       ``(i) which is administered after September 30, 1988, and
       ``(ii) which is a taxable vaccine (as defined in section 
     4132(a)(1)) at the time compensation is paid under such 
     subtitle 2, or
       ``(B) the payment of all expenses of administration (but 
     not in excess of $9,500,000 for any fiscal year) incurred by 
     the Federal Government in administering such subtitle.''.
       (2) Section 9510(b) of the 1986 Code is amended by adding 
     at the end the following new paragraph:
       ``(3) Limitation on transfers to vaccine injury 
     compensation trust fund.--No amount may be appropriated to 
     the Vaccine Injury Compensation Trust Fund on and after the 
     date of any expenditure from the Trust Fund which is not 
     permitted by this section. The determination of whether an 
     expenditure is so permitted shall be made without regard to--
       ``(A) any provision of law which is not contained or 
     referenced in this title or in a revenue Act, and
       ``(B) whether such provision of law is a subsequently 
     enacted provision or directly or indirectly seeks to waive 
     the application of this paragraph.''.
       (e) Amendments Related to Section 915 of 1997 Act.--
       (1) Section 915 of the Taxpayer Relief Act of 1997 is 
     amended--
       (A) in subsection (b), by inserting ``or 1998'' after 
     ``1997'', and
       (B) by amending subsection (d) to read as follows:
       ``(d) Effective Date.--This section shall apply to taxable 
     years ending with or within calendar year 1997.''.
       (2) Paragraph (2) of section 6404(h) of the 1986 Code is 
     amended by inserting ``Robert T. Stafford'' before 
     ``Disaster''.
       (f) Amendments Related to Section 1012 of 1997 Act.--
       (1) Paragraph (2) of section 351(c) of the 1986 Code, as 
     amended by section 6010(c) of the 1998 Act, is amended by 
     inserting ``, or the fact that the corporation whose stock 
     was distributed issues additional stock,'' after ``dispose of 
     part or all of the distributed stock''.
       (2) Clause (ii) of section 368(a)(2)(H) of the 1986 Code, 
     as amended by section 6010(c) of the 1998 Act, is amended by 
     inserting ``, or the fact that the corporation whose stock 
     was distributed issues additional stock,'' after ``dispose of 
     part or all of the distributed stock''.
       (g) Amendment Related to Section 1082 of 1997 Act.--
     Subparagraph (F) of section 172(b)(1) of the 1986 Code is 
     amended by adding at the end the following new clause:
       ``(iv) Coordination with paragraph (2).--For purposes of 
     applying paragraph (2), an eligible loss for any taxable year 
     shall be treated in a manner similar to the manner in which a 
     specified liability loss is treated.''
       (h) Amendment Related to Section 1084 of 1997 Act.--
     Paragraph (3) of section 264(f) of the 1986 Code is amended 
     by adding at the end the following flush sentence:

     ``If the amount described in subparagraph (A) with respect to 
     any policy or contract does not reasonably approximate its 
     actual value, the amount taken into account under 
     subparagraph (A) shall be the greater of the amount of the 
     insurance company liability or the insurance company reserve 
     with respect to such policy or contract (as determined for 
     purposes of the annual statement approved by the National 
     Association of Insurance Commissioners) or shall be such 
     other amount as is determined by the Secretary.''
       (i) Amendment Related to Section 1205 of 1997 Act.--
     Paragraph (2) of section 6311(d) of the 1986 Code is amended 
     by striking ``under such contracts'' in the last sentence and 
     inserting ``under any such contract for the use of credit or 
     debit cards for the payment of taxes imposed by subtitle A''.
       (j) Effective Date.--The amendments made by this section 
     shall take effect as if included in the provisions of the 
     Taxpayer Relief Act of 1997 to which they relate.

     SEC. 504. AMENDMENTS RELATED TO TAX REFORM ACT OF 1984.

       (a) In General.--Subparagraph (C) of section 172(d)(4) of 
     the 1986 Code is amended to read as follows:
       ``(C) any deduction for casualty or theft losses allowable 
     under paragraph (2) or (3) of section 165(c) shall be treated 
     as attributable to the trade or business; and''.
       (b) Conforming Amendments.--
       (1) Paragraph (3) of section 67(b) of the 1986 Code is 
     amended by striking ``for losses described in subsection 
     (c)(3) or (d) of section 165'' and inserting ``for casualty 
     or theft losses described in paragraph (2) or (3) of section 
     165(c) or for losses described in section 165(d)''.
       (2) Paragraph (3) of section 68(c) of the 1986 Code is 
     amended by striking ``for losses described in subsection 
     (c)(3) or (d) of section 165'' and inserting ``for casualty 
     or theft losses described in paragraph (2) or (3) of section 
     165(c) or for losses described in section 165(d)''.
       (3) Paragraph (1) of section 873(b) is amended to read as 
     follows:
       ``(1) Losses.--The deduction allowed by section 165 for 
     casualty or theft losses described in paragraph (2) or (3) of 
     section 165(c), but only if the loss is of property located 
     within the United States.''
       (c) Effective Dates.--
       (1) The amendments made by subsections (a) and (b)(3) shall 
     apply to taxable years beginning after December 31, 1983.
       (2) The amendment made by subsection (b)(1) shall apply to 
     taxable years beginning after December 31, 1986.
       (3) The amendment made by subsection (b)(2) shall apply to 
     taxable years beginning after December 31, 1990.

     SEC. 505. OTHER AMENDMENTS.

       (a) Amendments Related to Section 6103 of 1986 Code.--
       (1) Subsection (j) of section 6103 of the 1986 Code is 
     amended by adding at the end the following new paragraph:
       ``(5) Department of agriculture.--Upon request in writing 
     by the Secretary of Agriculture, the Secretary shall furnish 
     such returns, or return information reflected thereon, as the 
     Secretary may prescribe by regulation to officers and 
     employees of the Department of Agriculture whose official 
     duties require access to such returns or information for the 
     purpose of, but only to the extent necessary in, structuring, 
     preparing, and conducting the census of agriculture pursuant 
     to the Census of Agriculture Act of 1997 (Public Law 105-
     113).''.
       (2) Paragraph (4) of section 6103(p) of the 1986 Code is 
     amended by striking ``(j)(1) or (2)'' in the material 
     preceding subparagraph (A) and in subparagraph (F) and 
     inserting ``(j)(1), (2), or (5)''.
       (3) The amendments made by this subsection shall apply to 
     requests made on or after the date of the enactment of this 
     Act.
       (b) Amendment Related to Section 9004 of Transportation 
     Equity Act for the 21st Century.--
       (1) Paragraph (2) of section 9503(f) of the 1986 Code is 
     amended to read as follows:
       ``(2) notwithstanding section 9602(b), obligations held by 
     such Fund after September 30, 1998, shall be obligations of 
     the United States which are not interest-bearing.''
       (2) The amendment made by paragraph (1) shall take effect 
     on October 1, 1998.
       (c) Clerical Amendments.--
       (1) Clause (i) of section 51(d)(6)(B) of the 1986 Code is 
     amended by striking ``rehabilitation plan'' and inserting 
     ``plan for employment''. The reference to plan for employment 
     in such clause shall be treated as including a reference to 
     the rehabilitation plans referred to in such clause as in 
     effect

[[Page H8955]]

     before the amendment made by the preceding sentence.
       (2) Subparagraphs (C) and (D) of section 6693(a)(2) of the 
     1986 Code are each amended by striking ``Section'' and 
     inserting ``section''.

            TITLE VI--AMERICAN COMMUNITY RENEWAL ACT OF 1998

     SEC. 601. SHORT TITLE.

       This title may be cited as the ``American Community Renewal 
     Act of 1998''.

     SEC. 602. DESIGNATION OF AND TAX INCENTIVES FOR RENEWAL 
                   COMMUNITIES.

       (a) In General.--Chapter 1 is amended by adding at the end 
     the following new subchapter:

                  ``Subchapter X--Renewal Communities

``Part I.   Designation.
``Part II.  Renewal community capital gain; renewal community business.
``Part III. Family development accounts.
``Part IV.  Additional incentives.

                         ``PART I--DESIGNATION

``Sec. 1400E. Designation of renewal communities.

     ``SEC. 1400E. DESIGNATION OF RENEWAL COMMUNITIES.

       ``(a) Designation.--
       ``(1) Definitions.--For purposes of this title, the term 
     `renewal community' means any area--
       ``(A) which is nominated by one or more local governments 
     and the State or States in which it is located for 
     designation as a renewal community (hereinafter in this 
     section referred to as a `nominated area'), and
       ``(B) which the Secretary of Housing and Urban Development 
     designates as a renewal community, after consultation with--
       ``(i) the Secretaries of Agriculture, Commerce, Labor, and 
     the Treasury; the Director of the Office of Management and 
     Budget; and the Administrator of the Small Business 
     Administration, and
       ``(ii) in the case of an area on an Indian reservation, the 
     Secretary of the Interior.
       ``(2) Number of designations.--
       ``(A) In general.--The Secretary of Housing and Urban 
     Development may designate not more than 20 nominated areas as 
     renewal communities.
       ``(B) Minimum designation in rural areas.--Of the areas 
     designated under paragraph (1), at least 4 must be areas--
       ``(i) which are within a local government jurisdiction or 
     jurisdictions with a population of less than 50,000,
       ``(ii) which are outside of a metropolitan statistical area 
     (within the meaning of section 143(k)(2)(B)), or
       ``(iii) which are determined by the Secretary of Housing 
     and Urban Development, after consultation with the Secretary 
     of Commerce, to be rural areas.
       ``(3) Areas designated based on degree of poverty, etc.--
       ``(A) In general.--Except as otherwise provided in this 
     section, the nominated areas designated as renewal 
     communities under this subsection shall be those nominated 
     areas with the highest average ranking with respect to the 
     criteria described in subparagraphs (B), (C), and (D) of 
     subsection (c)(3). For purposes of the preceding sentence, an 
     area shall be ranked within each such criterion on the basis 
     of the amount by which the area exceeds such criterion, with 
     the area which exceeds such criterion by the greatest amount 
     given the highest ranking.
       ``(B) Exception where inadequate course of action, etc.--An 
     area shall not be designated under subparagraph (A) if the 
     Secretary of Housing and Urban Development determines that 
     the course of action described in subsection (d)(2) with 
     respect to such area is inadequate.
       ``(C) Priority for empowerment zones and enterprise 
     communities with respect to first half of designations.--With 
     respect to the first 10 designations made under this 
     section--
       ``(i) 10 shall be chosen from nominated areas which are 
     empowerment zones or enterprise communities (and are 
     otherwise eligible for designation under this section), and
       ``(ii) of such 10, 2 shall be areas described in paragraph 
     (2)(B).
       ``(4) Limitation on designations.--
       ``(A) Publication of regulations.--The Secretary of Housing 
     and Urban Development shall prescribe by regulation no later 
     than 4 months after the date of the enactment of this 
     section, after consultation with the officials described in 
     paragraph (1)(B)--
       ``(i) the procedures for nominating an area under paragraph 
     (1)(A),
       ``(ii) the parameters relating to the size and population 
     characteristics of a renewal community, and
       ``(iii) the manner in which nominated areas will be 
     evaluated based on the criteria specified in subsection (d).
       ``(B) Time limitations.--The Secretary of Housing and Urban 
     Development may designate nominated areas as renewal 
     communities only during the 24-month period beginning on the 
     first day of the first month following the month in which the 
     regulations described in subparagraph (A) are prescribed.
       ``(C) Procedural rules.--The Secretary of Housing and Urban 
     Development shall not make any designation of a nominated 
     area as a renewal community under paragraph (2) unless--
       ``(i) the local governments and the States in which the 
     nominated area is located have the authority--

       ``(I) to nominate such area for designation as a renewal 
     community,
       ``(II) to make the State and local commitments described in 
     subsection (d), and
       ``(III) to provide assurances satisfactory to the Secretary 
     of Housing and Urban Development that such commitments will 
     be fulfilled,

       ``(ii) a nomination regarding such area is submitted in 
     such a manner and in such form, and contains such 
     information, as the Secretary of Housing and Urban 
     Development shall by regulation prescribe, and
       ``(iii) the Secretary of Housing and Urban Development 
     determines that any information furnished is reasonably 
     accurate.
       ``(5) Nomination process for indian reservations.--For 
     purposes of this subchapter, in the case of a nominated area 
     on an Indian reservation, the reservation governing body (as 
     determined by the Secretary of the Interior) shall be treated 
     as being both the State and local governments with respect to 
     such area.
       ``(b) Period for Which Designation Is in Effect.--
       ``(1) In general.--Any designation of an area as a renewal 
     community shall remain in effect during the period beginning 
     on the date of the designation and ending on the earliest 
     of--
       ``(A) December 31, 2006,
       ``(B) the termination date designated by the State and 
     local governments in their nomination, or
       ``(C) the date the Secretary of Housing and Urban 
     Development revokes such designation.
       ``(2) Revocation of designation.--The Secretary of Housing 
     and Urban Development may revoke the designation under this 
     section of an area if such Secretary determines that the 
     local government or the State in which the area is located--
       ``(A) has modified the boundaries of the area, or
       ``(B) is not complying substantially with, or fails to make 
     progress in achieving, the State or local commitments, 
     respectively, described in subsection (d).
       ``(c) Area and Eligibility Requirements.--
       ``(1) In general.--The Secretary of Housing and Urban 
     Development may designate a nominated area as a renewal 
     community under subsection (a) only if the area meets the 
     requirements of paragraphs (2) and (3) of this subsection.
       ``(2) Area requirements.--A nominated area meets the 
     requirements of this paragraph if--
       ``(A) the area is within the jurisdiction of one or more 
     local governments,
       ``(B) the boundary of the area is continuous, and
       ``(C) the area--
       ``(i) has a population, of at least--

       ``(I) 4,000 if any portion of such area (other than a rural 
     area described in subsection (a)(2)(B)(i)) is located within 
     a metropolitan statistical area (within the meaning of 
     section 143(k)(2)(B)) which has a population of 50,000 or 
     greater, or
       ``(II) 1,000 in any other case, or

       ``(ii) is entirely within an Indian reservation (as 
     determined by the Secretary of the Interior).
       ``(3) Eligibility requirements.--A nominated area meets the 
     requirements of this paragraph if the State and the local 
     governments in which it is located certify (and the Secretary 
     of Housing and Urban Development, after such review of 
     supporting data as he deems appropriate, accepts such 
     certification) that--
       ``(A) the area is one of pervasive poverty, unemployment, 
     and general distress,
       ``(B) the unemployment rate in the area, as determined by 
     the most recent available data, was at least 1\1/2\ times the 
     national unemployment rate for the period to which such data 
     relate,
       ``(C) the poverty rate for each population census tract 
     within the nominated area is at least 20 percent, and
       ``(D) in the case of an urban area, at least 70 percent of 
     the households living in the area have incomes below 80 
     percent of the median income of households within the 
     jurisdiction of the local government (determined in the same 
     manner as under section 119(b)(2) of the Housing and 
     Community Development Act of 1974).
       ``(4) Consideration of high incidence of crime.--The 
     Secretary of Housing and Urban Development shall take into 
     account, in selecting nominated areas for designation as 
     renewal communities under this section, the extent to which 
     such areas have a high incidence of crime.
       ``(5) Consideration of communities identified in gao 
     study.--The Secretary of Housing and Urban Development shall 
     take into account, in selecting nominated areas for 
     designation as renewal communities under this section, if the 
     area has census tracts identified in the May 12, 1998, report 
     of the Government Accounting Office regarding the 
     identification of economically distressed areas.
       ``(d) Required State and Local Commitments.--
       ``(1) In general.--The Secretary of Housing and Urban 
     Development may designate any nominated area as a renewal 
     community under subsection (a) only if--
       ``(A) the local government and the State in which the area 
     is located agree in writing that, during any period during 
     which the area is a renewal community, such governments will 
     follow a specified course of action which meets the 
     requirements of paragraph

[[Page H8956]]

     (2) and is designed to reduce the various burdens borne by 
     employers or employees in such area, and
       ``(B) the economic growth promotion requirements of 
     paragraph (3) are met.
       ``(2) Course of action.--
       ``(A) In general.--A course of action meets the 
     requirements of this paragraph if such course of action is a 
     written document, signed by a State (or local government) and 
     neighborhood organizations, which evidences a partnership 
     between such State or government and community-based 
     organizations and which commits each signatory to specific 
     and measurable goals, actions, and timetables. Such course of 
     action shall include at least five of the following:
       ``(i) A reduction of tax rates or fees applying within the 
     renewal community.
       ``(ii) An increase in the level of efficiency of local 
     services within the renewal community.
       ``(iii) Crime reduction strategies, such as crime 
     prevention (including the provision of such services by 
     nongovernmental entities).
       ``(iv) Actions to reduce, remove, simplify, or streamline 
     governmental requirements applying within the renewal 
     community.
       ``(v) Involvement in the program by private entities, 
     organizations, neighborhood organizations, and community 
     groups, particularly those in the renewal community, 
     including a commitment from such private entities to provide 
     jobs and job training for, and technical, financial, or other 
     assistance to, employers, employees, and residents from the 
     renewal community.
       ``(vi) State or local income tax benefits for fees paid for 
     services performed by a nongovernmental entity which were 
     formerly performed by a governmental entity.
       ``(vii) The gift (or sale at below fair market value) of 
     surplus real property (such as land, homes, and commercial or 
     industrial structures) in the renewal community to 
     neighborhood organizations, community development 
     corporations, or private companies.
       ``(B) Recognition of past efforts.--For purposes of this 
     section, in evaluating the course of action agreed to by any 
     State or local government, the Secretary of Housing and Urban 
     Development shall take into account the past efforts of such 
     State or local government in reducing the various burdens 
     borne by employers and employees in the area involved.
       ``(3) Economic growth promotion requirements.--The economic 
     growth promotion requirements of this paragraph are met with 
     respect to a nominated area if the local government and the 
     State in which such area is located certify in writing that 
     such government and State, respectively, have repealed or 
     otherwise will not enforce within the area, if such area is 
     designated as a renewal community--
       ``(A) licensing requirements for occupations that do not 
     ordinarily require a professional degree,
       ``(B) zoning restrictions on home-based businesses which do 
     not create a public nuisance,
       ``(C) permit requirements for street vendors who do not 
     create a public nuisance,
       ``(D) zoning or other restrictions that impede the 
     formation of schools or child care centers, and
       ``(E) franchises or other restrictions on competition for 
     businesses providing public services, including but not 
     limited to taxicabs, jitneys, cable television, or trash 
     hauling,

     except to the extent that such regulation of businesses and 
     occupations is necessary for and well-tailored to the 
     protection of health and safety.
       ``(e) Coordination With Treatment of Empowerment Zones and 
     Enterprise Communities.--For purposes of this title, if there 
     are in effect with respect to the same area both--
       ``(1) a designation as a renewal community, and
       ``(2) a designation as an empowerment zone or enterprise 
     community,

     both of such designations shall be given full effect with 
     respect to such area.
       ``(f) Definitions and Special Rules.--For purposes of this 
     subchapter--
       ``(1) Governments.--If more than one government seeks to 
     nominate an area as a renewal community, any reference to, or 
     requirement of, this section shall apply to all such 
     governments.
       ``(2) State.--The term `State' includes Puerto Rico, the 
     Virgin Islands of the United States, Guam, American Samoa, 
     the Northern Mariana Islands, and any other possession of the 
     United States.
       ``(3) Local government.--The term `local government' 
     means--
       ``(A) any county, city, town, township, parish, village, or 
     other general purpose political subdivision of a State,
       ``(B) any combination of political subdivisions described 
     in subparagraph (A) recognized by the Secretary of Housing 
     and Urban Development, and
       ``(C) the District of Columbia.
       ``(4) Application of rules relating to census tracts and 
     census data.--The rules of sections 1392(b)(4) and 1393(a)(9) 
     shall apply.

