Congressional Record, Volume 145 Issue 110 (Friday, July 30, 1999)

[Congressional Record Volume 145, Number 110 (Friday, July 30, 1999)]
[Senate]
[Pages S9885-S9937]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

TAXPAYER REFUND ACT OF 1999

The PRESIDING OFFICER. Under the previous order, the Senate will now
resume consideration of S. 1429, which the clerk will report.
The legislative assistant read as follows:

A bill (S. 1429) to provide for reconciliation pursuant to
section 104 of the concurrent resolution on the budget for
fiscal year 2000.

Pending:

Bingaman amendment No. 1462, to express the sense of the
Senate regarding investment in education.
Hutchison modified amendment No. 1472, to provide for the
relief of the marriage tax penalty beginning in the year
2001.
Roth (for Grassley) amendment No. 1388, making technical
corrections to the Saver Act.
Roth (for Abraham) amendment No. 1411, to provide that no
Federal income tax shall be imposed on amounts received, and
lands recovered, by Holocaust victims for their heirs.
Roth (for Sessions) amendment No. 1412, to provide for the
Collegiate Learning and Students Savings (CLASS) Act title.
Roth (for Collins/Coverdell) modified amendment No. 1446,
to eliminate the 2-percent floor on miscellaneous itemized
deductions for qualified professional development and
incidental expenses of elementary and secondary school
teachers.
Roth (for Abraham) amendment No. 1455, to amend the
Internal Revenue Code of 1986 to expand the deduction for
computer donations to schools and to allow a tax credit for
donated computers.

amendment no. 1462

The PRESIDING OFFICER. Under the previous order, there will now be 15
minutes equally divided with respect to the Bingaman amendment No.
1462.
Who yields time?
Mr. BINGAMAN addressed the Chair.
The PRESIDING OFFICER. The Senator from New Mexico.
Mr. BINGAMAN. How much time is allotted to me?
The PRESIDING OFFICER. The Senator has 7 minutes 30 seconds.
Mr. BINGAMAN. I yield myself 4 minutes.
The PRESIDING OFFICER. The Senator is recognized for 4 minutes.
Mr. BINGAMAN. Mr. President, the amendment I presented yesterday and
that we are going to vote on first this morning is a simple statement
that we should reduce the size of the tax cut that is proposed by $132
billion so that we will have funds available to maintain the current
level of effort in support of education. It, I grant you, is a sense-
of-the-Senate resolution. It does not ensure that the money is spent
there, but to my mind it at least reserves those funds so we can
maintain the current level of effort in support of education. In other
words, I believe we should be on record for funding education at least
at current levels before we settle on the size of the tax cut that we
can afford.
Some might ask why am I singling out education. Well, S. 1429 is more

[[Page S9886]]

than just a tax bill; it is a reconciliation bill, which means, at
least in rough form, it purports to set national priorities for the
next 10 years. I believe that a very top priority should be providing
quality education to the young people of this Nation. Our future
depends more on that investment than it does on virtually any other
investment we might make.
So if education is a priority, what is the relationship of this tax
cut bill to education? Now, as I understand the estimates for the next
10 years, the tax cut bill is so large that it will require us to make
significant cuts in discretionary spending, including education, in
this coming decade, and that is the concern I have and that is what has
prompted this amendment.
Yesterday, as I was describing the amendment, I was informed that my
concern is unfounded; that in fact even after the tax cut--and I know
people do not like to have it referred to as a massive tax cut; I
notice that is what the Wall Street Journal called it this morning in
their headline--there will be plenty of discretionary funds for
education. That was the information I was given.
So let me look at the figures I have and see where I am confused on
this and where I have misunderstood the situation.
First of all, we all expect a surplus, and that is why we are having
this debate and talking about cutting taxes in the first place. So we
all agree to that. We also all agree that the portion of that surplus
attributable to Social Security should be left for Social Security. And
that is about $1.9 trillion. There is no dispute about that that I am
aware of, at least in this debate.
So after we take that out, what is left? At the beginning of the
debate, the Congressional Budget Office came out with the figure in the
range of $1 trillion, the non-Social Security-related surplus. So that
is represented here. This chart shows CBO, Congressional Budget Office.
This column represents the non-Social Security surplus as it was
understood by me when we started the debate.
Now I am informed that we have a new estimate and that the surplus is
not going to be $2.8 trillion over the next 10 years; instead, it is
going to be over $3.3 trillion. So there is going to be substantially
more money. The question is, Where did we find this additional $400 to
$500 billion?
Mr. President, let me yield myself 1 more minute.
The PRESIDING OFFICER. The Senator is recognized.
Mr. BINGAMAN. It was arrived at by assuming that less money is going
to be spent on discretionary spending during the 10 years. The
Congressional Budget Office assumed that $595 billion would be cut in
discretionary spending. The new claim is that there is going to be $1
trillion cut, and that by cutting discretionary spending by $1 trillion
instead of by $595 billion, we are going to have extra money that we
can turn around and spend on discretionary accounts.
Mr. President, that doesn't add up in my mind. I believe
discretionary accounts are important. I believe education has to be at
the top of that list. I do not see where we can expect to find the
money to maintain current levels of effort on education if we vote for
this very large tax cut. That is why the size of the tax cut should be
reduced so that education programs will not have to be cut.
How much time remains?
The PRESIDING OFFICER. The Senator has 2 minutes 25 seconds.
Mr. BINGAMAN. I yield the balance of my time to the Senator from
Washington.
Mrs. MURRAY. Mr. President, I rise in support of the amendment
offered by the Senator from New Mexico, Mr. Bingaman. This is a very
important amendment that he has offered. Certainly, as we are talking
about what the future of our country is going to be, we should be
looking at what we are doing to invest in our young children today so
they can be economically viable when they graduate from high school and
college 15, 20 years from now, making sure that we have the money there
for the Head Start Program, Pell grants, early childhood education.
These are important investments in our children, and if we follow
through on a massive tax cut at this time, as the Senator from New
Mexico has said, in the future we will not have the money to make sure
that our kids get the kind of education they need to be viable members
of our community. This is a very important amendment.
As we come to the end of this debate about what we are going to do to
invest in our future, let's remember that if we put in place a tax cut
such as this, we will harm our young children, we will harm Social
Security and Medicare and critical programs for women in this country
to make sure they don't live in poverty. We will not be able to pay off
our debt, a very important issue that is facing us, which we have not
left ourselves room for with a massive tax cut of this size.
Most critically, we will not be able to do what we have a
responsibility to do, not only as Senators but as parents and as adults
in this country, to make sure that those who follow us have the skills
they need to make sure this country continues to run well in the
future. Investment in Pell grants and in early childhood education, and
investment in education, class size reduction, and training of our
teachers will make a difference for the future. We have a
responsibility to do that.
I thank the Senator from New Mexico for his work on education, and I
urge my colleagues to support this amendment.
I thank the Chair.
Mr. DOMENICI addressed the Chair.
The PRESIDING OFFICER. The Senator from New Mexico is recognized.
Mr. DOMENICI. Mr. President, as I said yesterday, I don't normally
take to the Senate floor and speak in opposition to an amendment of my
colleague from New Mexico. But I did yesterday, and I must this morning
because if this amendment is reported in New Mexico, and if it says to
constituents of our State that the budget resolution we adopted, and
what will be left over after the tax cut would decimate education, then
it would appear to me that I must answer because that isn't true.
First of all, the Senator from New Mexico, my colleague, is at least
not as sensational in his approach as the President was yesterday. The
President even knows right down to the nickel what is not going to be
spent in education. That is impossible. He says that 544,000 kids
aren't going to be able to learn to read. That is ludicrous. If that is
the kind of talk he needs to defeat a tax bill, then good luck to him.
It is just absolutely untrue.
Let's get the facts as I remember and understand them. We produced a
budget resolution. It is nothing new with reference to the taxes; $792
billion spread out over 10 years was the tax cut in that bill. We also
allocated the remaining money for the next decade and, incidentally, in
doing that, even though there was a reduction in discretionary
spending, the highest priority domestic program was education, for all
the reasons stated on the floor by Senator Murray and Senator Bingaman.
It is terribly important that we use our education dollars right and
better but that there be more of them. We put $37 billion in additional
money during the first 5 years of that budget for education.
Now, what happened after that? After that, some 3 months later, the
Congressional Budget Office did a midsession review and told us there
was more money than that. As a matter of fact, there was $170 billion
more in the surplus account. We didn't add some of that to the tax cut.
It is sitting there. What I did, so that everyone would understand, I
said let's look at this surplus in the chart I used yesterday, and
let's assume that we freeze discretionary spending and ask CBO how much
money would then be available to put back into discretionary accounts
during the decade.
They told us: We don't know whether you will use it in discretionary
accounts. We can't say that.
But there is $505 billion that could be added into priority spending.
I believe that means all of the discretionary spending can go up
significantly and you can establish education as a high-priority item
and fund it at levels higher than we have now, which I think
Republicans will do if we have reform in the educational allowances of
the Federal Government, so that there is accountability and flexibility
in the programs that we send there.
I believe what my colleague from New Mexico is expressing on the
floor

[[Page S9887]]

is a sincere desire that we be sure that in the discretionary accounts
we fund education adequately. If that is what he was saying, I join
with him in saying that is true. But when he says you need to take $122
billion--or whatever the number is--out of the tax cut in order to do
that, I disagree. I don't think you have to do that.
Plain and simple, I think there is plenty of discretionary money
available. I add, if you use the President's numbers on Medicare--and
he said you only needed $46 billion to fix prescription drugs--you have
$505 billion, less the $46 billion, and all the rest can go to
discretionary spending in the next decade. I am not trying to mislead
anybody. In order to understand it, I said start with the premise that
we freeze all these accounts and put in what is left. If you look at
the budget resolution, we put $181 billion into those accounts, with
education being the highest priority. It just happens there is more
than that $181 billion because the midsession review added many
billions of dollars in accumulated surplus.

I am fully aware that Senator Bingaman, my colleague, has regularly
and consistently as a member of the Committee on Education, and on the
floor, been a promoter and a staunch supporter of education. I agree
with him, but I believe he is wrong in thinking that we have to reduce
the tax cut in order to be sure we do that. I also remind everybody
that there are some very significant education programs in this tax
bill. It makes it easier to continue your education because it has
allowances, credits, and deductions in the adult education area. It
makes it easier to pay off student loans. It makes college more
affordable, and it provides tax exempt financing for school
construction. All of that is in the Roth bill.
Whatever time I had remaining, I yield back.
I make a point of order that the Bingaman amendment No. 1462 is
extraneous to the bill before us. Therefore, I raise a point of order
under section 313(b)(1)(A) of the Congressional Budget Act.
Mr. BINGAMAN. Mr. President, pursuant to section 904 of the
Congressional Budget Act, I move to waive the applicable sections of
that act for the consideration of the pending amendment.
I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.

Amendment No. 1472, As Further Modified

The PRESIDING OFFICER. Under the previous order, there will now be 15
minutes equally divided for concluding remarks with respect to the
Hutchison of Texas amendment, No. 1472.
Who yields time?
The Senator from Texas.
Mrs. HUTCHISON. Mr. President, under the previous unanimous consent
agreement, I send a modification of the amendment to the desk to
amendment No. 1472.
The PRESIDING OFFICER. The amendment is so modified.
The amendment (No. 1472), as further modified, is as follows:

On page 10, line 6, strike ``2004'' and insert ``2005''.
On page 10, strike the matter between lines 19 and 20, and
insert:

Applicable
``Calendar year: dollar amount:
2006 or 2007..............................................$4,000 ....

2008 and thereafter......................................$5,000. ....

On page 11, strike the matter before line 1, and insert:

Applicable
``Calendar year: dollar amount:
2006 or 2007..............................................$2,000 ....

2008 and thereafter......................................$2,500. ....

On page 11, line 3, strike ``2007'' and insert ``2008''.
On page 11, line 11, strike ``2006'' and insert ``2007''.
On page 32, between lines 14 and 15, insert:

SEC. __. 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) Phase-in.--Subsection (c) of section 63 is amended by
adding at the end the following new paragraph:
``(7) Phase-in of increase in basic standard deduction.--In
the case of taxable years beginning before January 1, 2008--
``(A) paragraph (2)(A) shall be applied by substituting for
`twice'--
``(i) `1.671 times' in the case of taxable years beginning
during 2001,
``(ii) `1.70 times' in the case of taxable years beginning
during 2002,
``(iii) `1.727 times' in the case of taxable years
beginning during 2003,
``(iv) `1.837 times' in the case of taxable years beginning
during 2004,
``(v) `1.951 times' in the case of taxable years beginning
during 2005,
``(vi) `1.953 times' in the case of taxable years beginning
during 2006, and
``(vii) `1.973 times' in the case of taxable years
beginning during 2007, and
``(B) the basic standard deduction for a married individual
filing a separate return shall be one-half of the amount
applicable under paragraph (2)(A).

If any amount determined under subparagraph (A) is not a
multiple of $50, such amount shall be rounded to the next
lowest multiple of $50.''.
(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,
2000.
On page 38, line 18, strike ``2000'' and insert ``2002''.
On page 236, strike line 12 through the matter following
line 21, and insert:
(a) In General.--Section 2503(b) (relating to exclusions
from gifts) is amended--
(1) by striking the following:
``(b) Exclusions From Gifts.--
``(1) In general.--In the case of gifts'',
(2) by inserting the following:
``(b) Exclusions From Gifts.--In the case of gifts'',
(3) by striking paragraph (2), and
(4) by striking ``$10,000'' and inserting ``$20,000''.
On page 237, line 3, strike ``2000'' and insert ``2004''.
On page 262, strike lines 15 through 17, and insert:
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2004, and before January 1, 2007.
On page 270, line 18, strike ``2003'' and insert ``2004''.
On page 273, line 21, strike ``2003'' and insert ``2004''.
On page 275, line 12, strike ``2003'' and insert ``2004''.
On page 277, line 13, strike ``2003'' and insert ``2005''.
On page 278, line 13, strike ``2002'' and insert ``2004''.

Mrs. HUTCHISON. Mr. President, I now yield 2 minutes to Senator
Ashcroft of Missouri.
The PRESIDING OFFICER. The Senator from Missouri is recognized for 2
minutes.
Mr. ASHCROFT. Mr. President, first of all, I thank the Senator from
Texas for her outstanding work correcting a pernicious discrimination
against the most valuable institution in our society, the family. I
thank the chairman for his sensitivity to this important issue, for
placing in this bill procedures to remedy the marriage penalty.
The marriage penalty simply is an anomaly. It is a strangeness in the
tax structure that has evolved, that penalizes people for being
married. It puts them into higher tax brackets when they get married
than when they were single. When people get married, they start paying
a tax penalty. That is something we should stop.
The Senator from Texas and the chairman of this committee have agreed
that we should stop it. And we should, as a matter of fact, according
to the amendment of the Senator from Texas, of which I am an original
cosponsor along with Senator Brownback, accelerate the time at which we
begin to stop this very serious fault with the tax system.
America should not penalize the family. It should not make it harder
for people to have families. It should not make it financially more
difficult for two people to be married and live together than unmarried
and live together. That is a simple fact. It is because the family is
the best department of social services, the best department of
education; it is the best place in which individuals are enriched to
learn individual responsibility and the values and character our
culture needs to survive.

[[Page S9888]]

I am very pleased to be a part of this tax measure which will say
about America's families that we cherish them rather than punish them
and it is time for all of us to join together and eliminate the
marriage tax penalty.
The PRESIDING OFFICER. The time of the Senator has expired.
Who yields time? The Senator from Delaware.
Mr. ROTH. Mr. President, I yield myself 4 minutes.
Mrs. HUTCHISON. Mr. President, parliamentary inquiry. Is the 4
minutes from my 7\1/2\ minutes?
Mr. ROTH. I am yielding this from my time.
The PRESIDING OFFICER. Time in opposition to the amendment?
Mr. ROTH. Actually, Mr. President, I want to add my support for the
amendment put forward by Senator Hutchison. It builds on the basic
objectives of the Taxpayer Refund Act of 1999, particularly objectives
of helping families bring greater equity to the Tax Code.
One very important provision of the tax relief package we have
proposed is the elimination of the marriage tax penalty. There is
strong bipartisan agreement that this penalty is not only unfair but
that it is counterproductive in a way that discourages couples from
marrying.
When I introduced the Taxpayer Refund Act 2 days ago, I introduced
Robert and Dianne, a hypothetical couple who had fallen in love and
wanted to marry. I explained how, as individuals, they would not be
considered wealthy, how Robert worked as a foreman in an auto plant and
Dianne worked as a nurse. I then explained how, as a married couple
with a combined income, they would be considered well off and how they
would end up paying the Government $1,500 more in taxes than they would
if they remained single.
The Taxpayer Refund Act of 1999 does away with the marriage tax
penalty. It completely eliminates the penalty for Robert and Dianne and
for any other couples who choose to marry. What I like about the
amendment introduced by our distinguished colleague from Texas, Senator
Hutchison, is that under her plan the tax relief is expedited. This is
done at a price. The change does require the delay of other provisions
that provide relief for the taxpayer. I regret that. But we do think it
is desirable to provide marriage relief as early as possible.
Therefore, I encourage my colleagues to vote for this amendment.
I reserve the remainder of my time.
The PRESIDING OFFICER. Who yields time?
Mr. BAUCUS. If the Senator will yield just a few minutes?
Mr. ROTH. I yield 3 minutes to the Senator from Montana.
The PRESIDING OFFICER. The Senator from Montana is recognized for 3
minutes.
Mr. BAUCUS. Mr. President, I again compliment my good friend, the
Senator from Texas, as well as the chairman of the committee. The
Senator from Texas offered this amendment last night, and at that time
I explained we thought this was a very good amendment because it moves
in the direction of the Democratic substitute, raising the standard
deduction, in her case for married couples, to eliminate the marriage
tax penalty. We would have gone further, but we compliment the Senator
in going in this direction.
Last night, too, there was a slight question how this was going to be
paid for. We have worked it out overnight. As I understand it--the
Senator may correct me if I am wrong--the AMT delayed relief provisions
are no longer in place, but rather there will be a delay in the
expansion of the 15-percent bracket in order to pay for this.
Mrs. HUTCHISON. The Senator is correct. There are delays. Nothing is
eliminated, but there are delays in several provisions because we are
trying to say this is our first priority.
Mr. BAUCUS. Mr. President, I think that is a good offset. It adds a
little more progressivity, frankly, to the bill, than otherwise would
be there.
I compliment the Senator on her amendment.
The PRESIDING OFFICER. Who yields time?
The Senator from Texas.
Mrs. HUTCHISON. I yield the Senator from Kansas, Senator Brownback, 2
minutes.
The PRESIDING OFFICER. The Senator is recognized for 2 minutes.
Mr. BROWNBACK. Mr. President, I thank the Senator from Texas. I am
delighted to join her in this amendment that it appears will garner
overwhelming support. I hope that sends a strong signal across this
country that today is a day to celebrate. We should be celebrating the
institution of marriage and support that institution rather than tax
it.
For many years now we have taxed it. Clearly, if there is a policy in
Government that stands it is if you want less of something, tax it; if
you want more of something, subsidize it. We have been taxing marriage,
and marriage has fallen off in this country 43 percent over the last 30
years. That is a terrible situation for an institution that is so
central.
I note to my colleagues, we all frequently talk about family values.
Thomas, from Hilliard, OH, writes in about this point on the marriage
penalty and the notion of family values:

No person who legitimately supports family values could be
against this bill. The marriage penalty is but another
example of how in the past 40 years the federal government
has enacted policies that have broken down the fundamental
institutions that were the strength of this country from the
start.

I could not have put it better. I am delighted it appears that this
amendment is going to be agreed to. I hope we can get it to the
President's desk and that the President will be supportive of
eliminating the marriage penalty tax. I hope as well we could go
further in the future and enact income splitting, that we could provide
for a couple to split their income. This would be even more supportive
of this fundamental institution in our culture, in our Nation, of
marriage. I hope we can take that step on into the future.
I am delighted to have the chairman's support in this. I urge all my
colleagues in the name of family values, vote for this amendment.
I yield the remainder of my time to the Senator from Texas.
The PRESIDING OFFICER. Who yields time?
The Senator from Texas.
Mrs. HUTCHISON. Mr. President, how much time remains?
The PRESIDING OFFICER. There are remaining 3 minutes 20 seconds.
Mrs. HUTCHISON. Mr. President, I will finish on my statement.
Something very important is happening. What is important is, we are
apparently going to pass overwhelmingly the only amendment that will
have passed on this bill. On this very important tax cut measure, we
are going to add certainly the first amendment, and maybe the only one,
that says the marriage tax penalty is not going to be allowed to stand
in the United States of America. That is what we are doing today. The
bill provides for marriage tax penalty relief in 2005. I applaud the
committee for doing that. But I thought we should address it earlier.
That is why Senator Ashcroft, Senator Brownback, Senator Domenici,
Senator Roth, and Senator Baucus have come together and said that is
right. The people of this country who want to get married should not
have to pay $1,000 in taxes just because they got married. We are going
to end it today because we are sending a signal that is joined by the
House that this is our first priority.
So a high school football coach and a schoolteacher can get married
and not move into a bracket that is almost double just because they got
married. It hits our middle-income taxpayers the most. They are the
ones who are trying to save for a new house or a new car or to do
something special for their new baby. We are going to send a signal out
of the Senate, along with the House, to the President, saying: Mr.
President, we are going to have $1 trillion in income tax surplus. Are
you serious in saying you would veto this bill that gives marriage tax
penalty relief to our country, that gives pension relief to the women
who go in and out of the workforce who are unable to have the same
pension capabilities as those who never leave the workforce?
Is the President serious about vetoing a bill that provides for
Social Security, that provides for Medicare and education, and, yes,
the marriage tax penalty relief?
Mr. President, we are making a statement with this amendment. I am
proud the Senate is going to take up and I believe overwhelmingly pass
a

[[Page S9889]]

priority of eliminating the marriage tax penalty in this country once
and for all. I urge my colleagues to give a unanimous vote for the
married people who have been living with a penalty that is not
warranted.
I yield the floor.
Mr. ROTH. Mr. President, we yield back the remainder of the time.

Vote on Amendment No. 1462

The PRESIDING OFFICER. Under the previous order, the question is now
on the motion to waive the Budget Act on the Bingaman amendment.
The yeas and nays have been ordered.
The clerk will call the roll.
The legislative assistant called the roll.
The PRESIDING OFFICER (Mr. DeWine). Are there any other Senators in
the Chamber desiring to vote?
The yeas and nays resulted--yeas 48, nays 52, as follows:

[Rollcall Vote No. 232 Leg.]

YEAS--48

Akaka
Baucus
Bayh
Biden
Bingaman
Boxer
Breaux
Bryan
Byrd
Cleland
Collins
Conrad
Daschle
Dodd
Dorgan
Durbin
Edwards
Feingold
Feinstein
Graham
Harkin
Hollings
Inouye
Johnson
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lincoln
Mikulski
Moynihan
Murray
Reed
Reid
Robb
Rockefeller
Sarbanes
Schumer
Snowe
Specter
Torricelli
Wellstone
Wyden

NAYS--52

Abraham
Allard
Ashcroft
Bennett
Bond
Brownback
Bunning
Burns
Campbell
Chafee
Cochran
Coverdell
Craig
Crapo
DeWine
Domenici
Enzi
Fitzgerald
Frist
Gorton
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Jeffords
Kyl
Lott
Lugar
Mack
McCain
McConnell
Murkowski
Nickles
Roberts
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Stevens
Thomas
Thompson
Thurmond
Voinovich
Warner
The PRESIDING OFFICER. On this vote the yeas are 48, the nays are 52.
Three-fifths of the Senators duly chosen and sworn not having voted in
the affirmative, the motion is rejected. The point of order is
sustained and the amendment falls.
Mr. LOTT. I move to reconsider the vote.
Mr. LEAHY. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. LOTT addressed the Chair.
The PRESIDING OFFICER. The majority leader.
Mr. LOTT. Mr. President, I would object to any unanimous consent
regarding comments on my outfit this morning.
I ask unanimous consent that the remaining votes in the series be
limited to 10 minutes in length.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. LOTT. I urge my colleagues, please stay in the Chamber. We still
do have a number of amendments we will need to go through. Senator
Daschle and I have agreed that we want to limit those to 10 minutes
each, with 2 minutes between the 10 minutes for 1 minute of explanation
on each side. If we do that, I believe we can still finish this bill at
a reasonable hour.
Mr. ROTH addressed the Chair.
The PRESIDING OFFICER. The Senator from Delaware.

Privilege Of The Floor

Mr. ROTH. Mr. President, I ask unanimous consent that Brig Pari and
Ed McClellan of the Finance Committee staff be granted floor privileges
for the duration of the consideration of this bill.
The PRESIDING OFFICER. Without objection, it is so ordered.

Vote On Amendment No. 1472, As Further Modified

The PRESIDING OFFICER. The question is now on the amendment of the
Senator from Texas. Does the Senator request the yeas and nays?
Mrs. HUTCHISON. Yes.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
Mrs. HUTCHISON. I ask unanimous consent that Senator Domenici be
added as an original cosponsor of the amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
The question is on agreeing to amendment No. 1472, as further
modified. The yeas and nays have been ordered. The clerk will call the
roll.
The legislative clerk called the roll.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The result was announced--yeas 98, nays 2, as follows:

[Rollcall Vote No. 233 Leg.]

YEAS--98

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

NAYS--2

Hollings
Voinovich

The amendment (No. 1472), as further modified, was agreed to.
Mrs. HUTCHISON. Mr. President, I move to reconsider the vote.
Mr. BROWNBACK. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Ms. LANDRIEU addressed the Chair.
The PRESIDING OFFICER. The Senator from Louisiana is recognized.

Privilege Of The Floor

Ms. LANDRIEU. Mr. President, I ask unanimous consent that two
staffers, Kathleen Strottman and Ben Cannon, have floor privileges.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DURBIN addressed the Chair.
The PRESIDING OFFICER. The Senator from Illinois is recognized.

Privilege Of The Floor

Mr. DURBIN. Mr. President, I ask unanimous consent that a member of
my staff, Chris Stanek, have access to the floor.
The PRESIDING OFFICER. Without objection, it is so ordered.

Motion To Recommit

Mr. KERRY. Mr. President, I have a motion at the desk and ask that it
be called up.
The PRESIDING OFFICER. The clerk will read the motion.
The legislative clerk read as follows:

The Senator from Massachusetts [Mr. Kerry] moves to
recommit S. 1429, the Taxpayer Refund Act of 1999, to the
Committee on Finance, with instructions to report back to the
Senate within 3 days, with an amendment to reserve $20
billion over ten years for relief from the unintended
consequences of the Balanced Budget Act on teaching
hospitals, skilled nursing facilities, home health care
providers, rural and other community hospitals, and other
health care providers, by reducing or deferring certain new
tax breaks in the bill.

Mr. KERRY. Mr. President, I understand I have 1 minute.
The PRESIDING OFFICER. That is correct.
Mr. KERRY. Mr. President, let me share with my colleagues what this
is. Under the Balanced Budget Act, we set out to save some $103 billion
in Medicare expenditures with respect to hospitals, home care, et
cetera. The problem is the unintended consequences of the way that has
happened, coupled with the managed care process, in fact, about $205
billion in Medicare payments has been reduced. The result is that, in
hospitals, home care facilities, and nursing homes all across the
country, all of our States are significantly affected in the quality of
care that is being delivered.
Special care units in hospitals are closing. Home care facilities are
refusing patients. There has been a significant reduction in the
quality of care across the country. Our teaching hospitals are
threatened. What we are saying is that we need to reserve some $20
billion in order to be able to adequately make up for the unintended

[[Page S9890]]

consequences of the Balanced Budget Act.
Mr. ROTH. Mr. President, although the Kerry amendment is well-
intended, it is not germane to this reconciliation bill. The Finance
Committee is paying close attention to the concerns of health care
providers and beneficiaries. Over ten Medicare hearings have been held
this year, three focusing specifically on BBA 1997 policies.
The Finance Committee is also developing a Medicare package that will
address the many concerns in the Balanced Budget Act. The tax package
in no way interferes with this process.
Finally, I might add that even the President's Medicare proposal sets
aside a maximum of only $7.5 billion over 10 years to address BBA
fixes, $12.5 billion less than this amendment.
The amendment is not germane to this reconciliation legislation, and
I raise a point of order under section 305 (b)(2) of the Budget Act.
Mr. KERRY. Mr. President, pursuant to section 904 of the Budget Act,
I move to waive that section in that act for consideration of this
motion.
I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
Mr. KENNEDY. The Balanced Budget Act of 1997 helped bring us to this
era of budget surpluses and economic prosperity. But too much of the
actual savings used to balance the budget have come from Medicare.
At the time the BBA was enacted, those savings were expected to total
$116 billion over five years. Now, they are estimated by CBO to be
nearly twice as great--nearly $200 billion over five years. Such deep
cuts in Medicare are clearly unfair and unacceptable.
Not surprisingly, all of us are now hearing from bedrock health care
institutions across the country that are being devastated by these
excessive cuts. Teaching hospitals--community hositals--community
health centers and many others. We are hearing from those who care for
the elderly and disabled when they leave the hospital--nursing homes--
home health agencies--rehabilitation facilities. We are hearing from
virtually every one who cares for the 40 million senior citizens and
disabled citizens on Medicare. They are telling us in no uncertain
terms that Congress went too far.
This motion is the first step toward reducing the steepest cuts. It
would provide $20 billion over the next ten years to slow or eliminate
the harshest impact of the Balanced Budget Act. It would ensure that
the nation's hospitals and other health care facilities will be able to
care for senior citizens and the disabled in the years ahead.
With the retirement of the baby boom generation, the last thing we
should be doing is jeopardizing the viability of the many health care
facilities that depend on Medicare for their survival. These
institutions are being hard hit in cities and towns across the nation.
Often, the hospitals and other institutions that care for Medicare
patients also care for other patients as well. Health care in the
entire community is being threatened.
Teaching hospitals are on the receiving end of a triple-whammy. The
slash in Medicare reductions is leading to less patient care, less
doctor training, and less medical research at the nation's top
hospitals. In my own state of Massachusetts, for the first time in
history, some of the finest and most renowned teaching hospitals in the
country are now operating at a deficit. This situation is
unsustainable--and it is happening all over our country. We will all
suffer if these great institutions are forced out of business or into
the arms of for-profit corporations.
Community hospitals are suffering, too. Throughout my State of
Massachusetts, we are seeing red ink and cutbacks in essential
services. This, too, is happening all over the country.
In Massachusetts alone, house health agencies are losing $160 million
a year. Twenty agencies have closed their doors since the Balanced
Budget Act went into effect. Many others are seeing fewer patients, and
seeing their remaining patients less often. The home-bound elderly are
especially vulnerable, and are suffering even more. In just the last
two weeks, two Massachusetts nursing homes have declared bankruptcy.
This proposal is an important step to restore the viability of these
indispensable institutions in our health care system, and I urge the
Senate to approve it. We must undo the damage before it is too late.
The last thing we need to see on the doors of the nation's teaching
hospitals, community hospitals, home health agencies, and nursing
homes, is a sign that says, ``Closed because of the ill-considered
activities of the United States Congress.''
The PRESIDING OFFICER. The question is on agreeing to the motion. The
yeas and nays have been ordered. The clerk will call the roll.
The assistant legislative clerk called the roll.
The yeas and nays resulted--yeas 50, nays 50, as follows:

[Rollcall Vote No. 234 Leg.]

YEAS--50

Abraham
Akaka
Baucus
Bayh
Biden
Bingaman
Boxer
Breaux
Bryan
Byrd
Chafee
Cleland
Collins
Conrad
Daschle
Dodd
Dorgan
Durbin
Edwards
Feingold
Feinstein
Frist
Harkin
Hollings
Hutchison
Inouye
Johnson
Kennedy
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lincoln
Mikulski
Moynihan
Murray
Reed
Reid
Robb
Rockefeller
Sarbanes
Schumer
Snowe
Specter
Torricelli
Wellstone
Wyden

NAYS--50

Allard
Ashcroft
Bennett
Bond
Brownback
Bunning
Burns
Campbell
Cochran
Coverdell
Craig
Crapo
DeWine
Domenici
Enzi
Fitzgerald
Gorton
Graham
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hutchinson
Inhofe
Jeffords
Kerrey
Kyl
Lott
Lugar
Mack
McCain
McConnell
Murkowski
Nickles
Roberts
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Stevens
Thomas
Thompson
Thurmond
Voinovich
Warner
The PRESIDING OFFICER. On this vote the yeas are 50, the nays are 50.
Three-fifths of the Senators duly chosen and sworn not having voted in
the affirmative, the motion is rejected. The point of order is
sustained and the motion falls.
Without objection, the motion to table is agreed to.
The Senator from Tennessee.

change of vote

Mrs. HUTCHISON. Mr. President, on rollcall vote No. 234, I voted
``no.'' It was my intention to vote ``aye.'' Therefore, I ask unanimous
consent that I may be permitted to change my vote. It will in no way
change the outcome of the vote.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The foregoing tally has been changed to reflect the above order.)

Amendment No. 1467

Mr. FRIST. Mr. President, I call up amendment No. 1467.
The PRESIDING OFFICER. The clerk will report.
The bill clerk read as follows:

The Senator from Tennessee (Mr. Frist) proposes an
amendment numbered 1467.

Mr. FRIST. Mr. President, I ask unanimous consent that reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The amendment is printed in a previous edition of the Record.)
Mr. FRIST. Mr. President, this amendment is a sense-of-the-Senate
amendment that goes right at the heart of what we should be doing about
Medicare. It says Congress should be acting to modernize Medicare, to
ensure its solvency, and to include prescription drugs.
The congressional budget plan has $505 billion over the next 10 years
in unallocated budget surpluses that could be used for long-term
Medicare reform. In addition, the congressional budget resolution for
the year 2000 has specifically set aside $90 billion for this purpose.
Thus, my sense-of-the-Senate amendment says that the unallocated on-
budget surpluses provide adequate resources and that: No. 1, the
congressional budget resolution provides a sound framework for the
modernization of Medicare; No. 2, improving the solvency of Medicare;
and No. 3, improving coverage of prescription drugs.
Congress should act to accomplish these goals for the Medicare
program.

[[Page S9891]]

The PRESIDING OFFICER. The Senator from Montana.
Mr. BAUCUS. Mr. President, with great respect, I must inform this
body that this amendment is pure fiction. It is pure fiction because
the House and the Senate this year have been using Congressional Budget
Office baseline numbers to predict what the surplus is or is not and
what is left for spending. Under that formula, there is virtually no
money in this tax bill left for discretionary spending.
A few days ago, a new chart suddenly popped up. The new chart comes
up with this money. How does it come up with this money? It basically
assumes that the Congress, over the next 10 years, is going to not only
cut discretionary spending under the caps as planned but then not raise
discretionary spending above inflation over the next 8 years.
I say that is a fiction--it is just not going to happen, so the money
is not there--developed by this recent new chart.
If it is an accurate assumption that there is no spending, then it
cuts discretionary spending by 50 percent, one or the other. It is a
fiction.
The PRESIDING OFFICER. The question is on amendment No. 1467.
Mr. BAUCUS. Mr. President, I raise a point of order that the pending
amendment violates 313(b)(1)(A) of the Congressional Budget Act of
1974.
Mr. FRIST. Pursuant to section 904 of the Budget Act, I move to waive
the Budget Act for the consideration of my amendment No. 1467, and I
ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second? There is a
sufficient second. The yeas and nays were ordered.
The clerk will call the roll.
The legislative clerk called the roll.
The yeas and nays resulted--yeas 54, nays 46, as follows:

[Rollcall Vote No. 235 Leg.]

YEAS--54

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

NAYS--46

Akaka
Baucus
Bayh
Biden
Bingaman
Boxer
Breaux
Bryan
Byrd
Cleland
Conrad
Daschle
Dodd
Dorgan
Durbin
Edwards
Feingold
Feinstein
Graham
Harkin
Hollings
Inouye
Johnson
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lincoln
Mikulski
Moynihan
Murray
Reed
Reid
Robb
Rockefeller
Sarbanes
Schumer
Torricelli
Voinovich
Wellstone
Wyden
The PRESIDING OFFICER (Mr. Gorton). On this vote the yeas are 54, the
nays are 46. Three-fifths of the Senators duly chosen and sworn not
having voted in the affirmative, the motion is rejected. The point of
order is sustained and the amendment falls.
Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
Mr. STEVENS. I move to lay that motion on the table.
The motion to lay on the table was agreed to.

Frist Medicare Amendment

Mr. BYRD. Mr. President, today I voted against the Medicare Sense of
the Senate amendment numbered 1467, offered by Senator Frist. For the
benefit of my constituents in West Virginia, I offer a brief
explanation for why I voted the way I did.
I opposed Senator Frist's amendment because, in my judgment, it is
based on a fiction. As we all know, the Congressional Budget Office
(CBO) has projected a $996 billion non-Social Security surplus over the
next ten years. The Frist amendment said that, even allowing for the
$792 billion tax cut, there was still enough money left over to provide
for the long-term solvency of the Medicare system. One need not be an
economist, or even an expert in budget policy, to understand why that
was just plain wrong.
The Republican tax cut plan will cost $971 billion over the next ten
years--$792 billion for the actual tax cut, plus $179 billion in
additional interest payments on the debt. That leaves $25 billion of
the non-Social Security surplus. From that amount, the Republicans have
said we can provide for emergency expenditures for natural disasters
and international conflicts, which averages $80 billion over ten years;
fund current operations of government; and reserve enough money for
Medicare. And, as I say, they would do all that without using the
Social Security surplus. As anyone can plainly see, that is just not
possible. In all good conscience, I could not vote for the Frist
amendment.
The PRESIDING OFFICER. The Senator from New Jersey.