 ``PART II--RENEWAL COMMUNITY CAPITAL GAIN; RENEWAL COMMUNITY BUSINESS

``Sec. 1400F. Renewal community capital gain.
``Sec. 1400G. Renewal community business defined.

     ``SEC. 1400F. RENEWAL COMMUNITY CAPITAL GAIN.

       ``(a) General Rule.--Gross income does not include any 
     qualified capital gain recognized on the sale or exchange of 
     a qualified community asset held for more than 5 years.
       ``(b) Qualified Community Asset.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified community asset' 
     means--
       ``(A) any qualified community stock,
       ``(B) any qualified community partnership interest, and
       ``(C) any qualified community business property.
       ``(2) Qualified community stock.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `qualified community stock' means any stock in a 
     domestic corporation if--
       ``(i) such stock is acquired by the taxpayer after December 
     31, 1999, and before January 1, 2007, at its original issue 
     (directly or through an underwriter) from the corporation 
     solely in exchange for cash,
       ``(ii) as of the time such stock was issued, such 
     corporation was a renewal community business (or, in the case 
     of a new corporation, such corporation was being organized 
     for purposes of being a renewal community business), and
       ``(iii) during substantially all of the taxpayer's holding 
     period for such stock, such corporation qualified as a 
     renewal community business.
       ``(B) Redemptions.--A rule similar to the rule of section 
     1202(c)(3) shall apply for purposes of this paragraph.
       ``(3) Qualified community partnership interest.--The term 
     `qualified community partnership interest' means any interest 
     in a partnership if--
       ``(A) such interest is acquired by the taxpayer after 
     December 31, 1999, and before January 1, 2007,
       ``(B) as of the time such interest was acquired, such 
     partnership was a renewal community business (or, in the case 
     of a new partnership, such partnership was being organized 
     for purposes of being a renewal community business), and
       ``(C) during substantially all of the taxpayer's holding 
     period for such interest, such partnership qualified as a 
     renewal community business.

     A rule similar to the rule of paragraph (2)(B) shall apply 
     for purposes of this paragraph.
       ``(4) Qualified community business property.--
       ``(A) In general.--The term `qualified community business 
     property' means tangible property if--
       ``(i) such property was acquired by the taxpayer by 
     purchase (as defined in section 179(d)(2)) after December 31, 
     1999, and before January 1, 2007,
       ``(ii) the original use of such property in the renewal 
     community commences with the taxpayer, and
       ``(iii) during substantially all of the taxpayer's holding 
     period for such property, substantially all of the use of 
     such property was in a renewal community business of the 
     taxpayer.
       ``(B) Special rule for substantial improvements.--The 
     requirements of clauses (i) and (ii) of subparagraph (A) 
     shall be treated as satisfied with respect to--
       ``(i) property which is substantially improved (within the 
     meaning of section 1400B(b)(4)(B)(ii)) by the taxpayer before 
     January 1, 2007, and
       ``(ii) any land on which such property is located.
       ``(c) Certain Rules To Apply.--Rules similar to the rules 
     of paragraphs (5), (6), and (7) of subsection (b), and 
     subsections (e), (f), and (g), of section 1400B shall apply 
     for purposes of this section.

     ``SEC. 1400G. RENEWAL COMMUNITY BUSINESS DEFINED.

       ``For purposes of this part, the term `renewal community 
     business' means any entity or proprietorship which would be a 
     qualified business entity or qualified proprietorship under 
     section 1397B if--
       ``(1) references to renewal communities were substituted 
     for references to empowerment zones in such section; and
       ``(2) `80 percent' were substituted for `50 percent' in 
     subsections (b)(2) and (c)(1) of such section.

                ``PART III--FAMILY DEVELOPMENT ACCOUNTS

``Sec. 1400H. Family development accounts for renewal community EITC 
              recipients.
``Sec. 1400I. Demonstration program to provide matching contributions 
              to family development accounts in certain renewal 
              communities.
``Sec. 1400J. Designation of earned income tax credit payments for 
              deposit to family development account.

     ``SEC. 1400H. FAMILY DEVELOPMENT ACCOUNTS FOR RENEWAL 
                   COMMUNITY EITC RECIPIENTS.

       ``(a) Allowance of Deduction.--
       ``(1) In general.--There shall be allowed as a deduction--
       ``(A) in the case of a qualified individual, the amount 
     paid in cash for the taxable year by such individual to any 
     family development account for such individual's benefit, and
       ``(B) in the case of any person other than a qualified 
     individual, the amount paid in cash for the taxable year by 
     such person to any family development account for the benefit 
     of a qualified individual but only if the amount so paid is 
     designated for purposes of this section by such individual.


[[Page H8957]]


     No deduction shall be allowed under this paragraph for any 
     amount deposited in a family development account under 
     section 1400I (relating to demonstration program to provide 
     matching amounts in renewal communities).
       ``(2) Limitation.--
       ``(A) In general.--The amount allowable as a deduction to 
     any individual for any taxable year by reason of paragraph 
     (1)(A) shall not exceed the lesser of--
       ``(i) $2,000, or
       ``(ii) an amount equal to the compensation includible in 
     the individual's gross income for such taxable year.
       ``(B) Persons donating to family development accounts of 
     others.--The amount which may be designated under paragraph 
     (1)(B) by any qualified individual for any taxable year of 
     such individual shall not exceed $1,000.
       ``(3) Special rules for certain married individuals.--Rules 
     similar to rules of section 219(c) shall apply to the 
     limitation in paragraph (2)(A).
       ``(4) Coordination with ira's.--No deduction shall be 
     allowed under this section to any person by reason of a 
     payment to an account for the benefit of a qualified 
     individual if any amount is paid into an individual 
     retirement account (including a Roth IRA) for the benefit of 
     such individual.
       ``(5) Rollovers.--No deduction shall be allowed under this 
     section with respect to any rollover contribution.
       ``(b) Tax Treatment of Distributions.--
       ``(1) Inclusion of amounts in gross income.--Except as 
     otherwise provided in this subsection, any amount paid or 
     distributed out of a family development account shall be 
     included in gross income by the payee or distributee, as the 
     case may be.
       ``(2) Exclusion of qualified family development 
     distributions.--Paragraph (1) shall not apply to any 
     qualified family development distribution.
       ``(c) Qualified Family Development Distribution.--For 
     purposes of this section--
       ``(1) In general.--The term `qualified family development 
     distribution' means any amount paid or distributed out of a 
     family development account which would otherwise be 
     includible in gross income, to the extent that such payment 
     or distribution is used exclusively to pay qualified family 
     development expenses for the holder of the account or the 
     spouse or dependent (as defined in section 152) of such 
     holder.
       ``(2) Qualified family development expenses.--The term 
     `qualified family development expenses' means any of the 
     following:
       ``(A) Qualified higher education expenses.
       ``(B) Qualified first-time homebuyer costs.
       ``(C) Qualified business capitalization costs.
       ``(D) Qualified medical expenses.
       ``(E) Qualified rollovers.
       ``(3) Qualified higher education expenses.--
       ``(A) In general.--The term `qualified higher education 
     expenses' has the meaning given such term by section 
     72(t)(7), determined by treating postsecondary vocational 
     educational schools as eligible educational institutions.
       ``(B) Postsecondary vocational education school.--The term 
     `postsecondary vocational educational school' means an area 
     vocational education school (as defined in subparagraph (C) 
     or (D) of section 521(4) of the Carl D. Perkins Vocational 
     and Applied Technology Education Act (20 U.S.C. 2471(4))) 
     which is in any State (as defined in section 521(33) of such 
     Act), as such sections are in effect on the date of the 
     enactment of this section.
       ``(C) Coordination with other benefits.--The amount of 
     qualified higher education expenses for any taxable year 
     shall be reduced as provided in section 25A(g)(2).
       ``(4) Qualified first-time homebuyer costs.--The term 
     `qualified first-time homebuyer costs' means qualified 
     acquisition costs (as defined in section 72(t)(8) without 
     regard to subparagraph (B) thereof) with respect to a 
     principal residence (within the meaning of section 121) for a 
     qualified first-time homebuyer (as defined in such section).
       ``(5) Qualified business capitalization costs.--
       ``(A) In general.--The term `qualified business 
     capitalization costs' means qualified expenditures for the 
     capitalization of a qualified business pursuant to a 
     qualified plan.
       ``(B) Qualified expenditures.--The term `qualified 
     expenditures' means expenditures included in a qualified 
     plan, including capital, plant, equipment, working capital, 
     and inventory expenses.
       ``(C) Qualified business.--The term `qualified business' 
     means any business that does not contravene any law.
       ``(D) Qualified plan.--The term `qualified plan' means a 
     business plan which meets such requirements as the Secretary 
     may specify.
       ``(6) Qualified medical expenses.--The term `qualified 
     medical expenses' means any amount paid during the taxable 
     year, not compensated for by insurance or otherwise, for 
     medical care (as defined in section 213(d)) of the taxpayer, 
     his spouse, or his dependent (as defined in section 152).
       ``(7) Qualified rollovers.--The term `qualified rollover' 
     means any amount paid from a family development account of a 
     taxpayer into another such account established for the 
     benefit of--
       ``(A) such taxpayer, or
       ``(B) any qualified individual who is--
       ``(i) the spouse of such taxpayer, or
       ``(ii) any dependent (as defined in section 152) of the 
     taxpayer.

     Rules similar to the rules of section 408(d)(3) shall apply 
     for purposes of this paragraph.
       ``(d) Tax Treatment of Accounts.--
       ``(1) In general.--Any family development account is exempt 
     from taxation under this subtitle unless such account has 
     ceased to be a family development account by reason of 
     paragraph (2). Notwithstanding the preceding sentence, any 
     such account is subject to the taxes imposed by section 511 
     (relating to imposition of tax on unrelated business income 
     of charitable, etc., organizations). Notwithstanding any 
     other provision of this title (including chapters 11 and 12), 
     the basis of any person in such an account is zero.
       ``(2) Loss of exemption in case of prohibited 
     transactions.--For purposes of this section, rules similar to 
     the rules of section 408(e) shall apply.
       ``(3) Other rules to apply.--Rules similar to the rules of 
     paragraphs (4), (5), and (6) of section 408(d) shall apply 
     for purposes of this section.
       ``(e) Family Development Account.--For purposes of this 
     title, the term `family development account' means a trust 
     created or organized in the United States for the exclusive 
     benefit of a qualified individual or his beneficiaries, but 
     only if the written governing instrument creating the trust 
     meets the following requirements:
       ``(1) Except in the case of a qualified rollover (as 
     defined in subsection (c)(7))--
       ``(A) no contribution will be accepted unless it is in 
     cash, and
       ``(B) contributions will not be accepted for the taxable 
     year in excess of $3,000 (determined without regard to any 
     contribution made under section 1400I (relating to 
     demonstration program to provide matching amounts in renewal 
     communities)).
       ``(2) The requirements of paragraphs (2) through (6) of 
     section 408(a) are met.
       ``(f) Qualified Individual.--For purposes of this section, 
     the term `qualified individual' means, for any taxable year, 
     an individual--
       ``(1) who is a bona fide resident of a renewal community 
     throughout the taxable year, and
       ``(2) to whom a credit was allowed under section 32 for the 
     preceding taxable year.
       ``(g) Other Definitions and Special Rules.--
       ``(1) Compensation.--The term `compensation' has the 
     meaning given such term by section 219(f)(1).
       ``(2) Married individuals.--The maximum deduction under 
     subsection (a) shall be computed separately for each 
     individual, and this section shall be applied without regard 
     to any community property laws.
       ``(3) Time when contributions deemed made.--For purposes of 
     this section, a taxpayer shall be deemed to have made a 
     contribution to a family development account on the last day 
     of the preceding taxable year if the contribution is made on 
     account of such taxable year and is made not later than the 
     time prescribed by law for filing the return for such taxable 
     year (not including extensions thereof).
       ``(4) Employer payments; custodial accounts.--Rules similar 
     to the rules of sections 219(f)(5) and 408(h) shall apply for 
     purposes of this section.
       ``(5) Reports.--The trustee of a family development account 
     shall make such reports regarding such account to the 
     Secretary and to the individual for whom the account is 
     maintained with respect to contributions (and the years to 
     which they relate), distributions, and such other matters as 
     the Secretary may require under regulations. The reports 
     required by this paragraph--
       ``(A) shall be filed at such time and in such manner as the 
     Secretary prescribes in such regulations, and
       ``(B) shall be furnished to individuals--
       ``(i) not later than January 31 of the calendar year 
     following the calendar year to which such reports relate, and
       ``(ii) in such manner as the Secretary prescribes in such 
     regulations.
       ``(6) Investment in collectibles treated as 
     distributions.--Rules similar to the rules of section 408(m) 
     shall apply for purposes of this section.
       ``(h) Penalty for Distributions Not Used for Qualified 
     Family Development Expenses.--
       ``(1) In general.--If any amount is distributed from a 
     family development account and is not used exclusively to pay 
     qualified family development expenses for the holder of the 
     account or the spouse or dependent (as defined in section 
     152) of such holder, the tax imposed by this chapter for the 
     taxable year of such distribution shall be increased by the 
     sum of--
       ``(A) 100 percent of the portion of such amount which is 
     includible in gross income and is attributable to amounts 
     contributed under section 1400I (relating to demonstration 
     program to provide matching amounts in renewal communities), 
     and
       ``(B) 10 percent of the portion of such amount which is 
     includible in gross income and is not described in 
     subparagraph (A).

     For purposes of this subsection, distributions which are 
     includable in gross income shall be treated as attributable 
     to amounts contributed under section 1400I to the extent 
     thereof. For purposes of the preceding sentence, all family 
     development accounts of an individual shall be treated as one 
     account.
       ``(2) Exception for certain distributions.--Paragraph (1) 
     shall not apply to distributions which are--

[[Page H8958]]

       ``(A) made on or after the date on which the account holder 
     attains age 59\1/2\,
       ``(B) made to a beneficiary (or the estate of the account 
     holder) on or after the death of the account holder, or
       ``(C) attributable to the account holder's being disabled 
     within the meaning of section 72(m)(7).
       ``(i) Termination.--No deduction shall be allowed under 
     this section for any amount paid to a family development 
     account for any taxable year beginning after December 31, 
     2006.

     ``SEC. 1400I. DEMONSTRATION PROGRAM TO PROVIDE MATCHING 
                   CONTRIBUTIONS TO FAMILY DEVELOPMENT ACCOUNTS IN 
                   CERTAIN RENEWAL COMMUNITIES.

       ``(a) Designation.--
       ``(1) Definitions.--For purposes of this section, the term 
     `FDA matching demonstration area' means any renewal 
     community--
       ``(A) which is nominated under this section by each of the 
     local governments and States which nominated such community 
     for designation as a renewal community under section 
     1400E(a)(1)(A), and
       ``(B) which the Secretary of Housing and Urban Development 
     designates as an FDA matching demonstration area after 
     consultation with--
       ``(i) the Secretaries of Agriculture, Commerce, Labor, and 
     the Treasury, the Director of the Office of Management and 
     Budget, and the Administrator of the Small Business 
     Administration, and
       ``(ii) in the case of a community on an Indian reservation, 
     the Secretary of the Interior.
       ``(2) Number of designations.--
       ``(A) In general.--The Secretary of Housing and Urban 
     Development may designate not more than 5 communities as FDA 
     matching demonstration areas.
       ``(B) Minimum designation in rural areas.--Of the areas 
     designated under subparagraph (A), at least 2 must be areas 
     described in section 1400E(a)(2)(B).
       ``(3) Limitations on designations.--
       ``(A) Publication of regulations.--The Secretary of Housing 
     and Urban Development shall prescribe by regulation no later 
     than 4 months after the date of the enactment of this 
     section, after consultation with the officials described in 
     paragraph (1)(B)--
       ``(i) the procedures for nominating a renewal community 
     under paragraph (1)(A) (including procedures for coordinating 
     such nomination with the nomination of an area for 
     designation as a renewal community under section 1400E), and
       ``(ii) the manner in which nominated renewal communities 
     will be evaluated for purposes of this section.
       ``(B) Time limitations.--The Secretary of Housing and Urban 
     Development may designate renewal communities as FDA matching 
     demonstration areas only during the 24-month period beginning 
     on the first day of the first month following the month in 
     which the regulations described in subparagraph (A) are 
     prescribed.
       ``(4) Designation based on degree of poverty, etc.--The 
     rules of section 1400E(a)(3) shall apply for purposes of 
     designations of FDA matching demonstration areas under this 
     section.
       ``(b) Period for Which Designation is in Effect.--Any 
     designation of a renewal community as an FDA matching 
     demonstration area shall remain in effect during the period 
     beginning on the date of such designation and ending on the 
     date on which such area ceases to be a renewal community.
       ``(c) Matching Contributions to Family Development 
     Accounts.--
       ``(1) In general.--Not less than once each taxable year, 
     the Secretary shall deposit (to the extent provided in 
     appropriation Acts) into a family development account of each 
     qualified individual (as defined in section 1400H(f))--
       ``(A) who is a resident throughout the taxable year of an 
     FDA matching demonstration area, and
       ``(B) who requests (in such form and manner as the 
     Secretary prescribes) such deposit for the taxable year,

     an amount equal to the sum of the amounts deposited into all 
     of the family development accounts of such individual during 
     such taxable year (determined without regard to any amount 
     contributed under this section).
       ``(2) Limitations.--
       ``(A) Annual limit.--The Secretary shall not deposit more 
     than $1000 under paragraph (1) with respect to any individual 
     for any taxable year.
       ``(B) Aggregate limit.--The Secretary shall not deposit 
     more than $2000 under paragraph (1) with respect to any 
     individual for all taxable years.
       ``(3) Exclusion from income.--Except as provided in section 
     1400H, gross income shall not include any amount deposited 
     into a family development account under paragraph (1).
       ``(d) Notice of Program.--The Secretary shall provide 
     appropriate notice to residents of FDA matching demonstration 
     areas of the availability of the benefits under this section.
       ``(e) Termination.--No amount may be deposited under this 
     section for any taxable year beginning after December 31, 
     2006.

     ``SEC. 1400J. DESIGNATION OF EARNED INCOME TAX CREDIT 
                   PAYMENTS FOR DEPOSIT TO FAMILY DEVELOPMENT 
                   ACCOUNT.

       ``(a) In General.--With respect to the return of any 
     qualified individual (as defined in section 1400H(f)) for the 
     taxable year of the tax imposed by this chapter, such 
     individual may designate that a specified portion (not less 
     than $1) of any overpayment of tax for such taxable year 
     which is attributable to the earned income tax credit shall 
     be deposited by the Secretary into a family development 
     account of such individual. The Secretary shall so deposit 
     such portion designated under this subsection.
       ``(b) Manner and Time of Designation.--A designation under 
     subsection (a) may be made with respect to any taxable year--
       ``(1) at the time of filing the return of the tax imposed 
     by this chapter for such taxable year, or
       ``(2) at any other time (after the time of filing the 
     return of the tax imposed by this chapter for such taxable 
     year) specified in regulations prescribed by the Secretary.

     Such designation shall be made in such manner as the 
     Secretary prescribes by regulations.
       ``(c) Portion Attributable to Earned Income Tax Credit.--
     For purposes of subsection (a), an overpayment for any 
     taxable year shall be treated as attributable to the earned 
     income tax credit to the extent that such overpayment does 
     not exceed the credit allowed to the taxpayer under section 
     32 for such taxable year.
       ``(d) Overpayments Treated as Refunded.--For purposes of 
     this title, any portion of an overpayment of tax designated 
     under subsection (a) shall be treated as being refunded to 
     the taxpayer as of the last date prescribed for filing the 
     return of tax imposed by this chapter (determined without 
     regard to extensions) or, if later, the date the return is 
     filed.
       ``(e) Termination.--This section shall not apply to any 
     taxable year beginning after December 31, 2006.

                    ``PART IV--ADDITIONAL INCENTIVES

``Sec. 1400K. Commercial revitalization credit.
``Sec. 1400L. Increase in expensing under section 179.

     ``SEC. 1400K. COMMERCIAL REVITALIZATION CREDIT.

       ``(a) General Rule.--For purposes of section 46, except as 
     provided in subsection (e), the commercial revitalization 
     credit for any taxable year is an amount equal to the 
     applicable percentage of the qualified revitalization 
     expenditures with respect to any qualified revitalization 
     building.
       ``(b) Applicable Percentage.--For purposes of this 
     section--
       ``(1) In general.--The term `applicable percentage' means--
       ``(A) 20 percent for the taxable year in which a qualified 
     revitalization building is placed in service, or
       ``(B) at the election of the taxpayer, 5 percent for each 
     taxable year in the credit period.

     The election under subparagraph (B), once made, shall be 
     irrevocable.
       ``(2) Credit period.--
       ``(A) In general.--The term `credit period' means, with 
     respect to any building, the period of 10 taxable years 
     beginning with the taxable year in which the building is 
     placed in service.
       ``(B) Applicable rules.--Rules similar to the rules under 
     paragraphs (2) and (4) of section 42(f) shall apply.
       ``(c) Qualified Revitalization Buildings and 
     Expenditures.--For purposes of this section--
       ``(1) Qualified revitalization building.--The term 
     `qualified revitalization building' means any building (and 
     its structural components) if--
       ``(A) such building is located in a renewal community and 
     is placed in service after December 31, 1999,
       ``(B) a commercial revitalization credit amount is 
     allocated to the building under subsection (e), and
       ``(C) depreciation (or amortization in lieu of 
     depreciation) is allowable with respect to the building.
       ``(2) Qualified revitalization expenditure.--
       ``(A) In general.--The term `qualified revitalization 
     expenditure' means any amount properly chargeable to capital 
     account--
       ``(i) for property for which depreciation is allowable 
     under section 168 and which is--

       ``(I) nonresidential real property, or
       ``(II) an addition or improvement to property described in 
     subclause (I), and

       ``(ii) in connection with the construction of any qualified 
     revitalization building which was not previously placed in 
     service or in connection with the substantial rehabilitation 
     (within the meaning of section 47(c)(1)(C)) of a building 
     which was placed in service before the beginning of such 
     rehabilitation.
       ``(B) Dollar limitation.--The aggregate amount which may be 
     treated as qualified revitalization expenditures with respect 
     to any qualified revitalization building for any taxable year 
     shall not exceed the excess of--
       ``(i) $10,000,000, reduced by
       ``(ii) any such expenditures with respect to the building 
     taken into account by the taxpayer or any predecessor in 
     determining the amount of the credit under this section for 
     all preceding taxable years.
       ``(C) Certain expenditures not included.--The term 
     `qualified revitalization expenditure' does not include--
       ``(i) Straight line depreciation must be used.--Any 
     expenditure (other than with respect to land acquisitions) 
     with respect to which the taxpayer does not use the straight

[[Page H8959]]

     line method over a recovery period determined under 
     subsection (c) or (g) of section 168. The preceding sentence 
     shall not apply to any expenditure to the extent the 
     alternative depreciation system of section 168(g) applies to 
     such expenditure by reason of subparagraph (B) or (C) of 
     section 168(g)(1).
       ``(ii) Acquisition costs.--The costs of acquiring any 
     building or interest therein and any land in connection with 
     such building to the extent that such costs exceed 30 percent 
     of the qualified revitalization expenditures determined 
     without regard to this clause.
       ``(iii) Other credits.--Any expenditure which the taxpayer 
     may take into account in computing any other credit allowable 
     under this title unless the taxpayer elects to take the 
     expenditure into account only for purposes of this section.
       ``(d) When Expenditures Taken Into Account.--
       ``(1) In general.--Qualified revitalization expenditures 
     with respect to any qualified revitalization building shall 
     be taken into account for the taxable year in which the 
     qualified revitalization building is placed in service. For 
     purposes of the preceding sentence, a substantial 
     rehabilitation of a building shall be treated as a separate 
     building.
       ``(2) Progress expenditure payments.--Rules similar to the 
     rules of subsections (b)(2) and (d) of section 47 shall apply 
     for purposes of this section.
       ``(e) Limitation on Aggregate Credits Allowable With 
     Respect to Buildings Located in a State.--
       ``(1) In general.--The amount of the credit determined 
     under this section for any taxable year with respect to any 
     building shall not exceed the commercial revitalization 
     credit amount (in the case of an amount determined under 
     subsection (b)(1)(B), the present value of such amount as 
     determined under the rules of section 42(b)(2)(C)) allocated 
     to such building under this subsection by the commercial 
     revitalization credit agency. Such allocation shall be made 
     at the same time and in the same manner as under paragraphs 
     (1) and (7) of section 42(h).
       ``(2) Commercial revitalization credit amount for 
     agencies.--
       ``(A) In general.--The aggregate commercial revitalization 
     credit amount which a commercial revitalization credit agency 
     may allocate for any calendar year is the amount of the State 
     commercial revitalization credit ceiling determined under 
     this paragraph for such calendar year for such agency.
       ``(B) State commercial revitalization credit ceiling.--The 
     State commercial revitalization credit ceiling applicable to 
     any State--
       ``(i) for each calendar year after 1999 and before 2007 is 
     $2,000,000 for each renewal community in the State, and
       ``(ii) zero for each calendar year thereafter.
       ``(C) Commercial revitalization credit agency.--For 
     purposes of this section, the term `commercial revitalization 
     credit agency' means any agency authorized by a State to 
     carry out this section.
       ``(f) Responsibilities of Commercial Revitalization Credit 
     Agencies.--
       ``(1) Plans for allocation.--Notwithstanding any other 
     provision of this section, the commercial revitalization 
     credit amount with respect to any building shall be zero 
     unless--
       ``(A) such amount was allocated pursuant to a qualified 
     allocation plan of the commercial revitalization credit 
     agency which is approved (in accordance with rules similar to 
     the rules of section 147(f)(2) (other than subparagraph 
     (B)(ii) thereof)) by the governmental unit of which such 
     agency is a part, and
       ``(B) such agency notifies the chief executive officer (or 
     its equivalent) of the local jurisdiction within which the 
     building is located of such allocation and provides such 
     individual a reasonable opportunity to comment on the 
     allocation.
       ``(2) Qualified allocation plan.--For purposes of this 
     subsection, the term `qualified allocation plan' means any 
     plan--
       ``(A) which sets forth selection criteria to be used to 
     determine priorities of the commercial revitalization credit 
     agency which are appropriate to local conditions,
       ``(B) which considers--
       ``(i) the degree to which a project contributes to the 
     implementation of a strategic plan that is devised for a 
     renewal community through a citizen participation process,
       ``(ii) the amount of any increase in permanent, full-time 
     employment by reason of any project, and
       ``(iii) the active involvement of residents and nonprofit 
     groups within the renewal community, and
       ``(C) which provides a procedure that the agency (or its 
     agent) will follow in monitoring compliance with this 
     section.
       ``(g) Termination.--This section shall not apply to any 
     building placed in service after December 31, 2006.

     ``SEC. 1400L. INCREASE IN EXPENSING UNDER SECTION 179.

       ``(a) General Rule.--In the case of a renewal community 
     business (as defined in section 1400G), for purposes of 
     section 179--
       ``(1) the limitation under section 179(b)(1) shall be 
     increased by the lesser of--
       ``(A) $35,000, or
       ``(B) the cost of section 179 property which is qualified 
     renewal property placed in service during the taxable year, 
     and
       ``(2) the amount taken into account under section 179(b)(2) 
     with respect to any section 179 property which is qualified 
     renewal property shall be 50 percent of the cost thereof.
       ``(b) Recapture.--Rules similar to the rules under section 
     179(d)(10) shall apply with respect to any qualified renewal 
     property which ceases to be used in a renewal community by a 
     renewal community business.
       ``(c) Qualified Renewal Property.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified renewal property' 
     means any property to which section 168 applies (or would 
     apply but for section 179) if--
       ``(A) such property was acquired by the taxpayer by 
     purchase (as defined in section 179(d)(2)) after December 31, 
     1999, and before January 1, 2007, and
       ``(B) such property would be qualified zone property (as 
     defined in section 1397C) if references to renewal 
     communities were substituted for references to empowerment 
     zones in section 1397C.
       ``(2) Certain rules to apply.--The rules of subsections 
     (a)(2) and (b) of section 1397C shall apply for purposes of 
     this section.''

     SEC. 603. EXTENSION OF EXPENSING OF ENVIRONMENTAL REMEDIATION 
                   COSTS TO RENEWAL COMMUNITIES.

       (a) Extension.--Paragraph (2) of section 198(c) (defining 
     targeted area) is amended by redesignating subparagraph (C) 
     as subparagraph (D) and by inserting after subparagraph (B) 
     the following new subparagraph:
       ``(C) Renewal communities included.--Except as provided in 
     subparagraph (B), such term shall include a renewal community 
     (as defined in section 1400E).''
       (b) Extension of Termination Date for Renewal 
     Communities.--Subsection (h) of section 198 is amended by 
     inserting before the period ``(December 31, 2006, in the case 
     of a renewal community, as defined in section 1400E).''

     SEC. 604. EXTENSION OF WORK OPPORTUNITY TAX CREDIT FOR 
                   RENEWAL COMMUNITIES

       (a) Extension.--Subsection (c) of section 51 (relating to 
     termination) is amended by adding at the end the following 
     new paragraph:
       ``(5) Extension of credit for renewal communities.--
       ``(A) In general.--In the case of an individual who begins 
     work for the employer after the date contained in paragraph 
     (4)(B), for purposes of section 38--
       ``(i) in lieu of applying subsection (a), the amount of the 
     work opportunity credit determined under this section for the 
     taxable year shall be equal to--

       ``(I) 15 percent of the qualified first-year wages for such 
     year, and
       ``(II) 30 percent of the qualified second-year wages for 
     such year,

       ``(ii) subsection (b)(3) shall be applied by substituting 
     `$10,000' for `$6,000',
       ``(iii) paragraph (4)(B) shall be applied by substituting 
     for the date contained therein the last day for which the 
     designation under section 1400E of the renewal community 
     referred to in subparagraph (B)(i) is in effect, and
       ``(iv) rules similar to the rules of section 51A(b)(5)(C) 
     shall apply.
       ``(B) Qualified first- and second-year wages.--For purposes 
     of subparagraph (A)--
       ``(i) In general.--The term `qualified wages' means, with 
     respect to each 1-year period referred to in clause (ii) or 
     (iii), as the case may be, the wages paid or incurred by the 
     employer during the taxable year to any individual but only 
     if--

       ``(I) the employer is engaged in a trade or business in a 
     renewal community throughout such 1-year period,
       ``(II) the principal place of abode of such individual is 
     in such renewal community throughout such 1-year period, and
       ``(III) substantially all of the services which such 
     individual performs for the employer during such 1-year 
     period are performed in such renewal community.

       ``(ii) Qualified first-year wages.--The term `qualified 
     first-year wages' means, with respect to any individual, 
     qualified wages attributable to service rendered during the 
     1-year period beginning with the day the individual begins 
     work for the employer.
       ``(iii) Qualified second-year wages.--The term `qualified 
     second-year wages' means, with respect to any individual, 
     qualified wages attributable to service rendered during the 
     1-year period beginning on the day after the last day of the 
     1-year period with respect to such individual determined 
     under clause (ii).''
       (b) Congruent Treatment of Renewal Communities and 
     Enterprise Zones for Purposes of Youth Residence 
     Requirements.--
       (1) High-risk youth.--Subparagraphs (A)(ii) and (B) of 
     section 51(d)(5) are each amended by striking ``empowerment 
     zone or enterprise community'' and inserting ``empowerment 
     zone, enterprise community, or renewal community''.
       (2) Qualified summer youth employee.--Clause (iv) of 
     section 51(d)(7)(A) is amended by striking ``empowerment zone 
     or enterprise community'' and inserting ``empowerment zone, 
     enterprise community, or renewal community''.
       (3) Headings.--Paragraphs (5)(B) and (7)(C) of section 
     51(d) are each amended by inserting ``or community'' in the 
     heading after ``zone''.

     SEC. 605. CONFORMING AND CLERICAL AMENDMENTS.

       (a) Deduction for Contributions to Family Development 
     Accounts Allowable Whether or Not Taxpayer Itemizes.--
     Subsection (a) of section 62 (relating to adjusted

[[Page H8960]]

     gross income defined) is amended by inserting after paragraph 
     (17) the following new paragraph:
       ``(18) Family development accounts.--The deduction allowed 
     by section 1400H(a)(1)(A).''
       (b) Tax on Excess Contributions.--
       (1) Tax imposed.--Subsection (a) of section 4973 is amended 
     by striking ``or'' at the end of paragraph (3), adding ``or'' 
     at the end of paragraph (4), and inserting after paragraph 
     (4) the following new paragraph:
       ``(5) a family development account (within the meaning of 
     section 1400H(e)),''.
       (2) Excess contributions.--Section 4973 is amended by 
     adding at the end the following new subsection:
       ``(g) Family Development Accounts.--For purposes of this 
     section, in the case of a family development account, the 
     term `excess contributions' means the sum of--
       ``(1) the excess (if any) of--
       ``(A) the amount contributed for the taxable year to the 
     account (other than a qualified rollover, as defined in 
     section 1400H(c)(7), or a contribution under section 1400I), 
     over
       ``(B) the amount allowable as a deduction under section 
     1400H for such contributions, and
       ``(2) the amount determined under this subsection for the 
     preceding taxable year reduced by the sum of--
       ``(A) the distributions out of the account for the taxable 
     year which were included in the gross income of the payee 
     under section 1400H(b)(1),
       ``(B) the distributions out of the account for the taxable 
     year to which rules similar to the rules of section 408(d)(5) 
     apply by reason of section 1400H(d)(3), and
       ``(C) the excess (if any) of the maximum amount allowable 
     as a deduction under section 1400H for the taxable year over 
     the amount contributed to the account for the taxable year 
     (other than a contribution under section 1400I).

     For purposes of this subsection, any contribution which is 
     distributed from the family development account in a 
     distribution to which rules similar to the rules of section 
     408(d)(4) apply by reason of section 1400H(d)(3) shall be 
     treated as an amount not contributed.''
       (c) Tax on Prohibited Transactions.--Section 4975 is 
     amended--
       (1) by adding at the end of subsection (c) the following 
     new paragraph:
       ``(6) Special rule for family development accounts.--An 
     individual for whose benefit a family development account is 
     established and any contributor to such account shall be 
     exempt from the tax imposed by this section with respect to 
     any transaction concerning such account (which would 
     otherwise be taxable under this section) if, with respect to 
     such transaction, the account ceases to be a family 
     development account by reason of the application of section 
     1400H(d)(2) to such account.'', and
       (2) in subsection (e)(1), by striking ``or'' at the end of 
     subparagraph (E), by redesignating subparagraph (F) as 
     subparagraph (G), and by inserting after subparagraph (E) the 
     following new subparagraph:
       ``(F) a family development account described in section 
     1400H(e), or''.
       (d) Information Relating to Certain Trusts and Annuity 
     Plans.--Subsection (c) of section 6047 is amended--
       (1) by inserting ``or section 1400H'' after ``section 
     219'', and
       (2) by inserting ``, of any family development account 
     described in section 1400H(e),'', after ``section 408(a)''.
       (e) Inspection of Applications for Tax Exemption.--Clause 
     (i) of section 6104(a)(1)(B) is amended by inserting ``a 
     family development account described in section 1400H(e),'' 
     after ``section 408(a),''.
       (f) Failure To Provide Reports on Family Development 
     Accounts.--Paragraph (2) of section 6693(a) is amended by 
     striking ``and'' at the end of subparagraph (C), by striking 
     the period and inserting ``, and'' at the end of subparagraph 
     (D), and by adding at the end the following new subparagraph:
       ``(E) section 1400H(g)(6) (relating to family development 
     accounts).''
       (g) Conforming Amendments Regarding Commercial 
     Revitalization Credit.--
       (1) Section 46 (relating to investment credit) is amended 
     by striking ``and'' at the end of paragraph (2), by striking 
     the period at the end of paragraph (3) and inserting ``, 
     and'', and by adding at the end the following new paragraph:
       ``(4) the commercial revitalization credit provided under 
     section 1400K.''
       (2) Section 39(d) is amended by adding at the end the 
     following new paragraph:
       ``(9) No carryback of section 1400k credit before date of 
     enactment.--No portion of the unused business credit for any 
     taxable year which is attributable to any commercial 
     revitalization credit determined under section 1400K may be 
     carried back to a taxable year ending before the date of the 
     enactment of section 1400K.''
       (3) Subparagraph (B) of section 48(a)(2) is amended by 
     inserting ``or commercial revitalization'' after 
     ``rehabilitation'' each place it appears in the text and 
     heading.
       (4) Subparagraph (C) of section 49(a)(1) is amended by 
     striking ``and'' at the end of clause (ii), by striking the 
     period at the end of clause (iii) and inserting ``, and'', 
     and by adding at the end the following new clause:
       ``(iv) the portion of the basis of any qualified 
     revitalization building attributable to qualified 
     revitalization expenditures.''
       (5) Paragraph (2) of section 50(a) is amended by inserting 
     ``or 1400K(d)(2)'' after ``section 47(d)'' each place it 
     appears.
       (6) Subparagraph (A) of section 50(a)(2) is amended by 
     inserting ``or qualified revitalization building 
     (respectively)'' after ``qualified rehabilitated building''.
       (7) Subparagraph (B) of section 50(a)(2) is amended by 
     adding at the end the following new sentence: ``A similar 
     rule shall apply for purposes of section 1400K.''
       (8) Paragraph (2) of section 50(b) 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 adding at the end the following new 
     subparagraph:
       ``(E) a qualified revitalization building (as defined in 
     section 1400K) to the extent of the portion of the basis 
     which is attributable to qualified revitalization 
     expenditures (as defined in section 1400K).''
       (9) The last sentence of section 50(b)(3) is amended to 
     read as follows: ``If any qualified rehabilitated building or 
     qualified revitalization building is used by the tax-exempt 
     organization pursuant to a lease, this paragraph shall not 
     apply for purposes of determining the amount of the 
     rehabilitation credit or the commercial revitalization 
     credit.''
       (10) Subparagraph (C) of section 50(b)(4) is amended--
       (A) by inserting ``or commercial revitalization'' after 
     ``rehabilitated'' in the text and heading, and
       (B) by inserting ``or commercial revitalization'' after 
     ``rehabilitation''.
       (11) Subparagraph (C) of section 469(i)(3) is amended--
       (A) by inserting ``or section 1400K'' after ``section 42''; 
     and
       (B) by striking ``credit'' in the heading and inserting 
     ``and commercial revitalization credits''.
       (h) Clerical Amendments.--The table of subchapters for 
     chapter 1 is amended by adding at the end the following new 
     item:

``Subchapter X. Renewal Communities.''