Motion To Recommit

Mr. LAUTENBERG. Mr. President, I call up a motion we have at the desk
and ask for its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:

The Senator from New Jersey [Mr. Lautenberg] moves to
recommit the bill to the Committee on Finance, with
instructions to report back to the Senate within 3 days,
with an amendment to correct the fact that the bill uses
Social Security surpluses for tax breaks by causing on-
budget deficits, taking into account both revenue losses
and additional interest costs caused by the higher levels
of debt that would result from the bill's enactment.

The PRESIDING OFFICER. The Senator from New Jersey.
Mr. LAUTENBERG. Mr. President, the motion is very simple. It directs
the Finance Committee to correct the bill so that it does not raid
Social Security surpluses in any year to pay for tax cuts. In its
current form, this bill would use Social Security surpluses in each of
the second 5 years after enactment.
Altogether, $75 billion of Social Security money will be used to pay
for the broad-based tax rebates that are largely for special interests
and for the very wealthy. That is the intent, and it is inconsistent
with the Social Security lockbox that the Republicans claim to support.
If my colleagues are serious about stopping Congress from raiding
these surpluses, they will support my motion. The Finance Committee can
correct the problem very quickly, and then we can proceed to consider
the bill within only a few days.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. LAUTENBERG. I urge my colleagues to support the motion.
The PRESIDING OFFICER. The Senator from New Mexico.
Mr. DOMENICI. Mr. President, I ask unanimous consent that a table
prepared by the Congressional Budget Office be printed in the Record.
There being no objection, the table was ordered to be printed in the
Record, as follows:

TABLE 3.--CBO ESTIMATE OF THE CONGRESSIONAL BUDGET RESOLUTION FOR FISCAL YEAR 2000
[By fiscal year, in billions of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2000-2009
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
BASELINE SURPLUS OR DEFICIT (-)
On-budget.................................................. -4 14 38 82 75 85 92 129 146 157 178 996
Off-budget................................................. 125 147 155 164 172 181 195 205 217 228 235 1,901
------------------------------------------------------------------------------------------------------------------------------------
Total.................................................... 120 161 193 246 247 266 286 334 364 385 413 2,986
====================================================================================================================================
EFFECTS OF THE BUDGET RESOLUTION'S POLICIES

Revenues................................................... 0 0 -8 -54 -32 -49 -63 -109 -136 -151 -177 -778
====================================================================================================================================
Outlays:
Discretionry \1\......................................... 0 0 0 0 10 6 -6 -24 -42 -55 -70 -180

[[Page S9892]]

Mandatory................................................ 0 (\2\) 1 1 1 1 1 (\2\) (\2\) -1 -1 4
*COM008**COM008*......................................... 0 (\2\) (\2\) 2 4 7 10 15 20 26 32 117
------------------------------------------------------------------------------------------------------------------------------------
Subtotal \3\........................................... 0 (\2\) 1 3 16 14 5 -9 -22 -29 -38 -59
Total \4\.............................................. 0 (\2\) -9 -57 -48 -63 -68 -100 -114 -121 -139 -719
====================================================================================================================================
SURPLUS OR DEFICIT (-) UNDER THE BUDGET RESOLUTION'S
POLICIES AS ESTIMATED BY CBO

On-budget.................................................. -4 14 29 26 27 21 24 29 32 36 39 277
Off-budget................................................. 125 147 155 164 172 181 195 205 217 228 234 1,901
------------------------------------------------------------------------------------------------------------------------------------
Total.................................................... 120 161 184 190 199 203 219 234 250 263 275 2,178
Memorandum:
Debt Held by the Public:
Baseline............................................... 3,168 3,473 3,297 3,066 2,835 2,584 2,312 1,992 1,640 1,267 865 NA
Budget resolution as estimated by CBO.................. 3,618 3,473 3,305 3,132 2,949 2,761 2,557 2,336 2,099 1,847 1,584 NA
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ The effect of the 1999 supplemental appropriations bill (P.L. 106-31), which was enacted after the resolution was passed, has been added to the resolution totals. Also, the projections
include spending from contingent emergencies.
\2\ Less than $500 million.
\3\ Effect on outlays.
\4\ Effect on the surplus.

Note: NA = not applicable.

Source: Congressional Budget Office.

Mr. DOMENICI. Mr. President, this table clearly shows there is no
Social Security money in this tax cut.
Secondly, maybe the Senator is confused. CBO says the President still
does not lock up all the Social Security money. It is $30 billion
short.
Last, I suggest if they are really concerned about the Social
Security trust fund size, why are they filibustering against a lockbox
that would encapsulate it and make sure it is there?
In summary, the Senator from New Jersey is using the wrong chart. It
does not apply to the real situation. We are using no Social Security
money in terms of our tax cut.
I move to table the Lautenberg motion to recommit and ask for the
yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on agreeing to the motion to
table the motion to recommit. The yeas and nays have been ordered. The
clerk will call the roll.
The assistant legislative clerk called the roll.
The result was announced--yeas 55, nays 45, as follows:

[Rollcall Vote No. 236 Leg.]

YEAS--55

NAYS--45

Akaka
Baucus
Bayh
Biden
Bingaman
Boxer
Breaux
Bryan
Byrd
Cleland
Conrad
Daschle
Dodd
Dorgan
Durbin
Edwards
Feingold
Feinstein
Graham
Harkin
Hollings
Inouye
Johnson
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lincoln
Mikulski
Moynihan
Murray
Reed
Reid
Robb
Rockefeller
Sarbanes
Schumer
Torricelli
Wellstone
Wyden
The motion was agreed to.
Mr. LAUTENBERG. I move to reconsider the vote.
Mr. DOMENICI. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. KYL addressed the Chair.
The PRESIDING OFFICER. The Senator from Arizona.

Amendment No. 1469, As Modified

(Purpose: To repeal the Federal estate and gift taxes and the tax on
generation-skipping transfers, to repeal a step up basis at death, and
for other purposes)

Mr. KYL. I call up amendment No. 1469, and ask unanimous consent that
it be modified.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered. The clerk will report.
The legislative clerk read as follows:

The Senator from Arizona [Mr. Kyl] proposes an amendment
numbered 1469, as modified.

Mr. KYL. I ask unanimous consent that reading of the amendment be
dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment, as modified, is as follows:
Beginning on page 226, line 1, strike through page 237,
line 5, and insert:

TITLE VII--ESTATE AND GIFT TAX RELIEF PROVISIONS

Subtitle A--Repeal of Estate, Gift, and Generation-Skipping Taxes;
Repeal of Step Up in Basis At Death

SEC. 701. REPEAL OF ESTATE, GIFT, AND GENERATION-SKIPPING
TAXES.

(a) In General.--Subtitle B is hereby repealed.
(b) Effective Date.--The repeal made by subsection (a)
shall apply to the estates of decedents dying, and gifts and
generation-skipping transfers made, after December 31, 2007.

SEC. 702. TERMINATION OF STEP UP IN BASIS AT DEATH.

(a) Termination of Application of Section 1014.--Section
1014 (relating to basis of property acquired from a decedent)
is amended by adding at the end the following:
``(f) Termination.--In the case of a decedent dying after
December 31, 2007, this section shall not apply to property
for which basis is provided by section 1022.''
(b) Conforming Amendment.--Subsection (a) of section 1016
(relating to adjustments to basis) is amended by striking
``and'' at the end of paragraph (26), by striking the period
at the end of paragraph (27) and inserting ``; and'', and by
adding at the end the following:
``(28) to the extent provided in section 1022 (relating to
basis for certain property acquired from a decedent dying
after December 31, 2007).''

SEC. 703. CARRYOVER BASIS AT DEATH.

(a) General Rule.--Part II of subchapter O of chapter 1
(relating to basis rules of general application) is amended
by inserting after section 1021 the following:

``SEC. 1022. CARRYOVER BASIS FOR CERTAIN PROPERTY ACQUIRED
FROM A DECEDENT DYING AFTER DECEMBER 31, 2007.

``(a) Carryover Basis.--Except as otherwise provided in
this section, the basis of carryover basis property in the
hands of a person acquiring such property from a decedent
shall be determined under section 1015.
``(b) Carryover Basis Property Defined.--
``(1) In general.--For purposes of this section, the term
`carryover basis property' means any property--
``(A) which is acquired from or passed from a decedent who
died after December 31, 2007, and
``(B) which is not excluded pursuant to paragraph (2).

The property taken into account under subparagraph (A) shall
be determined under section 1014(b) without regard to
subparagraph (A) of the last sentence of paragraph (9)
thereof.
``(2) Certain property not carryover basis property.--The
term `carryover basis property' does not include--
``(A) any item of gross income in respect of a decedent
described in section 691,
``(B) property which was acquired from the decedent by the
surviving spouse of the decedent, the value of which would
have been deductible from the value of the taxable estate of
the decedent under section 2056, as in effect on the day
before the date of enactment of the Taxpayer Refund Act of
1999, and
``(C) any includible property of the decedent if the
aggregate adjusted fair market

[[Page S9893]]

value of such property does not exceed $2,000,000.

For purposes of this paragraph and paragraph (3), the term
`adjusted fair market value' means, with respect to any
property, fair market value reduced by any indebtedness
secured by such property.
``(3) Phasein of carryover basis if includible property
exceeds $1,300,000.--
``(A) In general.--If the adjusted fair market value of the
includible property of the decedent exceeds $1,300,000, but
does not exceed $2,000,000, the amount of the increase in the
basis of such property which would (but for this paragraph)
result under section 1014 shall be reduced by the amount
which bears the same ratio to such increase as such excess
bears to $700,000.
``(B) Allocation of reduction.--The reduction under
subparagraph (A) shall be allocated among only the includible
property having net appreciation and shall be allocated in
proportion to the respective amounts of such net
appreciation. For purposes of the preceding sentence, the
term `net appreciation' means the excess of the adjusted fair
market value over the decedent's adjusted basis immediately
before such decedent's death.
``(4) Includible property.--
``(A) In general.--For purposes of this subsection, the
term `includible property' means property which would be
included in the gross estate of the decedent under any of the
following provisions as in effect on the day before the date
of the enactment of the Taxpayer Refund Act of 1999:
``(i) Section 2033.
``(ii) Section 2038.
``(iii) Section 2040.
``(iv) Section 2041.
``(v) Section 2042(a)(1).
``(B) Exclusion of property acquired by spouse.--Such term
shall not include property described in paragraph (2)(B).
``(c) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to carry out the purposes of
this section.''
(b) Miscellaneous Amendments Related To Carryover Basis.--
(1) Capital gain treatment for inherited art work or
similar property.--
(A) In general.--Subparagraph (C) of section 1221(3)
(defining capital asset) is amended by inserting ``(other
than by reason of section 1022)'' after ``is determined''.
(B) Coordination with section 170.--Paragraph (1) of
section 170(e) (relating to certain contributions of ordinary
income and capital gain property) is amended by adding at the
end the following: ``For purposes of this paragraph, the
determination of whether property is a capital asset shall be
made without regard to the exception contained in section
1221(3)(C) for basis determined under section 1022.''
(2) Definition of Executor.--Section 7701(a) (relating to
definitions) is amended by adding at the end the following:
``(47) Executor.--The term `executor' means the executor or
administrator of the decedent, or, if there is no executor or
administrator appointed, qualified, and acting within the
United States, then any person in actual or constructive
possession of any property of the decedent.''
(3) Clerical amendment.--The table of sections for part II
of subchapter O of chapter 1 is amended by adding at the end
the following new item:

``Sec. 1022. Carryover basis for certain property acquired from a
decedent dying after December 31, 2007.''

(c) Effective Date.--The amendments made by this section
shall apply to estates of decedents dying after December 31,
2007.

Subtitle B--Reductions of Estate, Gift, and Generation-Skipping
Transfer Taxes

SEC. 711. REDUCTIONS OF ESTATE, GIFT, AND GENERATION-SKIPPING
TRANSFER TAXES.

(a) Maximum Rate of Tax Reduced to 50 Percent.--The table
contained in section 2001(c)(1) is amended by striking the 2
highest brackets and inserting the following:

$1,025,800, plus 53% of the excess over $2,500,000.''..................

(b) Repeal of Phaseout of Graduated Rates.--Subsection (c)
of section 2001 is amended by striking paragraph (2).
(c) Effective Date.--The amendments made by this section
shall apply to estates of decedents dying, and gifts made,
after December 31, 2003.

Subtitle C--Simplification of Generation-Skipping Transfer Tax

Mr. KYL. Mr. President, I begin today by thanking Senator Roth, the
chairman of the Senate Finance Committee, for recognizing that there is
a place for estate-tax relief in this bill. The measure reported by the
Finance Committee includes a variety of changes: a one-time reduction
in the top death-tax rate, converting the unified credit to a true
exemption, and raising the annual gift exclusion. These are all steps
in the right direction. The problem is, at the end of the day, the Roth
bill leaves the death tax in place.
By contrast, the bill that the House of Representatives passed last
week phases out the death tax over a 10-year period, and then
implements a version of the bill I introduced back in May with Senator
Bob Kerrey and a bipartisan group of 19 other Senators.
The amendment I am offering today is based upon that bipartisan
initiative. I would replace the death tax with a tax on the appreciated
value of inherited assets to be paid when the assets are sold. In other
words, the tax would be imposed when income is actually realized from
inherited property. Death would no longer be a taxable event.
This amendment represents an effort to find bipartisan consensus
about how to deal with the death tax, and I hope all Senators will
consider it with an open mind. It is an approach that Senators Moynihan
and Kerrey actually suggested to me during a hearing before the Finance
Committee two years ago. Bill Beach of the Heritage Foundation
discussed its merits at the same hearing. The more I looked into the
idea since then, the more sense I thought it made. The essence of it is
very simple: It takes death out of the equation. Whether an asset is
sold by the decedent during his or her lifetime, or by someone who
later inherits the property, the gain is taxed the same. Under this
approach, death neither confers a benefit, nor results in a punitive,
confiscatory tax. This is an approach that I believe both Republicans
and Democrats should be able to accept.
We know that many Americans are troubled by the estate tax's
complexity and high rates, and by the mere fact that it is triggered by
a person's death rather than the realization of income. For a long
time, I have advocated its repeal, because I believe death should not
be a taxable event.
Others agree that the tax is problematic, but are concerned the
appreciated value of certain assets might escape taxation forever if
the death tax is repealed while the step-up in basis allowed by the
Internal Revenue Code remains in effect. That is a legitimate concern.
We try to reconcile these positions in this amendment by eliminating
both the death tax and the step-up in basis, and attributing a
carryover basis to inherited property so that all gains are taxed at
the time the property is sold and income is realized.
The concept of a carryover basis is not new. It exists in current law
with respect to gifts, property transferred in cases of divorce, and in
connection with involuntary conversions of property relating to theft,
destruction, seizure, requisition, or condemnation.
In the latter case, when an owner receives compensation for
involuntarily converted property, a taxable gain normally results to
the extent that the value of the compensation exceeds the basis of the
converted property. However, section 1033 of the Internal Revenue Code
allows the taxpayer to defer the recognition of the gain until the
property is sold. This amendment would treat the transfer of property
at death--perhaps the most involuntary conversion of all--the same way,
deferring recognition of any gain until the inherited property is sold.
Small estates, which currently pay no estate tax by virtue of the
unified credit, and no capital-gains tax by virtue of the step up,
would be unaffected by the basis changes being proposed here. The
estate tax would be eliminated for them, and they would still get the
benefit of the current law's step-up. The basis changes would apply
only to estates valued at over $2 million.
There are four problems I see with the underlying bill's death-tax
provisions. First, the bill tries to make palatable what is
fundamentally indefensible. Taxing death is wrong.
Second, because it leaves the death tax in place, the need for
expensive estate-tax planning also remains. Some people will have to
divert money they would have spent on new equipment or new hires to
insurance policies designed to cover death-tax costs. Still others will
spend millions on lawyers, accountants, and other advisors for death-
tax planning purposes. But that leaves fewer resources to invest, start
up new businesses, hire additional people, or pay better wages.
Third, the higher exemption proposed in the committee bill provides
some relief, but I believe it also serves as an artificial cap on small
businesses' growth. To avoid the death tax, an entrepreneur merely
needs to limit the growth of his or her business so it does not exceed
the $1.5 million exemption amount. That means fewer jobs, and less
output.

[[Page S9894]]

I believe it would be better to eliminate the tax and, if there is a
need to impose a tax, impose it when income is actually realized--that
is, when the assets are sold. That is what this amendment would do.
I want to stress to colleagues, particularly colleagues on the
Democratic side of the aisle, that we do not allow appreciation in
inherited assets to go untaxed, as other death-tax repeal proposals
would do. We are merely saying that if a tax is imposed, it should be
imposed when income is realized. Earnings from an asset should be taxed
the same whether the asset is earned or inherited.
The question has been posed at various times during debate on this
bill whether the American people want tax relief. Let me answer that
question with respect to the issue at hand. Although most Americans
will probably never pay a death tax, most people still sense that there
is something terribly wrong with a system that allows Washington to
seize more than half of whatever is left after someone dies--a system
that prevents hard-working Americans from passing the bulk of their
nest eggs to their children or grandchildren.
Seventy-seven percent of the people responding to a survey by the
Polling Company last year indicated that they favor repeal of the death
tax. When Californians had the chance to weigh in with a ballot
proposition, they voted two-to-one to repeal their state's death tax.
The legislatures of five other states have enacted legislation since
1997 that will either eliminate or significantly reduce the burden of
their states' death taxes.
The 1995 White House Conference on Small Business identified the
death tax as one of small business's top concerns, and delegates to the
conference voted overwhelming to endorse its repeal. Outright repeal
received the fourth highest number of votes among all resolutions
approved at the conference.
A couple of other points to consider about the death tax. it is one
of the most inefficient taxes that the government levies. Alicia
Munnell, who was a member of President Clinton's Council of Economic
Advisors, estimated that the costs of complying with death-tax laws are
of roughly the same magnitude as the revenue raised. In 1998, that was
about $23 billion. In other words, for every dollar of tax revenue
raised by the death tax, another dollar is squandered in the economy
simply to comply with or avoid the tax.
The tax hurts the economy. A report issued by the Joint Economic
Committee in December of 1998 concluded that the existence of the death
tax this century has reduced the stock of capital in the economy by
nearly half a trillion dollars. By repealing it and putting those
resources to better use, the Joint Committee estimated that as many as
240,000 jobs could be created over seven years and Americans would have
an additional $24.4 billion in disposable personal income. So much for
the contention that this is a tax that touches only a few.
It appears that the chairman of the Finance Committee will raise a
point of order against this amendment. I think that is regrettable. If
there is a way to improve this amendment, I am willing to work with
Chairman Roth on any ideas he might have. But if the point of order is
intended to preserve the death tax as a permanent part of the Tax Code,
we have a very significant difference of opinion, and I think he should
allow the Senate to work its will, rather than use a parliamentary
point of order to block it.
This is a good amendment; the policy it proposes is sound, and fair.
Its time has come. I urge my colleagues to support the amendment.
As I say, this amendment would repeal the estate tax, the so-called
death tax. According to the Joint Tax Committee, under scoring, it
cannot occur until the eighth year or until 2007. But at that point it
replaces the death tax with a tax on the sale of the assets, usually a
capital gains tax, if and when the property is sold. In other words, it
is a very fair compromise between those who believe there should be
some tax on the sale of assets and those who believe that death itself
should not be a taxable event.
I am advised that a point of order will be made that this amendment
is not germane. If that is done, I believe that to be very unfortunate.
But because Senator Kerrey would prefer that we not proceed with a vote
on the point of order, I will not contest the ruling of the Chair.
I believe that repeal of the death tax enjoys more than majority
support and am confident that in the conference committee, we will be
able to accept the House version or something close to it which repeals
the death tax along the lines of the Kyl-Kerrey approach.
I urge my colleagues to support repeal of the death tax. If a point
of order is made, I will not contest it.
The PRESIDING OFFICER. Who seeks recognition?
Mr. MOYNIHAN. Mr. President, the pending amendment is not germane. I
therefore raise a point of order that the amendment violates section
305(b)(2) of the Congressional Budget Act of 1974.
The PRESIDING OFFICER. The point of order is well taken and the
amendment falls. Who seeks recognition?
Mr. HOLLINGS addressed the Chair.
The PRESIDING OFFICER. The Senator from South Carolina.

Motion To Recommit

Mr. HOLLINGS. Mr. President, on behalf of Senator Lieberman, Senator
Levin, and myself, I move to recommit the bill to the Finance Committee
with instructions that the committee report back within 3 days with an
amendment that implements the Greenspan recommendations by deferring
tax reductions and by taking any projected revenue surplus and actually
reducing the national debt.
Now, for days on end we have been talking about what Mr. Greenspan
said here, what Mr. Greenspan said here. As our friend, the former
Attorney General Mitchell said: Watch what we do, not what we say.
He has been trying to stay the course; namely, just take, in a sense,
any surpluses--don't argue about them, but if you can find them, then
apply that to reducing the national debt. So often we say that all of
us want to go to heaven but we don't want to do what is necessary to
get there. All of us say we want to reduce or pay down the national
debt, but we don't want to do what is necessary to get there. All you
have to do in order to get there or reduce the debt is vote for this
motion.
I yield to Senator Lieberman.
Mr. LIEBERMAN. Mr. President, in the interest of legislative
efficiency, let alone fiscal responsibility, Senator Levin and I are
withdrawing our motion to strike the entire tax cut and joining to
raise the same issue with Senator Hollings on this amendment which says
you can't have a tax cut if the surplus is not there, and there is no
evidence the surplus is there.
The PRESIDING OFFICER. The time of the Senator has expired. The
Senator from Delaware.
Mr. ROTH. Mr. President, I rise in opposition to this motion. In a
very real way, this is the final vote on the legislation before us. Let
me point out that both Democrats and Republicans have broadly agreed
that there should be a tax cut. That tax cut should be now. The
American people are entitled to relief. What we are really doing here
is restoring the excess taxes already paid. For that reason, I shall
make a motion to table.
Let me reemphasize again, the Democrats have had a proposal of $300
billion in a tax cut. There has been a $500 billion tax cut. We have
followed the budget recommendations of $792 billion. To deny the
working people of America the tax break they deserve today makes no
sense at all.
For that reason, I move to table the motion to recommit, and I ask
for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second? There is a
sufficient second.
The yeas and nays were ordered.
Mr. LEVIN. Mr. President, I join in cosponsoring the Hollings motion
to recommit the bill to the Finance Committee with instructions to
defer tax reductions in order to reduce the national debt. I
cosponsored the Hollings motion in lieu of calling up the Lieberman-
Levin amendment because the effect of the Hollings motion, had it been
adopted, would have been largely the same as the Lieberman-Levin
amendment.
The tax program before the Senate is unfair to middle income
Americans, it is economically unwise and it's based on unrealistic
assumptions. The unfairness is perhaps best shown by the fact that
about two-thirds of its tax benefits go to the upper one-fifth of our

[[Page S9895]]

people. In addition to being unfair, it is economically unwise in that
jeopardizes Medicare, fails to strengthen Social Security, and risks
higher interest rates.
This bill takes us back to the bad old days of backloaded tax breaks
whose real costs explode several years after enactment. This budgetary
time bomb is set to go off at roughly the same time as the Medicare
trust fund is expected to be bankrupt and the bill begins to come due
for Social Security. In that decade, as the ``baby boomers'' begin to
retire, the Social Security Trust fund will begin to run a deficit,
requiring the redemption of Treasury bonds which it holds.
It is also based on unrealistic projections. Projections are always
risky. We have seen many federal budget estimates, and we know well
that as quickly as these surpluses appear, they can disappear. In 1981,
President Ronald Reagan introduced his Economic Recovery Tax Act which
included huge tax cuts and predictions that the budget would be
balanced by 1984. In 1981, I opposed the Reagan tax cut because I was
convinced that it would lead to huge deficits. We have paid dearly for
the debt which resulted from that legislation. In 1992, the deficit in
the federal budget was $290 billion. The remarkable progress which has
brought us now to the threshold of surpluses has come about in large
part as a result of the deficit reduction package which President
Clinton presented in 1993, and which this Senate passed by a margin of
one vote, the Vice-President's. We should not now, by passing a tax
bill like the one before us, head back down the road toward new future
deficits.
I joined with Senator Hollings in his motion to defer the tax cut,
because it seems clear to me that we should first see if the surplus is
real before we adopt tax cuts; second, if those surpluses are real, we
should pay down the national debt faster; and third, we should save tax
cuts for a time of economic slow down.
During the consideration of this legislation and the national debate
which has surrounded it, much has been made of the projected reduction
of the national debt and concurrent reductions in interest payments.
Although the debt held by the public, or the so-called external debt,
is projected to be paid down by the surpluses accumulated in the Social
Security Trust Funds, interest paid to the Social Security Trust funds
in the form of bonds will continue to increase for more than a decade.
At that time, in approximately 2014, unless Social Security reform has
been accomplished, the Trust Funds will no longer be in surplus, but
instead there will be a shortfall in those funds. As the bonds held by
the Social Security Trust Funds are redeemed, we will therefore begin
paying a portion of the interest owed to the Social Security Trust
Funds, and eventually all of the interest owed to the Social Security
Trust Funds, in cash. Also, we will then have to redeem the trillions
of dollars of bonds representing principal owed to the trust funds.
Mr. President, I ask unanimous consent that a table entitled
``Interest Payments and Social Security'' based on data which has been
provided to me by the Office of Management and Budget (OMB) be printed
in the Record. (See Exhibit 1.)
The table shows that through 2035, under current projections, that
although the cash interest payments to the public on external debt go
down over the course of the next 15 years or so to zero, the amount of
interest that the Treasury will be required to pay to the Social
Security Trust Funds in bonds and eventually in cash rises steadily
during that period and beyond. After that, the amount of cash necessary
to redeem bonds representing principal held by the Social Security
Trusts Funds kicks in and then rises sharply. The projections show that
in the year 2025, for example, the Treasury would be required to pay to
Social Security $295 billion in interest payments and an additional $35
billion in cash to redeem bonds representing principal held by the
Social Security Trust Funds which will then be needed to pay benefits
to recipients. Ten years later, in the year 2035, the projections show
that, in the absence of Social security reform, the Treasury would be
required to pay to Social Security $135 billion in interest payments
and an additional $576 in cash for bonds representing principal
redeemed. These obligations are one more powerful reason why a huge tax
cut, at this time, before the surpluses have even actually materialized
is, in my judgement, both unwise and imprudent.

Exhibit 1

INTEREST PAYMENTS AND SOCIAL SECURITY
[By fiscal year, in billions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
2000 2005 2010 2015 2020 2025 2030 2035
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cash Interest Paid to Trust Fund........................ 0 0 0 0 139.7 295.4 253.3 135.9
Interest Paid on External Debt.......................... 218.5 155.2 43.1 0 0 0 0 0
Bond Interest Paid to Trust Fund........................ 58.2 98.5 158.8 225.0 139.2 0 0 0
Trust Fund Principal Redemptions in Cash................ 0 0 0 0 0 35.3 279.7 576.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: OMB.

The PRESIDING OFFICER. The question is on agreeing to the motion to
table the motion to recommit. The yeas and nays have been ordered. The
clerk will call the roll.
The legislative clerk called the roll.
The result was announced--yeas 65, nays 35, as follows:

[Rollcall Vote No. 237 Leg.]

YEAS--65

Abraham
Allard
Ashcroft
Bayh
Bennett
Bingaman
Bond
Breaux
Brownback
Bunning
Burns
Campbell
Chafee
Cochran
Collins
Coverdell
Craig
Crapo
DeWine
Domenici
Enzi
Fitzgerald
Frist
Gorton
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Jeffords
Kennedy
Kerrey
Kerry
Kohl
Kyl
Landrieu
Lott
Lugar
Mack
McCain
McConnell
Murkowski
Nickles
Roberts
Roth
Santorum
Schumer
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Specter
Stevens
Thomas
Thompson
Thurmond
Torricelli
Warner
Wyden

NAYS--35

Akaka
Baucus
Biden
Boxer
Bryan
Byrd
Cleland
Conrad
Daschle
Dodd
Dorgan
Durbin
Edwards
Feingold
Feinstein
Graham
Harkin
Hollings
Inouye
Johnson
Lautenberg
Leahy
Levin
Lieberman
Lincoln
Mikulski
Moynihan
Murray
Reed
Reid
Robb
Rockefeller
Sarbanes
Voinovich
Wellstone
The motion was agreed to.
Mr. McCAIN addressed the Chair.
The PRESIDING OFFICER. The Senator from Arizona is recognized.

Amendment No. 1397

Mr. McCAIN. Mr. President, I call up amendment No. 1397 and ask for
its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from Arizona (Mr. McCain) proposes an amendment
numbered 1397.

Mr. McCAIN. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The amendment is printed in a previous edition of the Record.)
Mr. McCAIN. Mr. President, my amendment would create a national
three-year school choice demonstration for children from economically
disadvantaged families and the cost of this is fully paid for by
eliminating unnecessary corporate subsidies for the ethanol, oil, gas,
and sugar industries.
This demonstration would provide educational opportunities for low-
income children by providing parents and students the freedom to choose
the

[[Page S9896]]

best school for their unique academic needs, while encouraging schools
to be creative and responsive to the needs of all students.
Each eligible child would receive $2,000 each year for attending any
school of their choice--including private or religious schools.
In total, the amendment authorizes $5.4 billion for the three-year
school choice demonstration program, as well as a GAO evaluation of the
program upon its completion. The cost of this important test of school
vouchers is fully offset by eliminating more than $5.4 billion in
unnecessary and inequitable corporate tax loopholes which benefit the
ethanol, sugar, gas and oil industries.
These tuition vouchers would help provide over 1 million low-income
children trapped in poor performing schools the same educational
choices as children of economic privilege.
Providing educational choice to low-income children is an important
step in ensuring all our children, not just wealthy children can make
their dreams a reality.
We can not afford to continue subsidizing the ethanol, sugar, oil and
gas industries at a time when we are struggling to save Social Security
and Medicare, provide much needed and deserved tax relief to American
families and strengthening our investment in the health, security and
education of our children--our future.
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. REED addressed the Chair.
The PRESIDING OFFICER. The Senator from Rhode Island is recognized.
Mr. REED. Mr. President, I oppose this amendment on procedural
grounds. This is a highly complex subject. It is a subject that I am
sure will be debated extensively as we consider the Elementary and
Secondary Education Act. But in principle also I think it is
inappropriate to divert these resources to private education when we
have so many unmet needs in public education.
I believe also that if we adopt the underlying tax bill there will be
even less resources to devote to public education and it will
exacerbate the demands that we already must meet with respect to public
education.
There is a difference between private schools and public schools.
Private schools can exclude children. Public schools must educate every
child in America.
I believe our obligation and commitment is to public education, and
this amendment will defeat that.
I also note that the pending amendment is not germane.
Therefore, I raise a point of order that the amendment violates
Section 305(b)(2) of the Congressional Budget Act of 1974.
The PRESIDING OFFICER. The Senator from Arizona.
Mr. McCAIN. Mr. President, pursuant to section 904 of the
Congressional Budget Act, I move to waive the point of order against
amendment No. 1397, and I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER (Mr. Hagel). The question is on agreeing to the
motion to waive the Congressional Budget Act in relation to the McCain
amendment No. 1397. The yeas and nays have been ordered. The clerk will
call the roll.
The legislative assistant proceed proceeded to call the roll.
The yeas and nays resulted--yeas 13, nays 87, as follows:

[Rollcall Vote No. 238 Leg.]

YEAS--13

Allard
Biden
DeWine
Gregg
Hutchinson
Kyl
Lieberman
McCain
Moynihan
Santorum
Shelby
Specter
Thompson

NAYS--87

Abraham
Akaka
Ashcroft
Baucus
Bayh
Bennett
Bingaman
Bond
Boxer
Breaux
Brownback
Bryan
Bunning
Burns
Byrd
Campbell
Chafee
Cleland
Cochran
Collins
Conrad
Coverdell
Craig
Crapo
Daschle
Dodd
Domenici
Dorgan
Durbin
Edwards
Enzi
Feingold
Feinstein
Fitzgerald
Frist
Gorton
Graham
Gramm
Grams
Grassley
Hagel
Harkin
Hatch
Helms
Hollings
Hutchison
Inhofe
Inouye
Jeffords
Johnson
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lincoln
Lott
Lugar
Mack
McConnell
Mikulski
Murkowski
Murray
Nickles
Reed
Reid
Robb
Roberts
Rockefeller
Roth
Sarbanes
Schumer
Sessions
Smith (NH)
Smith (OR)
Snowe
Stevens
Thomas
Thurmond
Torricelli
Voinovich
Warner
Wellstone
Wyden
The PRESIDING OFFICER. On this vote the yeas are 13 and the nays are
87. Three-fifths of the Senators present and voting, not having voted
in the affirmative, the motion to waive the Budget Act is rejected. The
point of order is sustained, and the amendment falls.
The Senator from Nebraska.

Change Of Vote

Mr. HAGEL. Mr. President, on rollcall No. 238, I voted ``aye''. It
was my intention to vote ``no.'' Therefore, I ask unanimous consent
that I be permitted to change my vote since it would in no way change
the outcome of the vote.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The foregoing tally has been changed to reflect the above order.)

Amendment No. 1383

(Purpose: To Increase the Federal minimum wage.)

Mr. KENNEDY. Mr. President, I have an amendment at the desk.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Massachusetts [Mr. Kennedy] proposes an
amendment numbered 1383.

Mr. KENNEDY. Mr. President, I ask unanimous consent reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The amendment is printed in a previous edition of the Record.)
Mr. KENNEDY. Mr. President, Republicans continue to deny us the
opportunity to vote on our bill to raise the minimum wage for the
lowest paid workers. That is why I have filed the Fair Minimum Wage Act
of 1999 as an amendment to the Budget Reconciliation Bill.
Shame on Congress for giving tax breaks to the rich, but denying a
pay raise for the working poor. The $792 billion Republican tax package
will disproportionately benefit the richest Americans. Almost thirty
percent of the tax breaks, once fully implemented, will go to the
wealthiest 1 percent of Americans--those who make over $300,000 a year.
Seventy-five percent of the tax breaks will benefit the wealthiest 20
percent of Americans--those with an average income of over $139,000.
But these tax breaks do virtually nothing for the lowest paid
workers. They give minimum wage earners less than $22 a year in tax
relief, compared to an average tax break of $22,964 a year for the
wealthiest Americans. The Republicans want to give America's wealthiest
1 percent a tax break that is equal to or higher than what 40 percent
of Americans earn in a year.
The vast magnitude of these tax breaks is possible only because they
depend on severe budget cuts in Head Start, Summer Jobs for low-income
youth, and HUD housing subsidies for low-income tenants. Shame on
Congress for ignoring the majority of America's workers to benefit the
wealthy few.
Our amendment is a modest proposal to raise the minimum wage from its
present level of $5.15 an hour to $5.65 on September 1, 1999 and to
$6.15 on September 1, 2000. It will help over 11 million American
families.
At $6.15 an hour, working full-time, a minimum wage worker would earn
$12,800 a year under this amendment--an increase of over $2,000 a year.
That additional $2,000 will pay for seven months of groceries to feed
the average family. It will pay the rent for an average family for five
months. It will pay for almost ten months of utilities. It will cover a
year and a half of tuition and fees at a two-year college, and provide
greater opportunities for those struggling at the minimum wage to
obtain the skills needed to obtain better jobs.
The national economy is the strongest in a generation, with the
lowest unemployment rate in three decades. Under the leadership of
President Clinton, the country as a whole is enjoying a remarkable
period of growth and

[[Page S9897]]

prosperity. Enterprise and entrepreneurship are flourishing--generating
unprecedented expansion, with impressive efficiencies and significant
job creation. The stock market has soared. Inflation is low, and
interest rates are low. We are witnessing the strongest peace-time
growth in our history.
The sad reality, however, is that low wage workers are being left
behind. And the Republican tax bill only widens the gap between the
wealthy and the working poor. The Republican pension provisions, for
example, only benefit high income Americans with extra income to
contribute to IRAs and 401(k) plans. Raising the contribution limits on
these savings vehicles only discourages companies from offering across-
the-board retirement plans that benefit all employees. The Republican
tax bill also undermines the current tax code rules that require
retirement benefits to be distributed fairly among lower and higher
paid workers.
Under current law, minimum wage earners can barely make ends meet.
Working 40 hours a week, 52 weeks a year, they earn $10,712--almost
$3,200 below the poverty line for a family of three. The real value of
the minimum wage is now more than $2.00 below what it was in 1968. To
have the purchasing power it had in 1968, the minimum wage should today
be at least $7.49 an hour, not $5.15. This unconscionable gap shows how
far we have fallen short over the past three decades in giving low
income workers their fair share of the country's extraordinary
prosperity.
To rub salt in the wound, Congress recently signed off on a cost of
living pay increase for every member of the Senate and House of
Representatives. Republican Senators don't blink about giving
themselves an increase--how can they possibly deny a fair increase to
minimum wage workers?
It is time to raise the Federal minimum wage. No one who works for a
living should have to live in poverty. I urge my colleagues to join me
in raising the minimum wage.
The PRESIDING OFFICER. The Senator from Oklahoma.
Mr. NICKLES. Mr. President, we should not be passing a law on a tax
cut bill to say it is against the law anywhere in the country to work
for $6.10 an hour, that the Federal Government, in its infinite wisdom,
decided if you don't have a job that pays at least $6.15 an hour you
should be unemployed. That would be a serious mistake.
This language in this amendment is not germane to the bill now before
us. I now raise a point of order under section 305(b)(2) of the
Congressional Budget Act.
Mr. KENNEDY. Mr. President, pursuant to section 904 of the
Congressional Budget Act, I move to waive all the applicable sections
of the Act for consideration of the pending amendment.
Mr. President, I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on agreeing to the motion to
waive the Budget Act in relation to the Kennedy amendment, No. 1383.
The yeas and nays have been ordered.
The clerk will call the roll.
The legislative clerk called the roll.
The yeas and nays resulted--yeas 46, nays 54, as follows:

[Rollcall Vote No. 239 Leg.]