     SEC. 606. EVALUATION AND REPORTING REQUIREMENTS.

       Not later than the close of the fourth calendar year after 
     the year in which the Secretary of Housing and Urban 
     Development first designates an area as a renewal community 
     under section 1400E of the Internal Revenue Code of 1986, and 
     at the close of each fourth calendar year thereafter, such 
     Secretary shall prepare and submit to the Congress a report 
     on the effects of such designations in stimulating the 
     creation of new jobs, particularly for disadvantaged workers 
     and long-term unemployed individuals, and promoting the 
     revitalization of economically distressed areas.

     TITLE VII--TAX REDUCTIONS CONTINGENT ON SAVING SOCIAL SECURITY

     SEC. 701. TAX REDUCTIONS CONTINGENT ON SAVING SOCIAL 
                   SECURITY.

       (a) Requirement for Balanced Budget and Social Security 
     Solvency.--Notwithstanding any other provision of this Act, 
     no provision of this Act (or amendment made thereby) shall 
     take effect before the first January 1 after the date of the 
     enactment of this Act that follows a calendar year for which 
     there is a social security solvency certification.
       (b) Exemption of Funded Provisions .--The following 
     provisions shall take effect without regard to subsection 
     (a):
       (1) Subtitle C of title I (relating to increase in social 
     security earnings limit and recomputation of benefits).
       (2) Section 213 (relating to production flexibility 
     contract payments).
       (3) Title III (relating to extension and modification of 
     certain expiring provisions).
       (4) Title IV (relating to revenue offset).
       (5) Title V (relating to technical corrections).
       (c) Social Security Solvency Certification.--For purposes 
     of subsection (a), there is a social security solvency 
     certification for a calendar year if, during such year, the 
     Board of Trustees of the Social Security Trust Funds 
     certifies that the Federal Old-Age and Survivors Insurance 
     Trust Fund and the Federal Disability Insurance Trust Fund 
     are in actuarial balance for the 75-year period utilized in 
     the most recent annual report of such Board of Trustees 
     pursuant to section 201(c)(2) of the Social Security Act (42 
     U.S.C. 401(c)(2)).

  The SPEAKER pro tempore. Pursuant to House Resolution 552, the 
gentleman from New York (Mr. Rangel) and a member opposed each will 
control 30 minutes.
  The Chair recognizes the gentleman from New York (Mr. Rangel).
  Mr. RANGEL. I yield one minute to the gentleman from Wisconsin (Mr. 
Kind).
  (Mr. KIND asked and was given permission to revise and extend his 
remarks.)
  Mr. KIND. Mr. Speaker, I thank the gentleman for yielding me time.
  Mr. Speaker, I rise in strong opposition to the Republican proposed 
tax cut bill and in support of the substitute offered by the gentleman 
from New York (Mr. Rangel).
  This is a wrong tax cut bill at the wrong time for the wrong reason. 
Is there any wonder that the people in this country are so cynical when 
we

[[Page H8961]]

are trying to rush through a tax cut bill just a few short weeks before 
the November elections?
  But the main problem is not the provisions of the tax cut, it is how 
we would pay the tax cut. There is no surplus unless we are willing to 
raid the Social Security trust fund.
  But perhaps the most compelling argument to oppose this is what the 
chairman of the Federal Reserve Board, Chairman Greenspan, has been 
saying. Is anyone who is pushing for this tax cut bill listening to one 
of the most credible voices on fiscal and monetary policy in this 
country today? He says do not rely on any of these so-called surpluses, 
because they may never materialize given the international economic 
crisis and the Y2K problem and the impact that it might have on our 
economy.
  Instead, we in this body should be trying to pass fiscally 
responsible, sound decisions that are going to encourage the Federal 
Reserve to lower long-term interest rates so we have investment in 
capital and increased worker productivity. That is why I urge my 
colleagues to oppose the tax cut bill and support the Rangel 
substitute.
  The SPEAKER pro tempore. Does the gentleman from Texas (Mr. Archer) 
seek to control the time in opposition to the amendment?
  Mr. ARCHER. Mr. Speaker, I do.
  The SPEAKER pro tempore. The gentleman from Texas (Mr. Archer) is 
recognized for 30 minutes.
  Mr. ARCHER. Mr. Speaker, I yield two minutes to the gentleman from 
Illinois (Mr. Weller), a respected member of the Committee on Ways and 
Means.
  Mr. WELLER. Mr. Speaker, I thank the chairman for yielding me time.
  Mr. Speaker, as I just begin my remarks in opposition to the Rangel 
substitute and in support of an effort to save Social Security and 
eliminate the marriage tax penalty, I might just use the Democrats, my 
friends on the other side of the aisle's own rhetoric. If you think 
about it, everything they have been claiming, they have admitted they 
have been raiding is the Social Security trust fund for 28 years. In 
fact, I believe a Democratic President, President Johnson, I think 
started that process in 1969.
  Now, thanks to a Republican Congress, for the first time since 1969, 
we have a $1.6 trillion budget surplus, money that we can use to save 
Social Security and eliminate the marriage tax penalty.
  The gentleman from New York (Mr. Rangel) in his substitute basically 
says ``Let's save Social Security and let's give a tax cut to Wall 
Street, but let's forget about Main Street.''
  It is interesting that the Rangel substitute chooses Wall Street and 
stiffs Main Street. Republicans, we want to save Social Security, and 
we also want to eliminate the marriage tax penalty, and our legislation 
will help 28 million married couples.
  It is interesting that my friends on the other side of the aisle 
continue to claim the ``raiding Social Security'' line. Let us look at 
the facts once again.
  When a representative of the Social Security Administration was asked 
last week whether or not the tax cuts in our package impact the Social 
Security trust fund, Judith Chesser, Deputy Commissioner of the Social 
Security Administration gave us a simple answer, and that answer was 
no.
  Mr. Speaker, our effort eliminates the marriage tax penalty. It helps 
28 million married working couples. In fact, the tax relief we provide 
in our package provides $243 in extra take-home pay for 28 million 
married working couples. In Joliet, Illinois, $240 is a car payment.
  Our effort is helpful to the people of Illinois, saving Social 
Security, setting aside $1.4 trillion of surplus funds for Social 
Security and also working to eliminate the marriage tax penalty helps 
people back home in Illinois. But this legislation that we will be 
voting on after we defeat the Rangel substitute will not only help 
eliminate the married tax penalty for 28 million American couples, it 
helps farmers in Illinois, small business in Illinois, and it helps 
parents who want to send their children to college in Illinois.
  Vote ``no'' on the Rangel substitute and ``yes'' on H.R. 4579.
  Mr. RANGEL. Mr. Speaker, I yield two minutes to the gentleman from 
Tennessee (Mr. Tanner), a member of the committee.
  Mr. TANNER. Mr. Speaker, I like this tax bill. I think it is good 
public policy. But for the first time in 29 years we now are in a 
position where we can say to the American people that there is more 
money coming into this town than leaving. This is just a projection. 
Beyond that, what I hate to see us do is there has been a lot of 
political bloodshed to get to this point of financial integrity once 
again in this town in terms of our budget.
  Now, no one can dispute that this is a unified budget, and if one 
took the payroll taxes, the Social Security taxes that come in here out 
of the unified budget or out of the budget, we would not have a 
surplus. That is a fact. That is not a political argument.

                              {time}  1015

  We still are running an operational deficit. I do not know how many 
people paid the price in 1993. I know President Bush paid a miserable 
price in his career for doing the right thing in 1990 to get us to the 
point where we are not running a $290 billion deficit every year.
  I am not for any new spending programs, and I am not going to be for 
this tax cut today. We cannot pay for it. Last year, we had a balanced 
budget. We paid for the tax bill last year. This one is not paid for; 
and, for that reason, I think it is financially irresponsible to do 
this what we are about to do today.
  I would urge my colleagues not to support this matter today.
  Mr. ARCHER. Mr. Speaker, I yield myself such time as I may consume 
simply to respond to how the Democrats have done a 180-degree shift 
since last year. Unless we counted Social Security surpluses in their 
terminology now, we had no balanced budget last year. When they get up 
and they say there was a balanced budget, they are assuming, then, by 
their logic, in this year that they were using surpluses out of Social 
Security. Every one of them that voted for the tax bill last year by 
their logic this year voted to spend the Social Security surplus. Every 
one of them.
  In fact, the projections last year when they voted were not nearly as 
good for the general fund as they are this year. They did not pay for 
it by their argument this year. They have just changed their view of 
the budget for political reasons going into this election.
  Mr. Speaker, I yield 2 minutes to the gentleman from Missouri (Mr. 
Hulshof).
  (Mr. HULSHOF asked and was given permission to revise and extend his 
remarks.)
  Mr. ARCHER. Mr. Speaker, I am from the show-me State. When my friends 
on the other side said there is no way that the Republican majority can 
balance the budget and provide tax relief, we showed them we could do 
it.
  Now we are telling them that we can save Social Security and provide 
a modest tax relief to the American people. We will show them if they 
give us the opportunity.
  There are a lot of good things in this bill. Married couples should 
not have to pay more in taxes simply because they say ``I do''. They 
are not saying I do want to pay more in tax. We provide relief. Farmers 
and ranchers need additional risk management tools. Small businesses 
should not have to pay the punitive death tax. All of these issues are 
addressed.
  But what I want to focus on is a provision that a freshman Member on 
the other side, the gentleman from Ohio (Mr. Kucinich), and I had the 
opportunity to sponsor called the Savings Advancement and Enhancement 
Act, the SAVE Act.
  The provision is very simple. It would provide an exclusion of up to 
$400 in interest and dividends from your taxes, $200 for individual 
filers. When you think about it, we are making a fundamental moral 
judgment. It is wrong to punish small savers and investors. We should 
be encouraging their thrift, not punishing their thrift.
  If this tax relief measure is included, 68 million people will be 
provided some relief. In fact, not only is it a good moral judgment 
about allowing small investors to exclude this interest income, but it 
is a tax simplification measure.
  As the gentleman from California talked about, 10 million taxpayers 
will

[[Page H8962]]

not have to file the 1040 form. They can go to the 1040EZ and 
electronically file. In fact, if you look on line 8 and 9 is where we 
have to put the fact that we have taxable interest or dividend income. 
Seven million Americans can leave page 124 in their tax books, Schedule 
B. They will not have to fill out this Schedule B.
  So we have not only good tax policy, but simplification. I urge the 
defeat of the gentleman's substitute and vote in favor of the 
chairman's bill.
  Mr. RANGEL. Mr. Speaker, I yield myself 30 seconds.
  Mr. Speaker, after last year's tax bill, I would have thought that 
nobody on the other side of the aisle would ever talk about 
simplification again. I thought that I heard the end of all of this 
pulling up the tax code by the roots since you so effectively deep-
sixed it for the year 2002.
  But if the chairman of the distinguished Committee on Ways and Means 
would check last year's tax bills, one thing we did do was pay for it. 
It did not come out of the surplus. It came out of tax cuts.
  Mr. Speaker, I yield 2 minutes to the gentleman from North Carolina 
(Mr. Hefner).
  (Mr. Hefner asked and was given permission to revise and extend his 
remarks.)
  Mr. HEFNER. Mr. Speaker, I will try to be as honest as I can in my 
statement. I would urge people to refrain from calling people liars and 
what have you. And referring to people in their sincerity in standing 
before the whole world and saying I have sinned seems to me to be a 
pretty good repentance; and maybe if God can forgive somebody, we can. 
Maybe someday in our heart we can see to do that.
  I want to make a couple of points here. When Ronald Reagan was 
President, his first budget that was sent to this floor by David 
Stockman called for the elimination of $125 for the minimum Social 
Security for the oldest, sickest senior citizens in this country, to 
eliminate it.
  Republicans have never been for Social Security. This is a Democratic 
program. Ronald Reagan took us to Camp David, and it was the Democrats 
fault that these deficits escalated during the Reagan administration. 
Why do I say that? Because there was a group of people that were called 
boll weevils that voted for this budget, and they escalated 
tremendously. They doubled during the Reagan administration.
  In 1993, I wish I had more time here. In 1993, let me tell you what 
some of the Republicans said about Bill Clinton's package in 1993. The 
gentleman from Illinois (Mr. Crane) said, ``This package will do 
nothing but discourage economic activity. Clinton wants us to pursue a 
course that would lead to economic disaster.''
  ``The economy is going to be damaged,'' the gentleman from New York 
(Mr. King) said.
  This measure is not the solution for our Nation's fiscal or economic 
growth problems. It will probably abort the economic stabilization in 
this country.
  The gentleman said that we Republicans have managed to have this 
balanced budget. Without what we did in 1993, we would not even be 
close to a balanced budget.
  The gentleman from Ohio (Mr. Kasich) said if we vote for the 1993 
Clinton package, we are going to have a $1 trillion 90 billion increase 
in the Federal budget. What actually happened, the deficit has declined 
ever since 1993. I tell the gentleman from Texas (Mr. Archer) that is 
facts, and I would be happy to produce them.
  Mr. ARCHER. Mr. Speaker, I yield 2 minutes to the gentleman from 
Georgia (Mr. Collins), another respected member of the Committee on 
Ways and Means Committee.
  Mr. COLLINS. Mr. Speaker, we have heard accusations from the other 
side of the aisle that this bill would endanger the Social Security 
system. That is false. This again is another clear attempt to scare our 
seniors.
  Our seniors should know that, with or without the enactment of this 
bill or this substitute, the Social Security trustees have reported to 
the Committee on Ways and Means that their retirement check is sound 
for another 33 years. That means, if you are 65 today, your check is 
sound until you are 98. If you are 80, it is sound until you are 113. 
If you are 90, your check is sound until you are 123. And Godspeed to 
you to live to collect each and every one of those checks.
  My age is 54. My check is sound until I am 87. Social Security is my 
old-age pension. It is different for many Members of this body. I 
declined the congressional pension. Social Security is my old-age 
pension.
  What this legislation does is ensure that generations behind those 
collecting Social Security checks today get to keep more of the money 
that they earn today for their family.
  Let me remind the opponents of this bill who use the Social Security 
scare tactic. There is no surplus in the ledgers of small business who 
create most of the U.S. jobs. There is no surplus for middle-income 
married couples working to provide for their family. There is no 
surplus for seniors who go back to work to supplement their Social 
Security check. There is no surplus for farmers struggling against low 
prices and natural disasters.
  This legislation provides these Americans who have paid the money 
into the so-called surplus a small piece of the benefit that comes with 
a balanced budget and a strong economy.
  Mr. Speaker, I strongly urge the Members of this body to support this 
bill, to give tax relief to middle-income working Americans and 
families.
  Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentlewoman from 
California (Ms. Sanchez).
  Ms. SANCHEZ. Mr. Speaker, I rise in opposition to the Taxpayer Relief 
Act of 1998 even though I support many of the goals in the bill. I 
support increasing tax deductions for married couples and the self-
employed and extending the research tax credit. I support creating more 
renewal of communities.
  But I believe this bill makes a grave mistake by drawing from the 
projected budget surplus to pay for these tax cuts.
  The solvency of the Social Security Trust Fund has not been assured. 
This Congress has not even debated a plan to save Social Security's 
worth for future generations of Americans.
  We really do not have a budget surplus to spend because Republicans 
are dipping into funds earmarked for Social Security. This worries me 
because I held two Social Security forums in my district this year, and 
my constituents are concerned that Social Security is going bankrupt 
and we are not doing anything about it. This bill weakens Social 
Security, and that is wrong.
  Furthermore, I cannot support the bill because it is a bad deal for 
our schools. We need to be helping to build more schools in America. 
This bill does not address that. I had hoped that my amendment to the 
bill would help that. Do not give our schools empty promises. Put 
Social Security first.
  Mr. ARCHER. Mr. Speaker, I yield 2 minutes to the gentleman from Ohio 
(Mr. Portman), another respected member of the Committee on Ways and 
Means.
  Mr. PORTMAN. Mr. Speaker, I thank the chairman for yielding my this 
time.
  Mr. Speaker, I want to commend the chairman for putting together a 
great tax package. This is not only a tax package that offers a sound 
package of tax relief for working families in America, but it also 
takes unprecedented steps to preserve Social Security. We have never 
done this before. We are setting aside adequate funds to preserve 
Social Security in the future.
  Earlier this year, Mr. Speaker, right up there at that podium, the 
President of the United States said that we should save every dime of 
the so-called budget surplus, which was less than half that it has 
turned out to be for this fiscal year.
  Since that time, the pledge has been broken. The President himself, 
as we heard earlier today, has agreed to spend already this year $2.9 
billion to support our efforts in Bosnia. Collectively, as I add it up, 
our friends on the other side of the aisle and the President suggests 
spending another $13 billion of the surplus for spending.
  By the way, where is the President's proposal to save Social 
Security? Talk is cheap. I do not think this is a question of 
preserving Social Security or providing tax relief. The real question 
is, this year are we going to use the expected budget surplus only for 
more spending or are we going to give some needed tax relief, a break 
to the very people whose hard work and ingenuity has gotten us into 
this position of having a budget surplus?

[[Page H8963]]

  If we put our minds to it, if we are sincere, we can do both. We can 
put together a Social Security plan over the next couple of years that 
works. This plan allows us to do that. Again, it is unprecedented. We 
are putting aside the surplus to do that.
  We have heard a lot of good things about the tax plan today. Even 
Democrats have taken to the well saying it is a great plan. I think it 
is a great plan because it helps families, senior citizens, job-
creating small businesses, farmers and ranchers.
  But I want to give my friend, the gentleman from New York (Mr. 
Rangel), some more confidence. It is even better than that. It provides 
unbelievable simplification of the tax code. A million people will not 
have to file anymore under this. Six million people will be able to 
stop itemizing under this proposal. Ten million people can go from 
filing a 1040 or a 1040A to the much simpler 1040EZ. Seven million 
Americans will not have to file a Schedule B for interest and income. 
This is not only responsible tax relief, it is responsible tax 
simplification.
  Mr. RANGEL. Mr. Speaker, can you tell me how the time is allocated 
now, please?
  The SPEAKER pro tempore (Mr. Thornberry). The gentleman from New York 
(Mr. Rangel) has 23\1/2\ minutes remaining. The gentleman from Texas 
(Mr. Archer) has 21 minutes remaining.
  Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentlewoman from 
Michigan (Ms. Stabenow).

                              {time}  1030

  Ms. STABENOW. Mr. Speaker, I was pleased to come to this House and 
support a balanced budget this last year for the first time in 30 
years, pleased to support tax cuts for middle class families totaling 
$95 billion. But now we have a window of opportunity to take the next 
step in fiscal responsibility. I believe it is incumbent on all of us 
to take that step. That is to repay the social security trust fund.
  We know there is no real surplus until we have totally repaid the 
trust fund and brought it off the budget. The seniors in my district, 
people of all ages in my district, understand that as long as we are 
using the social security trust fund to balance the budget, there is no 
surplus. There is no surplus.
  This tax bill is one that I support. I have cosponsored a number of 
the provisions in it. However, I believe that the Rangel substitute is 
the only responsible approach to fiscal responsibility and to future 
generations. Save social security first.
  Mr. ARCHER. Mr. Speaker, I yield 2\1/2\ minutes to the gentlewoman 
from Washington (Ms. Dunn), the highly respected member of the 
Committee on Ways and Means.
  Ms. DUNN. Mr. Speaker, I thank the gentleman for yielding time to me.
  Today life in America is changing for the better. More hardworking 
men, women, and retired seniors are sharing in new prosperity. Because 
we have kept spending down, we have balanced the budget for the first 
time in a generation, and we have given Americans the first tax relief 
in 16 years. Interest rates are down, and families are taking home more 
of what they earn.
  But even with a good economy, we still wonder how we are going to 
continue to meet the changing needs of Americans. That is why House 
Republicans are advancing a tax plan that focuses on building a 
brighter, more secure future for women and their families by ensuring 
that the social security trust funds are there, and by returning 
taxpayer dollars to Americans we can ensure a better quality of life 
for those struggling to make ends meet.
  Specifically, we have committed to setting aside $1.4 trillion of a 
projected budget surplus to protect and strengthen social security. 
Nothing is more important to women in retirement than ensuring that 
they have income security, and with that, peace of mind. We will keep 
that commitment.
  With the remainder of the surplus, we are holding true to our promise 
to cut taxes every year that Republicans control Congress. The Taxpayer 
Relief Act of 1998 makes important strides in providing the financial 
relief that women and families need to stay strong.
  It will ensure that there is no longer a financial disincentive for 
marriage. By doubling the standard deduction for married couples, a 
woman who files jointly with her husband no longer will feel an 
additional pinch from the government that the current marriage penalty 
costs. Forty eight million Americans will benefit from this relief, Mr. 
Speaker, over 1 million alone in my home State of Washington.
  In addition, a woman small business owner will no longer worry about 
being a financial burden on her sons and daughters when she passes on. 
The death tax relief provided in this bill will allow her children to 
keep that small business that has helped them plan and live the 
American dream.
  With women creating small businesses at twice the rate of men these 
days, health insurance costs are extremely important, and a great 
burden. Providing 100 percent deductibility of health insurance costs 
for women who are self-employed gives them the help they need to 
protect their family from illness and injury, something about which all 
mothers worry.
  Americans have always believed that if we work hard and take 
responsibility for ourselves and help others where we can, we will reap 
the benefits of our efforts and fulfill our own American dream. It 
makes sense. It is the American dream. It is in this bill. I urge its 
support.
  Mr. RANGEL. Mr. Speaker, I yield 3 minutes to the gentleman from 
Texas (Mr. Stenholm). No one has worked harder to save the social 
security system than the gentleman from Texas.
  (Mr. STENHOLM asked and was given permission to revise and extend his 
remarks and include extraneous matter.)
  Mr. STENHOLM. Mr. Speaker, listening to the debate again this 
morning, I am reminded of the words of Will Rogers, who said, ``It 
ain't peoples' ignorance that's bothering me so much, it is them 
knowing so much that ain't so is the problem.''
  I would yield to anyone who would challenge anything I am going to 
say in my remarks. There is no surplus other than social security trust 
funds. Over the next 5 years, there are $520 billion of projected 
surplus, of which $657 of the $520 are social security trust funds. 
That is a fact. Does anyone wish to challenge me on that?
  Hearing no response, this tax bill will increase the deficit.
  Mr. ARCHER. Mr. Speaker, will the gentleman yield?
  Mr. STENHOLM. I yield to the gentleman from Texas.
  Mr. ARCHER. Mr. Speaker, I would ask, did the gentleman vote for the 
tax bill last year?
  Mr. STENHOLM. That was not the question I asked.
  Mr. ARCHER. Was there a surplus then?
  Mr. STENHOLM. Mr. Speaker, I do not yield for the purpose of muddying 
up the argument today.
  We can go back as far as 1 year, 2 years, 3 years, and I can find 
mistakes I have made. I can point to mistakes the chairman has made. 
That is a valid point.
  But I would say, we will borrow, under this proposal today, we will 
borrow $237 billion more over the next 5 years if the tax bill in 
question today is passed, $237, which is $830 for every man, woman, and 
child in the United States that we will borrow in order to give this 
tax cut.
  The projected surplus that we are talking about may never 
materialize. That is why this is a fiscally irresponsible bill we are 
bringing, if Members claim to be conservative, fiscally irresponsible.
  Abandoning fiscal discipline is the wrong message to send to our 
financial markets at this time. The recent volatility of world 
financial markets makes it even more critical that we reaffirm our 
commitment to what we agreed to do, Mr. Chairman, last year, what we 
agreed to do last year, which has set us on the right track to 
balancing the budget. Yes, I voted for it, but for the reason that we 
voted for it last year, and the reason I oppose doing more this year.
  The Concord Coalition has warned us that the election year temptation 
to use social security surpluses for other purposes will lead to a 
dangerous breakdown in fiscal discipline.
  The potential harm to our economy, and let me give this example to my 
agricultural colleagues, we hear a lot about what we are going to do 
for farmers and ranchers. This package

[[Page H8964]]

that is going to be voted on in a moment will give to our farmers a 
$271 million annual benefit, but a one-half of 1 percent increase in 
interest rates will cost our farmers $870 million, three times the 
cost, if we abandon fiscal discipline and interest rates go up. So we 
are muddying the message completely in this, and talking about the 
great benefit.
  What everyone who is fiscally conservative is saying is reserve the 
social security trust fund for paying down the debt, and making sure we 
can in fact save social security for our future generations. Vote down 
this bill.
  Mr. Speaker, there is no surplus--unless we count the Social Security 
surplus.
  Over the next five years, 125% of the surplus comes from the Social 
Security trust fund. CBO projects unified budget surpluses of $520 
billion, $657 billion of which will be a result of the Social Security 
trust fund surplus.
  In other words, if you subtract the projected annual Social Security 
trust fund surpluses from the projected unified budget surplus, there 
is no surplus--a $137 billion on-budget deficit.
  According to the most recent report of the Congressional Budget 
Office, which included the projections of a budget surplus that are 
being used to justify this tax bill, we still have an on-budget 
deficit.
  ``Although the total budget is expected to show a healthy surplus in 
1998, CBO still anticipates an on-budget deficit. On budget revenues 
(which BYLAW exclude revenues earmarked for Social Security) are 
projected to be $41 billion less than on-budget spending.''--(CBO 
Economic and Budget Outlook August Update)


                 the tax bill will increase the deficit

  To my Republican colleagues who are insisting that this tax cut does 
not come out of Social Security, what you are admitting is that the tax 
cut is paid for with borrowed money, because there is no surplus if you 
exclude Social Security.
  I support all of the tax cuts included in this package, but, with 
borrowed money. Enacting a permanent tax cut that is not paid for would 
result in continued deficits as far as the eye can see.
  Instead of taking $137 billion out of private savings to cover the 
deficit over the next five years, the government will have to borrow 
$225 billion over the next five years if we pass this tax cut. That is 
another $830 of debt for every man, woman and child in this country.


              the projected surplus may never materialize

  The projections of a surplus are a result of dramatic improvements in 
budget estimates that could deteriorate just as quickly. As recent 
developments both at home and abroad have made clear, continued strong 
economic growth--and the budget surpluses it produces--are by no means 
guaranteed.
  According to CBO, a recession similar to the 1990-1991 recession 
would turn the projected surplus into a deficit. Even a modest slowdown 
in economic growth could wipe out much of the projected surplus.
  Republican economist and former Federal Reserve Governor, warned that 
the surge in income taxes that has contributed to the surplus in the 
unified budget may not continue, arguing that ``The prudent thing to do 
when you enjoy a windfall from some good luck is to save it, you might 
need the cushion in bad times.''
  Given all of the uncertainty in budget projections, the conservative 
thing to do is be conservative by waiting to see if these surpluses 
materialize.


abandoning fiscal discipline is the wrong message to send to financial 
                                markets

  The recent volatility of world financial markets makes it even more 
critical that we reaffirm our commitment to maintaining the discipline 
that has produced a dramatic improvement in the federal budget and a 
strong economy.
  In a letter sent out earlier this week, the Concord Coalition warned 
us that ``the election year temptation to use Social Security surpluses 
for other purposes will lead to a dangerous breakdown in fiscal 
discipline.''
  The potential harm to the economy from relatting the discipline of 
the budget agreement at all will outweigh the benefit of any tax cut.


                     don't forget the national debt

  The current projections of a budget surplus follow years of deficit 
spending that has resulted in a national debt of $5.4 trillion. 
Interest payments on the debt will consume $244 billion in 1998.
  Federal Reserve Chairman Alan Greenspan, former CBO Director Rudy 
Penner and countless other economist have told us that the best course 
of action for the economy is for Congress to use the surplus to reduce 
the debt.
  Reducing the national debt will help maintain a strong economy by 
reducing interest rates and increasing the amount of savings available 
for productive investment.


   we need to reserve the entire budget surplus to deal with social 
                            security reform

  Funding this tax cut out of the unified budget surplus will limit our 
options in the Social Security reform debate by using revenues that 
would be necessary to fund many of the reform options that have been 
proposed.
  Even if the current budget surplus projections hold true, it will be 
difficult to fund the transition costs of comprehensive Social Security 
reform that deals with the $9 trillion unfunded liability in the Social 
Security system within a balanced unified federal budget.
  The current annual surpluses being run by the Social Security Trust 
Fund are intended to prepare for future needs of the Social Security 
system. Since Social Security accounts for virtually all of the 
projected budget surpluses, addressing the financial challenges facing 
Social Security is the only appropriate use of the budget surplus.


                               conclusion

  It is extremely important that we follow the path of fiscal 
responsibility and take advantage of this opportunity to preserve the 
Social Security system for future generations. The bill before us, for 
all its merit, would undermine fiscal discipline and jeopardize our 
ability to preserve Social Security.
  If you care about fiscal discipline, if you care about the integrity 
of the Social Security system, all Members who care about the legacy we 
leave for future generations, vote for the motion to recommit and vote 
against this bill.


                               tax relief

  H.R. 4579 provides $24.2 billion of tax relief for farmers and small 
business from 1999 to 2003.
  Excluding Estate tax provisions, there are $6.3 billion in tax 
relief.
  Focusing on farmer and rancher benefits, including the $25,000 
expensing for small business and farmers, there are $1.4 billion in tax 
relief.
  The annual average tax relief for farmers and ranchers is $270 
million.


                          interest rate relief

  Total U.S. farm debt is $167.6 billion.
  The result of a 1% interest rate reduction is $1.676 billion less in 
annual debt service for farmers and ranchers.
  The result of a \1/2\% interest rate reduction is $838 million less 
in annual debt service for farmers and ranchers, more than 3 times the 
tax relief.
  The following chart illustrates this:

                             TAX RELIEF FARMERS AND RANCHERS VS INTEREST RATE RELIEF
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                    Total Cost      Annual Avg     Farmer  Only     Annual Avg
                                                      1999-03        Avg Cost           Est          Avg Cost
----------------------------------------------------------------------------------------------------------------
Health insurance deduction at 100 percent.......           5,111           1,022             168              34
$25,000 expensing...............................           1,059             212           1,059             212
Income averaging................................              45               9              45               9
Net operating loss carryback....................              81              16              81              16
PFC constructive receipt........................  ..............  ..............  ..............  ..............
    Total.......................................           6,296           1,259           1,353             271
    Total U.S. farm debt........................  ..............  ..............  ..............         167,600
1 percent interest rate reduction, annual.......  ..............  ..............  ..............           1,676
\1/2\ percent interest rate reduction, annual...  ..............  ..............  ..............             838
----------------------------------------------------------------------------------------------------------------

  Mr. ARCHER. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, as a brief response, I would say if the gentleman's 
logic is correct today, it was more correct last year, because the 
amount of the tax bill last year was bigger than the amount of the tax 
bill this year. It required, according to his logic, not mine, his, 
more borrowing than this tax bill does. But he and most of the 
Democrats voted for it.
  We heard nothing about social security then. Social security is a 
manufactured argument on their part this year for political reasons. It 
is an election year.

[[Page H8965]]

  Mr. STENHOLM. Mr. Speaker, will the gentleman yield?
  Mr. ARCHER. I am sorry, but I have already committed all of my time. 
I regret I cannot yield.
  Mr. STENHOLM. I yielded to the gentleman.
  Mr. ARCHER. Yes, but the gentleman continued to speak his argument, 
and his argument logically meant that last year we had to borrow more 
money for the tax bill than he says we will be borrowing this year. 
That is a fact.
  Mr. Speaker, I yield 1 minute to the gentleman from Pennsylvania (Mr. 
Goodling), the chairman of the Committee on Education and the 
Workforce.
  Mr. GOODLING. Mr. Speaker, I thank the gentleman for yielding time to 
me.
  Mr. Speaker, I want to point out, and I do not think it has been said 
enough, that there are two very important provisions in here in 
relationship to education.
  First of all, section 111 of the bill permits private higher 
education institutions to establish qualified pre-paid tuition 
programs. They cannot do that now. It will mean an awful lot to an 
awful lot of young people who would like to go to college.
  Secondly, something that is very, very important, because I hear 
people all the time say we need construction money, we need rebuilding 
money, all these things for schools. In this legislation, section 112 
of the bill would liberalize the permitted expenditure period of the 
present law construction bond exception in the case of bonds issued to 
finance the construction of public schools.
  What does that mean? That means school districts will get to keep 
1\1/2\ billions of dollars for school construction and school 
renovation. So I do not want to hear anymore talk about we are not 
doing anything for school districts, because they are doing an awful 
lot in this legislation to help them repair their buildings and build 
their buildings.
  Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from 
Vermont (Mr. Sanders).
  Mr. SANDERS. Mr. Speaker, let me start by saying I voted against the 
absurd balanced budget agreement last year because it cut Medicare by 
$115 billion. That is how it was paid for. We are suffering from it 
right now.
  More importantly, I rise in strong opposition to the Republican plan, 
which takes money from the social security trust fund in order to 
provide tax breaks, 6 weeks before an election. Let us be clear, the 
so-called surplus this year that the Republicans are taking from is 
made up completely from the social security surplus. Without that $100 
billion social security surplus, the government this year is in 
deficit, not to mention a $5 trillion national debt.
  It seems to me to be the essence of hypocrisy for some Republicans to 
go running around the country saying that we have to privatize the 
social security system because it is going broke, and the next day to 
be taking money from the very same social security system.
  Mr. Speaker, if we want targeted tax breaks for the middle class, 
fair enough, take it from corporate welfare and the huge loopholes that 
exist for billionaires.
  Mr. ARCHER. Mr. Speaker, I yield such time as he may consume to the 
gentleman from New York (Mr. Boehlert).
  (Mr. BOEHLERT asked and was given permission to revise and extend his 
remarks.)
  Mr. BOEHLERT. Mr. Speaker, I rise in opposition to the pending 
amendment and in support of the base bill, which provides tax relief to 
virtually every American while saving social security. This is the 
moderate's moment.
  Mr. Speaker, I rise in strong support of the Taxpayer Relief Act and 
in opposition to the substitute offered by Mr. Rangel.
  This bill will provide targeted, responsible tax relief to middle-
income families. This bill will strengthen our economy. And this bill 
will remedy problems with the current tax code that have been talked 
about for years, but have never before been addressed.
  The bill would correct the marriage penalty, which perversely creates 
a disincentive for couples to marry. It would exempt more interest and 
dividends from taxation, increasing the funds available for investment. 
It would allow more people to deduct the cost of their health 
insurance, reducing the number of Americans who lack coverage. It will 
allow seniors on Social Security to earn more income. It will create 
new incentives to save for education. It will exempt more inheritances 
from estate taxes. It will help farmers stabilize their tax payments so 
the government does not exacerbate the ups and downs of farm income. It 
will increase the number of families who can deduct education and child 
care expenses. And it will extend a number of credits for business, 
such as the research and development tax credit, that would otherwise 
expire.
  In short, virtually every American taxpayer will feel the benefits of 
this $80 billion tax cut bill both directly--in the form of lower tax 
bills--and indirectly--through the benefits to the overall economy.
  In fact, this is such a good tax bill that there's no disagreement 
over its tax provisions. The Democrat's substitute contains each and 
every tax cut provision that we Republicans have proposed. But the 
Democrats claim that we can't afford these cuts and that we are 
endangering Social Security. This is politics pure and simple.
  Just yesterday, we voted to place 90 percent of the budget surplus--
90 percent!--in a separate account dedicated to Social Security. This 
unprecedented action will reserve more than enough to cover our debts 
to the Social Security--and in so doing will pay down our national 
debt.
  Thanks to the strong economy, thanks to the Balanced Budget Act 
agreement, the surplus will be large enough to be used for more than 
one purpose without threatening Social Security. ``Save Social Security 
first'' is good advice--and we have followed it. ``Save Social Security 
only'' is bad advice; it's political advice; it assumes a false sense 
of impoverishment that will deprive taxpayers and the economy of a 
needed and affordable boost.
  I urge my colleagues to support H.R. 4579 and provide responsible tax 
relief.
  Mr. ARCHER. Mr. Speaker, I yield 2 minutes to the gentleman from New 
York (Mr. Houghton), another respected member of the Committee on Ways 
and Means.
  (Mr. HOUGHTON asked and was given permission to revise and extend his 
remarks.)
  Mr. HOUGHTON. Mr. Speaker, I am afraid we are so dug in here we are 
sort of getting to the point where we are not listening to one another. 
Both sides want to pull down the debt. Both sides want to take social 
security out of the spending pool and build it back. But the President 
has other ideas. The Republicans have other ideas. It is not just one 
sole mission.
  To pull this thing down into something which is at least meaningful 
to me, let us assume we have a little business, and the business has 
not made money for 29 years. All of a sudden it starts to make money. 
During those 29 years, we have had to borrow money. We have had to pull 
down from our pension, our unfunded liability. That is not good. We 
want to build it up. We feel badly about it. We are able to cover our 
pensioners, but not the way we would like.
  All of a sudden we start to make money. Not only that, we look at the 
future and it looks like we are going to continue to make money. So 
what do we do? Obviously, start to pay back our debt, but certainly we 
start to pull back the pension account, which in this case is the 
social security.
  Also I think we say to our stockholders, we have not given you any 
dividend increases for years. Therefore, you stuck with us, your 
capital has been involved. You have been decent about this thing. We 
would like to help you a little bit.
  This tax decrease amounts to .009 percent of our Federal revenues. 
That is not very much, $60 per person. We can do the other things, we 
are doing the other things, but we have to take a look at the 
individual shareholders of this country and pay our respects to them.
  Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentleman from 
California (Mr. Stark), another distinguished member of the Committee 
on Ways and Means.
  Mr. STARK. Mr. Speaker, I thank the gentleman for yielding time to 
me.
  Mr. Speaker, I must say that the gentleman from Texas (Chairman 
Archer) has crafted a good tax bill. I rise in support of the 
Democratic substitute, because that would pay for it.
  I think the issue, and the gentleman from New York (Mr. Houghton) 
touched on it a little bit, is that this is an issue of priorities. 
There are no more cuts to be made that are easy politically. So they 
are pushing us into basically deficit spending; reducing the surplus, 
if you will.