YEAS--46

Akaka
Baucus
Bayh
Biden
Bingaman
Boxer
Breaux
Bryan
Byrd
Cleland
Conrad
Daschle
Dodd
Dorgan
Durbin
Edwards
Feingold
Feinstein
Fitzgerald
Harkin
Hollings
Inouye
Johnson
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lincoln
Mikulski
Moynihan
Murray
Reed
Reid
Robb
Rockefeller
Sarbanes
Schumer
Specter
Torricelli
Wellstone
Wyden

NAYS--54

Abraham
Allard
Ashcroft
Bennett
Bond
Brownback
Bunning
Burns
Campbell
Chafee
Cochran
Collins
Coverdell
Craig
Crapo
DeWine
Domenici
Enzi
Frist
Gorton
Graham
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Jeffords
Kyl
Lott
Lugar
Mack
McCain
McConnell
Murkowski
Nickles
Roberts
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Stevens
Thomas
Thompson
Thurmond
Voinovich
Warner
The PRESIDING OFFICER. On this vote, the yeas are 46, the nays are
54. Three-fifths of the Senators duly chosen and sworn not having voted
in the affirmative, the motion is rejected. The point of order is
sustained, and the amendment falls.

Amendment No. 1386

(Purpose: To provide a complete substitute)

Mr. SPECTER. Mr. President, I call up amendment No. 1386.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from Pennsylvania [Mr. Specter] proposes an
amendment numbered 1386.

(The amendment is printed in a previous edition of the Record.)
The PRESIDING OFFICER. The Senator from Pennsylvania.
Mr. SPECTER. Mr. President, I urge my colleagues to support this flat
tax amendment realistically as a protest against the complicated Tax
Code which now numbers some 7.5 million words, costs $600 billion in
compliance, and takes 5.4 billion hours to comply. This amendment is
supported by Senator Lott, Senator Nickles, Senator Craig, and others.
In a very shorthand statement, this is a tax return under the flat
tax. It is a postcard, and it can be filled out in 15 minutes. It
eliminates taxes on capital gains, on estates, and on dividends, all of
which have been taxed before. It is not regressive. There is no tax for
a family of four up to $27,500 in earnings, which is 53 percent of
Americans. There is a reduction in tax for $1,000 up to $35,000. It is
even at $75,000. An affirmative vote will signal a protest to urge the
Finance Committee and Ways and Means to give serious consideration to
this important reform.
The PRESIDING OFFICER. The Senator from Montana.
Mr. BAUCUS. Mr. President, we have not seen a copy of this amendment,
but I assume it is the standard flat tax that has been discussed for
years. If that is the case, then the net effect of it will be, for most
income earners, most American taxpayers, in effect, a tax increase. The
only taxpayers with a tax reduction under the standard flat tax
proposal will be those of adjusted gross incomes of over $200,000, and
the tax reduction will be 50 percent. Stated differently, this is a tax
on workers but it is not a tax on investment income, it is not a tax on
other income, which I think is unfair.
In any event, the amendment is not germane. I raise a point of order
that it violates section 305(b)(2) of the Budget Act.
Mr. SPECTER. Mr. President, under the applicable provision, I move to
waive the provision as to germaneness, and I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on agreeing to the motion to
waive the Budget Act with respect to amendment No. 1386. The yeas and
nays have been ordered. The clerk will call the roll.
The assistant legislative clerk called the roll.
The yeas and nays resulted--yeas 35, nays 65, as follows:

[Rollcall Vote No. 240 Leg.]

YEAS--35

Allard
Bennett
Brownback
Burns
Campbell
Cochran
Collins
Coverdell
Craig
Crapo
Frist
Gorton
Gramm
Grassley
Gregg
Hatch
Helms
Hutchison
Inhofe
Kyl
Lott
Mack
McCain
McConnell
Murkowski
Nickles
Reid
Sessions
Shelby
Smith (NH)
Specter
Stevens
Thomas
Thompson
Thurmond

NAYS--65

Abraham
Akaka
Ashcroft
Baucus
Bayh
Biden
Bingaman
Bond
Boxer
Breaux
Bryan
Bunning
Byrd
Chafee
Cleland
Conrad
Daschle
DeWine
Dodd
Domenici
Dorgan
Durbin
Edwards
Enzi
Feingold
Feinstein
Fitzgerald
Graham
Grams
Hagel
Harkin
Hollings
Hutchinson
Inouye
Jeffords
Johnson
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman

[[Page S9898]]

Lincoln
Lugar
Mikulski
Moynihan
Murray
Reed
Robb
Roberts
Rockefeller
Roth
Santorum
Sarbanes
Schumer
Smith (OR)
Snowe
Torricelli
Voinovich
Warner
Wellstone
Wyden
The PRESIDING OFFICER. On this vote the yeas are 35, the nays are 65.
Three-fifths of the Senators duly chosen and sworn not having voted in
the affirmative, the motion is rejected. The point of order is
sustained and the amendment falls.

Amendment No. 1416

(Purpose: To amend the Internal Revenue Code of 1986 to make higher
education more affordable by providing a full tax deduction for higher
education expenses and a tax credit for student education loans)

Mr. SCHUMER. Mr. President, I call up my amendment.
The PRESIDING OFFICER. The clerk will report.
The legislative assistant read as follows:

The Senator from New York [Mr. Schumer], for himself, Ms.
Snowe, Mr. Bayh, and Mr. Smith of Oregon, proposes an
amendment numbered 1416.

Mr. SCHUMER. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The text of the amendment is printed in a prior edition of the
Record.)
Mr. SCHUMER. I thank the Chair. I yield 30 seconds of my time to the
Senator from Maine when I am completed.
This amendment is simple. It is bipartisan, sponsored by the Senator
from Maine, Ms. Snowe, Mr. Smith of Oregon, Mr. Bayh of Indiana, and
myself. It seeks no political advantage for either side. It helps the
middle class in a vitally needed way, by making college tuition, up to
$12,000, fully deductible for all those in the 28 percent bracket or
lower. That is over 90 percent of all Americans. The average middle
class person making $50,000, $60,000, $70,000 a year sweats at night
worrying about paying for the cost of college, which is getting higher
and higher. I urge support of the amendment.
The PRESIDING OFFICER (Mr. Bunning). The Senator's 30 seconds have
expired.
The Senator from Maine.
Ms. SNOWE. Mr. President, I urge my colleagues to support this
amendment. It will dramatically improve access for working American
families in this country to pursue higher education. The bottom line is
that even as the cost of college has quadrupled over the past 20 years,
in fact, growing nearly to twice the rate of inflation, the value of
Pell grants has actually decreased. Where it used to cover 39 percent
of the cost of public education, today it is 22 percent. In fact, in
the last 5 years alone, the total amount of college loans has soared by
82 percent, even after adjusted for inflation. I hope that we will help
American families with this amendment.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. Mr. President, Senator Schumer's amendment would provide a
full tax deduction for higher education and a tax credit for student
loans. While I recognize that we need to assist American families with
the cost of higher education, I cannot support this amendment. The
costs of this amendment are enormous. I understand that it would cost
something like $25 billion over 10 years, but the pay-for would delay
the AMT relief that is provided in this bill. That delay would impact
on working Americans, depriving them of the child credit, personal
exemptions, and, ironically, educational benefits such as the HOPE
scholarship and lifetime earnings.
Mr. President, I regret that I must make a point of order against the
amendment under section 305 of the Budget Act on the grounds it is not
germane.
The PRESIDING OFFICER. The Senator from New York.
Mr. SCHUMER. Mr. President, I move to waive the Budget Act, and I ask
for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second? There is a
sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on agreeing to the motion to
waive the Congressional Budget Act in relation to the Schumer amendment
No. 1416. The yeas and nays have been ordered.
The clerk will call the roll.
The legislative assistant called the roll.
The result was announced--yeas 53, nays 47, as follows:

[Rollcall Vote No. 241 Leg.]

YEAS--53

Abraham
Akaka
Baucus
Bayh
Biden
Bingaman
Boxer
Breaux
Bryan
Byrd
Cleland
Collins
Conrad
Daschle
DeWine
Dodd
Dorgan
Durbin
Edwards
Feingold
Feinstein
Fitzgerald
Graham
Harkin
Hollings
Inouye
Johnson
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lincoln
Mikulski
Moynihan
Murray
Reed
Reid
Robb
Rockefeller
Santorum
Sarbanes
Schumer
Smith (OR)
Snowe
Specter
Torricelli
Wellstone
Wyden

NAYS--47

Allard
Ashcroft
Bennett
Bond
Brownback
Bunning
Burns
Campbell
Chafee
Cochran
Coverdell
Craig
Crapo
Domenici
Enzi
Frist
Gorton
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Jeffords
Kyl
Lott
Lugar
Mack
McCain
McConnell
Murkowski
Nickles
Roberts
Roth
Sessions
Shelby
Smith (NH)
Stevens
Thomas
Thompson
Thurmond
Voinovich
Warner
The PRESIDING OFFICER. On this vote the yeas are 53, the nays are 47.
Three-fifths of the Senators duly chosen and sworn not having voted in
the affirmative, the motion is rejected. The point of order is
sustained and the amendment falls.

Objection to Committee Meeting

The PRESIDING OFFICER. The Senator from Rhode Island.
Mr. REED. Mr. President, I note that the banking committee is meeting
at this time, and objection to that meeting has been made for the
Record.
The PRESIDING OFFICER. It is so noted.
The PRESIDING OFFICER. The Senator from Oklahoma.
Mr. NICKLES. Mr. President, I thank the majority leader, the minority
leader, and also Senator Roth, Senator Reid, and Senator Moynihan.
We have made very good progress in reducing the number of amendments.
I think we are down to maybe a few amendments. I know that on this side
we are only looking at one or two that would require a rollcall vote.
We are trying to make it one or two. We have a few more requests. I
think we are making good progress. I know Senator Reid is making good
progress.
That is for the information of our colleagues.
We would also like to keep the rollcall votes to 10 minutes. The last
rollcall vote went a little extra. We are going to finish this bill
today. It is in everybody's interest to stay on the floor and to have
timely rollcall votes.
We expect to accept a couple of amendments right now. That will help
expedite the process.
I yield the floor.

Amendment No. 1452

(Purpose: To increase the mandatory spending in the Child Care and
Development Block Grant by $10,000,000,000 over 10 years in order to
assist working families with the costs of child care, and for other
purposes)

Mr. DODD. Mr. President, I call up amendment 1452 and ask for its
immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Connecticut [Mr. Dodd], for himself and
Mr. Jeffords, proposes an amendment numbered 1452.

(The text of the amendment is printed in a previous edition of the
Record.)
Mr. JEFFORDS. Mr. President, the child development block grant has
helped thousands of families keep jobs by helping offset the enormous
costs of child care, which enable them to go to work. In most cases,
subsidies are so low that families are forced to use the cheapest and,
in many cases, the poorest quality child care.
There are 66 Senators who voted for the money in the budget for this
purpose. The kids at the Burlington YMCA are right: We must act now for
quality child care.
Mr. DODD. Mr. President, this is a very good amendment. Only one in
10 eligible children is being served.

[[Page S9899]]

I thank my colleagues, Senators Jeffords, Chafee, Snowe, Collins,
Roberts, Specter, Stevens, and Domenici. This is a large bipartisan
group that cares about this very much.
These are needed resources to get to children who are not being well
served. The tax credit is not refundable so it does not reach that low-
income category. This child care development block grant does assist
these families.
For those reasons, we urge adoption of the amendment. I thank the
leadership for agreeing this be done on a voice vote.
The PRESIDING OFFICER. The question is on agreeing to the amendment.
The amendment (No. 1452) was agreed to.
Mr. DODD. Mr. President, I move to reconsider the vote.
Mr. ROBB. I move to lay that motion on the table.
The motion to lay on the table was agreed to.

Motion to Recommit

The PRESIDING OFFICER. The Senator from Virginia.
Mr. ROBB. Mr. President, despite the opportunities we have had in
this bill and in the Finance Committee to address the $112 billion
school repair needs in this country, this tax bill is simply inadequate
in terms of infrastructure assistance for our Nation's schools.
We know 14 million children attend schools in need of extensive
repair or complete replacement. We know we need to build 2,400 new
schools by 2003 to accommodate record school enrollments. We know we
need to equip our schools with modern technology and the infrastructure
necessary to support that technology. We know all these things. Yet we
have reported a tax bill that only helps build and renovate 200
schools. We cannot starve our schools of resources and then criticize
them when they are overcrowded or dilapidated.
On behalf of Senators Lautenberg, Conrad, Harkin, and Wellstone, I
move to recommit the bill to the Committee on Finance, with
instructions to report back to the Senate within 3 days with an
amendment reducing or deferring by $5.7 billion over the next 10 years
certain new tax rates in the bill that benefit those who least need
relief.
Mr. NICKLES. I think this procedure would be a serious mistake. We
don't want Federal bureaucrats trying to improve school construction
programs. I think it would be a serious mistake. We should leave those
decisions of which schools to be building and which schools to repair
to the State and local governments.
I move to table the motion, and I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on agreeing to the motion. The
yeas and nays have been ordered. The clerk will call the roll.
The assistant legislative clerk called the roll.
The result was announced--yeas 55, nays 45, as follows:

[Rollcall Vote No. 242 Leg.]

YEAS--55

NAYS--45

MOTION TO RECOMMIT

Mr. WELLSTONE. I call up my motion to recommit on veterans' health
care.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from Minnesota [Mr. Wellstone] moves to
recommit the bill, S. 1429, to the Committee on Finance
with instructions that the Committee on Finance report the
bill to the Senate with provisions which--
Establish a reserve account for purposes of providing funds
for medical care for veterans;
Provide for the deposit in the reserve account of
$3,000,000,000 in each of fiscal years 2000 through 2004;
Make available amounts in the reserve account in those
fiscal years for purposes of medical care for veterans, which
amounts shall be in addition to any other amounts available
for medical care for veterans in those fiscal years; and
Provide that amounts for deposits in the reserve account
shall be derived by reductions in the amounts of new tax
reductions provided in the bill, wherever possible, for
individuals with incomes exceeding $200,000 per year.

Mr. WELLSTONE. Mr. President, I introduce this motion with Senator
Johnson, Senator Daschle, and Senator Harkin. This motion calls for $3
billion added to veterans' health care. That is consistent with what
the Veterans' Affairs Committee has said we need to do. That is
consistent with the veterans independent budget. That is consistent
with the report we did last week on the gaps in veterans' health care,
and every single Senator voted on the budget resolution for a $3
billion increase for veterans' health care. That is the least we should
do to make sure there is high-quality health care for veterans in our
country.
Mr. JOHNSON. Mr. President, the underlying tax bill calls for
domestic spending reductions of anywhere from 24 to 38 percent, closing
down VA hospitals from one end of this country to the other. This is
the one vote on which my colleagues will have an opportunity to make
sure there is enough money in the VA system to keep those hospitals
open.
The PRESIDING OFFICER. The Senator from Missouri.
Mr. BOND. Mr. President, I agree with my colleagues on the other
side. Yet the President's budget devastates veterans' health care. The
flat-line budget proposed by this administration will result in some
13,000 Veterans Affairs employees being RIF'd or furloughed. It will
close down facilities. It will throw people out of the care of the
veterans facilities.
The problem is that this motion does nothing to get money to
veterans. This body has already gone on record saying we do not want to
stay at the low level submitted by the President. That is why we are
going to increase by hundreds of millions of dollars in the
appropriations bill the amount we spend for veterans' health care. We
are concerned about veterans' health care. That is why we are not going
to tolerate the unforgivably small budget that the President has
proposed. This is an attempt to provide appropriations when, in fact,
it will have no such impact. There is $505 billion set aside in this
plan for spending on high-priority matters.
Mr. President, I make a point of order against the amendment under
section 305 of the Budget Act on the grounds that it is not germane.
Mr. WELLSTONE. Mr. President, I move to waive the Budget Act, and I
ask for the yeas and nays on the motion.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question occurs on agreeing to the motion
to waive the Budget Act with respect to the motion to recommit. The
yeas and nays have been ordered. The clerk will call the roll.
The legislative clerk called the roll.
The yeas and nays resulted--yeas 58, nays 42, as follows:

[Rollcall Vote No. 243 Leg.]

YEAS--58

Abraham
Akaka
Baucus
Bayh
Biden
Bingaman

[[Page S9900]]

Boxer
Bryan
Burns
Byrd
Cleland
Collins
Conrad
Daschle
DeWine
Dodd
Dorgan
Durbin
Edwards
Feingold
Feinstein
Graham
Harkin
Hollings
Hutchinson
Hutchison
Inouye
Jeffords
Johnson
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lincoln
McCain
Mikulski
Moynihan
Murray
Reed
Reid
Robb
Rockefeller
Santorum
Sarbanes
Schumer
Smith (NH)
Snowe
Specter
Thomas
Torricelli
Warner
Wellstone
Wyden

NAYS--42

Allard
Ashcroft
Bennett
Bond
Breaux
Brownback
Bunning
Campbell
Chafee
Cochran
Coverdell
Craig
Crapo
Domenici
Enzi
Fitzgerald
Frist
Gorton
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Inhofe
Kyl
Lott
Lugar
Mack
McConnell
Murkowski
Nickles
Roberts
Roth
Sessions
Shelby
Smith (OR)
Stevens
Thompson
Thurmond
Voinovich
The PRESIDING OFFICER (Mr. Roberts). On this vote the yeas are 58,
the nays are 42. Three-fifths of the Senators duly chosen and sworn not
having voted in the affirmative, the motion is rejected. The point of
order is sustained and the motion falls.
Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
Mr. NICKLES. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. BINGAMAN addressed the Chair.
The PRESIDING OFFICER. The Senator from New Mexico.

Motion To Recommit

Mr. BINGAMAN. Mr. President, I have a motion at the desk to recommit
to the Finance Committee that I call up at this time.
The PRESIDING OFFICER. The clerk will report.
The legislative assistant read as follows:

The Senator from New Mexico [Mr. Bingaman] moves to
recommit the bill to the Committee on Finance with
instructions to report back within three days with an
amendment providing for an additional $100 billion of debt
reduction, and to do so by reducing narrowly-targeted,
special-interest tax breaks and tax reductions that
disproportionately benefit the wealthy.

Mr. BINGAMAN. Mr. President, we have a historic opportunity before
us. For the first time in my nearly two decades in the Senate, we are
presented with predictions of a growing surplus. We made the tough
choices in 1993 and again in 1997 to bring spending under control, to
reduce the deficit, and to restore the federal budget to balance.
We are at a crossroads now and must decide how to respond to this
opportunity. Will we invest it wisely and prudently, or will it be
squandered? Will we return to the disastrous policies of the 1980's, or
can we stay on the path of fiscal discipline? The American public is
deeply cynical about government. Now is our chance to prove we can come
together in our national interest.
I am deeply concerned about the Republican plan for using this
surplus. In my opinion, they are squandering an opportunity we won't
have again to extend the solvency of Medicare and Social Security, to
invest in key priorities like education, the environment and medical
research, and to pay down our national debt. We shouldn't go off on a
spending or tax-cutting spree when we have this huge debt to repay.
Unfortunately, the Republicans have chosen to focus single-mindedly
on cutting taxes. I believe we should have a tax cut--I would favor tax
relief for working families, such as easing the marriage penalty and
increasing the per-child credit--but this bill goes much too far.
Instead, we need to balance the money among several key priorities.
There is almost no single policy that is more important to the long-
term health of our budget, to the sustainability of the surplus, and to
our overall economy, than paying off some of our three-and-half
trillion dollar national debt. We cannot leave this burden to our
grandchildren.
With a single voice, economists have told us of the benefits of and
importance of paying down that debt. It will lead to lower interest
rates. It will produce higher surpluses, because we will be paying less
interest. And it will be of tremendous benefit to the economy, because
it will free up private capital for productive investment that makes
our economy grown, and raise the standard of living for us all.
Alan Greenspan himself has said repeatedly that the most important
thing to do with the surplus is to pay down the debt. He has said it
over and over and over again. And he's been saying it for quite some
time now. Some of my Republican colleagues have seized on another
statement he made--saying that if paying down the debt is not
politically feasible, then he prefers tax cuts to spending.
My colleagues, there is no one here but us. We are in charge. We are
free to vote for what's right, and to define what's possible or what's
not. We can vote to reduce the debt, or to irresponsibly spend this
one-in-a-lifetime surplus on an excessively large tax cut that would
damage our economy and endanger Medicare and Social Security,
education, law enforcement, defense--just about any important national
program.
Paying off the debt today will also leave us in a much stronger
position to afford the cost of the baby boom's retirement. As other
speakers have pointed out, the cost of the Republican tax cuts begin to
rise dramatically just at the same time the pressures on the budget
begin to grow as the baby boomers start to retire.
But Republicans have rejected our attempts to pay down the debt. They
claim they are doing plenty to pay down the debt--and that this is
enough.
They may even talk about a Congressional Budget Office report that
purports to show how their plan reduces the debt. But that analysis is
based on a fiction; the fiction that Republicans will be able to cut
spending dramatically--by nearly one-fourth. And if defense is funded
at the level the Administration has requested, other important domestic
programs would face cuts of nearly 40 percent. This means less medical
research, dramatic cuts in the number of children participating in Head
Start, substantial reductions in the number of law enforcement
personnel, no new environmental cleanups, closures at national parks.
The list goes on.
However, as we all know, Democrats and Republicans both, there is
really no support for cuts of that magnitude, either in Congress or
among the public. A story on the front page of the Washington Post on
July 27, 1999 puts the lie to Republican assertions that they will be
able to cut spending. They can't even pass this year's appropriations
bills without resorting to smoke-and-mirrors gimmickry to hid the cost
of their bills.
Without those cuts, they need to raid the Social Security trust fund
to pay for their tax cut. And they will increase, rather than reduce,
our national debt.
The truth is, they want their excessive, risky tax cut so badly that
they are willing to put the health of our economy at risk, to endanger
the security of retirees, and to short-change important national
priorities like investments in education, medical research, the
environment and even national defense.
Republicans want to spend 97 percent of the available non-Social
Security surplus on tax cuts--tax cuts whose cost explodes in the
future, overheat our economy, and disproportionately favor the rich and
special interests.
Democrats have offered reasonable alternatives that balance tax cuts
with Medicare solvency, debt reduction and investments in key domestic
priorities. But these have all been rejected.
So I am making this last, very modest attempt to avoid wasting
surplus--asking that $100 billion of this excessive tax cut be used
instead for paying off more of our national debt. This would leave
about 86 percent of the surplus for tax cuts--this is less than 97
percent they want to spend, but is still a substantial amount. We could
do more to reduce the debt. I would like to do more. But this is a
starting point.
My motion would instruct the Finance Committee to report the bill
back in 3 days, with an amendment to reduce the tax cut by $100
billion, and use the savings to pay down more of our national debt. It
also instructs the Committee to find the savings by reducing narrowly-
targeted special interest tax breaks in the bill, and tax relief that
disportionately benefits the wealthy.
Last week, just days after Republicans passed their tax bill out of
committee, the Washington Post ran a

[[Page S9901]]

story detailing the special-interest giveaways in the Republican tax
bills. These include special breaks for seaplane owners in Alaska,
barge lines in Mississippi, and foreign residents who use frequent-
flyer miles to purchase airline tickets. Since then, we have also
learned just how skewed the bill is toward families with the very
highest incomes. The top 1 percent of all taxpayers would receive a
whopping 30 percent of the tax cuts. Overall, the top one-fifth of
taxpayers would receive 75 percent of the tax relief. It seems to me
there is plenty of room in this bill to reduce the tax cut by $100
billion for the sake of reducing our national debt.
The Republicans have rejected our balanced alternative to a huge,
imprudent tax cut, and they have rejected our lockbox that would set
aside money for Social Security and Medicare--but can't they even
reduce their enormous, risky tax cut by $100 billion in order to
further reduce our nation's indebtedness? That's only about 10 percent
of the available surplus. Only 10 percent for prudence and
responsibility, the rest to fulfill their agenda.
Mr. NICKLES addressed the Chair.
The PRESIDING OFFICER. The Senator from Oklahoma.
Mr. NICKLES. One, I appreciate our colleague's willingness to have a
voice vote. I encourage others to have voice votes.
For the information of all Senators, I think we are making good
progress. We only have a few amendments left, maybe just three or four
that require votes.
I urge our colleagues, on this particular motion--despite my
colleague's very good intentions--to vote no by voice vote.
The PRESIDING OFFICER. The question is on agreeing to the motion.
The motion was rejected.
Mr. SANTORUM. Mr. President, I move to reconsider the vote.
Mr. NICKLES. I move to lay that motion on the table.
The motion to lay on the table was agreed to.

Motion to Recommit

Mr. DORGAN. Mr. President, I call up my motion to recommit.
The PRESIDING OFFICER. The clerk will report the motion.
The legislative clerk read as follows:

The Senator from North Dakota [Mr. Dorgan] moves to
recommit the the bill to the Committee on Finance, with
instructions to report back within 3 days, with an amendment
to reserve amounts sufficient to establish an improved income
safety net for family farmers and ranchers in fiscal years
2000 through 2009, by limiting the bill's new tax breaks for
large corporations and those with annual incomes in excess of
$300,000.

The PRESIDING OFFICER. The Senator from North Dakota.
Mr. DORGAN. Mr. President, this is a motion to recommit. I will not
seek a recorded vote on it. My motion to recommit is to recommit the
bill to the Finance Committee with instructions to report back with an
amendment to reserve sufficient amounts to establish an improved income
safety net for family farmers and ranchers in fiscal years 2000 through
2009 by limiting the bill's new tax breaks for large corporations and
those with annual incomes in excess of $300,000.
I ask for its immediate consideration.
Mr. ROTH. Mr. President, I suggest we are ready for a voice vote.
The PRESIDING OFFICER. The question is on agreeing to the motion.
The motion was rejected.
Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
Mr. ROTH. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
The PRESIDING OFFICER. The Senator from New York.
Mr. MOYNIHAN. May I just note, sir, for the Record, there are several
of us, including the junior Senator from Alaska, who regret that the
rum cover-over provisions for Puerto Rico and the Virgin Islands are
not included in this legislation. We hope to do so at some early future
date. I yield the floor.
The PRESIDING OFFICER. The Senator from Michigan.

Amendment No. 1470, Withdrawn

(Purpose: Providing the Sense of the Senate regarding Capital Gains Tax
Cuts)

Mr. ABRAHAM. Mr. President, I call up amendment No. 1470.
The PRESIDING OFFICER. The clerk will report the amendment.
The legislative clerk read as follows:

The Senator from Michigan [Mr. Abraham] proposes an
amendment numbered 1470.

Mr. ABRAHAM. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The amendment is printed in a previous edition of the Record.)
Mr. ABRAHAM. Mr. President, this amendment tries to address what I
consider to be one of the shortfalls in the Senate Finance Committee's
tax bill. This tax bill does not include any provisions to reduce the
capital gains tax rate. I believe we need to address the needs of
America's growing investor class through mutual funds, pension plans,
IRAs and other investment vehicles about 50 percent of Americans have.
Half the Nation's population own stocks and other financial assets.
I believe it is time to put to rest once and for all the old class
warfare slogan that only the rich pay capital gains taxes. Forty-nine
percent of the investor class are women, and 38 percent are
nonprofessional, salaried workers. Wall Street and Main Street are no
longer separated. I believe it is time we recognize this fact and help
new middle-class investors succeed in their drive to invest and save
for the future.
I think it is time to cut the tax on mutual funds and pensions for
working Americans and, therefore, I have offered this amendment which
is a sense of the Senate suggesting we should, in the conference that
will follow the passage of this legislation, recede to the House
position which reduces capital gains tax rates.
The PRESIDING OFFICER. The distinguished Senator from New York.
Mr. MOYNIHAN. Mr. President, the pending amendment is not germane.
Accordingly, I raise a point of order that the amendment violates
section 305(b)(2) of the Congressional Budget Act of 1974.
Mr. ABRAHAM. Mr. President, I respond by saying that it is my
impression that we will not have a majority for this amendment. We will
not overcome the point of order. So at this time, in light of the time
constraints we are operating under today, I withdraw the amendment.
The PRESIDING OFFICER. Without objection, the amendment is withdrawn.
The distinguished Senator from North Dakota.

Amendment No. 1439

(Purpose: To amend the Internal Revenue Code of 1986 to allow employers
a credit against income tax for information technology training
expenses paid or incurred by the employer, and for other purposes)

Mr. CONRAD. Mr. President, I call up my amendment No. 1439.
The PRESIDING OFFICER. The clerk will report the amendment.
The legislative clerk read as follows:

The Senator from North Dakota [Mr. Conrad], for himself,
Mr. Reid, and Mr. Robb, proposes an amendment numbered 1439.

Mr. CONRAD. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The amendment is printed in a previous edition of the Record.)
Mr. CONRAD. Mr. President, this amendment, I believe, addresses a
critical national need. The Commerce Department tells us we have a
shortage of information technology workers of 34,000 and that that will
grow by 130,000 a year every year for the next 10 years. This amendment
seeks to deal with that situation by providing for a tax credit of 20
percent, up to a limit of $6,000 per worker per year.
This means that the Federal Government would be in partnership with
businesses training high-technology workers. The company would have to
put up 80 percent of the cost, the Federal Government, through a tax
credit, 20 percent. This is a reasonable response to a critical
national need.
This amendment is cosponsored by Senator Reid of Nevada, Senator Robb
of Virginia, and Senator Abraham of Michigan. It is endorsed by the
Information Technology Association of America, the Software Information
Industry Association, the American Society for Training and
Development, Cisco Systems, EDS, Intel, Microsoft, Texas Instruments,
and many others.
Mr. NICKLES. Mr. President, I urge our colleagues to vote no on this

[[Page S9902]]

amendment, both on substance and also on a germaneness point, which I
will raise in a moment.
The Senator is proposing a $6,000 tax credit if somebody is trained
as a high-tech employee. We are going to have the Federal Government
saying in this one area we want to pay $6,000 for this person to be
trained how to run computers.
I want people to learn how to run computers. Millions of people are
doing it today. They don't need the Federal Government to give them
$6,000 to do it. What about steelworkers? What about auto workers? What
about oil workers? What about factory workers? We don't do it for them.
We shouldn't do it for this industry.
Also the Senator pays for it by taking away the tax benefits we have
that allow people to enhance their retirement income. I think that is a
serious mistake.
I make a point of order against the amendment under section 305 of
the Budget Act on the grounds that it is not germane, and I ask for the
yeas and nays.
Mr. CONRAD. Mr. President, I move to waive the Congressional Budget
Act point of order.
The PRESIDING OFFICER. Is there a sufficient second? There is a
sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on agreeing to the motion to
waive the Congressional Budget Act in relation to the Conrad amendment
No. 1439. The yeas and nays have been ordered. The clerk will call the
roll.
The legislative assistant called the roll.
The result was announced--yeas 46, nays 54, as follows:

[Rollcall Vote No. 244 Leg]

YEAS--46

Abraham
Akaka
Baucus
Bayh
Biden
Bingaman
Boxer
Breaux
Bryan
Byrd
Cleland
Conrad
Daschle
Dodd
Dorgan
Durbin
Edwards
Feingold
Feinstein
Graham
Harkin
Hollings
Inouye
Johnson
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lincoln
Mikulski
Moynihan
Murray
Reed
Reid
Robb
Rockefeller
Sarbanes
Schumer
Torricelli
Wellstone
Wyden

NAYS--54

Allard
Ashcroft
Bennett
Bond
Brownback
Bunning
Burns
Campbell
Chafee
Cochran
Collins
Coverdell
Craig
Crapo
DeWine
Domenici
Enzi
Fitzgerald
Frist
Gorton
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Jeffords
Kyl
Lott
Lugar
Mack
McCain
McConnell
Murkowski
Nickles
Roberts
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Specter
Stevens
Thomas
Thompson
Thurmond
Voinovich
Warner
The PRESIDING OFFICER. On this vote the yeas are 46, the nays are 54.
Three-fifths of the Senators duly chosen not having voted in the
affirmative, the motion is rejected. The point of order is sustained
and the amendment falls.
Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
Mr. BOND. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
The PRESIDING OFFICER. The distinguished Senator from Iowa is
recognized.

Amendment No. 1454

(Purpose: To block companies from entering into a situation where they
are giving benefits to younger workers and denying those same benefits
to older employees. The amendment clearly stops a method by which some
employers skirt the intent of current law that prevents them from
taking away already accrued pension benefits)

Mr. HARKIN. Mr. President, I call up amendment No. 1454 and ask
unanimous consent that Senator Kennedy and Senator Wellstone be added
as cosponsors.
The PRESIDING OFFICER. Without objection, it is so ordered.
The clerk will report.
The legislative clerk read as follows:

The Senator from Iowa (Mr. Harkin), for himself, and Mr.
Kennedy, and Mr. Wellstone, proposes an amendment numbered
1454.

Mr. HARKIN. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The amendment is printed in a previous edition of the Record.)
Mr. HARKIN. Mr. President, right now companies are changing pension
plans. They are going from defined benefit plans to these cash balance
plans. That is OK. This amendment doesn't stop that. But what is
happening now is workers who have worked at these companies for
sometimes 20 or 25 years have their pensions degraded. There are 5 to
7, and sometimes as many as 10, years when nothing is put into their
pension plans. The younger workers are getting money paid into their
pensions and the older workers are not.
This amendment says that if they change pension plans they can not
discriminate against the older workers, and the companies have to put
into the older workers' pension accounts whatever they are putting into
the younger workers' pension accounts so that we don't have this kind
of wear away for 5 or 7 years when older workers are denied their
pension benefits.
The PRESIDING OFFICER. The Senator from Tennessee.
Mr. THOMPSON. Mr. President, I rise to oppose this amendment.
Employer sponsorship of defined benefit pension plans have been
declining over the last few years, mainly due to the increased
regulatory burden that Congress and the IRS has placed on employers who
offer these plans to employees.
This amendment would also substantially impair the employer's ability
to design and change their pension plans to meet the changing needs of
the business and of the employees. In addition, it would punish good
corporate citizens who maintain pension plans while leaving other
companies free to terminate their plans in order to get from under this
new law.
We have dealt with the concerns that participants do not know or
understand changes to their pension plans with the more expansive
disclosure requirements that are contained in this bill.
We should focus on revitalizing the defined pension system, rather
than adding new burdens on employers who voluntarily establish these
plans. For these reasons, I urge my colleagues to oppose this
amendment.
Mr. President, I make a point of order against the amendment under
section 305 of the Budget Act on the grounds that it is not germane.
Mr. HARKIN. Mr. President, pursuant to section 904 of the
Congressional Budget Act, I move to waive the Congressional Budget Act
for the consideration of amendment No. 1454, and I ask for the yeas and
nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on agreeing to the motion to
waive the Congressional Budget Act in relation to the Harkin amendment
No. 1454. The yeas and nays have been ordered. The clerk will call the
roll
The legislative clerk called the roll.
The yeas and nays resulted--yeas 48, nays 52, as follows:

[Rollcall Vote No. 245 Leg.]

YEAS--48

Akaka
Baucus
Bayh
Biden
Bingaman
Boxer
Breaux
Bryan
Byrd
Cleland
Conrad
Daschle
Dodd
Dorgan
Durbin
Edwards
Feingold
Feinstein
Graham
Grassley
Harkin
Hollings
Inouye
Jeffords
Johnson
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lincoln
Mikulski
Moynihan
Murray
Reed
Reid
Robb
Rockefeller
Sarbanes
Schumer
Specter
Torricelli
Wellstone
Wyden

NAYS--52

Abraham
Allard
Ashcroft
Bennett
Bond
Brownback
Bunning
Burns
Campbell
Chafee
Cochran
Collins
Coverdell
Craig
Crapo
DeWine
Domenici
Enzi
Fitzgerald
Frist
Gorton
Gramm
Grams
Gregg
Hagel
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Kyl
Lott
Lugar
Mack
McCain
McConnell
Murkowski
Nickles
Roberts
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Stevens
Thomas
Thompson
Thurmond
Voinovich
Warner
The PRESIDING OFFICER. On this vote the yeas are 48, the nays are 52.

[[Page S9903]]

Three-fifths of the Senators duly chosen and sworn not having voted in
the affirmative, the motion is rejected. The point of order is
sustained and the amendment falls.
Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
Mr. LEAHY. I move to lay that motion on the table.
The motion to lay on the table was agreed to.

Motion To Recommit

The PRESIDING OFFICER. The distinguished Senator from Massachusetts
is recognized. The Senate will be in order.
Mr. KENNEDY. Mr. President, I send a motion to the desk and ask for
its immediate consideration.
The PRESIDING OFFICER. The clerk will report the motion.
The legislative clerk read as follows:

The Senator from Massachusetts [Mr. Kennedy] moves to
recommit the bill to the Committee on Finance, with
instructions to report back to the Senate within 3 days, with
an amendment to reserve $39 billion to provide permanent
appropriations to the Pell Grant program in years 2000
through 2009 by reducing or deferring certain new tax breaks
in the bill, especially those that disproportionately benefit
the wealthy.