[[Page H8966]]

  The question is, why this tax cut, then? Why not Medicare? The other 
day we tried to find $1,200,000,000 to fix home health care. They are 
unwilling to ask for a waiver. This bill breaks the budget law.

                              {time}  1045

  They had to get special permission to void the budget bill to get 
this bill to the floor. Otherwise, a point of order could knock it out. 
Why were they not willing to do that with home health care, which they 
promised us would be paid for, but we have not seen it paid for yet?
  Why are we not fixing Medicare? Perhaps we should be having the 
debate that Medicare is more important than cutting the inheritance 
tax. Some people may not think so, but that is a worthy debate.
  They are not willing to cut defense. They are not willing to cut the 
fat pork out of the transportation bill. Somehow, my Republican 
colleagues are doing it out of the surplus without identifying what 
they are willing to give up. They are not making a hard choice. They 
are making a political statement in an attempt to win back some votes 
from people who turned their backs on the Republicans, rightly so, 
years ago.
  They are trying to avoid the discussion that this will harm, well, 
let us say it another way, will not fix Social Security. It will not 
fix Medicare. It will not help education.
  Is it the right thing to do? It is not a bad tax bill. It is not paid 
for. It is bad economic policy, and it is irresponsible.
  Mr. ARCHER. Mr. Speaker, I yield 1 minute to the gentleman from 
Nebraska (Mr. Christensen), another respected member of the Committee 
on Ways and Means.
  Mr. CHRISTENSEN. Mr. Speaker, I thank the gentleman from Texas (Mr. 
Archer) for yielding me this time.
  Mr. Speaker, when I got here 4 years ago, I always heard that we 
could not cut taxes because there was a deficit. And now we cannot cut 
taxes because there is a surplus. But we have not heard the same debate 
on the Y2K debate, or on Bosnia. But when it comes to the people's 
money, we always cannot give it back to them.
  Coming from Nebraska, I have had an opportunity to talk to a lot of 
farmers and hear what they have to say. In my own family, we have my 
brother and brother-in-law who are involved in farming operations. They 
said, ``What can you do for us this year, because we are going through 
an incredible crisis?''
  Mr. Speaker, I said, what about 100 percent health care deduction for 
the self-employed? And they said, that is in the bill? And I said, 
absolutely. That will help.
  What about allowing the profits that a business has made in the last 
5 years to be able to be offset from losses this year? And they said, 
that is in the bill? And I said, yes. That will help. That is a small 
provision.
  Every little bit will help in the this bill. It is not a perfect bill 
as far as we wanted more. We always want more for the farmers and 
ranchers. But it is a great start, and I thank the gentleman from Texas 
(Chairman Archer) for putting this bill together.
  Mr. RANGEL. Mr. Speaker, I yield 30 seconds to the gentleman from 
Texas (Mr. Stenholm) to respond to our distinguished chairman.
  Mr. STENHOLM. Mr. Speaker, I want to refer to the gentleman from 
Texas (Chairman Archer), and I want to apologize for the tone in my 
voice a moment ago. But what I was wanting to say is if the gentleman 
will go back and examine the Record, that he will see that the Blue Dog 
Coalition last year argued for the opportunity to present on this floor 
a budget that would balance our budget without the utilization of 
Social Security trust funds. We were denied an opportunity even to 
debate that by the gentleman's side of the aisle.
  So, what the gentleman inferred to me a moment ago, I believe, was in 
error factually. We would have liked to have done it last year; the 
Republicans would not let us do it.
  Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from Texas 
(Mr. Bentsen).
  (Mr. Bentsen asked and was given permission to revise and extend his 
remarks.)
  Mr. BENTSEN. Mr. Speaker, I agree with the gentleman from Florida 
(Mr. Shaw), about trying to be truthful. I think we have to look at the 
facts.
  Whether Members are Republican or Democrat, they cannot deny that 
there is no surplus at hand. For Members to come down and say we have a 
$1.6 trillion surplus is foolish. Everybody here knows that may happen, 
it may not. That is a 10-year projection.
  Mr. Speaker, 10-year projections are worthless. We hope it happens, 
and we hope maybe it is even better, but we should not start spending 
that. And this 90-10 deal, that is made up. We do not know if that is 
true or not.
  My friend, the gentleman from Texas (Chairman Archer), says 
repeatedly every week in the national press that we are going to have a 
tax cut every year the Republicans are in control. That is good 
politics and it sounds good, but it is going to blow a hole through the 
90-10; particularly, if we do not get the $1.6 trillion.
  The other fact which is undeniable is if we spend the surplus, 
whether Members believe it is coming from Social Security or someplace 
else, the fact is we will spend money that is owed to the Social 
Security trust fund to pay the bonds off, and that will come from 
Social Security.
  Mr. ARCHER. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, simply to respond, since Lyndon Johnson was President, 
we have operated under what is called a unified budget, and all of the 
monies that are received by the Federal Government are put into one 
basket. All of the spending is put into another basket, to determine 
whether we have a surplus or whether we have a deficit.
  The debt ceiling relates to that, and the gentleman knows that. The 
Republicans did not contrive the unified budget. We have lived with 
what was contrived by President Lyndon Johnson and a Democrat Congress.
  It has never been argued against, other than, yes, the gentleman from 
Texas (Mr. Stenholm), my friend, and a few others have made arguments 
against it. Valid arguments. But it has never been denied by a majority 
of the Democrats in the House of Representatives or in the Senate.
  I suspect that my friend from Texas in the well today voted for the 
tax bill last year. Did we have a surplus then? Did we have to borrow 
more money to pay for that tax bill? The answer clearly is ``yes.'' 
It does not need a response. It is clearly ``yes.''

  But the argument has changed today. The budget concept has changed 
today on behalf of the leaders in the Democrat party. They want to have 
it both ways. They want to claim a balanced budget under a unified 
budget, and then they want to argue, oh, but we do not have a balanced 
budget.
  Mr. Speaker, it has to be one way or the other. We have always 
operated on the basis of deficits relating to a unified budget. We are 
working with that today. That is the budgetary concept. And on that 
basis, we have a surplus only because of a Republican Congress.
  When we took the majority, there was a projection of $3 trillion of 
deficit over 10 years. Now there is a projection of $1.6 trillion of 
surplus. But it is strange to me that my liberal Democrat friends never 
seem to want to be for tax relief. There is always a reason that it 
should not happen.
  Last year it was we have to balance the budget first. But they were 
talking about a unified budget last year. Now they have changed their 
budgetary concepts and they claimed we balanced the budget, therefore 
we can vote for tax relief. But by their argument today, we have to 
borrow more money for that tax relief.
  They have changed. They changed on Medicare. In 1996, they said the 
Republicans are going to destroy Medicare. Political year. In 1997, 
they voted for virtually the same bill that we had offered in 1996. 
They were on board, but we were not any longer destroying Medicare. We 
were saving Medicare. That is what we said in 1996.
  Now, again, there is a reason why they do not want to give tax relief 
to the hard-hit American people. That reason is designed for a 
political year. It was not there last year, but it is here this year. 
So, the American people should understand that amazing things happen in 
an election year. We proposed this tax relief at the beginning of this 
year. We have been working for it

[[Page H8967]]

all year, and we believe it is the people's money, not Washington's 
money.
  And, yes, we intend to see that as much of it is kept as possible in 
their pockets. It is their income tax dollars that have changed these 
projections.
  Mr. Speaker, I yield 2 minutes to the gentleman from Florida (Mr. 
Mica).
  Mr. MICA. Mr. Speaker, it is fitting that Congress is here working 
today on Saturday. In fact, tens of millions of Americans work on 
Saturday and throughout the week to feed their families and to pay 
their taxes. In fact to pay their taxes, which the Democrat majority 
has raised, most Americans work until May of each year to pay their tax 
bills.
  The proposal before us is not a big tax cut. In fact, it is a rather 
modest tax cut, but it is targeted to change oppressive and destructive 
tax policy. Taxation helps determine economic and social policy.
  Foremost, this measure will change Federal policy to say that married 
couples who live together under the law will not be penalized. Just as 
important as cutting the tax burden, this legislation will have a 
positive impact on nurturing the family structure.
  For 40 years, the other side of the aisle adopted policies that 
helped destroy the American family unit and the work ethic in this 
country. During those 40 years they paid people more not to work than 
to work. In 4 years, we changed that policy.
  During 40 years, the Democrats taxed, retaxed, and overtaxed those 
who went to work and those who produced. In 4 years, we changed that 
policy.
  During those 40 years, the Democrats penalized fathers who live with 
their families. In 4 years, we changed that policy.
  During 40 years, the Democrats adopted policies that robbed people of 
their pride, their dignity, and most of all, of their personal 
initiative. The Republicans began to change that policy.
  Today, we have one more small opportunity to change and correct a 
misguided policy.
  Mr. RANGEL. Mr. Speaker, I yield myself 30 seconds to respond to the 
distinguished gentleman from Texas (Chairman Archer).
  Mr. Speaker, it is really chutzpah to say that it is the Democrats 
who have changed their policy. It is the Republicans that wanted to get 
rid of the Code. Pull it up by the roots. Have a flat tax. Have a sales 
tax. Now they are coming in with another tax bill that certainly does 
not do that.
  It is the Republicans that said we had to have fiscal discipline, and 
they are the ones that are waiving the rules. It is the gentleman from 
Texas (Mr. Armey) that says we have to phase out Social Security over 
time. So, we are consistent.
  Mr. Speaker, I yield 1 minute to the gentleman from New York (Mr. 
Engel).
  Mr. ENGEL. Mr. Speaker, I thank the gentleman from New York for 
yielding me this time.
  Mr. Speaker, this floor update says, ``Republicans Raid Social 
Security for Election Eve Tax Cut,'' and that is exactly what it is. My 
Republican friends want to take the Social Security trust fund and turn 
it into an all-purpose slush fund, and I do not think the American 
people want that.
  Any way we cut it, we are stealing $177 billion away from Social 
Security. And let us note that the surplus, as has been stated here 
before, is only the result of the Social Security trust fund.
  Mr. Speaker, I have seniors in my district come to me all the time 
saying that we should not raid our Social Security to pay for 
everything that the government wants or to pay for tax cuts. Social 
Security monies should be used for Social Security purposes only, and 
we ought to save and strengthen Social Security first.
  This waives the Budget Act which says that all tax cuts must be fully 
paid for and offset. And the reason we do have a projected surplus, 
frankly, is that in 1993, the Democrats, without one Republican vote, 
had the courage to pass the bill.
  So, let us remember, the unified budget is not as a result of 
President Johnson. Presidents Bush and Reagan did not change it either. 
This bill is irresponsible, and it ought to be defeated.
  Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from 
Kentucky (Mr. Baesler).
  Mr. BAESLER. Mr. Speaker, just yesterday, the Republican House 
leadership set the stage to spend the Social Security surplus, ignoring 
the dangers of raiding the trust fund and ignoring the promises that 
they have made both to the current and future generations.
  Now, just 24 hours later, the Republican leadership is now ready to 
spend $150 billion of the Social Security trust fund. After all the 
debate over the past 2 days, three undeniable truths have emerged: 
There is no budget surplus, there is a surplus in the Social Security 
trust fund, and the Republicans are willing to spend the Social 
Security surplus to pay for an election year tax cut.
  The Social Security trust fund is more than a Republican piggy bank. 
It is a trust. I urge the House not to break that trust. Do not travel 
the easy road to broken promises.
  ``Save Social Security first'' is more than a slogan. It is similar 
to a slogan like ``Read my lips.'' Save Social Security first. 
Americans deserve better than more broken promises that we are getting 
today.

                              {time}  1100

  Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from Texas 
(Mr. Edwards).
  Mr. EDWARDS. Mr. Speaker, the real question today is whether 
Republicans, Gingrich-led House Republicans are once again willing to 
undermine Social Security. Let us look at the record.
  The number two leader in the House, the Republican majority leader, 
the gentleman from Texas (Mr. Armey), said, in 1994, I would never have 
created Social Security. Earlier, when he was running for office, he 
said, You know, what we really need to do is just phase out Social 
Security over a period of time.
  Let us look at the record. Today dozens of Republicans in this 
Congress are trying to privatize and change Social Security as we know 
it. Let us look at the record. A year ago Republicans said, trust us, 
senior citizens, we will never cut your Medicare. Ask hundreds of 
thousands of seniors who have been kicked out of home health care 
programs under Medicare because of their language in their budget bill. 
Ask them if they kept that promise.
  Let us look at the record. Just a few months ago, it is stealing to 
take money from the highway trust fund. Today they say it is not really 
stealing when you take money from Social Security.
  That is why seniors do not trust Republicans to protect their Social 
Security.
  Mr. RANGEL. Mr. Speaker, I yield 3 minutes to the gentleman from 
Michigan (Mr. Bonior), our distinguished Democratic whip.
  Mr. BONIOR. Mr. Speaker, this tax bill is a raid on the Social 
Security trust fund. It is nothing less. I would call it a sneak 
attack, but what is happening here is so blatant, we cannot call it a 
sneak attack.
  This tax bill spends the retirement savings of hard-working 
Americans. It squanders the progress America has made in balancing its 
books. After years of talking about fiscal responsibility, the 
Republicans come here, and they are rushing to spend the surplus that 
does not even exist. They are taking $177 billion from Social Security, 
and they are handing it out in an election year giveaway.
  The crazy thing is, the money that they are giving away has not even 
been collected yet. That is irresponsible.
  A lot of people have called it irresponsible across the political 
spectrum. The nonpartisan Concord Coalition says, The election year 
temptation to use Social Security surpluses for other purposes will 
lead to a dangerous breakdown in fiscal discipline.
  The conservative Cato Institute, which my colleagues on this side of 
the aisle bow to on a regular basis, they said, We ought to wall off 
Social Security to prevent the continued thievery, that is their word, 
thievery from the trust fund.
  The Secretary of the Treasury, Robert Rubin, warns that abandoning 
fiscal discipline now could destabilize the global economy.
  The Speaker got up on the floor and made this great big speech about 
destabilizing the global economy. Here they are, raiding $177 billion 
out of the trust fund, putting us back in the same fiscal mess that we 
got into in the early 1980s and could not get out of until we elected a 
President and a Congress who were

[[Page H8968]]

willing to do something about it in 1993.
  I want to be very clear: The Democrats support a tax cut. But the 
American people have been very clear as well: Save Social Security 
first. Trading away Americans' retirement security for short-term tax 
cuts makes about as much sense as ripping a hole in the bottom of your 
canoe right before you hit the rapids.
  We should not be surprised at this Republican plan to eliminate 
Social Security. As the majority leader, the gentleman from Texas, said 
when he first ran on a platform of eliminating Social Security, he 
called it, and I quote, a rotten trick on the American people. The 
Speaker apparently shares his views. In a newsletter that he put out 
entitled, this is a Progress and Freedom Foundation newsletter, it 
said, For freedom's sake, eliminate Social Security.
  That is where their leadership comes from. Maybe that is why they are 
so willing to spend Social Security trust funds before the money even 
comes in.
  They are dead wrong. There is no surplus to spend. We have an 
obligation to honor our commitment to America's families and save 
Social Security first.
  Mr. ARCHER. Mr. Speaker, may I inquire as to what time remains?
  The SPEAKER pro tempore (Mr. Thornberry). The gentleman from Texas 
(Mr. Archer) has 7\1/2\ minutes remaining, and the gentleman from New 
York (Mr. Rangel) has 8\1/2\ minutes remaining.
  Mr. ARCHER. Mr. Speaker, I reserve the balance of my time.
  Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from 
Tennessee (Mr. Ford).
  Mr. FORD. Mr. Speaker, I rise in support of tax cuts but certainly 
not in support of this irresponsible plan that has been offered by some 
of my colleagues on the other side.
  The money the Republicans plan to use to fund their tax bill is not 
their money, nor is it Democrats' money. For it was paid into the 
Social Security system through payroll contributions and should not be 
stolen away from that to fund other things, no matter how worthy they 
may be.
  Already young people, many in my generation, doubt whether the trust 
fund will be there for them. By introducing a tax bill paid for by 
taking money away from Social Security, they are pitting old against 
young and sowing conflict between generations.
  Democrats are interested in bringing people together across 
generations and social groups to work out a way to achieve long-term 
solvency for Social Security, for we agree with the Federal Reserve 
Chairman, Alan Greenspan, that the favored use for the surplus is not 
to spend it on domestic programs or tax cuts.
  At a time in which we are facing volatility in our world financial 
markets, I would hope that the fiscal responsibility that Republicans 
purport to pervade their party would finally take hold and they would 
do the right thing.
  Do not support the Archer tax plan. Support the Rangel substitute.
  Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from North 
Carolina (Mr. Price).
  (Mr. PRICE of North Carolina asked and was given permission to revise 
and extend his remarks.)
  Mr. PRICE of North Carolina. Mr. Speaker, I awoke this beautiful 
Saturday full of hope. By noon today we will be 107 hours away from the 
finish line I have been running toward, ever since I first came to the 
Congress. With the end of September, we will have achieved the first 
balanced budget since Lyndon Johnson was President.
  Our achievement is imperfect, however. The unified budget is balanced 
only because of the surplus in the Social Security trust fund. And as 
we finish the race to this balanced budget, we begin another race with 
two finishes to cross: providing for the long-term solvency of Social 
Security and balancing the budget without including the Social Security 
trust fund.
  The bill we are debating today, the ``Raid Social Security for an 
Election Eve Tax Cut Act,'' threatens these goals. The problem is not 
with the specific tax cuts but with using the Social Security trust 
fund surplus to pay for them.
  These tax cuts are also contained in the Democratic substitute. I 
have cosponsored many of them. But they are paid for in that 
substitute, and they maintain the trust in the trust fund.
  The Republican bill effectively repeals the cornerstone of budget 
balancing, the pay-as-you-go rule. It does so without even a fig leaf 
of a budget resolution. It is irresponsible.
  The Democratic substitute gives us tax cuts, maintains budget 
accountability. Pass the Democratic substitute.
  Mr. Speaker, I awoke this beautiful Saturday full of hope. By noon 
today, we will be 107 hours away from a finish line I have been running 
toward every day I have served in Congress. With the end of September, 
we will have achieved the first balanced budget since Lyndon Johnson 
was President.
  Our achievement is imperfect. The unified budget is balanced only 
because of the surplus in the Social Security Trust Fund. As we finish 
the race to this balanced budget, we begin another race with two 
finishes to cross: providing the long-term solvency of the Social 
Security System and balancing the budget without including the Social 
Security surplus.
  Our fiscal success is built on partisan and bipartisan achievement. 
The 1990 budget agreement put into place the cornerstone of our 
budgetary structure: the pay-as-you-go rules. If Congress or the 
President wants to add spending, it has to be paid for. If Congress or 
the President wants to cut taxes, it has to be paid for. Payment is 
either in spending cuts or tax increases. It was a bipartisan 
achievement, albeit one that our present House Republican leadership 
opposed.
  The 1993 budget was a partisan fight, passed by one vote in both 
chambers. it produced declining deficits five years in a row, laid the 
groundwork for phenomenal economic growth, and brought us to the point 
last year that we could hardly imagine not finishing the job.
  The 1997 budget agreement returned us to a bipartisan approach and 
accelerated the achievement of the goal now a little over 100 hours 
away.
  The bill we are debating today, the Raid Social Security for an 
Election Eve Tax Cut Act, threatens these goals. The problem is not 
with the specific tax cuts but with using the Social Security Trust 
Fund surplus to pay for them. More than half of the tax cuts in this 
bill come from proposals I have cosponsored. I support relief for small 
savers, small businesses, family farmers, health insurance, senior 
citizens, the marriage penalty and extending the research and 
development tax credit. These tax cuts are also contained in the 
Democratic substitute, but there they are paid for, and they maintain 
the ``trust'' in the Trust Fund.
  This Republican bill effectively repeals the cornerstone of budget 
balancing, the pay-as-you-go rule. It does so without even a fig leaf 
of a budget resolution, now more than five months past due. It hands 
our tax goodies as if they were Halloween candy, but the goody box it 
dips into is the Social Security Trust Fund.
  As the race to the balanced budget comes out of the turn and heads to 
the finish, this Republican tax bill is a dangerous detour. It can take 
us off the track, and it could prevent us from staying the course. We 
need a responsible approach that pays for tax cuts, that keeps us on 
the track to finish the race to a balanced budget. We need an approach 
that keeps the budget rules in place and effective so that we can begin 
the race to solving the challenge of Social Security and balancing the 
budget without including the Social Security surplus. The only way to 
achieve our goal is to support the Democratic alternative. Let's not 
fall off the track when the finish line is so close.
  Mr. ARCHER. Mr. Speaker, I reserve the balance of my time.
  Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from New 
York (Mr. Hinchey).
  Mr. HINCHEY. Mr. Speaker, we are for these tax cuts. In fact, 
virtually every one of these tax cuts was introduced by a Democrat. 
They were lifted from us in a transparently cynical gesture in an 
election year.
  You know this bill is not going to pass. If you thought it were, then 
you would have a totally different piece of legislation out here.
  The truth of the matter is, you have always hated Social Security, 
and you seek every opportunity to undermine it. That is what you are 
doing in this particular case by stealing money from the Social 
Security trust fund.
  If you were in the private sector, heading a corporation, and you 
sought to steal money out of the pension fund of that private 
corporation, you would be locked up. And that is what ought to happen 
to you in this particular context. This is wrong. It is indecent. It 
runs counter to everything that this Congress has stood for, and you 
are doing what you are doing at the expense of present and future 
retirees.

[[Page H8969]]

  You are not going to get away with it.
  Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from 
Minnesota (Mr. Minge).
  Mr. MINGE. Mr. Speaker, I thank the gentleman from New York for 
yielding time to me.
  We have 2 weeks left in this legislative session. We should not be 
squandering our time on bills that we know are not going anywhere.
  The trade bill, which I voted for last night, is not going anywhere, 
unfortunately. This tax cut bill is not going anywhere, on the other 
side of this building, on the other end of Pennsylvania Avenue.
  In the meantime, the budget languishes. The appropriations bills 
languish. The trade initiatives that we could take languish. Funding 
for IMF languishes.
  So what are we doing? We are using our time on a Saturday morning to 
add to the deficit, to handicap our ability to balance the budget, to 
handicap our ability to solve the Social Security financial woes, to 
violate the budget rules.
  This reminds me of a juvenile exercise in my youth. As a 7th grader, 
I and my friends campaigned to be president of home room. We were told 
by our teacher we should have a platform. We said we wanted to cut 
taxes. It was just as relevant then as it is now. It was not going 
anywhere.
  I campaigned to be president of our ``home room''. We were told by 
our teacher we should have a platform. We all pledged to cut taxes. As 
children we were echoing our parents table talk, but we were no more in 
touch with reality than the majority today. Indeed let's cut taxes--
when we can do so without jeopardizing Social Security and our 
commitment to balance the budget.
  Mr. ARCHER. Mr. Speaker, I yield myself 5 minutes.
  Mr. Speaker, although the tax cut last year, signed by the President, 
proclaimed by the President required more government borrowing, it did 
not raid or jeopardize Social Security.
  Today, when we have a surplus of $60 billion instead of a deficit, 
last year, of $21 billion, we are clearly not in any way raiding Social 
Security or even touching any of the dollars that go into the Social 
Security trust fund. That is clear. Not one penny of Social Security 
money is involved in this tax relief.
  Mr. Speaker, I am a conservative. Most people know that. I am 
conservative in most everything, but I am especially conservative when 
it comes to other people's money. I prepare my own taxes, I pay my own 
bills, and I have no personal debt.
  I believe that left to their own, without government interference, 
red tape and excessive taxation, there is no problem the American 
people cannot solve. In the last 4 years the lives of the American 
people have improved because we are getting government off their backs. 
We balanced the budget, moved people from welfare to work, protected 
people from the IRS, and we cut taxes.
  In short, we are downsizing the power of Washington and upsizing the 
power of individual Americans, helping them to help themselves.
  But we must remember that we are only the government. We cannot solve 
all the problems of the people by taking tax dollars that are earned by 
one citizen and handing them to another citizen, and then believe that 
we have improved the lot of either.
  For 40 years we tried that. It is called tax and spend. The time has 
come to admit that tax and spend has failed. It is time to reduce the 
size of government and let people keep their tax dollars. After all, 
the money belongs to them. Cutting taxes can never be ``a giveaway'' as 
the minority leader recently called it or ``squandering the surplus'' 
in the President's terminology, unless they believe that people's 
paychecks are government property, property for the government to give 
away.

                              {time}  1115

  Taxes are a takeaway. It is the government that takes. They take what 
workers make. It is not and never will be the other way around, at 
least not in America and not to Republicans.
  Mr. Speaker, it is time to stop punishing those who work and earn. It 
is time to start helping the taxpayer so each one of them can keep more 
of what they earn.
  It is clear from this debate that many of my Democrat friends are out 
of touch with overtaxed, mainstream America. It is clear that many are 
voting with their party leaders and against their farmers, ranchers, 
husbands, wives, senior citizens, local school districts and small 
business owners. While they claim they are for tax relief, their vote 
shows that their fingers remain stuck in the wallets of middle-income 
Americans, trying to take from one citizen to give to another. To my 
friends across the aisle, I really have a simple message: Let it go. 
Let it go. Let it go. We tried your way. For 40 years we squandered 
people's taxes and increased spending. Now it is our turn.
  My friends, vote for your constituents, not your leadership. Show 
your independence. Say ``yes'' to families, to farmers and ranchers, to 
senior citizens, to small businesses and to the building of local 
schools. Vote for the taxpayer. Support our 90-10 plan. And at the same 
time we are committed to join with you to save Social Security.
  Separately, Mr. Speaker, I would like to point out that the bill 
includes a temporary exception from current income inclusion under 
subpart F of the tax code for certain income earned abroad by dealers 
in securities. The committee report states: ``It is intended that the 
dealer exception not apply to income from transactions with persons 
located in the United States with respect to U.S. securities.'' The 
report language reflects the Committee's understanding that the 
exception from current inclusion for income earned by dealers in 
securities does not apply to activities that would otherwise be 
conducted in the United States.
  Mr. Speaker, I reserve the balance of my time.
  Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from 
Virginia (Mr. Moran).
  Mr. MORAN of Virginia. Mr. Speaker, the critical vote on this issue 
occurred yesterday with the rule, because what we did was to vote to 
break our own budget rules. It is those budget rules that enabled us to 
achieve a balanced budget, to turn a projected $300 billion deficit 
into a balanced budget. We did that because we did not want to be 
controlled by those rules as responsible as they are. We said that we 
are not going to pay for this tax cut by reducing spending or by taking 
it out of the general fund, we are going to take it from the Social 
Security trust fund.
  But by breaking those rules, we have also broken intergenerational 
legacy, where every generation of Americans has inherited a better 
standard of living from their parents than the prior generation. Yet we 
are going to pass on to our children's generation $5.5 trillion of debt 
and an insurmountable Social Security burden, a generational deficit.
  When I was born, there were 20 workers for every retiree. When I die 
there will be two. That is not fair. Let us not be so selfish.
  Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentlewoman from 
Florida (Mrs. Thurman) from the Committee on Ways and Means.
  Mrs. THURMAN. Mr. Speaker, I have heard a lot about yesterday and 
what happened and what is going on. But as a teacher, as a mother and 
someone who listened to their parents, I was told, ``Learn from your 
mistakes.''
  Mr. Speaker, I want to thank the gentleman from Texas (Mr. Archer) 
for reminding the American people that this Congress last year gave tax 
breaks to the country, gave it to hard-working families, gave it to the 
farmers, gave it to the teachers, gave it to people with children. That 
is what you gave us last year. All we are saying is this year, please, 
please remember what Mr. Greenspan said, that if we protect this 
surplus and help pay down the national debt, we could in fact produce 
lower interest rates. That is for mortgage payments, that is for car 
payments, that is for credit card payments. He said spending this 
surplus would be the worst outcome.
  Please just vote ``no.''
  Mr. RANGEL. Mr. Speaker, I yield the balance of my time to the 
gentleman from Missouri (Mr. Gephardt) our Democratic leader.
  Mr. GEPHARDT. Mr. Speaker, the decision that we make today is a 
decision that every American would understand. In our lives, in our 
families, we all face fundamental decisions. Often

[[Page H8970]]

those decisions are financial decisions. We have to decide whether or 
not to have instant gratification and buy something that we would like 
to have right now, or whether to save funds in our family for 
retirement or for a rainy day fund or for the future so that we do the 
responsible thing for our families and our future. It really is the 
kind of decision that we are making today as a national family. We are 
deciding whether we want very desirable tax cuts, which the American 
people want and which we want, or whether we should wait on that 
decision until we are sure that our pension funds in Social Security 
are safe and secure and adequate to take care of the baby boomers which 
will be soon coming and wanting their pension from Social Security. I 
urge my colleagues to vote for the Democratic substitute that will 
truly save the surplus for Social Security first.
  Yesterday Republicans voted against a Democratic proposal to save all 
of the surplus for the Social Security trust fund. They said, 90 
percent is good enough. 100 percent would be better, but 90 percent is 
good enough. I believe that was a wrong decision.
  Today they are raiding the surplus with ill-timed tax cuts. Once 
again they show their disregard for the long-term financial integrity 
of the most important program to the lives of every American. Our 
substitute will make sure, certain, positive, that fiscal 
responsibility is more than empty phrases and empty words.
  We support cutting taxes. We believe the American people deserve a 
tax cut. But it is more important to save every penny of the surplus 
until we find a way to pay for those tax cuts. It is a basic principle: 
Pay as you go; pay as you go. It says tax cuts funded out of the 
surplus must wait, must simply wait until Congress shores up the Social 
Security system so they can pay the benefits that baby boomers have 
earned by paying payroll taxes into the Social Security trust fund. It 
says ``yes'' to tax cuts to working families but makes sure that we do 
not wreck Social Security in the process.
  Democrats support tax cuts for working families. Speaker Gingrich and 
Chairman Archer have borrowed from Democratic tax relief proposals in 
writing this bill. We congratulate them for that. The only problem is 
that they forgot to include the bipartisan fiscal discipline that we 
wrote into the budget in their zeal to give the Republican Party a 
campaign issue in the November elections.
  This is an election-year tax cut. Unfortunately, their message to the 
American voter is the election is more important to the Republican 
Party than saving Social Security for future generations. We refuse to 
support Republican efforts to spend the Social Security trust funds 
that working families one day will have to rely on for their 
retirement, as the foundation of their retirement.
  The Republicans are taking $80 billion from the surplus and try to 
say that, ``Well, it's no big deal. It's not that much money.'' The 
party that refused to cast a single vote to put the Federal budget in 
surplus for the first time in a generation is now so impressed, in fact 
so giddy with election-year politics, they have decided to spend 
surplus money that really should stay in the Social Security trust 
fund. I think it is irresponsible. The surplus is just an upward line 
on a bar graph. It shows a unified budget in surplus but a non-Social 
Security budget projected in deficit for at least the next six years. 
The truth is we do not have a surplus if we take into account what 
should be in the Social Security trust fund.
  I am from Missouri. We have a saying in Missouri: Show me. Show me 
the trust fund. And what people in America want today is to be shown 
that we have learned as a national family to be responsible, to do the 
right thing for them and their future.
  This is a fundamental decision we have to make today. We are trustees 
of the most important program for the future of families in this 
country. I keep hearing Social Security is failed, that it will not be 
there. When I talk to my young constituents, they say, ``I'm paying 
this tax, but it's never going to be there.'' What cynicism we bring 
when we do things like this when we have a chance to regain the 
confidence of the people that the hard-earned money they put into this 
trust fund is going to be there.
  Do not give in to cynicism today and irresponsibility and instant 
gratification and election-year politics. Do what is right for the 
future of this country. Let us regain the confidence of our people that 
we know how to be trustees of this system. Vote for the Democratic 
substitute, vote for a tax cut when we can afford to do it, and say we 
have kept faith with Social Security.
  Mr. ARCHER. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Florida (Mr. Stearns).
  (Mr. STEARNS asked and was given permission to revise and extend his 
remarks.)
  Mr. STEARNS. Mr. Speaker, I rise in support of the Archer bill and 
against the Rangel amendment. We are talking about .0086 percent of the 
budget. That is very little amount of money for a tax cut.
  Now lets eliminate the accusations of ``raiding'' the social security 
trust fund. President Johnson and the Democratic Congress first unified 
the budget, making the Trust Fund part of the general revenue.
  The Democratic alternative would delay this important tax relief. Of 
course, this delay does not apply to tax incentives that are favored by 
the Democrats--in other words, spending on Title IV, to which their 
trigger does not apply. We want to provide as much educational, senior 
citizen, farming, and marriage penalty tax relief as we can. Let's get 
serious . . . this tax relief is $16 billion a year or $80 billion over 
5 years or .0086 of the yearly budget.
  Americans deserve a break--let's defeat the Rangel Amendment.
  Mr. ARCHER. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Michigan (Mr. Knollenberg).
  (Mr. KNOLLENBERG asked and was given permission to revise and extend 
his remarks.)
  Mr. KNOLLENBERG. Mr. Speaker, I rise in full support of the Archer 
underlying bill and oppose the substitute.
  Mr. ARCHER. Mr. Speaker, I yield the balance of my time to the 
gentleman from Georgia (Mr. Gingrich), the Speaker of the House of 
Representatives.
  Mr. GINGRICH. Mr. Speaker, I thank the gentleman from Texas for 
yielding me this time.
  Let me say first of all that I am proud that the United States House 
is busy at work legislating. We are not in California at a fund-raiser. 
We are not in Texas at a fund-raiser. We are here in Washington working 
on the people's business.
  Let me say to my friends, in 1994, when you finished 40 years of 
controlling the House, the projected deficit for the next 11 years was 
$3.1 trillion and in 40 years the amount of money you had set aside for 
Social Security was zero. Not a dollar. Three and a half short years 
later, we now have a projected $1.6 trillion surplus and we are setting 
aside over $1 trillion for Social Security. So being lectured by the 
people who had done nothing about who is trying to save Social Security 
is a historic anomaly.
  You know full well that the surplus is more than enough for Social 
Security, because on September 15 Democrats in this House voted 176-1 
to spend part of the surplus on government programs.
  And you know full well that the Clinton administration has sent up 
$13 billion of additional government spending out of the surplus which 
you support.
  So the fact is, liberal Democrats say, if it is government spending 
take it out of the surplus, but now if it is for the taxpayers, that 
would be dangerous.
  Democrats say if it is for Bosnia, take it out of the surplus, but if 
it is for Baltimore and Boise, that would be dangerous.
  Democrats say if it is to fix Y2K computers in the government, take 
it out of the surplus, but now if it is to let small business actually 
buy a computer, that would be dangerous.
  Let us be clear what is at stake here. We believe there is a surplus 
because the hard-working American people are paying more in taxes than 
the government is spending. Our liberal friends believe the answer is 
to raise government spending to catch up with the taxes. We believe 
lower taxes so we get the money back home.
  Consider what we are trying to do. We have already pledged to save 
Social Security. We have already set aside over $1 trillion. The Deputy 
Commissioner of Social Security of the Clinton

[[Page H8971]]

administration said, quote, as a result of the tax bill being 
considered, there will not be any impact on the moneys in the Social 
Security trust fund. That is what she said. The Clinton administration 
has said that this has nothing to do with Social Security. This has to 
do with some simple things.
  Do you believe in the middle of a drought, in the middle of price 
problems for farmers that we ought to have tax relief for farmers?
  Do you believe we ought to have income-averaging for farmers?
  Do you believe we ought to raise the earning limits for senior 
citizens so they can work without penalty?
  Do you believe we ought to reduce the marriage penalty?
  Do you believe we ought to cut the death tax for small business and 
family farms?
  Do you believe we ought to help local school boards keep their own 
bond money so they can build their own schools without going to 
Washington?