Mr. KENNEDY. Mr. President, as I understand, there is a 2-minute time
limit, 1 minute to either side; is that correct?
The PRESIDING OFFICER. The Senator's time is limited to 1 minute.
If we could have order in the Senate, please, we could expedite
things.
The Senator is recognized for 1 minute.
Mr. KENNEDY. Mr. President, this is to try to provide some help and
additional assistance to those individuals who are receiving the Pell
grants. Those are virtually the lowest-income students. For the over 4
million students who are receiving Pell grants, their average income is
$14,000 a year. They are the students who are encumbered to the
greatest degree as a result of borrowing. They start out, if they are
lucky enough to get into college, having these overwhelming debts. This
would provide some $39 billion which would increase the Pell grants
some $400. It would still only make them about 60 percent of what the
Pell grants were some 20 years ago.
As we are looking out after providing tax breaks for those in the
upper incomes, it does seem to me that to try to give further
encouragement to able and gifted students at the lower income level
deserves support.
The PRESIDING OFFICER. The distinguished Senator from Texas is
recognized.
Mr. GRAMM. We are all aware Congress has provided substantial funds
for Pell grants.
The PRESIDING OFFICER. The Senate is not in order.
Mr. GRAMM. Mr. President, you would have had to have just come in on
a turnip truck not to realize this Congress is a major funder of Pell
grants. We provide substantial funding in Pell grants in guaranteed
student loans. What we have before us is not another assistance
program, not another program that is trying to single out every
interest group in America and give them something, but instead we have
a tax bill that is aimed at letting working Americans keep more of what
they earn so they can help send their children to college.
I hope we might see an amendment such as this withdrawn and not have
to vote on it.
I yield the remainder of my time.
Mr. KENNEDY. Mr. President, as I understand it, the time has been
used or yielded back. I look forward to a vote on this motion.
The PRESIDING OFFICER. The question is on agreeing to the motion.
The motion was rejected.
Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
Mr. ROTH. I move to lay that motion on the table.
The motion to lay on the table was agreed to.

Motion To Recommit

Mr. DORGAN. I have a motion at the desk and ask for its immediate
consideration.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:

The Senator from North Dakota [Mr. Dorgan] moves to
recommit the bill to the Committee on Finance, with
instructions to report back within 3 days, with an amendment
to reserve sufficient amounts of funding to allow our nation
to reach our goal of serving one million children through the
Head Start program and to ensure that the number of
nutritionally at-risk women and children being served by the
Special Supplemental Nutrition Program for Women, Infants,
and Children will not be reduced in fiscal years 2000 through
2009, by limiting the bill's new tax breaks for those with
annual incomes in excess of $300,000 and for large
businesses.

The PRESIDING OFFICER. Without objection, the Senator is recognized.
Mr. DORGAN. Mr. President, I would like to take just a few seconds
and then yield to Senator Wellstone the remainder of the 1 minute.
This is a motion to recommit the bill to the Committee on Finance
with instructions to report back with an amendment to reserve
sufficient amounts of funding to allow our Nation to reach our goal of
serving 1 million children through the Head Start Program and to make
sure we are not diminishing or threatening those who are receiving
benefits under the WIC Program.
We hope if there is enough opportunity to provide tax cuts for 9 or
10 years, Members of the Senate will agree that Head Start and WIC also
ought to receive priority.
I yield to Senator Wellstone.
Mr. WELLSTONE. Mr. President, this is all about whether or not we
support children in our country. It is a terribly important program. We
will vote it up or down on a voice vote. On the ag appropriations bill
we will have a recorded vote.
The PRESIDING OFFICER. Does any Senator wish to speak in opposition?
Mr. ROTH. I suggest a voice vote.
The PRESIDING OFFICER. The question is on agreeing to the motion to
recommit.
The motion was rejected.
Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
Mr. HATCH. I move to lay that motion on the table.
The motion to lay on the table was agreed to.

Amendment No. 1456

Mr. ASHCROFT. Mr. President, I call up amendment No. 1456 which is at
the desk.
The PRESIDING OFFICER. The clerk will report the amendment.
The assistant legislative clerk read as follows:

The Senator from Missouri [Mr. Ashcroft] proposes an
amendment numbered 1456.

Mr. ASHCROFT. Mr. President, I ask unanimous consent that the reading
of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The amendment is printed in a previous edition of the Record.)
The PRESIDING OFFICER. The Senator is recognized for 1 minute.
Mr. ASHCROFT. Mr. President, this amendment simply eliminates from
this bill a special tax cut aimed at foreign technologies for
converting poultry waste into electricity. I agree with converting
poultry waste into something useful, but I disagree with giving a tax
break to foreign corporations when there are U.S. companies capable of
achieving that end.
Two such companies exist in my home State. Agri-Cycle of Springfield,
MO, processes chicken manure into pollution-free fertilizer pellets.
The British company that wants to build the facility here and burn the
waste claims they need the tax break because without it, they would not
be able to expand here because they are used to large subsidies they
receive from the British Government.
I ask my colleagues to support this amendment, and I ask for the yeas
and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There appears to be a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. Does any Senator wish to speak in opposition
to the amendment?
The Senator from Delaware.
Mr. ROTH. Mr. President, I rise in opposition to this amendment. The
poultry provision in the Taxpayer Refund Act of 1999 meets three
important criteria:
First, it facilitates the development and use of alternative fuel to
generate clean electricity--energy that is not only abundant, but
environmentally friendly. Certainly, in this summer of rolling
brownouts, we cannot overstate how important this is.

[[Page S9904]]

Second, the poultry provision in this bill addresses the need to
safely and effectively dispose of chicken waste. Poultry production in
the United States has tripled since 1975. Along with this growth, comes
the waste, and the need to dispose of it.
And third, the poultry provision in the bill demonstrates Congress'
willingness to help our poultry farmers, while encouraging
technological advances. Providing incentives for facilities that turn
chicken waste into clean energy is consistent with our objectives.
For these reasons, I urge my colleagues to vote against this
amendment, and to support the production of clean electricity--
production that will help America meet its energy needs, while helping
our farmers and protecting our environment.
Mr. MOYNIHAN. Mr. President, this measure was thoroughly discussed in
the Committee on Finance and is well understood on our side. I support
the chairman in the existing provision of the bill.
The PRESIDING OFFICER. The opposition time has expired.
Mr. ROTH. I call for the yeas and nays.
The PRESIDING OFFICER. The yeas and nays have already been ordered.
The question is on agreeing to amendment No. 1456. The yeas and nays
have been ordered. The clerk will call the roll.
The assistant legislative clerk called the roll.
The result was announced--yeas 23, nays 77, as follows:

[Rollcall Vote No. 246 Leg.]

YEAS--23

Abraham
Allard
Ashcroft
Bond
Brownback
Burns
Craig
Crapo
Durbin
Enzi
Fitzgerald
Gorton
Gregg
Inhofe
Johnson
Kohl
Kyl
McCain
Nickles
Roberts
Smith (NH)
Thomas
Wyden

NAYS--77

Akaka
Baucus
Bayh
Bennett
Biden
Bingaman
Boxer
Breaux
Bryan
Bunning
Byrd
Campbell
Chafee
Cleland
Cochran
Collins
Conrad
Coverdell
Daschle
DeWine
Dodd
Domenici
Dorgan
Edwards
Feingold
Feinstein
Frist
Graham
Gramm
Grams
Grassley
Hagel
Harkin
Hatch
Helms
Hollings
Hutchinson
Hutchison
Inouye
Jeffords
Kennedy
Kerrey
Kerry
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lincoln
Lott
Lugar
Mack
McConnell
Mikulski
Moynihan
Murkowski
Murray
Reed
Reid
Robb
Rockefeller
Roth
Santorum
Sarbanes
Schumer
Sessions
Shelby
Smith (OR)
Snowe
Specter
Stevens
Thompson
Thurmond
Torricelli
Voinovich
Warner
Wellstone
Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
Mr. LOTT. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
The PRESIDING OFFICER (Mr. Brownback). The Senator from Wisconsin.

Amendment No. 1417

(Purpose: To amend the Internal Revenue Code of 1986 to repeal the
percentage depletion allowance for certain hardrock mines)

Mr. FEINGOLD. Mr. President, I call up amendment No. 1417.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from Wisconsin [Mr. Feingold] proposes an
amendment numbered 1417.

Mr. FEINGOLD. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The amendment is printed in a previous edition of the Record.)
Mr. FEINGOLD. Mr. President, my amendment eliminates the percentage
depletion allowance for minerals mined on Federal public lands. It
applies only to hard rock minerals and does not touch oil and gas, and
it preserves the deduction for private lands.
The President's fiscal year 2000 budget recommends eliminating this
tax break. OMB estimates this amendment would raise $478 million over 5
years.
We allow companies to mine on public lands for very low patent fees
already. We shouldn't continue to provide them with a double subsidy by
preserving this special tax break for hard rock mining companies which
ordinary businesses do not get.
I understand this will be the subject of a voice vote.
The PRESIDING OFFICER. The question is on agreeing to amendment No.
1417.
The amendment (No. 1417) was rejected.
Mr. ROTH. Mr. President, I recognize Senator Coverdell for the next
amendment.

Amendment No. 1426, As Modified

Mr. COVERDELL. Mr. President, I ask unanimous consent to send a
modification of my amendment No. 1426 to the desk.
The PRESIDING OFFICER. Without objection, it is so ordered. The clerk
will report.
The legislative clerk read as follows:

The Senator from Georgia [Mr. Coverdell], for himself, Mr.
Torricelli, Mr. Domenici, Mr. Bayh, and Mr. Abraham, proposes
an amendment numbered 1426, as modified.

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

On page 32, strike lines 12 through 14, insert the
following:
(2) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after December 31,
2005.

SEC. __. LONG-TERM CAPITAL GAINS DEDUCTION FOR INDIVIDUALS.

(a) General Rule.--Part I of subchapter P of chapter 1
(relating to treatment of capital gains) is amended by
redesignating section 1202 as section 1203 and by inserting
after section 1201 the following new section:

``SEC. 1202. CAPITAL GAINS DEDUCTION FOR INDIVIDUALS.

``(a) In General.--In the case of an individual, there
shall be allowed as a deduction for the taxable year an
amount equal to the lesser of--
``(1) the net capital gain of the taxpayer for the taxable
year, or
``(2) $1,000.
``(b) Sales Between Related Parties.--Gains from sales and
exchanges to any related person (within the meaning of
section 267(b) or 707(b)(1)) shall not be taken into account
in determining net capital gain.
``(c) Special Rule for Section 1250 Property.--Solely for
purposes of this section, in applying section 1250 to any
disposition of section 1250 property, all depreciation
adjustments in respect of the property shall be treated as
additional depreciation.
``(d) Section Not To Apply to Certain Taxpayers.--No
deduction shall be allowed under this section to--
``(1) an individual with respect to whom a deduction under
section 151 is allowable to another taxpayer for a taxable
year beginning in the calendar year in which such
individual's taxable year begins,
``(2) a married individual (within the meaning of section
7703) filing a separate return for the taxable year, or
``(3) an estate or trust.
``(e) Special Rule for Pass-Thru Entities.--
``(1) In general.--In applying this section with respect to
any pass-thru entity, the determination of when the sale or
exchange occurs shall be made at the entity level.
``(2) Pass-thru entity defined.--For purposes of paragraph
(1), the term `pass-thru entity' means--
``(A) a regulated investment company,
``(B) a real estate investment trust,
``(C) an S corporation,
``(D) a partnership,
``(E) an estate or trust, and
``(F) a common trust fund.''
(b) Coordination With Maximum Capital Gains Rate.--
Paragraph (3) of section 1(h) (relating to maximum capital
gains rate) is amended to read as follows:
``(3) Coordination with other provisions.--For purposes of
this subsection, the amount of the net capital gain shall be
reduced (but not below zero) by the sum of--
``(A) the amount of the net capital gain taken into account
under section 1202(a) for the taxable year, plus
``(B) the amount which the taxpayer elects to take into
account as investment income for the taxable year under
section 163(d)(4)(B)(iii).''
(c) Deduction Allowable in Computing Adjusted Gross
Income.--Subsection (a) of section 62 (defining adjusted
gross income) is amended by inserting after paragraph (17)
the following new paragraph:
``(18) Long-term capital gains.--The deduction allowed by
section 1202.''
(d) Treatment of Collectibles.--
(1) In general.--Section 1222 (relating to other terms
relating to capital gains and losses) is amended by inserting
after paragraph (11) the following new paragraph:
``(12) Special rule for collectibles.--
``(A) In general.--Any gain or loss from the sale or
exchange of a collectible shall be treated as a short-term
capital gain or loss (as the case may be), without regard to
the period such asset was held. The preceding sentence shall
apply only to the extent the gain or loss is taken into
account in computing taxable income.
``(B) Treatment of certain sales of interest in
partnership, etc.--For purposes

[[Page S9905]]

of subparagraph (A), any gain from the sale or exchange of an
interest in a partnership, S corporation, or trust which is
attributable to unrealized appreciation in the value of
collectibles held by such entity shall be treated as gain
from the sale or exchange of a collectible. Rules similar to
the rules of section 751(f) shall apply for purposes of the
preceding sentence.
``(C) Collectible.--For purposes of this paragraph, the
term `collectible' means any capital asset which is a
collectible (as defined in section 408(m) without regard to
paragraph (3) thereof).''
(2) Charitable deduction not affected.--
(A) Paragraph (1) of section 170(e) is amended by adding at
the end the following new sentence: ``For purposes of this
paragraph, section 1222 shall be applied without regard to
paragraph (12) thereof (relating to special rule for
collectibles).''
(B) Clause (iv) of section 170(b)(1)(C) is amended by
inserting before the period at the end the following: ``and
section 1222 shall be applied without regard to paragraph
(12) thereof (relating to special rule for collectibles)''.
(e) Personal Exemptions Allowed in Computing Minimum Tax.--
(1) In general.--Subparagraph (E) of section 6(b)(1) is
amended by striking ``$50'' and inserting ``$300''.
(2) Conforming amendment.--Subparagraph (E) of section
56(b)(1), as amended by section 206(b)(2), is amended by
striking ``$50'' and inserting ``$300''.
(f) Conforming Amendments.--
(1) Section 57(a)(7) is amended by striking ``1202'' and
inserting ``1203''.
(2) Clause (iii) of section 163(d)(4)(B) is amended to read
as follows:
``(iii) the sum of--

``(I) the portion of the net capital gain referred to in
clause (ii)(II) (or, if lesser, the net capital gain referred
to in clause (ii)(I)) taken into account under section 1202,
reduced by the amount of the deduction allowed with respect
to such gain under section 1202, plus

``(II) so much of the gain described in subclause (I) which
is not taken into account under section 1202 and which the
taxpayer elects to take into account under this clause.''

(3) Subparagraph (B) of section 172(d)(2) is amended to
read as follows:
``(B) the deduction under section 1202 and the exclusion
under section 1203 shall not be allowed.''
(4) Section 642(c)(4) is amended by striking ``1202'' and
inserting ``1203''.
(5) Section 643(a)(3) is amended by striking ``1202'' and
inserting ``1203''.
(6) Paragraph (4) of section 691(c) is amended inserting
``1203,'' after ``1202,''.
(7) The second sentence of section 871(a)(2) is amended by
inserting ``or 1203'' after ``section 1202''.
(8) The last sentence of section 1044(d) is amended by
striking ``1202'' and inserting ``1203''.
(9) Paragraph (1) of section 1402(i) is amended by
inserting ``, and the deduction provided by section 1202 and
the exclusion provided by section 1203 shall not apply''
before the period at the end.
(10) Section 121 is amended by adding at the end the
following new subsection:
``(h) Cross Reference.--

``For treatment of eligible gain not excluded under subsection (a),
see section 1202.''
(11) Section 1203, as redesignated by subsection (a), is
amended by adding at the end the following new subsection:
``(l) Cross Reference.--

``For treatment of eligible gain not excluded under subsection (a),
see section 1202.''
(12) The table of sections for part I of subchapter P of
chapter 1 is amended by striking the item relating to section
1202 and by inserting after the item relating to section 1201
the following new items:

``Sec. 1202. Capital gains deduction.
``Sec. 1203. 50-percent exclusion for gain from certain small business
stock.''
(g) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 2005.
(2) Collectibles.--The amendments made by subsection (d)
shall apply to sales and exchanges after December 31, 2005.

Mr. COVERDELL. Mr. President, it is my understanding this will be
done by a voice vote. I am going to speak for about 50 seconds and
yield to my coauthor, Senator Torricelli from New Jersey.
Seventy-five percent of stockholders today have household incomes
less than $75,000. The Coverdell-Torricelli amendment targets middle-
class investors by exempting their first $1,000 capital gains from
taxation, beginning in fiscal year 2006. This is a bipartisan
amendment, which is also cosponsored by, as I said, Senators
Torricelli, Domenici, Bayh, and Abraham. It will wipe out the gains tax
for millions of middle-class taxpayers and promote tax simplification.
I yield the remainder of my minute to the Senator from New Jersey.
The PRESIDING OFFICER. The Senator from New Jersey.
Mr. TORRICELLI. Mr. President, Senator Bayh and I have joined with
Senator Coverdell on this amendment. It is simple on its face: to
encourage people to engage in modest savings, eliminating $1,000 of
capital gains tax for modest savers. Seventy-five percent of the people
who will be affected by this earn less than $70,000. It is to encourage
the culture of savings so people plan for their own retirements and
security in their own families.
The Nation today is in the midst of a savings crisis. I know of no
better way to encourage people to participate in the growth of this
economy and investment than giving this simple $1,000 exclusion on
their capital gains.
I thank the Chair.
The PRESIDING OFFICER. Who yields time in opposition?
Mr. ROTH. Mr. President, I call for a voice vote.
The PRESIDING OFFICER. The question is on agreeing to amendment No.
1426, as modified.
The amendment (No. 1426) was agreed to.
Mr. GRAMM. Mr. President, I move to reconsider the vote.
Mr. ROTH. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. ROTH. I recognize Senator Snowe for the next amendment.

Amendment No. 1468

Ms. SNOWE. Mr. President, I call up amendment No. 1468.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Maine [Ms. Snowe] proposes an amendment
numbered 1468.

Ms. SNOWE. Mr. President, I ask unanimous consent that reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The amendment is printed in a previous edition of the Record.)
Ms. SNOWE. Mr. President, I ask unanimous consent to add Senator
Schumer as a cosponsor of this amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Ms. SNOWE. Mr. President, essentially this takes a provision that is
included in the amendment that Senator Schumer and I had offered that
addresses the growing debt burden faced by recent college students.
The bottom line is, we all recognize that the cost of college
education has quadrupled over the last 20 years, growing at twice the
rate of inflation. In fact, over the past 5 years, the demand for
college loans has soared by more than 82 percent. Therefore, recent
graduates have been forced to assume a greater burden of debt after
they graduate from college.
My amendment would add a tax credit for interest on student loans for
the first 5 years upon graduation so that it would ease the amount of
debt that individuals have to assume. It would be a $1,500 tax credit.
In fact, this has received the support of the American Council on
Education.
I will quote from this letter:

By adding your amendment to the Roth provision, students
who are working hard to repay their loans will receive tax
relief for the duration of their repayment and benefit from
the additional relief of your credit during their first years
out of college.

I ask unanimous consent to have printed in the Record the letter from
which I just quoted.
There being no objection, the letter was ordered to be printed in the
Record, as follows:

American Council on Education,

Office of the President,

Washington, DC, July 30, 1999.
Hon. Olympia J. Snowe,
U.S. Senate,
Washington, DC.
Dear Senator Snowe: The higher education associations
listed below write in support of your amendment to create a
tax credit for interest payments on student loans. Your
amendment, which would provide a $1,500 tax credit on
interest payments for the first 60 months of repayment, is a
welcome addition to the provisions already contained in
Chairman Roth's bill.
We strongly support the provisions that Chairman Roth has
included in his bill to expand the existing Student Loan
Interest Deduction by eliminating the 60 payment restriction
and by modestly increasing the income limits for married
couples. We understand that your amendment is fully offset,

[[Page S9906]]

and will not change any of the underlying education
provisions in S. 1429.
By adding your amendment to the Roth provisions, students
who are working hard to repay their loans will receive tax
relief for the duration of their repayment and benefit from
the additional relief of your credit during their first years
out of college.
Thank you for your efforts to lessen the burden on student
borrowers.
Sincerely,
Stanley O. Ikenberry,
President.
On behalf of:
American Association of Community Colleges.
American Association of State Colleges and Universities.
American Council on Education.
Association of American Universities.
Association of Jesuit Colleges and Universities.
Council of Independent Colleges.
National Association of Independent Colleges and
Universities.
National Association of State Universities and Land-Grant
Colleges.
National Association of Student Financial Aid
Administrators.
United States Student Association.
US PIRG.

The PRESIDING OFFICER. The Senator's time has expired.
Mr. ROTH. Mr. President, I suggest a voice vote.
The PRESIDING OFFICER. The question is on agreeing to amendment No.
1468.
The amendment (No. 1468) was rejected.
Mr. GRAMM. Mr. President, I move to reconsider the vote.
Mrs. BOXER. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. ROTH. Mr. President, I recognize Senator Gregg for the next
amendment.

Amendment No. 1375, As Modified

(Purpose: To provide a minimum dependent care credit for stay-at-home
parents, and for other purposes)

Mr. GREGG. Mr. President, I send an amendment to the desk and ask for
its modification.
The PRESIDING OFFICER. Without objection, it is so ordered. The clerk
will report the amendment.
The assistant legislative clerk read as follows:

The Senator from New Hampshire [Mr. Gregg] proposes an
amendment numbered 1375, as modified.

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

On page 21, before line 1, insert:
(c) Minimum Dependent Care Credit Allowed for Stay-at-Home
Parents.--Section 21(e) (relating to special rules) is
amended by adding at the end the following:
``(11) Minimum credit allowed for stay-at-home parents.--
``(A) In general.--Notwithstanding subsection (d), in the
case of any taxpayer with 1 or more qualifying individuals
described in subsection (b)(1)(A) under the age of 1, such
taxpayer shall be deemed to have employment-related expenses
for the taxable year with respect to each such qualifying
individual in an amount equal to the sum of--
``(i) $200 for each month in such taxable year during which
such qualifying individual is under the age of 1, and
``(ii) the amount of employment-related expenses otherwise
incurred for such qualifying individual for the taxable year
(determined under this section without regard to this
paragraph).
``(B) Election to not apply this paragraph.--This paragraph
shall not apply with respect to any qualifying individual for
any taxable year if the taxpayer elects to not have this
paragraph apply to such qualifying individual for such
taxable year.''.
On page 21, line 1, strike ``(c)'' and insert ``(d)''.

Mr. GREGG. Mr. President, this is the stay-at-home-moms amendment. It
basically extends the dependent care tax credit to stay-at-home moms. I
note that the Senate voted 96-0 in a sense of the Senate for this
proposal. It applies to the first year of the child's life and would
apply the dependent care tax credit to that first year, so that mothers
who stay at home and raise children are treated the same way as mothers
who have to go to work and send their children to day care.
I note that it is an amendment that is targeted at middle- and low-
income families, with stay-at-home mothers in households with an
average $38,000 in income and with two working parents with an average
income of about $58,000. It is a proposal the Senate has spoken on
relative to the sense of the Senate. Therefore, I hope the Senate
supports this proposal.
I ask for a voice vote.
Mr. NICKLES addressed the Chair.
The PRESIDING OFFICER. The Senator from Oklahoma.
Mr. NICKLES. Mr. President, I urge my colleagues to support the Gregg
amendment.
The PRESIDING OFFICER. The question is on agreeing to the amendment.
The amendment (No. 1375) was agreed to.

Vote On Amendment No. 1468

Mr. NICKLES. Mr. President, if I might have the attention of the
Senate, a moment ago we had a voice vote on the Snowe amendment and
there was some question on the outcome. I think the Chair ruled ``no''
on the Snowe amendment, and I personally think there was a significant
question about that. A lot of people voted in favor of the Snowe
amendment. So I move to reconsider the vote on the Snowe amendment.
The PRESIDING OFFICER. Is there objection to reconsidering the vote?
Without objection, the vote will be reconsidered.
The question is on agreeing to amendment No. 1468 by the Senator from
Maine, Ms. Snowe.
The amendment (No. 1468) was agreed to.
Mr. ROTH addressed the Chair.
The PRESIDING OFFICER. The Senator from Delaware is recognized.

Motion To Waive

Mr. ROTH. Mr. President, section 202 of S. 1429 makes certain that
the marriage penalty relief in the bill also applies to married couples
receiving earned-income tax credits. Thus, the provision violates the
Budget Act because it increases outlays.
In order to protect the provision against a point of order, I move to
waive any point of order against section 202 in this legislation, a
subsequent conference report, or in an amendment between the Houses if
such point of order is made on the grounds that the enhancement of the
earned-income tax credit for married couples is an increase in outlays.
I call for a voice vote.
The PRESIDING OFFICER. The question is on agreeing to the motion of
the Senator from Delaware.
In the opinion of the Chair, three-fifths of the Senators duly sworn
having voted in the affirmative, the motion is agreed to.
Mr. ROTH. Mr. President, I ask unanimous consent that notwithstanding
the passage of the reconciliation bill, the managers of the bill have
the authority, in conjunction with the Secretary of the Senate, to make
further changes to the bill.
I further ask consent that the changes just described must be cleared
by both managers and the authority extend until 5 p.m. on Friday.
The PRESIDING OFFICER. Without objection, it is so ordered.

Amendments Agreed To, En Bloc

Mr. ROTH. Mr. President, I send a series of amendments to the desk
and ask unanimous consent that these amendments be considered agreed to
en bloc, the motion to reconsider be laid upon the table, and any
statements relating to these amendments appear at this point in the
Record. I indicate to my colleagues that these amendments have been
cleared on both sides of the aisle.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendments (Nos. 1377, 1387, 1394, 1402, 1407, 1425, 1441, 1458,
1460, 1464, 1479, 1485, 1488, and 1491), en bloc, were agreed to.
(The amendments are printed in a previous edition of the Record.)
The amendments (Nos. 1378, as modified; 1403, as modified; 1404, as
modified; 1418, as modified; 1443, as modified; 1465, as modified;
1474, as modified), en bloc, were agreed to, as follows:

AMENDMENT NO. 1378 AS MODIFIED

(Purpose: To amend the Internal Revenue Code of 1986 to expand S
corporation eligibility for banks, and for other purposes)

On page 225, after line 24, add the following:

SEC. __. EXCLUSION OF INVESTMENT SECURITIES INCOME FROM
PASSIVE INCOME TEST FOR BANK S CORPORATIONS.

(a) In General.--Section 1362(d)(3)(C) (defining passive
investment income) is amended by adding at the end the
following:
``(v) Exception for banks; etc.--In the case of a bank (as
defined in section 581), a

[[Page S9907]]

bank holding company (as defined in section
246A(c)(3)(B)(ii)), or a qualified subchapter S subsidiary
bank, the term `passive investment income' shall not
include--

``(I) interest income earned by such bank, bank holding
company, or qualified subchapter S subsidiary bank, or
``(II) dividends on assets required to be held by such
bank, bank holding company, or qualified subchapter S
subsidiary bank to conduct a banking business, including
stock in the Federal Reserve Bank, the Federal Home Loan
Bank, or the Federal Agricultural Mortgage Bank or
participation certificates issued by a Federal Intermediate
Credit Bank.''

(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
1999.

SEC. __. TREATMENT OF QUALIFYING DIRECTOR SHARES.

(a) In General.--Section 1361 is amended by adding at the
end the following:
``(f) Treatment of Qualifying Director Shares.--
``(1) In general.--For purposes of this subchapter--
``(A) qualifying director shares shall not be treated as a
second class of stock, and
``(B) no person shall be treated as a shareholder of the
corporation by reason of holding qualifying director shares.
``(2) Qualifying director shares defined.--For purposes of
this subsection, the term `qualifying director shares' means
any shares of stock in a bank (as defined in section 581) or
in a bank holding company registered as such with the Federal
Reserve System--
``(i) which are held by an individual solely by reason of
status as a director of such bank or company or its
controlled subsidiary; and
``(ii) which are subject to an agreement pursuant to which
the holder is required to dispose of the shares of stock upon
termination of the holder's status as a director at the same
price as the individual acquired such shares of stock.
``(3) Distributions.--A distribution (not in part or full
payment in exchange for stock) made by the corporation with
respect to qualifying director shares shall be includible as
ordinary income of the holder and deductible to the
corporation as an expense in computing taxable income under
section 1363(b) in the year such distribution is received.''
(b) Conforming Amendments.--
(1) Section 1361(b)(1) is amended by inserting ``, except
as provided in subsection (f),'' before ``which does not''.
(2) Section 1366(a) is amended by adding at the end the
following:
``(3) Allocation with respect to qualifying director
shares.--The holders of qualifying director shares (as
defined in section 1361(f)) shall not, with respect to such
shares of stock, be allocated any of the items described in
paragraph (1).''
(3) Section 1373(a) is amended by striking ``and'' at the
end of paragraph (1), by striking the period at the end of
paragraph (2) and inserting ``, and'', and adding at the end
the following:
``(3) no amount of an expense deductible under this
subchapter by reason of section 1361(f)(3) shall be
apportioned or allocated to such income.''
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
1999.
____

amendment no. 1403, as modified

(Purpose: To amend the Internal Revenue Code of 1986 with respect to
the treatment of the transportation of person traveling to or from
areas not connected to a road system)

At page 180, line 18 before the period insert the following
new phrase:

``AND PASSENGERS PERMITTED TO UTILIZE OTHERWISE EMPTY SEATS
ON AIRCRAFT''.

At page 180, between lines 21 and 22 insert the following
new subsections:
``(b) Subsection (h) of section 132 of the Internal Revenue
Code of 1986 (relating to certain fringe benefits) is amended
by adding at the end thereof the following new paragraph:
``(4) Special rule for passengers traveling on
noncommercial aircraft.--Any use of non-commercial air
transportation by an individual shall be treated as use by an
employee if no regularly scheduled commercial flight is
available that day from the air facility at the individual
location.
``(c) Subsection (j) of section 132 of the Internal Revenue
Code of 1986 (relating to certain fringe benefits'' is
amended by adding at the end thereof the following new
paragraph:
``(9) Special rule for certain noncommercial air
transportation.--For the purposes of subsection (b) the term
``no-additional-cost service'' includes the value of
transportation provided by an employer to an employee on a
noncommercially operated aircraft if--
``(A) such transportation is provided on a flight made in
the ordinary course of the trade or business of the employer
owning or leasing such aircraft for use in such trade or
business,
``(B) the flight on which the transportation is provided by
the employer would have been made whether or not such
employee was transported on the flight, and
``(C) the employer incurs no substantial additional cost in
providing such transportation to such employee.

For purposes of this paragraph, an aircraft is
noncommercially operated if transportation provided by the
employer is not provided or made available to the general
public by purchase of a ticket or other fare.
At page 180 line 22 strike ``(b)'' and insert in lieu
thereof ``(d)''.
____

AMENDMENT NO. 1404 AS MODIFIED

(Purpose: To expand the adoption credit to provide assistance to
adoptive parents of special needs children, and for other purposes)

At the end of title II, insert the following:

SEC. __. EXPANSION OF ADOPTION CREDIT.

(a) In General.--Section 23(a)(1) (relating to allowance of
credit) is amended to read as follows:
``(1) In general.--In the case of an individual, there
shall be allowed as a credit against the tax imposed by this
chapter--
``(A) in the case of an adoption of a child other than a
child with special needs, the amount of the qualified
adoption expenses paid or incurred by the taxpayer, and
``(B) in the case of an adoption of a child with special
needs, $7,500.''
(b) Dollar Limitation.--Section 23(b)(1) is amended--
(1) by striking ``($6,000, in the case of a child with
special needs)'', and
(2) by striking ``subsection (a)'' and inserting
``subsection (a)(1)''.
(c) Year Credit Allowed.--Section 23(a)(2) is amended by
adding at the end the following new flush sentence:
``In the case of the adoption of a child with special needs,
the credit allowed under paragraph (1) shall be allowed for
the taxable year in which the adoption becomes final.''
(d) Definition of Eligible Child.--Section 23(d)(2) is
amended to read as follows:
``(2) Eligible child.--The term `eligible child' means any
individual who--
``(A) has not attained age 18, or
``(B) is physically or mentally incapable of caring for
himself.''
(e) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2000.
____

amendment no. 1418 as modified

(Purpose: To amend the Internal Revenue Code of 1986 with respect to
the treatment of maple syrup production)

On line 3 of subsection (k) of section 3306 of the Internal
Revenue Code of 1986 is amended by inserting after
``chapter'' the following: ``agricultural labor includes
labor connected to the harvesting or production of maple sap
into maple syrup or sugar, and''.
____

AMENDMENT NO. 1443 as modified

(Purpose: To provide that trusts established for the benefit of
individuals with disabilities shall be taxed at the same rates as
individual taxpayers, and for other purposes)

On page 32, between lines 14 and 15, insert the following:

SEC. 207. MODIFICATION OF TAX RATES FOR TRUSTS FOR
INDIVIDUALS WHO ARE DISABLED.

(a) In General.--Section 1(e) (relating to tax imposed on
estates and trusts) is amended to read as follows:
``(e) Estates and Trusts.--
``(1) In general.--Except as provided in paragraph (2),
there is hereby imposed on the taxable income of--
``(A) every estate, and
``(B) every trust,
taxable under this subsection a tax determined in accordance
with the following table:

The tax is:e income is:
15% of taxable income..................................................
$225, plus 28% of the excess over $1,500...............................
$785, plus 31% of the excess over $3,500...............................
$1,405, plus 36% of the excess over $5,500.............................
$2,125, plus 39.6% of the excess over $7,500...........................
``(2) Special rule for trusts for disabled individuals.--
``(A) In general.--There is hereby imposed on the taxable
income of an eligible trust taxable under this subsection a
tax determined in the same manner as under subsection (c).
``(B) Eligible trust.--For purposes of subparagraph (A), a
trust shall be treated as an eligible trust for any taxable
year if, at all times during such year during which the trust
is in existence, the exclusive purpose of the trust is to
provide reasonable amounts for the support and maintenance of
1 beneficiary who is permanently and totally disabled (within
the meaning of section 22(e)(3)). A trust shall not fail to
meet the requirements of this subparagraph merely because the
corpus of the trust may revert to the grantor or a member of
the grantor's family upon the death of the beneficiary.''
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2006.
____

AMENDMENT NO. 1465 as modified

(Purpose: To index the State-ceiling on the low-income housing credit,
and for other purposes)

On page 288, strike line 5 and insert:
(c) Adjustment of State Ceiling for Increases in Cost-of-
Living.--Paragraph (3) of

[[Page S9908]]

section 42(h) (relating to housing credit dollar amount for
agencies), as amended by subsection (b), is amended by adding
at the end the following new subparagraph:
``(I) Cost-of-living adjustment.--
``(i) In general.--In the case of a calendar year after
2005, the $1.75 amount in subparagraph (H) shall be increased
by an amount equal to--

``(I) such dollar amount, multiplied by
``(II) the cost-of-living adjustment determined under
section 1(f)(3) for such calendar year by substituting
`calendar year 2004' for `calendar year 1992' in subparagraph
(B) thereof.

``(ii) Rounding.--Any increase under clause (i) which is
not a multiple of 5 cents shall be rounded to the next lowest
multiple of 5 cents.''.
(d) Conforming Amendments.--
On page 288, line 19, strike ``(d)'' and insert ``(e)''.
____

AMENDMENT NO. 1474 as modified

(Purpose: To exclude certain severance payment amounts from income)

On page 371, between lines 16 and 17, insert the following:

SEC. __. EXCLUSION FROM INCOME OF SEVERANCE PAYMENT AMOUNTS.

(a) In General.--Part III of subchapter B of chapter 1
(relating to items specifically excluded from gross income)
is amended by redesignating section 139 as section 140 and by
inserting after section 138 the following new section:

``SEC. 139. SEVERANCE PAYMENTS.