                              {time}  1130

  Do you think we ought to extend 100 percent deductibility to small 
business to have the same chance to buy health insurance as giant 
corporations?
  Do you think we ought to eliminate any tax on the first $200 in 
interest and dividends?
  That is what is at stake here. We are returning to the American 
people their own money, and we are doing so as the people who created 
the first surplus in a generation and the first projected decade of 
surpluses since the 1920s. We will keep our word and pass a bill next 
year to save Social Security. This year, let us try to keep the 
American economy growing, despite worldwide economic problems, by 
cutting taxes and returning money to the American people.
  I challenge any of my liberal friends, if you vote ``no'' on 
returning money to the American people, then do not turn around and 
take money and spend it on bigger and bigger government. But you know 
in your heart you are going to vote for the bigger government, so why 
not give the American people a chance to have at least some of that 
money in their own family.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise to speak on behalf of 
this substitute amendment to H.R. 4579, sponsored by Congressman 
Rangel. I support this substitute, because it is necessary to protect 
the financial well-being of hard-working Americans.
  We Democrats are no strangers to tax cuts. Many of us, in fact, voted 
for tax cuts last year. In fact, the final passage of the Taxpayer 
Relief Act of 1997 was done with a great deal of bipartisan support. 
One hundred and sixty-four Democrats voted in favor of that bill, 
including myself. I am especially proud of the $500 Child Tax Credit 
for low-income families that the bill contained, which came about as a 
result of some very hard-work by the Democratic Members of this House.
  I, personally, am also not a stranger to taxpayer relief. I sponsored 
legislation that would have eliminated the marriage penalty, 
established a commission to simply the tax code, required the Internal 
Revenue Service to use alternative dispute resolution (ADR) to settle 
claims, and prohibited certain types of discrimination by IRS officers 
and employees. Yet the Republicans would have the American public 
believe that we do not want tax cuts of any sort. They could not be 
more wrong.
  This substitute is significantly better than the unamended version of 
H.R. 4578 because it holds the door open for the exact same tax cuts 
that the Republicans are championing, but only after we are assured 
that the Social Security Trust Fund will be there for the people of 
America who currently pay into the Social Security system. So as you 
hear the Republicans clamoring about their targeted tax cuts for 
families and small business, remember that you get the same from the 
Democrats.
  Both the bill and the Democratic substitute contain provisions that 
address the marriage penalty, small savers, and farm relief. Both give 
tax relief to small business owners and beneficiaries of estates. Both 
assist taxpayers that are themselves on Social Security or self-
employed. The truth is, that Democrats give the taxpayers no less than 
Republicans. In fact, we give more--we save Social Security as well.
  The difference between these two competing versions of H.R. 4578 
represents the fundamental difference in the way that Members of 
Congress view this ``budget surplus''. While the supporters of the 
reported version of H.R. 4579 believe that this is a true surplus that 
we can take money out of, the substitute speaks for the Members who see 
those funds as debt, owed to the people who have paid into the system 
throughout their working careers.
  There are strong and reliable indications that without the Social 
Security surplus, a real budget surplus would not exist until the year 
2006. According to the CBO, the budget surpluses over the next five 
years amount to $520 billion. If you leave the surplus from Social 
Security out of that equation, the budget instead runs a deficit of 
$137 billion. A deficit!
  We owe this money to the people who have paid into this system. Last 
month I held a series of town hall meetings. Although the meetings were 
all held in different neighborhoods, with people of different races, 
and backgrounds, with people from different financial strata, and with 
people of all age groups, at each of the meetings there was a clear 
consensus that Social Security must be saved. It must be saved for 
them, not out of the generosity of our hearts, but because we owe them 
their money. It is theirs!
  This substitute does more than just save the budget surplus for 
Social Security. It puts the money where it will be safe--by 
transferring it to the Federal Reserve Bank of New York to be held in 
trust. It is, in effect, a ``lock box'' which cannot be reached by 
politicians here in Congress. Under the substitute, Congress would have 
to default on publicly traded debt instruments before it could default 
on its Social Security payments. With the state of things of today, 
that is about as safe as you can get.
  This substitute to H.R. 4578 is being made for the sake of fiscal 
responsibility. It simply acknowledges that we ought not to spend money 
that we do not have. We all know that early next century, when the 
Social Security tab arrives bearing the names of the baby boomers that 
have participated in this program, we will have to pay. If you think 
that the American public has a lack of respect for government now, how 
do you think they will feel when we shortchange them after 20 or 30 
years of hard work? Let me remind all of you, we owe the American 
people well over $5 trillion in already-collected funds.
  I implore all of you to support this substitute because it protects 
the statutory rights of millions of people around the country. I also 
warn those who plan to oppose it, because their votes will send a 
message to the hard-working people of this country, not only that they 
play election-year politics, but also that they play politics with 
their constituents' money!
  I would also like to remind all of you that the substitute will be 
the only way that we get any tax cuts this year. The Administration 
strongly opposes the unamended version of H.R. 4579, and will veto it. 
They oppose it because it ``drain[s] billions out of projected 
surpluses . . . and violates the President's unwavering commitment to 
save Social Security first. None of the surpluses should be touched 
until the long-term solvency of Social Security has been fully 
secured.'' This substitute surely meets those requirements, as it 
requires assurances that Social Security, is indeed safe before any tax 
cuts go into effect.
  I urge you all to vote for this substitute. We owe it to all of the 
people of this country who have lived up to their part of the Social 
Security bargain by dutifully paying into the system with their every 
hard-earned paycheck.
  Mr. CUMMINGS. Mr. Speaker, I rise today in support of the amendment 
offered by my friend and colleague, Charlie Rangel, and in opposition 
to a raid on the Social Security Trust Fund in the form of a fool-hardy 
tax bill.
  This body can and has agreed on many, if not all, of the tax relief 
provisions included in this bill.
  Unfortunately, we are not in a position to discuss those provisions 
today because, quite simply, we can not pay for them.
  Mr. Speaker, there are no budget surpluses projected for at least the 
next five years.
  What there is is the Social Security Trust Fund which the people of 
the United States have entrusted to the Congress so that we can 
continue to guarantee the solvency of the Social Security system.
  It is fool-hardy, irresponsible and dangerous to use this money for 
tax cuts.
  Mr. Speaker, I want to provide the American people tax relief. My 
wish list for my constituents is a long one. Unfortunately, we in this 
body have fiscal responsibilities.
  We need to be disciplined. We can not act simply off of wish lists. 
We must act based on fiscal realities.
  We need to be conservative with the American people's money and we 
need to ensure that the Social Security system is there for our 
children and for our grandchildren as it has been there for us. We can 
do this, as long as we leave the Social Security Trust Fund alone.
  Therefore, Mr. Speaker, I support the Rangel Substitute because it 
provides tax relief only after we have guaranteed the solvency of the 
Social Security system.
  The SPEAKER pro tempore (Mr. Thornberry). The question is on the 
amendment in the nature of a substitute offered by the gentleman from 
New York (Mr. Rangel).
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.

[[Page H8972]]

                             Recorded Vote

  Mr. RANGEL. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--ayes 197, 
noes 227, not voting 11, as follows:

                             [Roll No. 468]

                               AYES--197

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baesler
     Baldacci
     Barcia
     Barrett (WI)
     Becerra
     Bentsen
     Berry
     Bishop
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brown (CA)
     Brown (FL)
     Brown (OH)
     Capps
     Cardin
     Carson
     Clay
     Clayton
     Clement
     Clyburn
     Condit
     Conyers
     Costello
     Coyne
     Cramer
     Cummings
     Danner
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Dixon
     Doggett
     Dooley
     Doyle
     Edwards
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Fazio
     Filner
     Ford
     Frank (MA)
     Frost
     Gejdenson
     Gephardt
     Gonzalez
     Gordon
     Green
     Gutierrez
     Hall (OH)
     Hall (TX)
     Harman
     Hastings (FL)
     Hefner
     Hilliard
     Hinchey
     Hinojosa
     Holden
     Hooley
     Hoyer
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     John
     Johnson (WI)
     Johnson, E. B.
     Kanjorski
     Kaptur
     Kennedy (MA)
     Kennedy (RI)
     Kennelly
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     Klink
     Kucinich
     LaFalce
     Lampson
     Lantos
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren
     Lowey
     Luther
     Maloney (NY)
     Manton
     Markey
     Martinez
     Mascara
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McDermott
     McGovern
     McHale
     McIntyre
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Miller (CA)
     Minge
     Mink
     Moakley
     Mollohan
     Moran (VA)
     Murtha
     Nadler
     Neal
     Oberstar
     Obey
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Peterson (MN)
     Pickett
     Pomeroy
     Poshard
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Rothman
     Roybal-Allard
     Rush
     Sanchez
     Sanders
     Sandlin
     Sawyer
     Schumer
     Scott
     Serrano
     Sherman
     Sisisky
     Skaggs
     Skelton
     Slaughter
     Smith, Adam
     Snyder
     Spratt
     Stabenow
     Stark
     Stenholm
     Stokes
     Strickland
     Stupak
     Tanner
     Thompson
     Thurman
     Tierney
     Torres
     Towns
     Traficant
     Turner
     Velazquez
     Vento
     Visclosky
     Waters
     Watt (NC)
     Waxman
     Wexler
     Weygand
     Wise
     Woolsey
     Wynn
     Yates

                               NOES--227

     Aderholt
     Archer
     Armey
     Bachus
     Baker
     Ballenger
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bateman
     Bereuter
     Bilbray
     Bilirakis
     Bliley
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Brady (TX)
     Bryant
     Bunning
     Burr
     Buyer
     Calvert
     Camp
     Campbell
     Canady
     Cannon
     Castle
     Chabot
     Chambliss
     Chenoweth
     Christensen
     Coble
     Collins
     Combest
     Cook
     Cooksey
     Cox
     Crane
     Crapo
     Cubin
     Cunningham
     Davis (VA)
     Deal
     DeLay
     Diaz-Balart
     Dickey
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Ensign
     Everett
     Ewing
     Fawell
     Foley
     Forbes
     Fossella
     Fox
     Franks (NJ)
     Frelinghuysen
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Gingrich
     Goode
     Goodlatte
     Goodling
     Graham
     Granger
     Greenwood
     Gutknecht
     Hamilton
     Hansen
     Hastert
     Hastings (WA)
     Hayworth
     Hefley
     Herger
     Hill
     Hilleary
     Hobson
     Hoekstra
     Horn
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Inglis
     Istook
     Jenkins
     Johnson (CT)
     Johnson, Sam
     Jones
     Kasich
     Kelly
     Kim
     King (NY)
     Kingston
     Klug
     Knollenberg
     Kolbe
     LaHood
     Largent
     Latham
     LaTourette
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     Livingston
     LoBiondo
     Lucas
     Maloney (CT)
     Manzullo
     McCollum
     McCrery
     McDade
     McHugh
     McInnis
     McIntosh
     McKeon
     Metcalf
     Mica
     Miller (FL)
     Moran (KS)
     Morella
     Myrick
     Nethercutt
     Neumann
     Ney
     Northup
     Norwood
     Nussle
     Oxley
     Packard
     Pappas
     Parker
     Paul
     Paxon
     Pease
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Pombo
     Porter
     Portman
     Quinn
     Radanovich
     Ramstad
     Redmond
     Regula
     Riggs
     Riley
     Roemer
     Rogan
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Roukema
     Royce
     Ryun
     Sabo
     Salmon
     Sanford
     Scarborough
     Schaefer, Dan
     Schaffer, Bob
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Shimkus
     Shuster
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (OR)
     Smith (TX)
     Smith, Linda
     Snowbarger
     Solomon
     Souder
     Spence
     Stearns
     Stump
     Sununu
     Talent
     Tauscher
     Tauzin
     Taylor (NC)
     Thomas
     Thornberry
     Thune
     Tiahrt
     Upton
     Walsh
     Wamp
     Watkins
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     White
     Whitfield
     Wicker
     Wilson
     Wolf
     Young (AK)
     Young (FL)

                             NOT VOTING--11

     Berman
     Burton
     Callahan
     Coburn
     Fowler
     Furse
     Goss
     Olver
     Pryce (OH)
     Saxton
     Taylor (MS)

                              {time}  1151

  The Clerk announced the following pairs:
  On this vote:

       Mr. Taylor of Mississippi for, with Mr. Callahan against.
       Mr. Olver for, with Mrs. Fowler against.
       Mr. Berman for, with Mr. Burton against.

  Messrs. GOODLATTE, SMITH of Michigan, HILLEARY, LAZIO of New York and 
ROGAN and Mrs. CHENOWETH changed their vote from ``aye'' to ``no.''
  Mr. OWENS changed his vote from ``no'' to ``aye.''
  So the amendment in the nature of a substitute was rejected.
  The result of the vote was announced as above recorded.
  The SPEAKER pro tempore (Mr. Thornberry). Pursuant to House 
Resolution 552, the previous question is ordered on the bill, as 
amended.
  The question is on the engrossment and third reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.
  The SPEAKER pro tempore. The question is on the passage of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.


                             Recorded Vote

  Mr. RANGEL. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--ayes 229, 
noes 195, not voting 11, as follows:

                             [Roll No. 469]

                               AYES--229

     Archer
     Armey
     Bachus
     Baker
     Ballenger
     Barcia
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bateman
     Bereuter
     Bilbray
     Bilirakis
     Bishop
     Bliley
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Boswell
     Brady (TX)
     Bryant
     Bunning
     Burr
     Buyer
     Calvert
     Camp
     Campbell
     Canady
     Cannon
     Capps
     Chabot
     Chambliss
     Christensen
     Coble
     Collins
     Combest
     Condit
     Cook
     Cooksey
     Cox
     Cramer
     Crane
     Crapo
     Cubin
     Cunningham
     Danner
     Davis (VA)
     Deal
     DeLay
     Diaz-Balart
     Dickey
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     English
     Ensign
     Everett
     Ewing
     Fawell
     Foley
     Forbes
     Fossella
     Fox
     Franks (NJ)
     Frelinghuysen
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Gingrich
     Goode
     Goodlatte
     Goodling
     Gordon
     Graham
     Granger
     Greenwood
     Hansen
     Harman
     Hastert
     Hastings (WA)
     Hayworth
     Hefley
     Herger
     Hilleary
     Hobson
     Hoekstra
     Hooley
     Horn
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Inglis
     Istook
     Jenkins
     Johnson (CT)
     Johnson, Sam
     Jones
     Kasich
     Kelly
     Kennelly
     Kim
     King (NY)
     Kingston
     Klug
     Knollenberg
     Kolbe
     Largent
     Latham
     LaTourette
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     Livingston
     LoBiondo
     Lucas
     Maloney (CT)
     Manzullo
     McCarthy (NY)
     McCollum
     McCrery
     McDade
     McHugh
     McInnis
     McIntosh
     McKeon
     Metcalf
     Mica
     Miller (FL)
     Moran (KS)
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Oxley
     Packard
     Pappas
     Parker
     Paul
     Paxon
     Pease
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Pombo
     Porter
     Portman
     Quinn
     Radanovich
     Ramstad
     Redmond
     Regula
     Riggs
     Riley
     Roemer
     Rogan
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Roukema
     Royce
     Ryun
     Salmon
     Sandlin
     Scarborough
     Schaefer, Dan
     Schaffer, Bob
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherman
     Shimkus
     Shuster
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (OR)
     Smith (TX)
     Snowbarger
     Solomon
     Souder
     Spence
     Stearns
     Stump
     Sununu
     Talent
     Tauscher
     Tauzin
     Taylor (NC)
     Thomas
     Thornberry
     Thune
     Tiahrt
     Turner
     Upton
     Walsh
     Wamp
     Watkins
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     White
     Whitfield
     Wicker
     Wilson
     Wolf
     Young (AK)
     Young (FL)

[[Page H8973]]



                               NOES--195

     Abercrombie
     Ackerman
     Aderholt
     Allen
     Andrews
     Baesler
     Baldacci
     Barrett (WI)
     Becerra
     Bentsen
     Berry
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Boucher
     Boyd
     Brady (PA)
     Brown (CA)
     Brown (FL)
     Brown (OH)
     Cardin
     Carson
     Castle
     Chenoweth
     Clay
     Clayton
     Clement
     Clyburn
     Conyers
     Costello
     Coyne
     Cummings
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Dixon
     Doggett
     Dooley
     Doyle
     Edwards
     Emerson
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Fazio
     Filner
     Ford
     Frank (MA)
     Frost
     Gejdenson
     Gephardt
     Gonzalez
     Green
     Gutierrez
     Gutknecht
     Hall (OH)
     Hall (TX)
     Hamilton
     Hastings (FL)
     Hefner
     Hill
     Hilliard
     Hinchey
     Hinojosa
     Holden
     Hoyer
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     John
     Johnson (WI)
     Johnson, E.B.
     Kanjorski
     Kaptur
     Kennedy (MA)
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     Klink
     Kucinich
     LaFalce
     LaHood
     Lampson
     Lantos
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren
     Lowey
     Luther
     Maloney (NY)
     Manton
     Markey
     Martinez
     Mascara
     Matsui
     McCarthy (MO)
     McDermott
     McGovern
     McHale
     McIntyre
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Miller (CA)
     Minge
     Mink
     Moakley
     Mollohan
     Moran (VA)
     Morella
     Murtha
     Nadler
     Neal
     Neumann
     Oberstar
     Obey
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Peterson (MN)
     Pickett
     Pomeroy
     Poshard
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sanford
     Sawyer
     Schumer
     Scott
     Serrano
     Sisisky
     Skaggs
     Skelton
     Slaughter
     Smith, Adam
     Smith, Linda
     Snyder
     Spratt
     Stabenow
     Stark
     Stenholm
     Stokes
     Strickland
     Stupak
     Tanner
     Thompson
     Thurman
     Tierney
     Torres
     Towns
     Traficant
     Velazquez
     Vento
     Visclosky
     Waters
     Watt (NC)
     Waxman
     Wexler
     Weygand
     Wise
     Woolsey
     Wynn
     Yates

                             NOT VOTING--11

     Berman
     Burton
     Callahan
     Coburn
     Fowler
     Furse
     Goss
     Olver
     Pryce (OH)
     Saxton
     Taylor (MS)

                              {time}  1212

  The Clerk announced the following pairs:
  On this vote:

       Mr. Callahan for, with Mr. Taylor of Mississippi against.
       Mrs. Fowler for, with Mr. Olver against.
       Mr. Burton for, with Mr. Berman against.

  Mr. Porter changed his vote from ``no'' to ``aye.''
  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.
  Pursuant to secton 3 of House Resolution 552, the title of H.R. 4579 
is amended so as to read:

       ``A bill to provide tax relief for individuals, families, 
     and farming and other small businesses, to provide tax 
     incentives for education, to extend certain expiring 
     provisions, and for other purposes, and to amend the Social 
     Security Act to establish the Protect Social Security Account 
     into which the Secretary of the Treasury shall deposit budget 
     surpluses until a reform measure is enacted to ensure the 
     long-term solvency of the OASDI trust funds.''

  Pursuant to section 3 of House Resolution 552, the text of H.R. 4578 
will be appended to the engrossment of H.R. 4579, and H.R.4578 will be 
laid on the table.

                          ____________________