``(a) In General.--In the case of an individual, gross
income shall not include any qualified severance payment.
``(b) Limitation.--The amount to which the exclusion under
subsection (a) applies shall not exceed $2,000 with respect
to any separation from employment.
``(c) Qualified Severance Payment.--For purposes of this
section--
``(1) In general.--The term `qualified severance payment'
means any payment received by an individual if--
``(A) such payment was paid by such individual's employer
on account of such individual's separation from employment,
``(B) such separation was in connection with a reduction in
the work force of the employer, and
``(C) such individual does not attain employment within 6
months of the date of such separation in which the amount of
compensation is equal to or greater than 95 percent of the
amount of compensation for the employment that is related to
such payment.
``(2) Limitation.--Such term shall not include any payment
received by an individual if the aggregate payments received
with respect to the separation from employment exceed
$75,000.''
(b) Clerical Amendment.--The table of sections for part III
of subchapter B of chapter 1 is amended by striking the item
relating to section 139 and inserting the following new
items:

``Sec. 139. Severance payments.
``Sec. 140. Cross references to other Acts.''
(c) Effective Date.--The amendments made by subsections (a)
and (b) shall apply to taxable years beginning after December
31, 2000, and before January 1, 2002.

amendment no. 1378, as modified

Mr. ALLARD. Mr. President, this amendment would expand the small
business provisions of this tax bill. I am pleased that several of the
provisions have been accepted. We are making solid progress on this
issue.
This is a bipartisan amendment, cosponsored by Senators Robb of
Virginia and Hagel of Nebraska.
I support tax relief for the American people, and I will support this
tax bill. The surplus belongs to the American people, and I think a
refund of one-third of the surplus is reasonable.
While I support the bill, I have been working to improve it before
final passage.
In particular, we should expand the small business tax section of the
code known as Subchapter S. Subchapter S of the Internal Revenue Code
was enacted by Congress in 1958 and has been liberalized a number of
times over the last two decades, significantly in 1982 and again in
1996.
This reflects a desire on the part of Congress to reduce taxes on
small businesses. Subchapter S eliminates the double taxation of small
business income.
Under Subchapter S the business is taxed at the shareholder level
alone, it is not taxed at the corporate level. Subchapter S is
available only to small businesses that have a small number of
shareholders.
Congress made small banks eligible for S corporation status in the
1996 ``Small Business Job Protection Act.''
Since first becoming eligible, nearly 1,000 small banks have
converted from regular corporations to small business corporations.
Unfortunately, many more would like to convert, but are prevented
from doing so by a number of remaining obstacles in the tax law.
My amendment builds on and clarifies the Subchapter S provisions from
1996. It contains several provisions of particular benefit to community
banks that may be contemplating a conversion to Subchapter S.
The amendment is based on S. 875, legislation that I introduced
earlier this year with the cosponsorship of Senators Gramm, Bennett,
Shelby, Abraham, Hagel, Enzi, Mack, Grams, Inhofe, Brownback, and
Thomas.
I have selected several provisions from the bill for this amendment
and the Finance Committee has agreed to accept them. Let me review
these provisions:
First, we exclude investment securities income from the passive
income test for banks. Banks are unique, they are required to hold
passive investments such as federal bonds and municipal bonds in order
to comply with safety and soundness regulations.
This provision is only fair. If we require certain investments by
regulation, we should not use this requirement to prohibit banks from
becoming Subchapter S small businesses.
Second, we permit Subchapter S small business corporations to have
bank director stock. Again, regulations require banks to have bank
director stock.
We clarify that this does not punish banks. They can still become
small business corporations.
In addition, I will be working with Chairman Roth and his staff on
several other provisions to consider for the future. These include one
to permit Individual Retirement Accounts to be shareholders in an S
corporation. This provision is a recognition of the importance of IRAs.
We have found that many community bank owners have their shares in an
IRA. There is nothing wrong with this. We should let them be
shareholders.
In addition, we hope in the future to permit S corporations to issue
preferred stock. This would give all small businesses that are S
corporations access to investment capital.
Let me conclude with a general statement on why we should enact these
changes. Last year we enacted broad legislation to support credit
unions. I supported this legislation.
We should now give small banks some tax relief. They are in a tough
competitive position.
We are about to approve financial modernization in this Congress. I
am a member of the Conference on this important legislation. I support
the legislation.
But I think it is right to note that this legislation is of greatest
appeal to larger financial institutions.
Again, our small community banks need help. They need tax relief to
help them compete and survive. This amendment give the small banks tax
relief.
This amendment is supported by the Independent Community Bankers of
America, the American Bankers Association, the Independent Bankers of
Colorado, the Colorado Bankers Association, the Independent Bankers
Association of Texas, and others.
I am pleased that the Finance Committee has accepted the passive
income and director stock provisions of the amendment.
In addition, Senator Roth and his staff have agreed to work with us
on the remaining provisions of the amendment and S. 875.

Amendment No. 1403

Mr. STEVENS. Mr. President, my amendment mirrors a bill I introduced
on an earlier occasion-S. 1410.
This amendment would equate the tax treatment of persons flying what
would otherwise be empty seats on private noncommercial aircraft with
the treatment of airline employees flying on space available basis on
regularly scheduled flights. Currently, use of these empty seats is
deemed taxable personal income to the employee. I refer to it as the
empty-seat tax. In contrast, under current law, airline employees,
retirees and their parents and children can fly tax-free on scheduled
commercial flights for nonbusiness reasons. Military personnel and
their families can hop military flights for nonbusiness reasons without
the imposition of tax. Current and former employees of airborne freight
or cargo haulers, together with their parents and children, can fly
tax-free for nonbusiness reasons on seats that would have otherwise
been empty.
Employers who own or lease these aircraft are compelled by IRS
regulations to consider 13 separate factors or

[[Page S9909]]

steps in determining the incidence and amount of tax to be imposed on
their employees. My proposal seeks to deal with this inequity by
treating all passengers the same way, but includes a provision which
retains a reasonable standard of proof at audit to prevent abuse.
This amendment would not allow an executive to use a company jet to
fly with his family and friends on vacation. My amendment would require
proof to be shown that the flight was made in the ordinary course of
business, the flight would have been made whether or not the person was
transported on the flight, and no substantial additional cost was
incurred in providing the transportation for the passenger.
In addition to the facilitation of employee travel, this provision is
an especially important issue to large States with smaller populations
because air travel comprises such a large part of our transportation
systems. Instead of driving a car from city to city, many people from
rural areas get on a plane to travel within their States. There are no
roads from Barrow to Nome or Anchorage to Cold Bay. Additionally, in
the event of illness, many people in rural States must take an empty
seat on a company owned airplane and incur a tax penalty because they
need medical treatment that can only be found in larger cities. My
amendment includes a provision to allow passengers to be treated as
employees if they live in remote areas that are not connected to a road
system. For cases of medical emergency or other time sensitive
situations, a passenger could as if they were an employee of the
operator of the non-commercial aircraft without being taxes on the
value of the seat.
This is a modest proposal with small revenue impacts. The joint
Committee on Taxation estimates the revenue impact for this provision
would be approximately five million dollars per year over the next ten
year period. While this is a small amount against the backdrop of the
overall tax cut measure we are considering, it is a large amount to the
people who are forced to pay the tax simply because they do not work
for or are not related to an employee of an airline, the military, a
cargo freight company, or because they live in remote areas without
road access. Flights are often, at best, biweekly to some rural
villages in my State and during the long periods when no flights are
scheduled, transportation out of these remote areas in emergency
situations requires chartering an aircraft.
We should keep in mind that we are currently debating a tax refund
bill that seeks to level the playing field for the American taxpayers.
The tax refund bill would remove the marriage penalty that discriminate
against married couples. It addresses inequities in pension plans that
discriminate against certain workers. Yet, the Tax Refund Act does not
address the tax discrimination against the users of empty seats who
live or do business in rural areas.
It is my hope that we can address this basic issue of tax fairness
and complexity by eliminating the empty seat tax.

amendment no. 1460

Mr. STEVENS. Mr. President, the proposed Taxpayers Refund Act of 1999
includes a provision to create farm and ranch risk management (FARRM)
accounts to help farmers and ranchers through down times. The estimated
cost for this provision is $887 million over the next ten years. The
FARRM accounts would be used to let farmers and ranchers set aside up
to 20 percent of their income on a tax deferred basis. The money could
be held for up to five years, then it would have to be withdrawn from
the individual's account. Once the money is withdrawn from the account,
the farmers and ranchers would pay tax on the amount that was
originally deferred. Any interest earned on the money in the account
would be taxed in the year that it was earned.
This approach to encouraging farmers and ranchers to set some money
aside for downturns in the market makes sense. However, this provision
should be expanded to include fishermen--I have an amendment that would
do just that. The Joint Committee on Taxation estimates allowing
fishermen to set aside 20 percent of their income into these tax
deferred accounts would cost only an additional $18 million over 10
years.
Fishermen are the farmers of the sea. They face the same type of
economic problems that farmers and ranchers face and they shouldn't be
excluded from establishing their own tax deferred accounts. In previous
years we have had to bail out fishing areas that have been hit hard by
fishery failures. A recent fishery failure in Alaska, and the impact of
that failure on families and communities, is still being felt today. We
were forced to allocate $50 million to bail out those fishermen and the
local communities. This amendment, at a cost of $18 million over ten
years, is a far-sighted way to let fishermen play a part in a disaster
recovery and preserve the proud self-reliance that marks their
industry.
Fishermen should receive the same benefits as farmers and ranchers
under the Tax Code. They share seasonal cyclical harvest levels and
should not be left behind in the Tax Code. While this amendment is one
step toward equal treatment, it is an important part of ensuring the
long-term sustainability of our fishing industry. I thank my colleagues
who have joined me on this amendment, Senators Murkowski, Inouye,
Shelby, Breaux, Hollings, Gorton, and Murray.

amendment no. 1488

Mr. STEVENS. Mr. President, the proposed Taxpayer Refund Act of 1999
contains a provision to coordinate a farmer's income averaging with the
alternative minimum tax (AMT). This would ensure that a farmer's AMT is
not increased solely because he or she elects income averaging.
Under section 604 of the Finance Committee's bill, a farmer electing
to average his or her farm income would owe AMT only to the extent he
or she would have owned alternative minimum tax had averaging not been
elected. I have offered an amendment that would extend the income
averaging to fishermen and would coordinate the tax treatment with the
AMT, just as the bill attempts to do for farmers.
Fishermen should receive the same treatment as farmers. The Joint
Committee on Taxation estimates the measure for farmers would cost $22
million over the next ten years. According to the Joint Committee on
Taxation, my amendment for fishermen would cost $5 million over the
next ten years. This is a small amount to ensure that fishermen receive
the same benefits as farmers under our current tax structure.
Fishermen face the same type of economic ups and downs that farmers
and ranchers face. Because of this, they shouldn't be excluded from
income averaging or coordination with the AMT. I thank my colleagues
who have joined me on this amendment, Senators Murkowski, Inouye,
Shelby, Breaux, Hollings, Gorton, and Murray.

amendment no. 1485, As Modified

Mr. BENNETT. Mr. President, I ask unanimous consent that amendment
No. 1485, which was previously adopted, be modified with the changes
that are at the desk.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment (No. 1485), as modified, is as follows:

On page 286, line 6, strike ``1999'' and insert ``2004''.
On page 371, between lines 16 and 17, insert the following:

SEC. __. TREATMENT OF BONDS ISSUED TO ACQUIRE RENEWABLE
RESOURCES ON LAND SUBJECT TO CONSERVATION
EASEMENT.

(a) In General.--Section 145 (defining qualified 501(c)(3)
bond) is amended by redesignating subsection (e) as
subsection (f) and by inserting after subsection (d) the
following new subsection:
``(e) Bonds Issued To Acquire Renewable Resources on Land
Subject to Conservation Easement.--
``(1) In general.--If--
``(A) the proceeds of any bond are used to acquire land (or
a long-term lease thereof) together with any renewable
resource associated with the land (including standing timber,
agricultural crops, or water rights) from an unaffiliated
person,
``(B) the land is subject to a conservation restriction--
``(i) which is granted in perpetuity to an unaffiliated
person that is--

``(I) a 501(c)(3) organization, or
``(II) a Federal, State, or local government conservation
organization,

``(ii) which meets the requirements of clauses (ii) and
(iii)(II) of section 170(h)(4)(A),
``(iii) which exceeds the requirements of relevant
environmental and land use statutes and regulations, and

[[Page S9910]]

``(iv) which obligates the owner of the land to pay the
costs incurred by the holder of the conservation restriction
in monitoring compliance with such restriction,
``(C) a management plan which meets the requirements of the
statutes and regulations referred to in subparagraph (B)(iii)
is developed for the conservation of the renewable resources,
and
``(D) such bond would be a qualified 501(c)(3) bond (after
the application of paragraph (2)) but for the failure to use
revenues derived by the 501(c)(3) organization from the sale,
lease, or other use of such resource as otherwise required by
this part,
such bond shall not fail to be a qualified 501(c)(3) bond by
reason of the failure to so use such revenues if the revenues
which are not used as otherwise required by this part are
used in a manner consistent with the stated charitable
purposes of the 501(c)(3) organization.
``(2) Treatment of timber, etc.--
``(A) In general.--For purposes of subsection (a), the cost
of any renewable resource acquired with proceeds of any bond
described in paragraph (1) shall be treated as a cost of
acquiring the land associated with the renewable resource and
such land shall not be treated as used for a private business
use because of the sale or leasing of the renewable resource
to, or other use of the renewable resource by, an
unaffiliated person to the extent that such sale, leasing, or
other use does not constitute an unrelated trade or business,
determined by applying section 513(a).
``(B) Application of bond maturity limitation.--For
purposes of section 147(b), the cost of any land or renewable
resource acquired with proceeds of any bond described in
paragraph (1) shall have an economic life commensurate with
the economic and ecological feasibility of the financing of
such land or renewable resource.
``(C) Unaffiliated person.--For purposes of this
subsection, the term `unaffiliated person' means any person
who controls not more than 20 percent of the governing body
of another person.''
(b) Effective Date.--The amendment made by subsection (a)
shall apply to obligations issued after the date of the
enactment of this Act.

SEC. . MODIFICATION OF ALTERNATIVE MINIMUM TAX FOR
INDIVIDUALS.

Section 56(b)(1)(e), as amended by section 206, is amended
by striking ``$250'' and inserting ``$300''.

tax relief

Mr. ABRAHAM. Mr. President, my motion to recommit is the substitute
tax plan submitted by Majority Leader Lott in the Finance Committee. I
will not request a vote on this motion.
I commend the efforts of Chairman Roth in putting together the
Taxpayer Refund Act. However, it is my belief that Congress right now
has a unique opportunity to enact broad-based tax cuts, providing more
pro-growth and pro-family relief than is currently provided in the
Finance Committee bill.
This substitute combines the elements I believe are essential to
preserving economic security for years to come: It preserves Social
Security and Medicare; It reduces the near-record tax burden currently
placed on the American people; and It empowers America's growing
investor class--working, middle class families who strive to save for
the future so that they may enjoy secure retirements and so that they
can bequeath a legacy to their children.
All this, Mr. President, without greatly increasing the complexity of
the tax code.
Over the next 10 years the federal government will accumulate
surpluses of about $3 trillion. Now that the age of surpluses has
arrived, we must decide what to do with them, how we can best use them
to insure economic growth and security into the next millennium.
Thus, of the $3 trillion in coming surpluses, the $1.8 trillion for
the Social Security Trust Funds must be protected; it must stay in
Social Security. The question is, what should we do with the remaining
$1 trillion?
I believe that we should give at least $800 billion back to the
American people. Whatever plan we adopt, it seems to me we must ensure
that Social Security remains strong so that the senior citizens of
today and tomorrow may depend on it for security in their old age. We
also must approach our national debt in a responsible way seeing to it
that it never again becomes a drain on our economy. And, also for the
sake of our economy, we must see to it that investments in plant,
equipment and human capital increase over the coming decades. Finally,
we must address a worsening problem in American life: the overtaxation
of the American people.
The President's plan addresses none of these needs. It does nothing
to save Social Security, instead merely commencing a vast shell game
with taxpayer money. What is more, the President proposes massive new
spending, and even $95 billion in new taxes.
The bottom line is this, Mr. President Clinton wants to spend the
surplus. According to the CBO, the President proposes $1 trillion in
new spending over the next 10 years. That would mean taking $29 billion
out of the Social Security Trust Fund surplus.
Now I know some of my colleagues on the other side of the aisle have
been quoting from Federal Reserve Chairman Greenspan's recent
Congressional testimony. In that testimony, Chairman Greenspan said
``My first priority, if I were given such a priority, is to let the
surpluses run.''
Some of my colleagues have been claiming that, in these words,
Chairman Greenspan has rejected tax relief for the American people. But
this is simply not so, Mr. President. Any reasonable examination of the
record would show Chairman Greenspan's true views on the matter, namely
that he would delay tax cuts ``unless, as I've indicated many times, it
appears that the surplus is going to become a lightening rod for major
increases in outlays. That's the worst of all possible worlds, from a
fiscal policy point of view, and that, under all conditions, should be
avoided.''
Chairman Greenspan was not saying ``I oppose tax cuts.'' Rather, he
was saying, quite reasonably in my view, that tax cuts must not come at
the expense of fiscal and monetary stability.
I agree with Chairman Greenspan that tax cuts cannot be our first
priority. Our first priority must be to protect Social Security and
address the national debt. Which is exactly what this substitute does
by setting aside more than half our projected surpluses for those
purposes.
At the same time, we cannot allow these surpluses to become
``lightning rods'' for yet more increases in the size and scope of
government, and in the tax burden on the American people. And that is
precisely what the President's plan would do; it would spend the
surplus, including the Social Security surplus, on further government
programs, leaving nothing for the American people.
That is simply wrong. And I was pleased to learn that Chairman
Greenspan agrees. In his testimony he said ``I have great sympathy for
those who wish to cut taxes now to pre-empt that [spending] process,
and indeed, if it turns out that they are right, then I would say
moving on the tax front makes a good deal of sense to me.''
It makes a great deal of sense, Mr. President, for us to set aside
the bulk of the surplus for Social Security and debt relief, then to
return the rest to the American people. It makes a great deal of sense
for us, after reserving over $2 trillion for these essential functions
to return $800 billion to the American people, as a refund of their tax
overpayment.
I believe we are doing the right thing by giving 25 cents back to the
American people for every surplus dollar. I believe the plan crafted by
those on the other side of the aisle is wrong to give back only 10
cents on each surplus dollar.
Let me briefly outline the provisions of this substitute, crafted as
I said by majority Leader Lott. It includes:
Broad-based rate cuts, expanding the 15% tax bracket upwards by
$10,000.
Family tax relief, including an end to the marriage penalty and
provisions for child care and foster care.
An end to the estate or death tax.
Incentives for savings and investments, including exclusions for
interest and dividend income and a cut in individual capital gains
rates to 15% and 7.5%.
Retirement savings incentives through an increase in the IRA
contribution limit to $5,000 per year.
Education incentives, including education savings accounts, student
loan interest deductions and prepaid tuition plans for public and
private schools.
Provisions making health care more affordable, including a new
deduction for health insurance expenses, long-term care provisions,
Medical Savings Accounts, and an additional caretaker dependency
deduction.
Small business tax relief, including immediate 100% deductibility of
health insurance for the self-employed and in increase in small
business expensing to $30,000.
Risk management accounts for farmers and ranchers.

[[Page S9911]]

Permanent extension of the Research and Development tax credit, and
An extension of the work opportunity credit and welfare to work
credit.
I would like to focus on the provisions in this substitute that I
believe differentiate it from the Finance Committee legislation;
provisions that in my view provide even more pro-family and pro-growth
tax relief where it is most needed.
First is family tax relief. Families today pay a higher proportion of
their incomes in taxes than ever before in our history--31.7 percent.
They pay more in income taxes than at any time since World War II. They
spend more on taxes than on food, clothing and shelter combined. And
this tax burden leaves families with less money to spend on
necessities, and less to save for their retirement and for their
children's education.
Families deserve tax relief, particularly at a time when they are
overpaying to the tune of over a trillion dollars.
This substitute will give families the substantive tax break they
need and deserve.
First, it includes broad-based tax relief by increasing the amount of
income a family can earn while remaining in the 15% income tax bracket
by $10,000. The figure for single taxpayers will increase by $5,000. In
this way, Mr. President, we will return 7 million taxpayers to the
lower, 15% tax bracket, and 35 million taxpayers will receive a tax
cut.
Under this proposal, even a single filer would save $550 on his or
her taxes.
In addition, this substitute ends the marriage penalty and provides
relief for child and foster care services.
Taken together, these provisions will directly reduce the tax rate
imposed on American families and increase incentives for work and
economic growth.
Second, this substitute will provide tax relief to literally millions
of working Americans struggling to build a nest egg for the future. By
cutting taxes on interest, dividends and capital gains.
This latest era of economic growth has been unique, Mr. President, in
that it has seen savings rates fall into negative numbers--indicating
an increase in consumer borrowing in excess of savings. We cannot
sustain economic growth and job creation unless Americans save and
invest for the future.
That is why this substitute will address the needs of America's
growing ``investor class.'' These working Americans--125 million and
counting--are the real owners of the means of production in America.
Surveys conducted by a number of sources agree that, through pension
plans, IRAs and other investment vehicles, roughly 50% of Americans--
half our nation--owns stocks. They outnumber any of the special
interest groups you would care to name. Yet they want no special
favors, just the opportunity to save and invest. And, with $4.5
trillion invested in mutual funds alone, America's investor class has
become the bedrock of our economy.
It is time to put to rest once and for all the old class warfare
slogan that only the rich pay capital gains taxes. Is half of America
``rich?'' Do half our people earn so much money that they do not
deserve a tax relief?
I think not. Indeed, 49% of the investor class if female, 38% are
non-professional salaried workers. Wall Street and Main Street are no
longer separated by a vast socioeconomic divide. It is high time we
recognized this fact, and helped new, middle class investors succeed in
their drive to invest for the future.
This substitute would do precisely that, Mr. President. It would make
the first $500 of interest and/or dividend income tax-free for
families, with the first $250 of this income becoming tax-free for
individuals. It also would increase the IRA contribution limit to
$5,000 per year, allowing Americans to more effectively save for
retirement. Finally, it would cut capital gains tax rates, reducing the
current 20 and 10% tax brackets to 15 and 7.5%, respectively.
Of course, not all of nation's economic growth comes from stock
investment. Many entrepreneurs in this country invest their blood,
tears, toil and sweat into family owned businesses--businesses that
keep our main streets vital and our economy growing.
Our nation was built on the strength of family-owned businesses.
Whether on the frontier or in more settled urban areas, family
businesses have delivered the goods for generations. Yet the federal
government sets up almost insurmountable obstacles to family
businesses.
The death tax makes it impossible for many entrepreneurs to pass the
business on to their children. Too often today, children must sell the
family business just to pay taxes. And the result is often a sell-off
of assets to large corporations, destroying jobs and investment
opportunities.
I realize that some people favor the death tax as a means of
punishing people who have amassed great quantities of wealth. But the
IRS' own records show that fully 80% of all taxable estates are worth
less than $1 million.
$1 million still sounds like a lot of money, Mr. President. But
consider this: according to the Associated General Contractors of
America, any contractor who purchases the three pieces of equipment
essential to this trade, an off-highway dump truck, bulldozer and
front-end loader, will have already amassed assets valued at over $1
million.
And relatively new businesses, such as those begun by black Americans
until recent years deprived of the chance to compete, are especially
vulnerable to the death tax. A Kennesaw State College survey found that
close to a third of African American-owned businesses would have to be
sold by their inheriting heirs to pay taxes. The death tax destroys
family businesses. It destroys wealth, and it destroys jobs. It is time
to end it.
But entrepreneurs need more help from us. Current tax laws, by
subsidizing employer-purchased health plans, penalize small business
owners. They make it more difficult for them to afford their own health
insurance and to attract and keep good employees without spending
themselves into bankruptcy.
The substitute framed by Leader Lott would address these barriers to
family-owned business survival by accelerating the 100% deductibility
of self-employed health insurance.
The provisions I have outlined aim to bring substantive tax relief to
the mainstream of the American economy. This is crucial to the economic
well-being of our nation.
But we must do more. We also must bring greater economic opportunity
to disadvantaged urban and rural areas throughout the United States. If
we are to remain prosperous over the long term, we must bring more
Americans into the vast mainstream of our economy by empowering them to
take control of their own economic lives. That is why this substitute
extends the critical work opportunity credit and welfare-to-work
credits through 2004.
Finally, we must continue to encourage the research and development
so crucial to maintaining our competitive edge in global markets,
particularly in this era of high-tech development. That is why this
substitute provides for the permanent extension of the R&D tax credit.
All told, the provisions making up this substitute will provide $800
billion in tax relief for the American people. This substitute will
encourage work, savings and investment, it will help working families,
it will help distressed urban and rural areas, and it will provide $2.2
trillion for Social Security, Medicare, and debt reduction.
It is my hope that the conference committee on the tax bill will
produce an agreement that mirrors the Leader's substitute tax plan.
I believe we must look to this era of budget surpluses with
confidence. Confidence in ourselves and confidence in the American
people. This is no time for business as usual. Rather, we are faced
with once-in-a-lifetime opportunity to free Americans from the burden
of stifling overtaxation, freeing their energies and their intellects
even as we provide a solid grounding of Social Security and Medicare
for generations to come.
There are voices of doom abroad in the land, Mr President. But these
voices are as wrong today as they have always been. They would have us
put all of our faith and confidence in an ever-growing federal
government, with its ever-growing financial resources diverted by its
bureaucratic experts into

[[Page S9912]]

programs designed to protect us from ourselves.
I say no to these doomsayers. I say ``no'' to them because I believe
it is important for us to say ``yes' to the American people. Yes to
their dreams of financial security, yes to their desire to pass the
family business on to their children, yes to their cries for help
relieving the highest tax burden since World War II.
It is time to provide the kind of broad-based tax relief in this
substitute so that the American economy and the American spirit may
grow and prosper. This act of hope will protect our seniors, pay down
our debt and constitute an investment in our future that will pay
dividends for decades to come.
Mr. REED. Mr. President, I am proud to join Senator Rockefeller in
proposing a prudent, fiscally responsible tax cut alternative.
Like many, we are skeptical with the underlying assumption that there
will be nearly a trillion dollar surplus. Indeed, the numbers show that
much of the surplus is generated under the assumption that Congress
will significantly slash investments in education, veterans, and
defense below the level needed to keep pace with inflation. Such cuts
in key investments are not what the American people want. Moreover, the
current majority has already exceeded last year's spending limit by $35
billion in the first 10 months of this fiscal year.
The real surplus from our current economic growth is closer to $112
billion when one eliminates the unrealistic, rosy scenarios painted by
the Republican's $800 billion tax bill.
Mr. President, our great economic growth has presented us with an
opportunity to do many things. Sensible, modest, and targeted tax cuts
for working families is part of that mix along with domestic
investments and Medicare reform.
In that spirit of balancing priorities, I supported the proposal of
Sen. Moynihan to provide $290 billion in targeted tax relief, while
extending the life of Medicare and preserving funding for our most
pressing domestic needs. That proposal was realistic and based on sound
footings.
But, we should not enact an $800 billion tax cut based on mere
projections; which slashes domestic investments; and which does nothing
to preserve Medicare.
Our $112 billion tax cut proposal is tied to a realistic review of
the actual unencumbered surplus. This is the judgement of many outside
experts including former Congressional Budget Office Director Robert
Reischauer. Using this figure we can still provide marriage penalty
relief, education tax credits, preserve Medicare, and meet the
expectations of America's families. That is why Senators Rockefeller,
Leahy, and I have put forth this proposal.
Mr. President, my hope is that our colleagues on the side of the
aisle will take a moment to review the real surplus numbers and join us
in our effort.
Mr. EDWARDS. Mr. President, I rise today to oppose S. 1429. Passing
this bill is like going on a spending spree just because a sweepstakes
company tells you ``you might be a winner.''
I support tax cuts. The question for me is, when? I am a fiscal
conservative and am happy to vote for tax cuts. Any tax cut, however,
needs to be done in a fiscally-responsible manner. This is common
sense.
But we need to look at the big picture, and we can't engage in
wishful thinking. So when we talk about cutting taxes we must do it in
the same breath as paying down the national debt and dealing with
Social Security and Medicare.
We should cut government spending. Working Americans pay taxes to the
federal government, and that money buys a lot of great things. But we
have a responsibility and obligation to only spend what is absolutely
necessary, and I am afraid that we haven't done a very good job of
that. The federal government is too big and spends too much, and we
need to do something about it.
We should pay down the public debt. If we reduce our public debt, we
reduce the money the federal government owes to foreign investors and
other bondholders. If we reduce our public debt--a debt that has
accumulated because of out-of-control government spending in years
past--it will lower interest rates, increase investment in America's
economy, and help ensure our economy's continued growth and success.
That has real benefits for average Americans: lower mortgage interest
rates and a booming economy.
This isn't inside-the-Beltway stuff. This is important to North
Carolinians and all other Americans. And I think all of them can relate
to why it is unwise to cut taxes before we are certain there is a
surplus and before we are on the road to securing the future of Social
Security and Medicare.
Look into your crystal ball. How much will you be earning in the year
2008? Will your 10-year-old be going to Duke or UNC, and what will be
the tuition? What are you going to pay for health insurance during the
next 10 years? And how much can you put away for retirement?
I think these questions are important to North Carolinians and all
other Americans. I have been thinking about how a family might try to
answer these questions, and two things come to mind.
First, answers are extremely difficult to find with any degree of
certainty. Unforseen expenses can arise. And other factors--career
changes, interest rates, or family size--may also affect the answers.
It seems to me very likely, given this uncertainty, that a family would
be very cautious about their financial planning.
Second, if that family had to make a decision now about which one of
those items they would forego if they needed extra money to cover
unforseen expenses, which one would it be?
If making these projections for a family is difficult, what can be
said about the difficulty of predicting the federal government's budget
10 years?
I'll tell you what I think about it. I think it is extremely
difficult. And I am not alone.
I had an exchange the day before yesterday with Federal Reserve Board
Chairman Alan Greenspan during a hearing. I talked to him about his
earlier comments about the surplus, the proposed tax cuts and about the
problems the federal government has showing restraint.
Mr. Greenspan noted that these projections are rarely accurate.
His advice, then, is very simple and practical: wait. ``Several
years,'' he said. ``In other words, one year, two years.'' Chairman
Greenspan said he favors paying down the public debt--not using any
surplus for increasing government spending.
It is hard to wait. This has been a real struggle. I break with the
President, with my party and with the Republican party. But I do so
because first and foremost we should not imperil our unprecedented
economic prosperity by moving too quickly. To put it simply: look
before you leap. A huge tax cut today is like entering the biggest
watermelon contest the day after an especially good-looking vine
sprouts up.
I, myself, just don't have that much confidence that we have a
surplus at all or that the economic assumptions underlying the surplus
projections are reliable. It feels like smoke and mirrors--hocus pocus.
And when people waive around numbers like $1 trillion, it's hard not to
get swept away.
But if we step back and take a look at the facts, we get a more
frightening picture. If government spending is 1 percent higher than
projected and revenues are 1 percent lower than projected, then the so-
called $1 trillion surplus would be off by $170 billion annually.
When it comes to government spending, the truth is Congress has not
been able to live within its budgets. Federal spending should be cut,
but let's not be naive: Congress has bad spending habits.

Current projections are based on assumptions about our spending
habits that everyone admits have been impossible to live with. This is
a fact. I want to remind everyone that this body passed a $12 billion
``emergency'' spending package--raiding the Social Security Trust
Fund--earlier this year. I voted against that package because nearly
half of it was spending that no honest person would consider an
``emergency.'' We've also been pouring money into defense spending--
something I support--but it's not within the budget we tried to set for
the government. We can't stick to our limits now, and yet we are
talking about a tax cut

[[Page S9913]]

based on the assumption that we are going to spend less. This just
doesn't make sense to me.
Having noted that we never stay within the spending caps, let me say
that we should not give up on them. They are important. And, despite
our history of breaking them, they have acted to keep our spending
lower than it would have been otherwise. This is important because we
need to make sure that the federal government doesn't just spend money
because taxpayers send it to us. We need to constantly look for ways to
cut unnecessary spending and pressure the federal government to operate
more efficiently.
Even as we propose to dramatically cut taxes based on the fantasy
that we will control spending and enjoy unprecedented economic
prosperity, we are hiding our head in the sand about a very real and
very near fiscal catastrophe. In 2012, we will need to pay more for
Medicare than we have. We'll need to dip into a Medicare trust fund.
But there is no Medicare trust fund. In 2014, Social Security benefits
paid out will exceed receipts, and we will have to start dipping into
the trust fund. This tax cut puts the cart before the horse. Cut taxes
and then try to figure out how to deal with a looming crisis? No one
could call that fiscally responsible.
What if there's a real emergency? This bill leaves me worried.
Suppose a Class 5 hurricane were to strike North Carolina sometime in
the next few years. If we needed emergency relief, this proposal could
leave us high and dry--or taking a dip into Social Security.
North Carolinians might be excused for thinking that the current tax
debate sounds like hocus pocus. And they might be excused for wondering
whether people are making promises they can't keep. This government has
made a great many promises:
Putting more money in your pocket;
Saving Social Security;
Reserving money for Medicare;
Improving Veterans' health care;
Funding for the National Institute of Health;
Putting 100,000 cops on the street;
Aiding America's farmers;
Funding for programs like Head Start;
Maintaining interstate highways; and
Supporting National Missile Defense and other spending to ensure a
strong national defense.
I don't think we can keep all of these promises. And I can't bring
myself to bait the American public with a tax cut only to be forced to
cut their legs off on Social Security, Medicare and debt reduction or
raise taxes again.
If not now, when?
I heard this question asked earlier today about tax cuts. My answer
is the same as the one Chairman Greenspan gave at the hearing
yesterday--he said wait a few years.
After a few years we may know a few things.
First, are we keeping spending reasonably under control?
Second, have we saved Social Security and reformed Medicare?
Third, how's the economy doing?
Fourth, have we paid down some of our national debt?
Our first real test will come this fall--when we will again start the
process that will lead to meeting--or breaking--the spending caps. The
federal government needs to prove to the American public that it can
operate under its own budgetary limits. If we can do this, if we can
break the habit of busting the budget caps, we will then be able to
tell if we do in fact have a surplus.
I want the American people to know this: I am for cutting taxes paid
by working Americans. We've got an amazingly successful economy right
now. I want to make sure when I cast my vote that I'm voting for
something that will ensure, not destroy, the continued growth of our
economy. Right now, the projections are too speculative, the
assumptions too unrealistic, and to me, the solution is obvious. We
should not spend money until we know we have it--and when we do have
it, we need to give it back to working Americans.
Mr. ALLARD. Mr. President, I would like to make some comments
regarding repeal of the ``temporary'' 0.2 percent Federal unemployment
tax (FUTA) surtax.
Earlier this year I introduced S. 103 to repeal the surtax.
I commend Chairman Roth and my colleagues on the Finance Committee
for including in their tax bill repeal of the temporary 0.2 percent
FUTA surtax.
I would, however, like to accelerate the effective date from 2004 to
next year.
I believe that this tax relief provision is very important for both
businesses and employees. We should repeal the surtax immediately.
The ``temporary'' surtax was enacted in 1976 by Congress to repay the
general fund of the Treasury for funds borrowed by the unemployment
trust fund.
Although the borrowings were repaid in 1987, Congress has continued
to extend the surtax in tax bill after tax bill.
Since 1987, Congress has used extension of the surtax to help raise
revenue to pay for tax packages.
In fact, the surtax was most recently extended to help pay for the
1997 tax bill.
The tax takes money out of the private economy for no valid reason.
By repealing the surtax, Congress will honor a promise that it made
when the surtax was first enacted.
Small businesses were told repeatedly that the tax was temporary and
would be repealed when it was no longer needed to finance the
unemployment tax system.
Clearly a tax is not temporary when it has already been in place for
over twenty years.
Based on the original purpose, the surtax is no longer needed.
The economy is experiencing the highest level of employment in
decades, and all state unemployment funds have surpluses.
It is inappropriate for the government to continue to raise excess
unemployment taxes and then use the surplus for purposes completely
unrelated to unemployment.
Repeal of the temporary unemployment surtax will also be beneficial
to small businesses.
The surtax is especially hard on the small businesses because they
are often labor intensive.
Any payroll tax is added directly to the employer's payroll costs.
In fact, according to the National Federation of Independent
Business, payroll taxes are the fastest growing federal tax burden on
small business.
It is also important to note that the payroll taxes must be paid
whether the business experiences a profit or a loss.
As a former small businessman myself, I am particularly aware of this
fact.
I suspect that my view is similar to the view of many other small
business owners.
It is one thing to have a surtax when unemployment is high and the
surtax is necessary.
However, it is totally unjustified when unemployment is at the lowest
level in three decades.
Repeal of the 0.2 percent surtax will reduce the tax burden on
employers and workers by $6 billion over the next five years.
Lower payroll taxes mean higher wages for workers.
Although the employer appears to fully pay the unemployment surtax
and other payroll taxes, the economic evidence is strong that the cost
is actually passed along to workers in the form of lower wages.
Consistent tax relief will help to ensure that our economy remains
the strongest and most vibrant in the world.
Low taxes reduce unemployment and help ensure that future surtaxes
are unnecessary.
The time has come to do away with this outdated and unnecessary
surtax.
Again, I commend the Finance Committee for their provision to repeal
the FUTA surtax, and I urge my colleagues to support efforts to
accelerate the effective date so that repeal is immediate.
Mr. REED. Mr. President, we are at a historic juncture. In the
1980's, we faced massive deficits and growing debts. In sum, Congress
debated red ink.
On the edge of the millennium, we are debating the question of what
to do with about $1 trillion in anticipated budget surpluses.
Why are we here debating a surplus? We are here because of the tough

[[Page S9914]]

choice we made in the past: a choice to use fiscal discipline. We
started down the road of deficit reduction with the 1993 budget
package, which passed without a single Republican vote. In fact, some
members on the other side of the aisle claimed the bill would lead to
economic collapse. However, because of the courageous stand we took
then, we have gone from a $290 billion deficit in 1992 to an estimated
$70 billion surplus in 1999.
But we did more than reduce the deficit and restore fiscal
discipline, we spurred tremendous economic growth and unprecedented
economic expansion. For the sake of perspective, I would like to list
the following facts: we have seen 3.5% annual growth since 1993, 18.9
million new jobs, 4.3% unemployment, and the median family income grow
by more than $3,500 since 1993. This is good news, and we cannot afford
to squander it.
The days of red ink as far as the eye can see are gone. Instead,
based on various budget projections, we can suppose that there will be
a total surplus of approximately $3 trillion over the next ten years.
More than $2 billion of that total comes from Social Security payroll
taxes and must absolutely be set aside to preserve Social Security for
current and future beneficiaries. Social Security is a promise to those
Americans who worked and fought to make this nation great, and it is a
program that must be preserved.
The Office of Management and Budget and the Congressional Budget
Office both project that the remaining non-Social Security surplus
totals roughly $965 billion. But these are merely projections,
dependent upon the performance and vagaries of the economy. And, I
would caution that the Office and Management and Budget and the
Congressional Budget Office have a history of predictions that fall far
short of the mark. Indeed, Mr. President, because of changes in the
economy between April and July of 1999, the Congressional Budget Office
revised its ten year projections, adding $300 billion to the surplus.
Imagine--a swing of $300 billion in three months.
But how are we generating the surplus, or more accurately, why is the
Congressional Budget Office predicting a budget surplus?
Quite simply, the vast bulk of the non-Social Security surplus,
nearly $600 billion of it, comes from the continuation of arbitrary
spending caps established in the 1997 Balanced Budget Act. When we
passed that legislation, we still had a deficit, but many of us
realized then that if these budget caps were maintained beyond the
period they were required to balance the budget, they would prevent us
from meeting our long-term obligations for education, health care, and
the environment.
The American people cannot afford, as my colleagues on the other side
of the aisle have asked of them, to retain these caps for the next 10
years. We cannot afford $600 billion in cuts to Pell Grants, Head
Start, the Special Supplemental Nutrition Program for Women Infants and
Children, Brownfield cleanup, Community Policing, Veterans benefits,
and the National Institutes of Health, to name a few essential
initiatives. Let me emphasize that the $600 billion figure is not for
new, outlandish investments. Rather, that figure represents the
resources we need to maintain current levels of funding. Make no
mistake, these are cuts, not ``reductions in the rate of growth'', but
real cuts.
Moreover, if we adopt the Republican $800 billion tax cut plan and if
we fund the President's plan to meet the military's personnel and
equipment needs, as the Republican leadership has said it will do, non-
defense domestic spending will be cut by a whopping 38% in 2009. Under
this scenario, 375,000 children will not get Head Start services, 1.4
million veterans will lose medical care, and 6.5 million poor students
will lose Title I education aid. Simply put, the $800 billion tax cut
before us today crowds out every priority we know must be met in the
future.
Mr. President, the most serious shortfall of the Republican tax bill
is that it disposes of the entire surplus without making any provisions
to shore up Medicare. By using all of the projected surplus for tax
cuts, we leave ourselves severely restricted in the options we will
have in the future.
Actuarial reports from the Medicare Trustees project that, under
current economic conditions, we will have to contend with the
inevitable fact that the Medicare program will be insolvent by 2015.
Regrettably, by allocating the entire federal budget surplus for tax
cuts, we will be forced to make radical changes to the program, either
in the form of dramatic benefit reductions, large increases in
premiums, or tax increases.
In addition, the Republican tax cut plan completely ignores the
impending burdens of a retiring baby boom generation. The truth is that
by 2030, there will be about 70 million Americans 65 years or older,
more than twice their number in 1996. In terms of the total population,
seniors will grow from 13% to 20% between 1999 and 2030.
In spite of these imminent demographic challenges, the Republican tax
cut bill is structured in a way that tax breaks would explode during
their second ten years. As the baby boom generation retirements occur,
the cost of the tax cuts would explode to $2 trillion.
Prudence dictates that we should take the opportunity the surplus
presents to make meaningful changes to the Medicare program. I believe
that we should be looking at the possibility of adding a prescription
drug benefit as well as additional preventive benefits to the basic
package of health care benefits. For elderly Rhode Islanders the cost
of prescription drugs is a major concern and a major expense.
Unfortunately, Medicare does not cover this expense nor does the COLA
for Social Security accurately represent the medical expenditures of
today's seniors.
While consideration of these matters should be made in the context of
overall structural reform, we must ensure that there are adequate
resources to guarantee a basic benefit package upon which Medicare
beneficiaries continue to rely.
Sadly, the Republican tax bill saps these resources before the debate
can even begin. The massive size of the Republican tax plan threatens
to unravel the many years of fiscal austerity that have brought us to
this important juncture. Their unrealistic and dangerous proposal
sacrifices the future for short-term gratification.
Mr. President, these are good times in our nation. More Americans are
employed. More Americans own a home. Crime is down. Productivity is up,
and inflation is low.
Working families in Rhode Island expect us to be responsible and
prepare for the future. They want us to preserve Medicare, but the
Republicans say ``no''. They want us to invest in education, but the
Republicans say ``no''. They want us to care for our veterans, but the
Republicans say ``no''. They want us to address the shameful fact that
1 out of every 5 children in America lives in poverty, but the
Republicans say ``no''.
Mr. President, saying ``no'' to the needs of the American people is
not an acceptable legacy for this Congress. On the edge of the
Millennium, we should not put politics ahead of what is fair and
responsible. Let's build for the future.
Ms. COLLINS. Mr. President, yesterday I offered an amendment to the
Taxpayer Refund Act of 1999. My good friend Senator Coverdell and I
crafted this amendment to help our public school teachers pursue
professional development and pay for incidental supplies for their
classrooms.
Our amendment will allow teachers to deduct their professional
development expenses without subjecting the deduction to the existing
two percent floor. It will also allow teachers to deduct up to $125 for
books, supplies, and equipment related to their teaching.
Mr. President, while our amendment provides financial relief for
teachers, its ultimate beneficiaries will be their students. Other than
involved parents, a well-qualified teacher is the most important
prerequisite for student success. Educational researchers have
demonstrated the close relationship between qualified teachers and
successful students. Moreover, teachers themselves understand how
important professional development is to maintaining and extending
their levels of competence. When I meet with teachers from Maine, they
repeatedly tell me of their need for more professional development and
the scarcity of financial support for this worthy pursuit.

[[Page S9915]]

The willingness of Maine's teachers to fund their own professional
development activities has impressed me deeply. For example, an English
teacher who serves on my Educational Policy Advisory Committee told me
of spending her own money to attend a curriculum conference. She is
typical of many teachers who generously reach into their own pockets to
pay for professional development and to purchase materials that enhance
their teaching.
Let me explain how our amendment works in terms of real dollars. The
average yearly salary of a teacher in 1997 was about $38,500. Under
current law, a teacher making this salary could not deduct the first
$770 in professional development and incidental instruction-related
expenses that he or she paid for out of pocket. Our amendment would see
to it that teachers receive tax relief for all such expenses.
I greatly admire the many teachers who have voluntarily financed the
additional education that they need to improve their skills and to
serve their students better and who purchase books, supplies, equipment
and other materials that enhance their teaching. I hope that this
change in our tax code will encourage teachers to continue to take
formal course work in the subject matter that they teach, to complete
graduate degrees in either their subject matter or in education, and to
attend conferences to give them new ideas for presenting course work in
a challenging manner. This amendment will reimburse teachers for a
small part of what they invest in our children's future.
Mr. President, this would be money well spent. Investing in education
is the surest way for us to build one of the most important assets for
our country's future, a well-educated population. We need to ensure
that our public schools have the best teachers possible in order to
bring out the best in our students. Adopting this amendment will help
us to accomplish this goal. I thank my colleagues in joining Senator
Coverdell and me in support of this effort.
Mr. CRAIG. Mr. President, I rise in support of S. 1429, the Taxpayer
Refund Act of 1999.
This debate has been about numbers and surpluses and budget rules. To
some extent, it has to be. But our efforts to provide tax relief are
also about something more important:
People.
The kind of relief that both the Senate and House tax bills would
provide is a matter of providing real help to real people who have real
needs.
This tax relief is about returning some modest amount of liberty,
some small measure of power, to the people. This is the most heavily
taxed generation of Americans in history. Providing some degree of tax
relief will return to individuals and families more power over their
own lives, more ability to meet their pressing needs, and more of an
opportunity to pursue their dreams.
I've looked at both the Senate and House bills. I think we can come
up with a very good conference report based on these two bills--a
conference report that preserves the best of both bills, and helps
improve the lives of all Americans.
We are talking about a tax bill that removes some fundamental
unfairness from the current system.
For example, it just isn't fair that two individuals should be forced
to pay hundreds of dollars more in taxes simply because they get
married. That's why the Senate bill ends the marriage penalty for two
earners. I think we should go farther, which is why I've supported the
Gramm amendment and the Hutchison amendment and hope we can do more in
conference.
Mr. President, it just isn't fair that working families sometimes
have to sell part or all of the family farm or the family business just
to pay taxes. I've seen family farms carved up because of the death
tax. The other side would have us believe that this is a debate about
the so-called ``estates'' of rich people. It's not.
Death tax relief is a question of saving the family farm; maintaining
the family business; and allowing people the fundamental freedom to
dispose of their own property and their own savings as they see fit.
The death tax imposes a double tax, because it confiscates property and
savings built up from income left over after it's already been taxed
one, two, or three times before.
But we know where the other side and the Administration are coming
from. In fact, this Administration's former Secretary of Labor, in one
of his books, called it a ``loophole'' for the tax code to allow
parents actually to pass along some of their savings and possessions to
their children.
I support the relief from the death tax in this bill and wish we
could do more. That's why I've supported the Kyl amendment.
This tax relief bill is good for children. It would allow more
parents to afford child care, both because it increases and expands the
child care tax credit, also called the Dependent Care Credit, and
because it allows more modest- and middle-income families to make full
use of the child tax credit we enacted in the 1997 Tax Relief Act. It
also would expand the tax exclusion for foster care payments.
This bill will help make education more affordable and available to
individuals and families. It includes tax-free, qualified tuition
plans; extends the employer-provided tuition assistance; and makes our
1997 education tax credits more fully available to modest- and middle-
income families, by taking it out of the Alternative Minimum Tax
calculations.
We should be doing even more to help families meet their educational
needs and opportunities. This is why I've supported the Coverdell-
Torricelli amendment to expand and improve Educational Savings
Accounts.
The Coverdell-Torricelli amendment would give parents greater choice
in how best to educate their children. The issue here is parental
choice. Who knows best--parents or a distant government bureau in
Washington, DC? In recent years, the focus has been entirely too much
on growing the government and inventing federal programs. But much of
that national government is far removed from the year-to-year and day-
to-day decisions that parents must make, and work on with teachers and
school boards, about their children's education.
This amendment would shift power and resources back to the most local
level--Mom and Dad. The Coverdell amendment would allow more
flexibility--and the use of more of their own money--as they face
decisions about paying for things like tutoring, home computers,
private or religious school, higher education, and vocational
education. The amendment focuses especially on those who find it hard
to pay for educational expenses now. In talking about public schools,
supplies and activity fees are a burden on parents today. The Coverdell
amendment would help families deal with those costs.
Mr. President, a few months ago, we passed the Ed-Flex bill. This law
gives the state educational agency and the local educational agency the
flexibility in how they spend federal dollars. Now, Mr. President, it
is time to give parents similar flexibility in how they help provide
for their children's education.
I hope we can do more to help families with their children's
educational needs when this bill goes to conference. I hope we can
include provisions that come much closer to the Coverdell-Torricelli
amendment.
Besides helping families with the care and education of their
children early in life, this bill also will help provide care in the
twilight of life, through an additional deduction for providing in-home
care for an elderly family member.
This bill takes a significant step forward in making health care
coverage more affordable and available for millions of Americans. Small
businesses and farm families, especially, will be helped by the
accelerated, full deductibility of health care premiums, as will other
workers not covered by an employer-provided plan. More Americans would
be able to plan for long-term care, a critical area of growing need,
because of an above-the-line deduction for individuals and inclusion in
cafeteria plans at work.

America's farm families are in a period of economic crisis today.
That crisis should be, and will be, addressed in a major farmers' aid
package a number of us are working on. But additional, much-needed help
is provided in this bill, as well.
Besides self-employed health insurance and death tax relief, this
bill would provide for increased expensing,

[[Page S9916]]

starting next year, to $30,000; create the new FARRM Accounts--Farm and
Ranch Risk Management Accounts--that Senators Grassley, Burns, I, and
others have been working on; protect income averaging from the
Alternative Minimum Tax; increase credits for reforestation; and allow
farmer co-ops more dividend flexibility.
Like farmers, small business, the over-taxed engines of job-creation,
innovation, and economic opportunity in our economy, will finally
receive some relief from many of these same provisions.
The Senate bill makes tremendous strides in retirement security.
Today's baby boomers, the first generation to have spent their entire
lives in the most heavily-taxed generation, are becoming increasingly
anxious about their prospects for retirement security. Why is no
mystery: Since the baby boomers were children, they have seen the
average family's tax burden, at all levels, increase by more than 50
percent, as a share of income. When the government takes 50 percent
more from you than it did from your parents, how do you save and invest
for your own retirement?
All taxpayers, of all incomes and all ages, stand to benefit from
expanding the use of Individual Retirement Accounts. In the past, IRAs
were a simple, universally-understood, readily-accessible to save for
retirement. One of the worst things in the 1986 tax bill was the
confusing limitations placed on IRAs that, in fact, have discouraged
many modest- and middle-income workers from using them. Farmers and
small business owners and their employees, especially, have an
important stake in more accessible IRAs, because they have no other
large, employer-provided pension plan to participate in.
Mr. President, the tax relief bills moving through Congress will help
real people. The real debate is over two competing visions of how the
government can help people. Those of us who support tax relief say, we
help people when we give them back the power and freedom to control
their own destinies. The other side says, they think it would help
people if the government made decisions for them, and dispensed
dependency through an expensive bureaucracy.
You can confiscate more and more money from workers, savers, and
families. That, in fact, has been and is the trend. Then the government
can spend that money, grow the bureaucracy, write more rules, make
citizens feel more like supplicants, and, in the end, hand someone
another small government check.
Or we can let workers, savers, entrepreneurs, and families keep a
little more of their fruits of their own labors, and let them apply
that directly to taking care of their children, their parents, their
health care needs, and their education.
We can, as this bill does by extending the Work Opportunity Tax
Credit, tell employers they can keep a little more of what they earn,
if they also provide jobs for disadvantaged, hard-to-place workers.
Today, 70 percent of taxpayers receive no recognition of charitable
giving--because they don't itemize their deductions. We can, in this
bill, reward and encourage those middle-class taxpayers who benefit
their community, help the less fortunate, and promote the social good,
by letting them keep a little more of their hard-earned income, with an
above-the line deduction for charitable donations.
We are talking about a modest and reasonable package of tax relief.
Both Houses are calling for a tax cut of only 3.5 percent over the next
10 years, or less than one-fourth of the total amount taxpayers have
been overcharged by their government.
We are proposing a modest amount of tax relief that leaves plenty of
room to safeguard Social Security completely. In fact, with the budget
we passed earlier this year, for the first time in history, Congress
has committed itself to reserving all of the Social Security surplus,
and all future Social Security revenues, exclusively for future Social
Security benefits.
Our tax relief is based upon huge over-collections of taxes from
American workers and taxpayers. In other words, yes, it is based upon
projections of budget surpluses--surpluses projected both by the
nonpartisan Congressional Budget Office and the President's own Office
of Management and Budget. It is interesting that the same critics who
criticize the idea of basing tax relief on projections then make up
their own, speculative projections about the cuts in future spending
programs they claim would result from this tax relief.
In point of fact, we all agree that Medicare, Veterans programs,
education, and other priorities must be maintained and improved in the
future. The budget we passed earlier this year provides for that, and
this tax relief package doesn't infringe on them.
I remember how, just a few years ago, some in Congress, the White
House, and special interest groups made dire predictions of how
spending on all kinds of essential programs would have to be slashed to
balance the budget.
Since then, a new Congress came to town in 1995, committed to
balancing the budget and reining in the growth of government.
We've still had increases in spending, but they've been more
moderate. We do have some high priority programs to re-evaluate. Some
increases are needed. In other places, we need more restraint, and even
some cuts.
But a balanced budget and a significant surplus have emerged--along
with an economy that is strong because the people who work, save,
invest, and create jobs took us seriously when we said we would balance
the budget and limit the growth of spending.
Now, Congress has taken the first critical steps needed to save and
preserve Social Security for the current generation of seniors and
those who expect to retire soon. We all agree the next step is to
modernize it for future generations. Our budget, and this tax relief,
is perfectly consistent with that commitment.
Most of us agree with the majority of the bipartisan Medicare
Commission that we need to shore up that program as well, too. That
will involve expanding or improving some of what Medicare provides, as
well as expanding consumer choice, increasing market discipline,
curbing waste and abuse, and finding savings. Unfortunately, the
necessary super-majority of the commission didn't allow it to turn its
majority views into what it could call its ``official''
recommendations. But we in Congress stand ready to work with the
President on the responsible reforms suggested by that commission and
others.
And this Congress remains committed to reducing the national debt.
Under our budget, and including this tax bill, we will cut the public
debt in half over the next ten years, and reduce the debt by more than
$200 billion over what the President's budget recommendations called
for.
Still, Mr. President, even as we tackle all these challenges, we do
have the capability of refunding to the hard-working American taxpayers
a little of what they have been overcharged. That's what this
legislation, and this debate, are all about today.
The choice is simple: More government and more spending versus
letting the people keep a little more of their hard-earned incomes and
a little more control over their own lives.
Mr. President, I vote for this tax relief bill because I am casting a
vote of confidence for the wisdom of the people, and a vote to help by
removing some of the heavy tax burden they are bearing.

community renewal and charity empowerment amendment

Mr. SANTORUM. Mr. President, I rise to discuss one of my amendments,
No. 1476, offered with Senator Abraham and Senator DeWine, to establish
renewal communities and encourage charitable giving to those
organizations which make a lasting difference in the lives of people.
The amendment creates 100 renewal communities where businesses will
have the incentive to stay and locate to provide economic opportunity
for some of the most disadvantaged communities in America. The
amendment also allows states to utilize federal block grant funds, if
they choose to, in order to offset any revenue loss associated with
offering a targeted state charity tax credit for individual donations
to charities working predominantly to alleviate poverty.
Mr. President, I will continue to work with the chairman of the
Finance Committee in order to see that these

[[Page S9917]]

critical provisions for expanding opportunity and transforming lives
are included in the conference report. The Renewal Community provisions
were included in the House of Representatives tax relief package and I
look forward to working with the chairman to see that these provisions
are included which unleash the power of the private sector and American
charitable and faith-based resources to renew our commodities.
Mr. ROTH. I appreciate the comments of the Senator from Pennsylvania.
My staff has been reviewing this proposal and we will continue working
with him toward a favorable outcome.
Mr. SANTORUM. I thank the Senator. I appreciate his continued
assistance.
Mr. ABRAHAM. Mr. President, I also rise in strong support of this
legislation creating Renewal Communities. These distressed communities
will be able to benefit from lower taxes, regulatory relief, and
brownfields clean-up while committing to lowering barriers to economic
opportunity. The President of the United States has voiced his support
for helping these communities. The House of Representatives has already
passed this legislation. Moreover, our amendment also provides states
the option to leverage federal dollars to transform lives and
communities to the extent that individuals are motivated to contribute
to charitable organizations walking along side those in need.
Mr. ROTH. I thank the Senator from Michigan for his comments and look
forward to working with him.
Mr. ABRAHAM. I thank the Senator.
Mr. ASHCROFT. Mr. President, I join the Senator from Pennsylvania and
the Senator from Michigan and rise in support of the American community
renewal and charity empowerment amendment. I would also encourage the
Chairman to include these essential provisions in the conference
report. The legislation will also provide increased flexibility for
states that choose to offer targeted charity tax credits. This
principle is consistent with the growing support for expansion of
charitable choice and recognizes that empowering faith-based and other
charities is an essential next step in welfare reform.
Mr. ROTH. I thank the Senator from Missouri and appreciate the
commitment of the Senators who have spoken to these important issues.
Ms. MIKULSKI. Mr. President, I rise today to oppose what the
Republicans are calling a tax cut. This so-called tax cut is a gimmick
to get attention, to get votes, but not to get America what it needs.
The Republicans are trying to pander to every interest group in
America and give them a tax break. And who doesn't want a tax break?
I oppose these tax cuts for three reasons. First, these tax cuts are
premature. They are based on a projected surplus of funds that we do
not have. We all know that this surplus exists on paper only. It is no
more than a promissory note and we don't know if that note can or will
be delivered.
Second, these tax cuts are irresponsible. With no surplus, we are
spending money before we have it. We are on a collision course between
monetary and fiscal responsibility. Shouldn't we combine our monetary
and fiscal responsibilities to get the country in the right direction
towards growth in the future?
Third, these tax cuts are callous. We are giving money away that we
don't have--when we've not even met the compelling needs of our
country: We've not fixed the draconian Medicare cuts stemming from the
Balanced Budget Act of 1997. We've not ensured the long-term solvency
of Social Security and Medicare. We've not addressed the spending
caps--which are forcing cruel cuts in critical services for veterans
health, and children's education, and which are crippling scientific
research.
The Medicare cuts in the Balanced Budget Act of 1997 have already
caused 34 Home Health agencies in my state to close--only two public
Home Health Agencies remain in Maryland. Maryland is also facing a
managed care crisis. Because of Balanced Budget Act of 1997, 18,000
people in Maryland will lose access to supplemental benefits such as
prescription drug coverage and preventive health benefits.
Republicans may say that a tax cut will allow these senior citizens
to use the money from a tax cut to buy supplemental coverage, such as
Medi-Gap and that they are returning ``choice'' and ``freedom'' to the
American people. But what about the forty-percent of Medicare
beneficiaries who do not even submit tax returns because their incomes
are so low. Those people will not see a dime of the tax out. They will
still not have any way to afford prescription drugs like heart
medication or insulin for diabetes, because their HMO left town.
Spending caps will threaten our ability to meet compelling human
needs; to maintain the national security of the United States; and to
stay the course on research and development.
Because of the spending caps, veterans of this nation are facing a
10% cut in health care.
Because of the spending caps, our members of the military will
continue to be forced to shop in consignment shops and use food stamps
because they are not making enough money. Mr. President, we cannot have
a second-hand military. These are people who put their lives on the
line to protect our nation. They should not have to use food stamps to
feed their families and shop in second-hand stores for clothing.
Because of the spending caps, our continued technological advancement
will be jeopardized. America must maintain its competitive edge if we
are to maintain our leadership in science and technology.
I am not opposed to tax cuts when it is the right time to do so. I
believe it is the right time for tax cuts when there is a real and
actual surplus or an incredible recession and we need to stimulate
consumption. It is clear that neither of these conditions exists today.
We need to get back to basics--to save lives, save communities, and
save America. I urge my colleagues to join me in rejecting this phony
tax cut.

CIAC

Mr. GRASSLEY. Mr. President, in the Small Business Job Protection Act
of 1996, I had the good fortune of working with my esteemed colleague,
the senior senator from Nevada, on an amendment restoring the exclusion
for the receipt of contributions in aid of construction (CIAC) for
water and sewage disposal property repealed by the Tax Reform Act of
1986.
I rise today to voice my concern about the possible direction of the
Department of the Treasury's regulations interpreting the definition of
CIAC under Internal Revenue Code section 118(b). Specifically, I am
troubled by an effort to narrow the definition to exclude service
laterals.
The Senator from Nevada and I, along with many of our colleagues here
in the Chamber worked hard over the course of a number of years to
restore the pre-1986 Act exclusion for the receipt of CIACs for water
and sewage. As part of our efforts, we developed a revenue raiser in
cooperation with the industry to make up any revenue loss due to our
legislation. This revenue raiser extended the life, and changed the
method, for depreciating water utility property from 20 year
accelerated to 25 year straight line depreciation. As a consequence of
this cooperation with the industry, our CIAC change made a net $274
million contribution toward deficit reduction.
In addition to these efforts, we made a number of changes to the pre-
1986 language. The most important of these was a change to clarify that
service laterals should be included in the definition of CIAC.
These lines typically run from a larger water distribution line to
the property line of one or more customers. The utility is responsible
for all maintenance and liability associated with service laterals.
Additionally, state public utility commissions treat contributions for
service laterals (or any other capital component of the water supply
system) as a CIAC and, therefore, do not allow a utility company to
include them in its rate base.
It is important to distinguish that service laterals are not fees
charged to customers for the right to start and stop service. Such fees
would be treated as taxable income. However, as elements of utility
plant, the service laterals should be treated as CIAC.
Additionally, it is my sense that the final revenue estimate done by
the Joint Committee on Taxation on the restoration of CIAC included
service

[[Page S9918]]

laterals. In an October 11, 1995 letter to me the Joint Committee on
Taxation provided revenue estimates for the CIAC legislation. A
footnote in this letter states, ``These estimates have been revisited
to reflect more recent data.'' The industry had only recently supplied
the committee with comprehensive data, which reflected total CIAC in
the industry including service laterals.
It is my sincere hope that the Department of the Treasury drafts the
regulations on this important matter clearly reflecting the intent of
Congress to include service laterals in the definition of CIAC.
Mr. REID. Mr. President, I, too, stand to express my concern over the
possible direction of the Treasury regulations. The Senator from Iowa
and I worked long and hard to fix this problem in 1996. We worked with
the various staffs here in Congress and at the Department of the
Treasury to ensure that all contributions in aid of construction as
regulated by the various state utility commissions were included under
our legislation. We worked with the industry to develop a revenue
raiser paid for by companies receiving relief in our legislation. I
urge the Department to stick closely with the congressional intent of
our amendment and look forward to working with my colleague to ensure
that we reach the correct result on this issue.
Mr. KOHL. Mr. President, I rise in opposition to the Roth tax bill
and to express disappointment that Senator Moynihan's alternative did
not pass the Senate. The Moynihan amendment would have provided real
tax relief to those Americans who need it most, maintained the balanced
budget that we fought so hard to achieve, and strengthened the Social
Security and Medicare programs for generations to come.
Senator Moynihan's amendment would have reduced the unprecedented
$800 billion, ten year tax cut to a more reasonable $295 billion. The
Moynihan proposal pays a fair dividend, fairly distributed, to the
working families that have fueled the current economic recovery. The
Roth proposal breaks the bank with tax breaks for those who don't need
them, and benefit cuts to those who have already suffered them. The
Moynihan proposal takes a conservative, cautious estimate of the
American economic pie and divides it evenly. The Roth proposal uses
``pie in the sky'' surplus estimates to justify huge tax breaks for a
very small segment of society.
The proponents of $800 billion worth of tax relief would have us
believe that a $1 trillion surplus is as reliable and inevitable as the
sun coming up in the morning. But as my colleagues know, this
projection is based on the most optimistic and unrealistic
assumptions--assumptions about the precise direction of the economy,
which is notoriously hard to predict, and assumptions about the
willingness of Congress to make large and drastic spending cuts, which
is notoriously nonexistent.
Over the next 5 years, the smallest changes in the economy could lead
the $1 trillion surplus estimate to be off by as much as $250 billion.
And, who among us believes that Congress and the President have the
ability, or the desire, to cut programs like education, agriculture,
and biomedical research by the approximately 50% required? In fact,
already this year we have increased spending by $35 billion with more
added every day. Furthermore, members of Congress from both sides of
the aisle admit there is no way we will finish our annual
appropriations bill without yet another, end-of-the-year cash infusion.
The surplus is not a sure thing, and basing an $800 billion tax cut
on it is a long-shot gamble. It was wrong, during the years of deficit
spending, to take money from future generations and spend it on
ourselves. It is equally wrong today to bet the money of future
generations on shaky economic projections and the surreal expectation
that Congress will suddenly--for the first time--decide to make tough
cuts in government spending.
None of this is to suggest that our budget is as bad as it was ten
years ago--it is just not as good as the Roth proposal assumes. Our
nation is currently enjoying record unemployment, falling welfare
rolls, and increased prosperity for more Americans than at any time in
history. We can and should use this opportunity to fix oversights and
inequities in our tax code. Working Americans have driven this economy,
and they deserve to share in it--they deserve a tax code that helps
them send their children to college, that eases the burden of paying
for long-term care, that encourages marriage, saving and high quality
child care. Simply put, in times of economic prosperity, we have the
chance--and the obligation--to expand the pool of winners in our
economy.
And there are definitely some provisions in the Roth proposal that do
just that. Both Senator Roth's bill and the Moynihan amendment contain
a version of my Child Care Tax Credit to encourage employers to get
involved in increasing the supply of quality child care. Both bills
also contain my Farmer Tax Fairness Act to allow farmers to realize the
benefits of income averaging. And both bills provide for education tax
relief, marriage penalty relief, full health insurance deduction for
the self-employed, tax relief to cover the costs of long-term care, and
the extension of tax credits that are vital to our economic health.
But despite any common elements, on almost every point, the Moynihan
alternative not only does a better job of containing the overall cost
of tax relief, it also focuses that relief on those taxpayers most in
need of help. It is a conservative package that leaves plenty of room
to preserve Social Security and Medicare, preserve the fiscal balance
we have worked so hard to achieve, and pay down the national debt.
Mr. President, for all these reasons, I hope, when we finally get
serious about writing a tax bill later this year, we will seriously
consider the Moynihan alternative. It is balanced, responsible and
fiscally prudent. It will help us expand opportunities and make life
better and easier for more Americans and their families. And we should
reject the Roth proposal. It turns the clock back to the failed budget
policies of the past, while providing too much benefit for too few
Americans at too great a cost.
Mr. GORTON. Mr. President, the question now being considered by the
Senate is whether we should refund a portion of the federal government
surplus to American families.
Over the next ten years, the federal government will collect $996
billion more in income and other taxes than is necessary to pay fully
for every existing federal program, agency and department. This means
that the IRS will be taking almost $1 trillion more in taxes from the
American people's paychecks than it needs to operate the government.
This is a tax surplus--a tax overpayment.
This tax relief debate, serious as it is, concerns only the non-
Social Security surplus. Both sides agree that the Social Security
surplus itself is to be reserved for Social Security recipients only,
and not be diverted to any other purpose.
There is, however, an important distinction between the two parties
even on Social Security. Republicans, myself included, believe that we
should pass a ``lockbox'' law, giving the strongest possible statutory
protection to that Social Security surplus. Democrats have consistently
filibustered our proposal, asking Americans simply to trust them not to
raid the Social Security surplus in the future as they have in the
past. That is not enough.
The difference between the parties on taxes is even more striking.
Republicans believe that the lion's share of the non-Social Security
surplus ought to be returned to the American taxpayer whose taxes
created that surplus; Democrats want to spend that surplus on new and
expanded government programs.
I am convinced that this tax overpayment should be refunded to the
American people who worked for and earned it. It is their money and it
should be returned to them to invest and spend as they deem best for
their families and their futures. The alternative to refunding the tax
surplus to taxpayers is to leave the money in Washington, DC where it
will be spent to create $1 trillion in new government programs.
The President and his supporters in Congress are making outrageous
claims that giving a refund to taxpayers is risky or even dangerous.
They say that somehow returning a portion of the government surplus to

[[Page S9919]]

American families will somehow endanger the very livelihoods of women
and children. On that point, I would ask every American citizen to
challenge the President and his Democratic allies to back up with facts
their politically-charged claims.
This latest shameless charade by the President is absolutely
outrageous. The inference propounded by President Clinton is that those
of us in this Chamber who support a tax refund are out to harm women
and children, and that those who oppose such a refund care more about
women and children than we do. That's an absolute outrage, and I'm
truly sorry to see that the President of the United States will stoop
to such low levels in order to keep this money here in Washington, D.C.
so that he can spend it on new government programs.
I will resist the temptation to join the President in his game of
scare tactics, but I will take this opportunity to challenge all
Americans to ask themselves this question when they hear these
ridiculous charges: how will women and children, or anyone else for
that matter, possibly be hurt by the government giving them back some
of the money they overpaid to Washington, D.C.?
To further illustrate the weakness of the President's argument, I'd
like everyone watching this on C-Span back home to take three dollars
out of his or her purse or wallet. Now imagine that each dollar bill is
worth a trillion dollars. That's the surplus--the people's tax
overpayment. That's the amount that Americans have overpaid the
government in personal income and other taxes.
We Republicans want to put two of these dollars aside to protect
Social Security and Medicare and other essential programs, and to cut
the national debt in half.
The debate with the Democrats is over what to do with the third
dollar. Republicans want to give it back to the taxpayers who earned
it. Democrats want to spend it on new programs and bureaucracies. It's
as simple and clear as that.
The surplus is generated from personal income and other taxes, it
belongs to the American people. It's not the government's money--it's
your money . . . you sent it here. Shouldn't you get some of it back?
While I strongly support refunding the tax surplus to the taxpaying
families and hardworking individuals all across this country, it is my
sincere hope that Congress will ultimately pass a bill that reduces the
tax burden on Washington state families while moving towards
simplification of the federal tax code.
Fundamental reform of the tax code is my number one tax priority. I
am a strong, committed advocate for the elimination of our current
federal tax system. It is too complicated, too burdensome, too unfair.
The current system should be scrapped and replaced with one that is
much simpler and easier to understand. We need to focus our energy and
attention in Congress on developing an alternative. I will support a
replacement code that is based on four principles: the new code must be
fair, simple, uniform and consistent. Americans deserve a tax code they
can understand and predict.
A vast majority of the American people and those in Congress support
reforming our tax code. I hope that when Congress takes action to ease
the cost burden of the federal tax code, the opportunity to simplify or
reduce the complexity of the tax code will be seized. I do not pretend
to believe there is consensus on how to reform the code completely at
this time, but at the very least Congress should pass a tax bill that
does not make the code even more of a bewildering mess than it is
today.
Unfortunately, the bill reported out of the Finance Committee does
not achieve the goals of either simplifying the code, or even to do no
further harm. The bill contains 15 titles, 19 subtitles and 163 various
sections to total over 400 pages in length. It takes a report of an
additional almost 300 pages to explain what the bill even does. Yes,
the bill does refund nearly $800 billion in unneeded tax dollars back
to the American people, but at what price? Adding more pages to the tax
code? Making the code more complicated? Further confusing taxpayers as
they struggle to fill out their tax returns?
What is most unfortunate is that a tax relief bill need not be so
complex. It is certainly possible to refund the tax surplus simply and
directly. An alternative was proposed during committee consideration by
Senator Gramm that accomplished the goal of simple tax relief by
including just four elements: broad-based income tax rate relief,
repeal of death taxes, elimination of the marriage penalty, and full
deductibility for health insurance for all Americans. I voted for that
alternative in the Senate.
While I may not fully endorse every aspect of this specific proposal,
I strongly and enthusiastically support its intent to refund the
taxpayers' money in a manner that simplifies and corrects injustices in
the current tax code. We should get rid of death taxes, stop penalizing
married couples through the tax code, allow self-employed and
individual Americans to fully deduct their health insurance costs just
as corporations can, and we should permanently extend the R&D tax
credit so that our increasingly technology driven economy can continue
to grow and create jobs.
I cannot, though, happily endorse a tax relief package that moves
toward such reform only to get lost in a 443-page swamp of countless
new provisions and rules. The citizens of Washington state and the
taxpayers of this nation deserve to have a significant portion of the
tax surplus returned to them, and they deserve it in a manner that
doesn't make filling out their IRS return by April 15th even more of an
exasperating experience.
For now, I will continue to push for a debate that reforms our tax
code. In the meantime, I am committed to pushing onward with the
principles that guide this debate: Should a portion of the government
surplus be refunded to American families, or should the rest of the
non-Social Security and Medicare surplus be left in Washington, D.C.
for increased spending on government programs?
On that question, the answer is easy . . . give American families a
tax refund. That requires a yes vote, though with serious reservations.

captial gains exclusion

Mr. DORGAN. Mr. President, I rise to enter into a colloquy with the
chairman of the Finance Committee, Senator Roth, about a tax issue that
is important to farm families across the country.
The Senate is on record in this year's budget resolution as
supporting legislation to end the disparity between family farmers and
their urban and suburban counterparts with respect to the $500,000
capital gains inclusion for homes sales that Congress passed in 1997 by
expanding it to cover capital gains from the sale of farmland along
with the farmhouse. Under current law, farmers receive little or no
benefit from the existing capital gains exclusion because farm homes
away from town often hold little or no value.
It is my understanding that the chairman is supportive of the effort
to end this tax inequity and will work to include this family farmers
capital gains fairness proposal in conference should the final tax bill
include other capital gains tax relief.
Mr. ROTH. I understand the Senator's concerns. In the context of
capital gains, I believe the needs of farmers should be considered as
we develop future legislation. In the conference, we will certainly be
discussing capital gains. And we will consider the special needs of
farmers in this area.
Mr. CAMPBELL. Mr. President. Today I express my support for S. 1429,
The Taxpayer Refund Act of 1999. This is a sound bill based on real
need and I believe the American taxpayers deserve and want this
legislation.
The Taxpayer Refund Act of 1999 goes a long way to relieve taxpayers
of an unfair tax burden. This bill provides: broad-based tax relief;
family tax relief by addressing the Marriage Penalty Tax; retirement
savings and education incentives; health care tax reductions; small
business tax relief; international tax reform, and death and gift tax
relief, among other provisions.
I am particularly interested in the estate tax relief because earlier
this year I introduced the Estate and Gift Tax Rate Reduction Act of
1999, (S. 38). Estate and gift taxes remain a burden on American
families, particularly those who pursue the American dream

[[Page S9920]]

of owning their own business. This is because family-owned businesses
and farms are hit with the highest tax rate when they are handed down
to descendants--often immediately following the death of a loved one.
These taxes, and the financial burdens and difficulties they create
come at the worst possible time. Making a terrible situation worse is
the fact that the rate of this estate tax is crushing, reaching as high
as 55 percent for the highest bracket. That's higher than even the
highest income tax rate bracket of 39 percent.
Furthermore, the tax is due as soon as the business is turned over to
the heir, allowing no time for financial planning or the setting aside
of money to pay the tax bills. Estate and gift taxes right now are one
of the leading reasons why the number of family-owned farms and
businesses are declining; the burden of this tax is just too much.
This tax sends the troubling message that families should either sell
the business while they are still alive, in order to spare their
descendants this huge tax after their passing, or run-down the value of
the business, so that it won't make it into their higher tax brackets.
Whichever the case may be, it hardly seems to encourage private
investment and initiative, which have always been such a strong part of
our American heritage.
I am pleased that the bill before us takes the important step to
address this unfair burden. I will continue to work with my colleagues
for the complete elimination of the death tax.
I have heard the argument that this tax cut will threaten Social
Security, but that's just not true. In fact, this bill saves every
penny of the money set aside for Social Security. Social Security is
safe and secure with this bill. This bill also leaves $277 billion to
finance Medicare, emergencies or other priorities, so this bill does
not threaten Medicare or Medicare beneficiaries. In contrast, the
administration's budget would increase spending by $1 trillion and
increase taxes by $100 billion over the next 10 years according to the
Congressional Budget Office. How can this administration believe that
they can increase spending and taxes even though they already admitted
raising taxes too much? I think since we now have a balanced budget,
then the American people deserve this tax cut. The American people have
earned this tax cut, this is their money and I think we should give it
back to them.
I know that $792 billion is a lot of money, but we have a $3 trillion
surplus and one reason we have a $3 trillion surplus is the taxpayers
got their taxes raised too much. I realize that we could just go ahead
and spend that extra money like the administration wants to do, but I
think that would be irresponsible. I think if the American people
overpaid, then the American people should get their money back--that's
just fair.
The Taxpayer Refund Act of 1999 is the largest middle-class tax
relief since the Reagan administration and I think it's high time the
hard-working taxpayer get this refund.
I ask unanimous consent to have pertinent information printed in the
Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Congress of the United States,

Joint Committee on Taxation,

Washington, DC, March 5, 1999.
Senator Ben Nighthorse Campbell,
U.S. Senate,
Washington, DC.
Dear Senator Campbell: This is in response to your request
dated February 24, 1999, for a revenue estimate of your bill,
S. 38, ``The Estate and Gift Tax Rate Reduction Act.''
Briefly, this bill would reduce the statutory estate and gift
tax rates contained in section 2010 of the Internal Revenue
Code of 1986 (the ``Code'') each year by subtracting 5
percent from each rate in each rate bracket contained
therein. In addition, your bill would also reduce the credit
for State death taxes contained in section 2011 of the Code
by subtracting each year 1.5 percent from each rate in each
rate bracket contained therein. As the result of these
reductions in the statutory estate and gift tax rates,
Subtitle B of the Code pertaining to estate, gift, and
generation-skipping transfer taxes will effectively be
repealed for decedents dying and gifts made after December
31, 2009.
Assuming that your bill would take effect for decedents
dying and gifts made after December 31, 1999, we estimate
that this proposal would decrease Federal fiscal year budget
receipts as follows:

[In billions of dollars]

Fiscal years:
2000..............................................................
2001.............................................................-4.1
2002.............................................................-8.4
2003............................................................-13.4
2004............................................................-18.1
2005............................................................-22.1
2006............................................................-26.3
2007............................................................-30.8
2008............................................................-35.1
2009............................................................-39.5
__________

Total......................................................-197.8

I hope this information is helpful to you. Please let me
know if we can be of further assistance in this matter.
Sincerely,
Lindy L. Paul.
____

United States Senate,

Washington, DC, December 11, 1998.
Dear Colleague: As we prepare to convene the 106th
Congress, I am writing to seek your co-sponsorship of
legislation that would eliminate the burden of the death
taxes. On July 16, 1998, I introduced S. 2318, a bill that
took a fresh and prudent approach to reducing the burden of
estate and gift taxes. This important bill, which I plan on
re-introducing as soon as we reconvene, would amend the
Internal Revenue Service Code of 1986 to phase out gift and
estate taxes completely over a ten year period. A copy of S.
2318 is enclosed for your convenience.
Just this month, the Joint Economic Committee released its
study entitled, ``The Economics of the Estate Tax.'' This
thorough analysis concluded that ``the estate tax generates
costs to taxpayers, the economy and the environment that far
exceed any potential benefits that it might arguably
produce.'' The study shows persuasively that this unfair and
byzantine tax restricts economic growth and squelches
entrepreneurial initiative. Of special importance to me, the
study also demonstrates how this tax undermines family-owned
businesses and farms--a segment of our economy responsible
for about \2/3\ of new job creation since the early 1970s.
Clearly, the time for eliminating the estate tax has arrived.
My bill would gradually eliminate this tax completely, by
reducing the tax five percent each year, until the highest
rate reaches zero. Although the $23 billion received from
this tax last year represents only a tiny percentage of
overall IRS receipts, eliminating it requires a gradual
approach. A gradual reduction over ten years is wise as we
struggle to maintain our commitment to balance the budget and
prune the federal government. A gradual approach minimizes
possible dislocations.
Several states have already taken a similar initiative and
phased out their state taxes on their own. I think it's time
we follow their example and eliminate this federal tax. My
bill last year was endorsed by the American Farm Bureau, the
Family Business Estate Tax Coalition, the U.S. Chamber of
Commerce, and other interested groups.
Should you wish to be an original cosponsor of this bill
when I reintroduce it, or if you have any questions about
this bill, please contact me, or have your staff contact Amy
Amato of my staff at 224-5852. I look forward to working with
you.
Sincerely,
Ben Nighthorse Campbell,
U.S. Senator.
____

United States Senate,

Washington, DC, April 22, 1999.
Dear Colleague: We are writing to request your
cosponsorship of S. 38, the Estate and Gift Tax Rate
Reduction Act of 1999. This bill takes a fresh and prudent
approach to reducing the burden of estate and gift taxes by
phasing out gift and estate taxes completely over a ten year
period.
In December, the Joint Economic Committee released its
study entitled, ``The Economics of the Estate Tax.'' This
thorough analysis concluded that ``the estate tax generates
costs to taxpayers, the economy and the environment that far
exceed any potential benefits that it might arguably
produce.'' The study shows persuasively that this unfair and
Byzantine tax retards economic growth, and squelches
entrepreneurial initiative. The study also demonstrates how
this tax undermines family-owned businesses and farms--a
segment of our economy responsible for about \2/3\ of new job
creation since the early 1970s. In fact, in large part due to
this tax, only 30% of family-owned businesses survive through
the second generation and only 13% survive through the third.
Clearly, the time for eliminating the estate tax has arrived.
S. 38 would gradually eliminate this tax completely, by
reducing the tax five percent each year, until the highest
rate reaches zero. Although the $23 billion received from
this tax last year represents only a tiny percentage of
overall IRS receipts, eliminating it requires a gradual
approach to minimize possible dislocations. A gradual
reduction over ten years is prudent as we struggle to
maintain our commitment to balance the budget and prune the
federal government.
Several states have already taken a similar initiative and
phased out their state estate taxes on their own. It's time
we follow their example and eliminate this federal tax.
Eliminating the tax has widespread support. In fact, 60% of
business owners report that they would increase investment
and add more jobs if this tax were eliminated. That kind of
positive effect on the American economy is tremendous. This
bill has the endorsement of the American Farm Bureau, the
Family Business Estate Tax Coalition,

[[Page S9921]]

the U.S. Chamber of Commerce, the National Federation of
Business, and over 100 other interested organizations. The
time to eliminate this tax has clearly come.
Should you wish to be a cosponsor of this bill, or if you
have any questions about this bill, please contact us, or
have your staff contact Amy Amato of Senator Campbell's staff
at 224-5852 or Kolan Davis of Senator Grassley's staff at
224-3744. We look forward to working with you.
Sincerely,
Ben Nighthorse Campbell,
U.S. Senator.
Charles Grassley,
U.S. Senator.

Mr. AKAKA. Mr. President, I rise, while we are debating the budget
reconciliation bill, to talk about an important family issue that I
raised during debate on the emergency supplemental bill in March. I
want to voice my strong opposition to efforts by Members in the other
body to use $6 billion in unspent welfare and health care funds,
intended for low-income children and their families, as a gimmick to
overcome their problem with this year's low budget caps.
Mr. President, I am referring to attempts to rescind $6 billion in
unobligated Temporary Assistance for Needy Families, or TANF money, and
unobligated Medicaid or Children's Health Insurance Plan funds. I
learned of this proposal after reading the July 28, 1999, New York
Times, in which appeared a story entitled, ``Leaders in House Covet
States' Unspent Welfare Money.'' Why do they want to do this? To help
fund the $792 billion tax cut proposal that the other body passed last
week--a proposal that would mostly help the wealthy in our nation. Any
such action would be a repudiation of our promise to help families
living in poverty. It is a classic situation of reverse Robin Hood:
robbing the poor to give more to the rich.
Mr. President, during debate on the welfare reform bill in 1996,
states agreed to trade entitlement status under the Aid to Families
with Dependent Children program for the assurance of a fixed, annual
amount in the form of a block grant. Those of us who opposed the
welfare bill for this and other reasons warned that it would be harder
under a block grant to keep welfare funds from being cut. Now, certain
members are turning our fears into reality. The cuts in this former
entitlement program have begun. Cutting funds in this manner, Mr.
President, would represent a betrayal of our promise to protect
America's poor families.
Again, as I explained in March, the term, ``unobligated,'' may seem
self-explanatory--that these are simply funds that have not been spent
under TANF, Medicaid, or CHIP. Under TANF, according to the U.S.
Department of Health and Human Services, a combined total of $4.2
billion from fiscal years 1997, 1998 and 1999 is available. Some would
point out that many poor families have worked their way to self-
sufficiency and that welfare rolls have fallen by record numbers, as
reasons why this money is not needed by states and remains unobligated.
However, many states are relying heavily on these unobligated funds
and have already committed them for a wide variety of uses. States need
to distribute some of this funding to counties and local agencies, or
to child care and social services activities. Governors are keeping
``rainy day'' funds for contingencies such as recessions or periods of
stagnant growth--as we have now in my State of Hawaii--that force
families back onto welfare and leave states without enough money until
the next quarterly federal payment. States are also planning to use
this money for fundamental or new, innovative expenses to help poor
families become financially independent.
In July 23, the National Governors Association wrote to Congressmen
John Porter and David Obey of the House Appropriations Committee, to
plead their case. This letter is signed by Governors Thomas R. Carper
of Delaware and Michael O. Leavitt of Utah, one Democrat and one
Republican. The letter states, ``Cutting funding for vital health and
human services programs such as Medicaid, CHIP, TANF, and child support
would adversely affect millions of Americans--with the greatest impact
on children and the elderly in the greatest need. We reiterate our
adamant and uniform opposition to these unprecedented cuts and to any
proposal that would result in such drastic cuts to our most vulnerable
citizens.''
I concur with the Governors' sentiments about these valuable
programs.
Mr. President, I do this especially because the monies in question
were originally designated to help our poorest children and their
families. Instead, they would, over the next 10 years, go toward such
things as estate tax relief and capital gains tax relief--tax benefits
for the wealthiest taxpayers in the Nation.
Tax relief can be a good thing. However, it should not be the top
priority when we face the urgent need to pay down our country's debt
and save Social Security and Medicare. I hope my colleagues agree with
me on an issue that is important to many poor Americans. I hope funding
is not taken out of TANF, Medicaid or CHIP, as a solution to low budget
caps.

independent bakery drivers

Mr. NICKLES. Mr. President, I have been working for several years to
clarify a provision of the tax code which treats certain truck drivers
as ``statutory employees,'' meaning they are independent contractors
except for payroll tax purposes.
Prior to 1991, these individuals could pay their own payroll taxes if
they had a substantial investment in a distribution route. However, a
1991 IRS ruling said that an investment in a distribution route no
longer qualified as an investment in ``facilities.'' This reversal by
the IRS has created much uncertainty, particularly in the bakery
industry.
I have prepared an amendment to clarify that an investment in
facilities can include a substantial investment in a distribution
route, area, or territory. Thus, an independent-contractor truck driver
who has a substantial investment in a distribution route or territory
will not be treated as a statutory employee for FICA and FUTA tax
purposes.
Unfortunately, I am prevented from offering my amendment to this tax
reconciliation bill because it affects the Social Security program.
Under Section 310(g) of the Budget Act, the adoption of my amendment
would cause the entire bill to be subject to a 60-vote point of order.
Therefore, I will not offer my amendment to this bill. However, I ask
my colleague from Delaware, Senator Roth, if he would work with me to
consider this amendment on the next non-reconciliation tax measure
considered by the Senate Finance Committee.
Mr. ROTH. I thank the Senator from Oklahoma for his comments on this
issue. The budget reconciliation procedures do prevent the
consideration of some amendments such as the one described by the
Senator from Oklahoma. I look forward to working with the Senator from
Oklahoma on this important issue on the next non-reconciliation tax
bill.

tax rules for consolidation of life insurance compensation

Mr. COVERDELL. Mr. President, let me ask the Chairman. As I
understand it, the tax rules regarding the taxation of life insurance
companies have changed substantially over the past years. As a vestige
of these old tax rules, however, there are certain limitations on when
life insurance companies can file consolidated tax returns with non-
life companies.
Mr. ROTH. Yes, I agree.
Mr. SHELBY. I also want to note that in the Senator's tax bill and in
the House tax bill, some of these restrictions on life insurance
consolidation have been addressed.
Mr. ROTH. Yes, that is true.
Mr. SHELBY. I ask that the Chairman keep in mind the further
rationalization of these restrictions as this bill heads into
conference and in future action in the Committee.
Mr. ROTH. I will keep in mind the concerns of both Senators in this
important issue.

bringing computers to the classroom

Mr. DASCHLE. Mr. President, as a cosponsor of the New Millennium
Classrooms Act, introduced by Senators Abraham and Wyden, I am very
pleased the Senate adopted this provision to encourage computer
donations to schools. While I oppose the underlying bill, and believe
the magnitude of the Republican tax cut is irresponsible, I do support
a more reasonable level of tax relief with provisions targeted to
address national needs. This provision, which has strong bipartisan
support,

[[Page S9922]]

meets that test. I would also like to point out that Senator Baucus
sponsored a similar provision that was part of the Democratic
alternative considered earlier.
Technology is playing an increasingly important role in our society,
in homes, in businesses, and in many aspects of everyday life.
Employers will require increasingly sophisticated levels of
technological literacy in the workplace of the 21st Century. Education
Secretary Riley has pointed out that we can expect 70 percent growth in
computer and technology-related jobs in the next 6 years.
Yet, a recent U.S. Department of Commerce report, ``Falling Through
the Net: Defining the Digital Divide,'' finds there is a growing
disparity in terms of who has access to technology. While more
Americans are embracing technology, African Americans and Hispanics,
particularly from lower-income families and from rural areas, have less
access to computers, and that gap is growing. We find ourselves with a
new, information-age definition of ``haves'' and ``have-nots.'' These
conditions are not good either for those left behind, or for those who
will be looking to hire employees in the future.
Every child should be able to gain technological skills through his
or her classroom. Yet many schools are having difficulty meeting this
challenge. Sadly, while some schools have access to the latest in
equipment, too many schools, particularly in fiscally strapped urban
and rural areas, have an insufficient number of computers, and most of
those are outdated. The average computer in the classroom is 7 years
old--and many are even older. A large proportion of these computers
cannot run current educational software or connect to the Internet.
The Department of Education recommends that the optimal ratio of
students per computer is five to one. Yet schools where 81 percent or
more of the children meet the Title I eligibility standards have only
one multimedia computer for every 32 students. Even schools where less
than 20 percent of the students are economically disadvantaged have
only one multimedia computer for every 22 students.
At the same time, research shows that students with the least access
to technology can be helped most from effectively integrating
technology into the classroom. A study by City University of New York
found test scores of disadvantaged children increased dramatically with
computer-aided instruction.
We have taken several steps at the federal level to increase schools'
ability to integrate technology into the classroom. The creation of the
E-rate program, for example, is helping schools obtain access to the
Internet. Technology Challenge grants are providing resources to
schools to upgrade their computer programs. We are also providing more
resources to help train teachers on the best ways to use technology
effectively in their classes. But many schools have a fundamental
problem in obtaining suitable hardware.
Current law provides an enhanced deduction for corporate donations to
schools until December 31, 2000. Unfortunately, few corporations are
taking advantage of the enhanced deduction for two main reasons: the
requirement that donated equipment be 2 years old or less does not fit
companies' equipment use cycles, and the deduction does not provide a
sufficient incentive. Modifying the tax code to address these
limitations, as the Abraham-Wyden amendment proposes, will help us
achieve the goal of putting a computer in every classroom and create
ongoing incentives to make sure the technology is kept reasonably up-
to-date.
The Rand Institute has estimated the cost of providing our schools
with appropriate technology to be about $15 billion. The New Millennium
Classrooms Act will help stretch federal funds efficiently and
effectively to address this shortfall.
Mr. President, we all talk about the importance of encouraging
businesses to become more involved in the educational process in their
communities. This provision creates a strong incentive to help build
those relationships while providing school children with access to
updated equipment. I thank my colleagues for supporting it and intend
to work to see it enacted as part of a more responsible budget plan.
Mr. WYDEN. Mr. President, I am pleased that last night the Senate
adopted the Abraham-Wyden New Millennium Classrooms Act as an amendment
to the reconciliation tax bill. Senator Abraham and I have worked on
many technology issues together as members of the Senate Commerce
Committee.
The New Millennium Classrooms Act is about digital recycling. It
gives companies an incentive to recycle technology. It says the
computer Bill Gates may see as a dinosaur, is really a dynamic new
opportunity for seniors and students who have none.
There is a growing need to encourage access to information technology
for both seniors and students. The Administration on Aging estimates
there are about 11,500 senior centers throughout the United States
serving millions of older Americans. The centers offer a variety of
services, including employee assistance and educational programs.
Equipping senior centers with donated computer equipment could help
open the door to employment opportunities.
We know there is a growing demand for skilled high tech workers. Just
last year, the high tech community came to Congress asking for a large
increase in the number of skilled H-1B visas so they could hire foreign
workers to fill the gap. Congress agreed to boost the number of H-1B
visas from 65,000 to 115,000 for 1999 and 2000. Those are 50,000 jobs
that could have gone to Americans. Many seniors have the drive and the
desire to keep working; they simply need to gain some basic computer
skills.
While it is important for all Americans to have equal access to
information technology, the most pressing need is in our schools. The
Department of Commerce recently published a report, ``Falling Through
the Net: Defining the Digital Divide.'' It shows that the rapid build-
out of the information superhighway has by-passed many in rural and in
less-advantaged urban communities. The report says factors such as
race, income and area of residence help limit access to information
technology. For example, the study found that households earning more
than $75,000 are five times more likely to own computers than those
earning less than $10,000. Households earning more than $75,000 are
seven times more likely to use the Internet as those earning less than
$10,000.
We know that very early in the next Century 60% of all jobs will
require high-tech computer skills. To prepare our children for the jobs
of the future, they not only must have access to technology, but they
must be trained to use it as well. But we cannot count on children in
low-income and rural communities even to have access to computers.
Schools can serve as great equalizers in this equation, giving all
children access to information technology resources. However, a 1997
report by the Educational Testing Service found that on average there
was only one multimedia computer for every 24 students. In economically
disadvantaged communities, the situation is worse: the computer to
student ratio rises to one in 32.
The purpose of our amendment is to build more bridges between the
technology ``haves'' and the ``have nots'' to build more on-ramps to
the information superhighway. You can't get 21st Century classrooms,
using Flintstones technology. However, technology is not cheap and
school budgets are limited, making it tough for schools to upgrade
their systems by themselves. The point of our amendment is to enhance
existing incentives to businesses to donate computer equipment to
schools.
There is a federal program in place, the 21st Century Classroom Act
of 1997, but its use has been limited. It allows businesses to take a
tax deduction for certain computer equipment donations to K-12 schools.
But most businesses take longer to upgrade their computers than allowed
for under the law.
The New Millennium Classrooms Act would make this law work the way it
was intended, and include donations to senior centers under this tax
credit. First, our legislation would increase the age limit from two to
three years for donated equipment eligible for a tax credit. This more
realistically tracks the time line businesses follow for their computer
upgrades. It will cover hardware that possesses the necessary memory
capacity and graphics capability to support Internet and multimedia
applications.

[[Page S9923]]

Second, our bill expands the current limitation of ``original use''
to include both original equipment manufacturers and any corporation
that reacquires their equipment. We believe that by expanding the
number of donors eligible for the credit, we will expand the number of
computers donated to schools and senior centers.
Third, our bill provides for a 30% tax credit of the fair market
value for school and senior center computer donations, and a 50% credit
for donations to schools located in empowerment zones, enterprise
communities and Indian reservations. The Department of Commerce report
highlights the need to encourage school computer donation in these
notoriously under-served communities and we want to target donations
toward these communities.
Finally, our bill requires an operating system to be included on a
donated computer's hard drive in order to qualify for the tax credit.
This will ensure students and seniors don't get empty computer shells,
but the brains that drive the computers.
Our legislation is supported by a wide range of business and
education groups. Leaders of technology associations, like the
Information Technology Industry Council and TechNet, and the National
Association of Manufacturers have joined education associations, such
as the National Association of Secondary School Principals and the
National Association of State University and Land Grant Colleges, in
support of the amendment.
The Digital Millennium Classrooms Act promotes digital recycling. It
will encourage companies to put their used computers into classrooms
instead of into landfills. It will help build a safety net under
students trying to cross the digital divide. I thank my colleagues for
supporting this amendment, and again wish to commend Senator Abraham
for his leadership on this legislation.
Mr. McCAIN. Mr. President, as one who has advocated tax relief and
reform for American families throughout my 17 years in Congress, I
welcome the opportunity to speak on the Taxpayer Refund Act of 1999.
Americans want, need, and deserve tax relief. The government takes
too much of the American people's earnings to fund the bloated
bureaucracy in Washington. The notion that the government knows better
than families how to spend their money is absurd. Americans should be
able to keep much more of their hard-earned money to use and invest for
themselves and their family's future.
Not only do Americans want and need tax relief, they also deserve
fundamental reform of our unfair and overly complex tax code. For
years, and this bill is no exception, we have compounded the tax code's
complexity and put tax loopholes for special interests ahead of tax
relief for working families. The result is a tax code that is a
bewildering 44,000 page catalogue of favors for a privileged few and a
chamber of horrors for the rest of America--except perhaps the
accountants and lawyers.
No one can possibly believe it's fair to tax your salary, your
investments, your property, your expenses, your marriage, and your
death. Taxes claim nearly 40 percent of the average taxpayer's income.
This is simply not right.
This bill takes several steps toward relieving that excessive tax
burden, and I congratulate the Chairman and his colleagues on the
Senate Finance Committee for their hard work in crafting this bill for
the Senate's consideration.
There are many good provisions in this bill, and I intend to support
it in the hope that a conference agreement can be reached that provides
meaningful tax relief and that the President will sign into law.
However, I am concerned that the majority of the tax relief proposed in
this bill will not be available to taxpayers for several years. The
bill also excludes other very good ideas but includes several
provisions that are clearly intended to benefit special interests. I
hope the amendment process, limited though it is by the Senate's arcane
rules for dealing with reconciliation measures, will improve it before
we are asked to vote on final passage.
Mr. President, the latest reports project a nearly $3 trillion
federal budget surplus over the next 10 years. About two-thirds of the
projected surplus comes from Social Security payroll taxes that are
deposited in the Social Security Trust Funds, and must be kept away
from spendthrift politicians to ensure that Social Security benefits
are paid as promised. Our first priority must be to lock up the Social
Security Trust Funds to prevent Presidential or Congressional raids on
workers' retirement funds to pay for so-called ``emergency'' spending
or new big government programs. Most Americans don't share the view
that dubious pork-barrel projects, such as millions of dollars in
assistance to reindeer ranchers and maple sugar producers, should be
treated as emergencies to be paid for with their Social Security taxes,
but that is what Congress did earlier this year.
That leaves nearly $1 trillion in non-Social Security revenue
surpluses. Now, the typical Washington response would be to spend the
money on new government programs and bureaucracies. Let me state very
clearly that I vehemently oppose the view that ``growing government''
should be a national priority. To the contrary, our goal should be to
continue to shrink the size of the federal government, returning more
power and money to the people.
I firmly believe a healthy portion of the projected non-Social
Security surplus should be returned to the American people in the form
of tax cuts. I also believe we have a responsibility to balance the
need for tax relief with other pressing national priorities.
After locking up the Social Security surpluses, I would dedicate 62
percent of the remaining $1 trillion in non-Social Security surplus
revenues, or about $620 billion, to shore up the Social Security Trust
Funds, extending the solvency of the Social Security system until at
least the middle of the next century. The President promised to save
Social Security, but he failed to include this proposal anywhere in his
budget submission. In fact, he has since proposed or supported spending
billions of dollars from the surplus on other government programs,
depleting the funds needed to ensure retirement benefits are paid as
promised.
I would also reserve 10 percent of the non-Social Security surplus to
protect the Medicare system, and use 5 percent to begin paying down our
$5.6 trillion national debt.
With the remaining $230 billion in surplus revenues, plus about $300
billion raised by closing inequitable corporate tax loopholes and
ending unnecessary spending subsidies, I would provide meaningful tax
relief that benefits Americans and fuels the economy.
My tax relief plan, which was filed as an amendment to this bill,
provides slightly more than $500 billion in tax relief over 10 years,
targeted toward lower- and middle-income Americans, family farmers and
small businessmen, and families. The bill before the Senate includes
provisions that are similar to some of the proposals included in my
plan.
The bill does provide relief from the marriage penalty and gift and
estate taxes, but these important provisions do not take effect for
several years. I believe we should repeal, once and for all, the
disgraceful tax penalty that punishes couples who want to get married.
We should also slash the death tax that prevents a father or a mother
from leaving the hard-earned fruits of their labor to their children.
Why wait five or seven years to provide some relief from these onerous
and unfair taxes?
The bill properly targets the lowest 15 percent tax bracket for a
one-percent rate reduction and provides for a gradual increase in the
upper limit of the bracket. My plan would also expand this bracket to
allow as many as 17 million more Americans to pay taxes at the lowest
rate.
The bill also increases the income threshold for tax-deferred
contributions to IRAs, but not until 2008, and very gradually increases
the amount that employees can contribute each year to employer-
sponsored retirement plans. We should make these increases effective
immediately to encourage more Americans to save now for their
retirement.

What the bill before the Senate does not do is provide much-needed
incentives for saving. Restoring to every American the tax exemption
for the first $200 in interest and dividend income would go a long way
toward reversing the abysmal savings rate in this country.

[[Page S9924]]

Most important, we must eliminate immediately the Social Security
earnings test. This tax unfairly penalizes senior citizens who choose
to, or have to, work by taking away $1 of their Social Security
benefits for every $3 they earn. There is no justifiable reason to
force seniors with decades of knowledge and expertise out of the
workforce by imposing such a punitive tax.
Many of the other provisions in this bill that provide tax relief for
education, health care, and other issues important to American families
are implemented gradually or simply delayed for several years.
Likewise, some of the provisions that benefit small businesses and tax-
exempt organizations do not take effect for a number of years. In fact,
less than half of the 120 provisions in this bill provide any tax
relief at all in the year 2000. Those tax cuts that do take effect
immediately amount to just $5 billion of the nearly $800 billion total
tax cuts in the bill.
But look at some of the provisions that do take effect immediately:
--A provision to extend the tax credit for electricity produced from
wind and closed-loop biomass sources, and also extend the credit to
electricity produced from poultry waste, which is defined to include
rice hulls, wood shavings, straw, bedding, and other litter. This
provision goes into effect immediately, and will cost $1.6 billion over
10 years.
--A provision to exempt individuals with foreign addresses from
paying the 7.5 percent air passenger ticket tax on frequent flier
miles, leaving American passengers to pay for our over-burdened air
traffic control system. The provision goes into effect on January 1,
2000, and will cost $238 million over 10 years.
--A provision that exempts small seaplanes from paying ticket taxes.
This provision goes into effect on December 31, 1999, and will cost $11
million over 10 years.
--A provision to reduce the excise tax, from 12.4 percent to 11
percent, on component parts of arrows used for hunting fish and game
that measure 18 inches overall or more in length. This provision takes
effect immediately.
How can we justify giving a $33 million tax break next year to
companies producing electricity from chicken waste, when senior
citizens have to forego some of their Social Security benefits if they
must work to make ends meet. How can we justify writing off $15 million
in revenue next year from people from other countries who fly to the
U.S., when American families get absolutely no relief from the
egregious marriage penalty until 2005?
Mr. President, as I have said, there are many good provisions in this
bill which reflect the hard work and difficult decisions that Chairman
Roth and the Finance Committee faced. They have worked hard to do the
best we can for the American people who need and deserve relief from
excessive taxation and a burdensome tax code.
I intend to vote for this bill, even though I know, as do my
colleagues, that the President has pledged to veto both the Senate and
House tax bills. Neither bill will ever become law, and the American
people will never see a nickel's cut in their taxes, if the President
has his way. That is the unfortunate reality that the conferees on this
measure must recognize as they work to craft a meaningful tax relief
bill that can be enacted and implemented for the benefit of the
American people.
I will vote for this bill to move the process along and send this
bill to conference with the House. What will matter at the end is that
we focus on crafting a bill that can become law so that the American
taxpayers get the relief they deserve and need. I have put forward a
plan, described briefly here, that I believe can be a starting point
for meaningful and achievable tax cuts. I urge the conferees on this
legislation to focus on a conference agreement that the President will
sign and that will become law this year. That is what the American
people want and need.
Mr. DODD. Mr. President, I would like to take this opportunity to
express my thoughts and observations on the Senate's consideration of
S. 1429, The Taxpayer Refund Act of 1999.
Regrettably, in choosing to pass this bill, the Senate has missed a
unique opportunity to provide Americans with long-term economic
stability, improved retirement and health security for seniors, and
targeted tax cuts for working families.
Instead, the Senate has adopted--along largely partisan lines--a
package of reckless and fiscally irresponsible tax cuts that threatens
our economic prosperity and short-changes our commitment to Social
Security, Medicare, education, and other priorities.
Let me briefly express my concerns about this legislation in more
detail.
First, it would harm the country's long-term economic prospects. I
find it somewhat ironic that many of our Republican colleagues applaud
Federal Reserve Chairman Greenspan's economic stewardship, yet choose
to ignore his warnings about the ill-considered implications of their
tax plan. In fact, the Chairman has made abundantly clear that this tax
package will stimulate an economy that is already performing at a high
level. That will only contribute to the kinds of inflationary pressures
that have already caused the Fed to recently raise interest rates. The
further irony, of course, is that, as we all know, an increase in
interest rates acts as a hidden tax on taxpayers. So by contributing to
a hike in interest rates, this tax package could actually have the
effect of raising the cost of a mortgage loan, a car loan, a student
loan, and so many other items upon which working families depend.
Second, S. 1429 fails the test of tax fairness. According to the
Department of the Treasury, nearly 67 percent of the tax cuts would
benefit the wealthiest 20 percent of families. Only 12 percent of the
tax benefits are targeted at the bottom 60 percent of income earners.
The bill contains estate tax relief that eases tax burdens for those
with estates exceeding $10,000,000 in worth. Is this middle America? I
don't believe so. Meanwhile, the Majority has once again refused to
extend child care tax credits to people earning less than $28,000.
The Republicans stress the importance of securing the solvency of
Social Security and Medicare. Again, it is a cruel irony that, at
precisely the time early in the next century that Medicare is scheduled
to become insolvent and Social Security surpluses are expected to
disappear, the cost of the Majority's tax cut will begin to skyrocket
to almost $2 trillion. As the baby boomers begin to retire and the
solvency needle approaches zero, the Republicans have left virtually
nothing to secure the viability of these important programs for future
generations of retirees.
Drastic cuts to domestic and defense spending are a third consequence
of this ill-conceived tax bill. It will have the effect, if not the
intent, of crowding out investments in critical domestic and defense
priorities. This bill assumes cuts in defense of $198 billion and cuts
of $511 billion in discretionary priorities. As a result, 375,000
children would be cut from the Head Start program, 1.4 million veterans
would be denied much needed medical services from VA hospitals, and
approximately 1.25 million low-income tenants would lose rental
subsidies in FY 2009. Even more troublesome is the fact that if defense
spending is funded at the President's request, cuts in domestic
spending would be as high as 40 percent.
Mr. President, I am deeply disturbed not only by the details of this
tax plan but also by the erosion of the integrity of the budget process
that it represents. It is premised on accounting gimmicks, false
assumptions, and budgetary slights of hand to achieve its desired
numbers on spending and revenues. That was tried in the 1980's, with
disastrous results. In this decade, we have restored the integrity of
the budget process. In some ways, that is an achievement almost as
important as balancing the budget itself, since it has given confidence
to taxpayers and financial markets that the Administration and Congress
can keep its fiscal house in order. Now, with S. 1429, we risk simply
squandering the gains that have been made. This distorted process using
budgetary smoke and mirrors will, I fear, lead this nation down a
precarious path in years to come.
This is not to say that I do not support some reasonable tax relief
targeted at those who need it the most. But just as no family would
leave for vacation without making sure that their bills could be paid,
the Congress should not provide tax cuts without first meeting our
obligations to

[[Page S9925]]

strengthen Social Security and Medicare, reduce the debt, and invest in
defense and domestic priorities. What the supporters of this bill have
done is essentially to buy a vacation without making sure they could
pay for the necessities.
Senator Moynihan's amendment struck the proper balance among these
important obligations by devoting one-third of the surplus to
discretionary spending, one-third to paying down the debt, and $290
billion in tax cuts for low and middle income Americans. It would have,
among other provisions, increased the standard deduction for the 73
percent of Americans who claim the standard deduction, provided a 100
percent deduction for health insurance for the self-employed, and
offered a 25 percent credit for employers who operate child care
centers on site or who help employees pay the cost of off-site child
care. This is broad-based tax relief targeted to the people who need it
the most. While the Dodd-Jeffords amendment on child care was adopted
by voice vote, regrettably the Moynihan amendment did not prevail. Nor
did other important amendments. Chief among these was Senator Kennedy's
efforts to provide a much needed prescription drug benefit. Three-
quarters of American seniors lack dependable private sector coverage of
prescription drugs. Yet seniors increasingly rely on new and often
costly medicines to preserve their health and prolong their life. In a
bill providing $792 billion in tax breaks, I regret that the Senate
could not find $49 billion for modest drug coverage for seniors.
My friend and colleague from Connecticut, Senator Lieberman, along
with Senator Hollings, offered an important amendment that would have
stricken all of S. 1429's provisions, effectively eliminating the tax
cut for now. The surplus would have then been used to pay down the
debt. I voted in favor of this amendment not as a statement against all
tax cuts, but rather to support its message of fiscal responsibility
and to express my utter opposition to the Majority's tax bill.
Mr. President, in simple terms, tax cut may be compared to apple pie.
Everyone likes them. Everyone would like a slice. But we have other
responsibilities. We should provide tax cuts, but we should take care
of our other priorities as well. Especially now, when economic times
are as good as they have been in our lifetimes, we should build a
strong foundation for long-term prosperity by reducing the national
debt, strengthening Social Security and Medicare, boosting our national
defense, and investing in education, the environment, and other vital
priorities. The bill that has just passed the Senate fails to do that.
I remain optimistic that in conference we can craft legislation that is
more faithful to our shared vision of future prosperity and stability
for all Americans.
Mr. McCONNELL. Mr. President, the amendment I submitted would reduce
the capital gains holding period for horses from 24 months to 12 months
and would correct an inequity in the tax code that has discriminated
against the horse industry since 1969. Currently, all capital assets--
with the exception of horses and cattle--qualify for the lowest capital
gains tax rate if held for 12 months. This discrepancy in the tax code
is simply not fair to the horse industry and must be changed.
The horse industry is extremely important to our economy, and
accounts for thousands of jobs. Whether it is owning, breeding, racing,
or showing horses--or simply enjoying an afternoon ride along a trail--
one in thirty-five Americans is touched by the horse industry. In
Kentucky alone, the horse industry has an economic impact of $3.4
billion, involving 150,000 horses and more than 50,000 employees.
What supports this industry is the investment in the horses
themselves. Much like other businesses, outside investments are
essential to the operation and growth of the horse industry. Without
others willing to buy and breed horses, it is impossible for the
industry to remain competitive. The 2-year holding period ultimately
discourages investment, putting this industry--and the 1.4 million jobs
it supports nationwide--at risk. Clearly, this is bad economic policy
and must be changed.
The two-year holding period for horses is sorely outdated. It was
established in 1969, primarily as an anti-tax shelter provision. Since
then, there have been a number of changes in the tax code.
Specifically, the passive loss limitations have been adopted, putting
an end to these previous tax loopholes.
Although horses are categorized as livestock, they have an entirely
different function than other animals, like cattle. While both are
livestock, the investment in these two animals is entirely different.
Beef is a commodity, with a finite and generally short life span.
However, horses--whether they are used for racing, showing, or
working--are frequently bought and sold multiple times over their
longer life in order to maximize the return on the owner's investment.
Additionally, once horses retire from the track or show arena, they
continue to enhance their value through breeding.
The cost of my amendment will be completely offset by postponing for
one year the 7.5 percent Air Passenger Ticket Tax that has been
proposed on the frequent flier miles for persons with foreign
addresses. Changes to the capital gains holding period for horses would
go into effect in 2001 and the Air Passenger Ticket Tax would also go
into effect in 2001.
There is no sound argument for distinguishing horses from other
capital assets. The two-year holding period discriminates against the
horse industry and must be reduced. I urge my colleagues to join me in
correcting this unfair tax policy.

Veterans Health Care

Mr. ROCKEFELLER. Mr. President, I filed a motion to protect veterans'
health care because veterans are apt to be hurt by the tax reduction
bill before us. I was joined in this effort by Senators Mikulski,
Bryan, Daschle, Harkin, and Bingaman. Senator Mikulski, as vice chair
of VA Appropriations Subcommittee, and my other cosponsors all
understand what is at stake here. I did not proceed in offering this
motion, however, because Senator Wellstone offered a similar motion.
The issue raised by my amendment still applies to this tax bill. It
is very simple: approval of this $800 billion tax reduction bill leaves
no ability to meet our obligations to veterans. If we spend all of the
federal surplus on tax giveaways, there will be nothing left to fund
veterans' health care.
In my view, the Senate Finance Committee needed to rethink this tax
bill and reserve $8.5 billion over 5 years to appropriately fund VA
health care.
This is simple math. My motion instructed the Finance Committee to
provide for slightly more than 1 percent of the tax cut included in the
bill before us. I want to repeat that--it would have set aside about 1
percent of the tax cut included in the bill for veterans.
The amount included in the motion--$8.5 billion over 5 years--has
been fully justified by the Committee on Veterans' Affairs in its Views
and Estimates letter to the Committee on the Budget.
I ask unanimous consent that a copy of this letter be printed in the
Record.
There being no objection, the letter was ordered to be printed in the
Record, as follows:

U.S. Senate,

Committee on Veterans' Affairs,

Washington, DC, March 15, 1999.
Hon. Pete V. Domenici,
Chairman,
Hon. Frank R. Lautenberg,
Ranking Minority Member,
Committee on the Budget, U.S. Senate,
Washington, DC.
Dear Pete and Frank: Pursuant to section 301(d) of the
Congressional Budget Act of 1974, the Committee on Veterans'
Affairs (hereafter, ``Committee'') hereby reports to the
Committee on the Budget its views and estimates on the fiscal
year 2000 (hereafter, ``FY 00'') budget for veterans'
programs within the Committee's jurisdiction. This report is
submitted in fulfillment of the Committee's obligation to
provide recommendations for programs in Function 700
(Veterans' Benefits and Services) and for certain veterans'
programs included in Function 500 (Education, Training,
Employment, and Social Services).

I. Summary

VA requires over $3 billion in additional discretionary
account funding in FY 00 to support its medical care
operations: an additional $1.26 billion to meet unanticipated
spending requirements; an additional $853.1 million to
overcome the effects of inflation and other
``uncontrollables'' in order that it might maintain current
services; and at least $1 billion in additional funding to
better address the needs of an aging, and increasingly
female, veterans population. At

[[Page S9926]]

this time, however, we limit our request to $1.7 billion in
additional FY 00 medical care funding. We believe that this
level of additional funding, coupled with ongoing VA efforts
to gain efficiencies and passage of VA Medicare subvention
legislation this year, will allow VA to meet veterans'
medical care needs in FY 00.
With respect to mandatory account programs, the Budget
Committee has already approved provisions of S. 4, the
``Soldiers', Sailors', Airmen's and Marines' Bill of Rights
Act of 1999,'' which will raise VA mandatory account spending
by $3.8 billion over fiscal years 2000-2004. We do not
request ``pay-go'' relief beyond that amount. We will,
however, anticipate the availability of such funds in the
event that S. 4 falters.

II. General Comments

We note at the outset that the Nation's veterans have
already contributed significantly to the cause of fiscal
restraint. On the mandatory account side, numerous money-
saving measures, unanimously approved by the Committee's
membership in both 1996 and 1997, were enacted into law as
Title VIII of Public Law 105-33, the ``Balanced Budget Act of
1997.'' Relative to baseline assumptions then in effect,
these measures are resulting in savings of $2.783 billion in
mandatory account outlays over fiscal years 1998 through
2002. In addition, the statutory bar on VA compensation for
disabilities stemming from in-service tobacco use, approved
as section 8202 of the ``Transportation Equity Act for the
21st Century,'' Public Law 105-178, has resulted in net
savings of $15.2 billion during fiscal years 1999 through
2003.
In addition to these mandatory account savings, the
Balanced Budget Act froze veterans' programs discretionary
spending outlays through fiscal year 2002. This freeze has
required--and will continue to require at an accelerating
pace--unacceptable cuts in veterans' discretionary spending,
particularly medical care spending, even after projected
third-party receipt/Medical Care Cost Recovery (MCCF) funds
are collected. Whatever the merits of this plan when enacted,
it was passed before budgetary surpluses has materialized.
The freeze on medical care funding can no longer be
justified. It must now be lifted.
Regrettably, the Administration has proposed a budget that
would impose further cuts in veterans' medical care programs
by freezing appropriated medical care funding at $17.306
billion, the FY 99 appropriation. Since VA anticipates an
increase in MCCF receipts of only $124 million in FY 00,
overall medical care spending would increase under the
Administration's plan by less than \7/10\'s of 1%. This is
unacceptable; after three years of flat-line medical care
appropriations, VA requires, at minimum, a 10% (or $1.7
billion) increase in appropriated funding.

III. Discretionary Account Spending

a. proposed medical care spending

The standstill level of funding proposed by the
Administration for FY 00 medical care spending is inadequate
for VA to fulfill unanticipated spending requirements imposed
on VA by events outside the Department's control. Indeed, the
proposed flat-line budget will not even allow VA to maintain
current services. Clearly, the budget will not permit VA to
better address the single most pressing, and least met,
medical need of the World War II/Korean War veteran
generation: long-term care. Nor is it sufficient for VA to
serve the growing cohort of female veterans. Thus, budget
relief is imperative.
1. Unanticipated VA spending requirements--$1.26 billion
VA will require an additional $1.26 billion in FY 00 to
meet care requirements which could not be anticipated when
the Balanced Budget Act was enacted.
Hepatitis C treatment
Hepatitis C virus (HCV) is today the most common chronic
bloodborne infection in the United States. The Centers for
Disease Control and Prevention (CDC) reports highest
prevalence rates among males aged 30-49 and intravenous drug
users. VA studies now indicate that at least 20% of
hospitalized veteran-patients test positive for HCV, twice
the rate reported among the population generally.
No vaccine against hepatitis C exits, nor is there a cure.
And while it is true that HCV was first identified in the
late 1980's no treatment regime was generally recognized
until last year, when a recommended drug therapy of
interferon and ribavirin was approved. This drug therapy
alone cost $13,200 per patient--costs that VA did not
anticipate prior to approval of this treatment regime in late
1998. Related testing, biopsy and other costs amount to an
additional $1,820 per patient.
VA anticipates that of the 3.3 million patients it will
treat in FY 00, 36,300 will be candidates for HCV drug
therapy. Taking into account the completion of treatments
initiated in FY 99, VA will require an additional $625
million in FY 00 to respond to this unanticipated medical
challenge.
Emergency medical services
VA currently provides enrolled veterans with a full range
of hospital care and medical services. It does not, however,
generally provide comprehensive emergency care services.
Rather, VA patients must rely on insurance they may have to
defray such expenses, or pay for such expenses themselves.
The Administration intends to propose legislation this year
declaring that emergency care is a basic right of all
Americans. Such legislation would, reportedly, require that
all health care plans provide such care, as a matter of
right, to the enrollees. In such circumstances, VA will be
compelled to offer emergency care services to its enrollees,
either directly or more likely, by reimbursing fees charged
by other providers. Prior to the development of the
Administration's proposal on the issue, VA had not
anticipated the assumption of this added responsibility.
Legislation requiring VA to pay for emergency care provided
to veterans by non-VA medical facilities has already been
introduced in the House and will be advanced in the Senate.
VA estimates the costs of providing emergency care services
and subsequent hospital admission to VA enrolles will be $548
million in FY 00.
Weapons of mass destruction preparedness
In response to Public Law 105-114, VA has enchanced its
role in assisting the Department of Health and Human Services
(HHS) in stockpiling antidotes and other pharmaceuticals
needed for response to potential domestic terrorist attacks
with weapons of mass destruction. VA medical facilities
are dispersed nationwide and thus, along with Department
of Defense hospitals located within the continental U.S.,
they are natural depositories of drugs, supplies and other
materials which might be needed to respond to such
emergencies.
VA participation in preparatory activities is cost-
efficient--but it is not without costs. Such costs, which had
not been anticipated by VA prior to enactment of Public Law
105-114, will amount to $14.619 million in FY 00.
Increased prosthetic costs
VA expenditures in meeting the prosthetic device needs of
its patients--needs which include not only artificial limbs
and the like, but also more conventional aids such as hearing
aids, eyeglasses, walkers, etc.--have increased markedly
between 1993 and 1998, at annual rates of up to 18.90%. A
portion of those increases are an unanticipated side effect
of ``eligibility reform'' legislation, enacted in 1996, which
allows VA to enroll all veterans, subject to available
funding, for VA medical care. That legislation appears to
have stimulated demand for VA services among persons needing
such devices.
Even after general inflation is factored out, VA
anticipates that its prosthetic device expenses will increase
by a rate of 14.8%. VA will require an additional $74.075
million to defray these expenses in FY 00.
2. Current services--$853.1 million
We have closely observed VA's recent efforts to restructure
to deliver health care services to the Nation's veterans more
efficiently. Generally, we are satisfied with VA's effort,
and we acknowledge that fiscal restraints have been--and will
continue to be--a stimulus to change. Nonetheless, we believe
that a fourth consecutive year of non-growth in the medical
care budget would be destructive.
As anyone who pays medical bills or health insurance
premiums knows, medical costs are rising. Payroll inflation,
increases in the costs of goods, and other
``uncontrollables'' dictate funding increases of $853.1
million in FY 00 just to maintain current service levels.
Health care is an extremely labor-intensive enterprise;
that is why VA is the largest civilian agency, in terms of
employment, in the Federal government. Can labor efficiencies
be wrung out of health care systems, VA included? Most
assuredly so, as demonstrated by the annual shrinkage of VA's
medical labor force (from 201,000 in FY 95 to 174,000 in FY
00) even as the number of veterans treated during that period
increased by almost 40% (from 2.6 million to 3.6 million).
But even with the shrinkage of VA's medical labor pool, VA's
medical care payroll costs will increase by $562.6 million in
FY 00 due to non-optional cost-of-living and within-grade
salary and wage adjustments, and increases in Government-paid
Social Security, health insurance, retirement, and other
benefit costs.
Other inflation-related cost increases must also be borne
by the Veterans Health Administration. While VA has
implemented an aggressive pharmaceutical management program
which has saved more than $350 million--making VA the model
for Medicare, DOD and others to emulate--increases in VA's
annual pharmaceutical costs, medical and non-medical supply
costs, leased building space costs, and the like, will
account for an additional $267.1 million. Finally, the
Veterans Health Administration will be required to absorb an
additional $23.4 million in other uncontrollable expenses
(e.g., State home and CHAMPVA workload increases, storage and
space requirements, additional calendar day costs, etc.)
It is imperative that the Budget Committee understand that
requiring VA to absorb such cost increases continually must
result, at some point, in cuts in the amount of care--or,
more alarmingly, in the quality of care--which VA provides.
We have documented serious quality problems, e.g., an
increase in dangerous pressure ulcer sores, which appear to
be directly associated with inpatient staffing shortfalls.
With respect to outpatient care access, waiting times for
appointments for routine services have reached 100 days or
longer. Mental health services are simply unavailable at 60%
of VA's outpatient clinics.
In short, VA operates in a national environment where
medical care cost inflation exceeds the general inflation
rate by a factor of more than two; if the medical care
inflation rate, 3.6% were to be applied to VA's fiscal year
1999 medical care budget, on that

[[Page S9927]]

basis alone a funding increase of $650 million would be
justified. Yet VA is required to--and is succeeding in--
treating more patients with funding that is declining in real
terms. Such a situation cannot persist into a fourth year
without drastically affecting quality.
3. Unmet needs--$1 billion +
The foregoing discussion has focused on additional funding
of $2 billion needed to meet unanticipated requirements and
to maintain current services. Further funding increases of $1
billion or more are required to address the two largest unmet
needs VA faces due to demographic shifts in the veterans'
population: long-term care for aging World War II and Korea
veterans, and maternity and reproductive health services for
the growing number of female veterans.
Long-term care
In our view, the health care issue that VA must face over
the intermediate term--indeed, the health care issue that the
Nation must face over the next decade--is the need for long-
term care among the aging World War II generation. WWII
veterans saved Western civilization. We cannot turn our backs
on them now.
The Budget Committee can anticipate an extended dialog with
the Committee on Veterans' Affairs on this issue. For now, we
advise that, at minimum, an additional $1 billion per year in
funding will be necessary, starting in FY 00, to begin
addressing the needs of VA patients who seek long-term care.
For the most part, such funding would not be directed to new
programs. Rather, it would be devoted to providing VA-
supplied, State home-supplied, or VA- supported contract/
community-based care. These programs are, in our view,
effective. But they are grossly underfunded and do not
begin to meet the WWII generation's need for long-term
care services. In addition, we anticipate other
initiatives--e.g., increased VA support for State
veterans' homes in the form of both increased per diem
payments and pharmaceutical supplies, and initiatives to
transfer excess VA property in exchange for cash to
support medical operations or discounted medical services
to VA-eligible patients.
Maternity benefits and reproductive health services
Women now make up 13% of the active duty military. At lower
ranks, the percentage of women serving is higher. For
example, 20% of new recruits to the services other than the
U.S. Marine Corps are now women. These women will become
veterans, and VA must be prepared to meet their care needs.
Such needs invariably include maternity benefits and
reproductive health services since 62% of all women veterans
are under the age of 45, when childbearing generally ends.
Women who are drawn to service with a promise of benefits,
and then induced to enroll for VA care with the promise of a
full continuum of care, rightfully demand that their basic
health care needs be met.

b. medical facility construction

As noted above, we are generally satisfied with VA's
efforts to restructure the delivery of health care services.
VA's construction programs, however, have not kept pace with
changes needed to accommodate the structural reorganization.
Older hospitals designed around an outmoded inpatient
treatment model lack space to handle increased outpatient
demand. In addition, such facilities generally fall far short
of modern patient privacy, handicapped accessibility, fire
sprinkler, and air conditioning standards. At best, these
shortcomings hinder VA's ability to attract veterans into the
system. At worst, they seriously compromise patient safety.
Two construction projects which would rectify such
shortcomings warrant particular mention. The first is a $29.7
million outpatient clinic expansion at the VA Medical Center
in Washington, DC, which was authorized by Public Law 105-
368. The second is a relatively modest ($10.8 million)
environmental improvements project at VA's Medical and
Regional Office Center in Fargo, ND. That project would
address asbestos removal, fire prevention, patient privacy,
and handicapped accessibility needs. We particularly request
funding for these projects in FY 00.

c. general operating expenses--veterans benefits administration

In a reversal of recent trends, in the last two years the
Veterans Benefits Administration (VBA) has experienced
increases in both the size of the pending compensation and
pension case backlog, and the average ``age'' of cases which
comprise the backlog. At the same time, the quality of VBA
decision making has not improved sufficiently despite
promises of improvements which were the rationale for a
slowdown in case processing. Internal VA reviews indicate an
error rate of 36%.
VBA requests $49 million in additional funding to support
an FY 00 personnel increase of 164 FTE. These new hires
would, according to VBA, join personnel shifted from other
duties to yield a net addition of 440 staff devoted to
adjudication functions. We have seen no specific plan which
identifies the source of the majority of these transferred
employees, so we must question whether this plan will
actually materialize. We do, however, support VBA's request
for an additional $49 million in funding to add new
adjudication staff. In addition, we believe that the
adjudication backlog must be attacked now using current staff
in a one-time, targeted, and carefully controlled overtime
effort.

IV. Projected Mandatory Account Spending

a. education assistance programs

As part of the ``Soldiers', Sailors', Airmens' and Marines'
Bill of Rights Act of 1999,'' the Senate has already
approved, without objection from the Budget Committee, the
following improvements in VA educational assistance programs:
An increase in monthly assistance payments (from $528 to $600
for veterans who served three-year enlistments, and from $325
to $429 for two-year enlistees); a repeal of the requirement
that servicemembers contribute $100 per month for 12 months
from base pay to ``buy'' eligibility; the allowance of a
``lump sum'' benefit at the beginning of a training term; and
a provision allowing veterans to transfer benefits to a
spouse and/or children. CBO has estimated that these
provisions will result in additional mandatory account costs
of $3.8 billion over fiscal years 2000-2004, and $13 billion
over fiscal years 2000-2009.
Had this business been conducted in the regular order,
these improvements would have been considered by the
Committee on Veterans' Affairs, the committee of primary
jurisdiction. Our committee, perhaps would have recommended a
different mix of program improvements--e.g., the Commission
on Servicemembers and Veterans Transition Assistance had
recommended enactment of a tuition-reimbursment benefits
program like that in force after World War II. We did not,
however, impede these Armed Services Committee-reported
measures, and we continue to support them. Of course, we
reserve the right to revisit the issue within our committee
irrespective of the fate of the ``Soldiers', Sailors',
Airmens' and Marines' Bill of Rights Act of 1999.'' We almost
certainly will do so should that legislation falter.

V. Conclusion

In summary, VA requires at least $1.26 billion in
additional discretionary account funding to meet
unanticipated spending requirements that have been thrust
upon VA by events beyond VA's control; an additional $853.1
million to overcome the effects of inflation and
other ``uncontrollables'' and maintain current services
for eligible veterans; and at least $1 billion in
additional discretionary account funding to begin to
better address the needs of an aging, and increasingly
female, veterans population. These needs total over $3
billion.
We do not request, however, that discretionary account
ceilings be raised $3 billion+ for FY 00. While such an
increase would be totally justified to make up for flat VA
medical care funding levels over the last three years, we
believe that recent budgetary restraints have stimulated
needed reform. We believe, further, that VA can squeeze out
yet more efficiencies in the way it provides health care, and
we would not want to impede such reforms by requesting
funding increases beyond VA's ability to absorb them without
waste. Thus, we request that VA discretionary spending be
allowed to increase by $1.7 billion for FY 00.
As for mandatory account spending, we do not, at this time,
request a five-year ``pay-go'' waiver beyond the $3.8 billion
already acceded to by the Budget Committee.
These views reflect our best judgment as of this date. If
we can provide further assistance in your consideration of
this report, please feel free to call on us.
Sincerely,
Arlen Specter,
Chairman.
John D. Rockefeller, IV,
Ranking Minority Member.

Mr. ROCKEFELLER. Mr. President, it is a reasonable amount which
covers $853 million in ``automatic'' costs such as inflation and wage
increases. It also allows for new initiatives, such as the need to
address the dramatic increase in deadly hepatitis C, particularly among
veterans who served in Vietnam; emergency care; and the rising long-
term care needs of World War II veterans.
The Conference Report on the Budget Resolution includes this number.
And in an April 30, 1999, letter to the Appropriations Committee, 51
Senators are on record supporting it.
Even with the economic prosperity our country has recently begun to
experience, if we approve the proposed huge tax cuts, or fail to adjust
the budget caps, there simply will not be money left to increase the
veterans' health care budget to what it needs to be.
I can assure my colleagues that further cuts will seriously
jeopardize the quality of VA health care. Earlier this week, I spoke
about the erosion of VA's programs to help veterans with special needs.
Resource shortfalls have imperiled services for the spinal-cord
injured, for blind veterans, for veterans in need of prosthetics, and
for veterans in need of mental health care. Health care professionals
within VA are overworked. Reductions-in-force have also become a
reality for them.
In my own state, we are already seeing lapses in the availability of
health

[[Page S9928]]

care. For example, at the Beckley VA Medical Center, approximately 400
new veterans are waiting to be seen in primary care. Approximately 500
veterans already in the system are on a waiting list for hearing
evaluations. And the caseload in pharmacy has increased over 41 percent
in the last year, with no increase in staffing, causing many veterans
to wait two hours or longer to have a prescription filled.
At the Martinsburg VA Medical Center, veterans are waiting six months
for a urology appointment. In the PTSD program, the number of beds have
increased by 14 while the number of staff have been reduced, making
one-on-one counseling very difficult.
At the Clarksburg VA Medical Center, current staffing has not kept
pace with the demand for inpatient care, and veterans are too often
referred to private hospitals because no beds are available at the VA.
In outpatient care at Clarksburg, the waiting times for an
appointment in optometry and dermatology are approximately four months,
and in urology, veterans are waiting seven months for an appointment.
There has been a recent proposal to close both the inpatient and
outpatient surgical programs at the Huntington VA Medical Center and to
refer veterans to a VAMC in Kentucky, over 130 miles away.
I can assure my colleagues that if these things are happening in the
VA medical centers in my state of West Virginia--and trust me, they
are--then you can be sure that they are occurring in the VA medical
centers in your states, as well.
Staff at each of our VA medical centers have been stretched to the
limit, and without additional funding, staffing will only get worse.
The erosion of services and the huge reductions in staff have already
put the veterans' health care system in serious jeopardy, and I cannot
allow it to continue.
In summary, there is no doubt that we are at a precipice, and the
fate of veterans and their families, as well as millions of other
Americans, are threatened by this rush to enact hugely bloated tax
giveaways.
Mr. President, I am pleased that a majority of the Senate recognized
that the size of this tax bill would have jeopardized veterans' health
care. As we proceed to conference, I now hope they will come to the
same conclusion about other critical domestic programs and rethink this
tax cut.

alternative fuel vehicles

Mr. CHAFEE. I would like to engage the Chairman of the Finance
Committee, Senator Roth, and the Senator from Utah, Senator Hatch, in a
colloquy regarding alternative fuel vehicles. As the chairman knows,
Senator Hatch and I presented an amendment during the finance
Committee's markup of the tax bill, to provide incentives for the sale
and use of clean alternative motor fuels and alternative fuel vehicles.
Although the amendment has not been included in the legislation we are
considering today, I continue to believe that a tax bill should
ultimately include these provisions.
As the Chairman and Senator Hatch know, the increased use of these
fuels and vehicles will provide substantial environmental and energy
efficiency benefits. The vehicles targeted for credits by our amendment
are far less polluting than conventional cars and trucks. So, one
result of our amendment would be improved air quality. One study of the
effect of our proposal estimates that the number of natural gas
vehicles in operation could more than triple by 2004, exceeding 250,000
vehicles. That number would continue to grow exponentially. These cars
are so much cleaner than gasoline and diesel vehicles that our proposal
could eliminate 58,000 tons of smog-forming emissions by 2004. That
number would more than double by 2009. In order to accomplish that
without alternative fuel vehicles, we would have to remove 1.5 million
conventionally-fueled vehicles from the road.
Furthermore, each gallon of alternative fuel used in such a vehicle
represents one less gallon of gasoline that we need to obtain from
imported oil. The Department of Energy estimates that nearly three
billion gallons of gasoline would be displaced, thus reducing our
foreign oil dependence.
Mr. HATCH. The Senator from Rhode Island is correct. Millions of
Americans live in areas that are not in compliance with air quality
standards. The increased motor vehicle traffic anticipated in the four
county Wasatch front in my home state of Utah will certainly push us
toward non-attainment compliance problems. Promoting the increased use
of alternative fuel vehicles is a viable option available to help Utah
achieve our clean air objectives. Alternative fuel vehicles represent
the cleanest vehicles in the world. Market-based incentives will help
encourage the use of such vehicles. I am very pleased to be part of
this effort with my colleagues from the Finance Committee and am
looking into getting a natural gas car of my own at this very moment.
Mr. CHAFEE. The legislation Senator Hatch and I have drafted would
address the problem that currently prevents these fuels and vehicles
from competing on their own in the market. Incentives to make them less
costly will stimulate demand and permit the economies of scale that are
needed in order for them to gain more widespread use. Our proposal has
been endorsed by a diverse group of stakeholders including the Natural
Resources Defense council, the Union of Concerned Scientists, virtually
all the major automobile manufacturers, and the American Gas
Association. There is growing bipartisan support in the Senate for many
of these concepts; on the Finance Committee, Senators Rockefeller,
Bryan, and Robb have all expressed support. I would ask Senator Roth
whether there might be an opportunity to consider this legislation and
whether he would work with us toward its inclusion in a future tax
package.
Senator ROTH. I thank my colleagues from Rhode Island and Utah for
their hard work on this legislation. The bipartisan support for this
proposal is impressive. This is legislation that could make an
important contribution to the environment. I look forward to working
with my colleagues on this effort.
Mr. BIDEN. Mr. President, it has taken a lot of tough choices here in
Washington--and a lot of hard work and restructuring in the private
economy--to put our country's budget into the black. For the first time
in a generation, we have a balanced federal budget. And for the first
time in our modern history, we can project substantial surpluses for
the foreseeable future.
There were times I believed we would never see this day, Mr.
President, but our official forecasts now call for as much as one
trillion dollars in surplus over the next ten years. That's on top of
the two trillion in Social Security surpluses that will build up over
that same time, money that is already promised to future retirees.
I want to say something about whether we should count on those
surpluses actually materializing, Mr. President, but first I want to
talk about what most families I know would do if they woke up to the
kind of windfall in their household budgets that we anticipate in our
federal budget today.
Take your average family, Mr. President, with a mortgage, maybe
paying for one or two children already in college, maybe another child
with college still in his or her future. They have some debts, some
worries about how to pay for a retirement that gets closer every year,
some aspirations for their children that they may not be able to
afford. Maybe Grandma and Grandad have moved in with them, bringing
with them some health care problems that add to the family's expenses.
Let's assume that after years of spending more than they took in, our
family finally turns the corner. Let's borrow a story from today's new
high-tech economy and say that the stock they hold in their new start-
up company has just jumped in value. They cannot be sure that the stock
will stay that high next year, or the year after that, but they feel a
whole lot richer than they did before.
Now let's picture the discussion around their kitchen table, with
this new problem to discuss. I'm betting that most of the families I
know in Delaware would make plans to pay down their past debts, the
mortgage hanging over their heads, make provisions for their children's
education, their parents' health needs, and their own retirement.
Maybe, after they had taken care of those priorities, they would allow
themselves to relax and enjoy a more affluent lifestyle.

[[Page S9929]]

Mr. President, I don't claim that this is a perfect analogy to the
situation before us in the Senate. I certainly don't claim that for
many hardworking Americans sensible tax relief is some kind of luxury.
But I think it makes an important point, which is simply that most
Americans would be a lot more cautious, and a lot more prudent, in
using any anticipated surplus in their family budget.
Those are the priorities that I think should guide us in our
deliberations today. We should take the opportunity given us with the
expectation of future budget surpluses first to pay down the debt that
has built up in a generation of deficit finance, then we should restore
solvency to Social Security and Medicare, and then we should prevent
further erosion in funding for national security, law enforcement,
education, and the other basic functions of a space-age, high-
technology, industrial economy.
I think we can do all that, Mr. President, and still provide tax
relief to the millions of Americans whose hard work and sacrifice--
through downsizing, restructuring, and all the rest--has been the real
driving force behind the remarkable economy we enjoy today.
But as we all know, Mr. President, the forecasts on which our
projected surpluses are based make a lot of assumptions. That's all
well and good for making long-term economic projections. But it is not
good enough, as far as I'm concerned, for making long term economic
policy.
I ask my colleagues to listen to some of these assumptions, and to
answer honestly if our country can really afford the nearly $800
billion tax cut before us today.
The surplus that is forecast assumes no major interruption in the
economic growth we have enjoyed in what is now the longest economic
expansion in our history. That unprecedented economic growth has
kept revenues strong enough to meet and exceed our spending plans. But
as Alan Greenspan has reminded us, it is not a question of if, but
when, that growth will slow. Still, those who call for an $800 billion
tax cut are basing policy on the false hope that inevitable day will
never come.

Mr. President, the surplus that some of my colleagues want to use to
pay for this tax cut also assumes that there will be no emergencies--no
Bosnias, no Kosovos, no Iraqs, no hurricanes, no floods--that could
increase spending, even though we regularly spend an average of $8
billion a year on such emergencies.
The surplus also assumes that we will continue deep cuts in national
defense, in education, health care, law enforcement, in environmental
protection. It assumes that we will continue to reduce spending beyond
the current levels, levels that are already causing gridlock in our
budget process this year. Right now, Mr. President, spending for the
basic functions of government--as well as the number of people we pay
to perform those functions, down more than 340,000 in the past seven
years--are both at levels we have not seen since 1962.
We should recognize the hard work that achieved those low numbers,
Mr. President. They are an important part of how we got to where we are
today, with a balanced budget in hand, and surpluses in sight. As the
private sector has become leaner and more efficient, the federal
government has also moved in the same direction.
But we must also realize that national defense, the FBI, medical
research, education, veterans' health care, air traffic control, water
quality--all of those things we have learned to count on as citizens of
the richest nation the world has ever known--combined now comprise just
6.5 percent of GDP. But the surpluses my colleagues expect to be there
to pay for this tax cut depend on pushing that down to just 5 percent
of GDP--a further cut of more than 20 percent.
But after years of defense cuts at the end of the Cold War, the
Pentagon is asking for substantial increases to meet future threats. I
agree with those who see the need for further investments in our
nation's defense. If we actually increase defense spending to meet that
request, we would have to cut the remaining functions of the federal
government by almost forty percent.
Now, Mr. President, I hear a lot of calls for responsible budgeting
these days, but I don't hear many people calling for cutting forty
percent from our law enforcement, education, or health care programs.
For example, cuts of those size would eliminate health care for
1,430,000 of our country's veterans. Cuts of that size would eliminate
$6.0 billion from the research into cancer and other diseases at the
National Institutes of Health. Cuts of that size would require the FBI
to cut over 4,000 agents from its current force of 10,600.
That's what a $800 billion tax cut would require, Mr. President--
either cuts of unacceptable size in basic services, or, just as bad, we
would simply return to the destructive path of deficit spending.
Mr. President, one thing that ought to sober us up is what Alan
Greenspan has been saying about delaying any tax cut until the
surpluses actually materialize, until a downturn in the economy might
justify the boost that would come from a tax cut. Twice he has come
here to Congress in the past two weeks, to tell us that he continues to
be concerned about our economy overheating, and that he is prepared to
bump interest rates up again to prevent that from happening.
Every American with a mortgage should think long and hard about the
trade off between a tax break now and the long term costs that an
increase in interest rates would mean. The Treasury Department
estimates that a household in the lower 60 percent of the population--
10 percent above the middle and on down--would get just an average of
$174 a year from the tax plan before us today. But a one percent
increase in a 7 percent mortgage on a $250,000 house amounts to over
$2,000 a year in additional payments. That is not a deal any informed
American would take, Mr. President.
If Greenspan thinks the economy is already at risk of overheating,
imagine his reaction if we throw an $800 billion tax cut into his
calculations the next time he considers increasing interest rates.
Everybody here knows that low interest rates and low inflation have
been the keys that have unlocked the potential of our economy. I can't
think of anything more likely to throw both of those keys out the
window than a return to unbalanced budgets.
That is why I will oppose a tax cut of the size before us here today.
Not because Americans don't deserve tax relief--of course they do. But
they also deserve our best judgement about how we manage the public
finances of their country after so many years of deficit financing. And
as far as I'm concerned, I'll take my guidance from the common sense of
the average American family, and put first the priorities of debt
reduction, Social Security and Medicare, funding national security and
law enforcement, education and health care, and then, a more prudent,
sensible tax cut.
Mr. DOMENICI. Mr. President, pursuant to section 313(c) of the
Congressional Budget Act of 1974, I submit for the Record a list of
material considered to be extraneous under subsections (b)(1)(A),
(b)(1)(B), and (b)(1)(E) of section 313. The inclusion or exclusion of
material on the following list does not constitute a determination of
extraneousness by the Presiding Officer of the Senate.

Title III, subtitle E, sec. 345--Protection of Investment
of Employee Contributions to 401(k) plans--(b)(1)(A).
Title III, subtitle F, sec. 351--Periodic Pension Benefits
Statements--(b)(1)(A).
Title III, subtitle F, sec. 356--Notice and Consent Period
Regarding Distributions--(b)(1)(A).
Title III, subtitle G, sec. 369--Annual Report
Dissemination--(b)(1)(A).
Title III, subtitle H, sec. 371--Provisions Relating to
Plan Amendments--(b)(1)(A).
Title IV, sec. 407--Federal Guarantee of School
Construction Bonds by Federal Home Loan Banks--(b)(1)(A).
Title IX, sec. 905--Advance Pricing Agreements Treated as
Confidential Taxpayer Information--(b)(1)(A).
Title X, subtitle C, sec. 1071--Study Relating to Taxable
REIT Subsidiaries--(b)(1)(A).
Title XIV, sec. 1401--Amendments Relating to Tax and Trade
Relief Extension Act of 1998--(b)(1)(A).
Title XIV, sec. 1402--Amendment Related to Internal Revenue
Service Restructuring and Reform Act of 1998--(b)(1)(A).
Title XIV, sec. 1403--Amendments Related to Taxpayer Relief
Act of 1997--(b)(1)(A).
Title XIV, sec. 1404--Other Technical Corrections--
(b)(1)(A).
Title XIV, sec. 1405--Clerical Changes--(b)(1)(A).

[[Page S9930]]

Mr. HELMS. Mr. President, I genuinely appreciate the courtesy of the
distinguished Chairman of the Finance Committee (Mr. Roth) for allowing
me to discuss an innovative new technology more readily available to
the dry cleaning industry.
Dr. Joe DeSimone, an highly-respected professor on the faculties of
both the University of North Carolina at Chapel Hill and N.C. State
University in Raleigh has developed an environmentally safe way to dry
clean clothes while eliminating the millions of pounds of toxic
solvents currently now being used to clean clothes, and, at the same
time, advancing more energy-efficient technology. This procedure would
dramatically reduce the dry cleaning industry's reliance on hazardous
chemicals as solvents.
My amendment will allow for a 20 percent tax credit to new and
existing dry cleaners who purchase the equipment which uses non-toxic
solvents. The equipment includes both wet cleaning and liquid carbon
dioxide cleaning systems which are now readily available. In fact, the
EPA recently published a case study extolling the benefits of carbon
dioxide technology.
The Joint Tax Committee estimates the tax credit would decrease
revenues by a little more than $500 million during the next 10 years. I
find this a modest price to pay considering the amount Americans rely
on dry cleaners and by the fact that so many of these Americans bring
potentially hazardous chemicals into their homes when they dry clean
their clothes.
I believe that clarification of a Treasury regulation's application
to an international tax treaty would provide an ample offset for this
tax credit. Let me briefly explain the current situation:
Just this month, a judge in New York overturned 19 years of tax
treaty policy. The judge ruled that an existing regulation that permits
the Treasury to allocate interest based on a company's worldwide
operations did not comply with the 1980 treaty. I disagree. The
regulations allowed the U.S. Treasury to disallow abusive tax
strategies and make sure that these companies pay their fair share of
taxes. Tax treaties are never intended to be a means to avoid taxes,
simply a means to prohibit double taxation. This amendment will
continue this policy and avoid a rush for billions of dollars in tax
refunds by international corporations.
Mr. President, I ask unanimous consent that an article from the July
9 edition of The New York Times entitled ``British Bank Wins Dispute
With the IRS'' be printed in the Record at the conclusion of my
remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See Exhibit 1.)
Mr. HELMS. Unfortunately, Mr. President, under the rules of the
budget act, my amendment is subject to a point of order. However, I do
appreciate the willingness of Chairman Roth to work with me to find a
way to make this tax credit a reality.

Exhibit 1

[From the New York Times, July 7, 1999]

British Bank Wins Dispute With the I.R.S.

Judge Rules Tax Treaty Supersedes Regulation

(By David Cay Johnston)

In a stunning defeat for the Internal Revenue Service's
efforts to restrict strategies that foreign corporations
employ to avoid taxes, a Federal judge ruled in favor of
National Westminister Bank P.L.C. of Britain in its demand
for a $180 million tax refund.
Lawyers who specialize in international corporate tax said
yesterday that the decision would prompt more foreign
companies to challenge the I.R.S. in future cases and to
press for favorable rulings on issues currently in dispute.
Judge James T. Turner of the United States Court of Claims
ruled Wednesday that the I.R.S had violated a 1980 tax treaty
between the United States and Britain by refusing to allow
NatWest to deduct interest on loans from its home office and
Hong Kong operations to its American branches from 1981 to
1987.
In effect NatWest was taking money from one pocket, in,
say, Hong Kong, and lending it to another pocket in, say, New
York. Doing this allowed the bank to reduce its profits, and
thus its taxes, in the United States and to shift profits to
places, like Hong Kong, where tax rates are lower.
The 1980 tax treaty allowed NatWest and all other British
banks to take such deductions. NatWest contended that under
the tax treaty its American branch must be treated as a
separate company and not just another pocket in its worldwide
operations.
But the Treasury Department, ever on the alert for abusive
tax strategies, issued a regulation shortly after the treaty
took effect allowing the I.R.S. to disregard any deductions
deemed excessive. The regulation lets the I.R.S. apply a
complicated formula to allocate interest based on a company's
worldwide operations.
But, Judge Turner wrote, the Treasury regulation is
``fundamentally incompatible'' with the tax treaty and must
be ignored. In his 21-page decision, he also castigated the
United States for its conduct, quoting in detail from written
promises made during the treaty negotiations and other
documents to show that NatWest was justified in relying on
the tax treaty in preparing its corporate tax returns for the
I.R.S.
The judge said the regulation ``plainly violates'' the tax
treaty and he characterized the reasoning behind it as
``fundamentally flawed.''
He did not award the $180 million, plus interest, to
NatWest, however. Instead, Judge Turner ruled in the bank's
favor on the issue in a pretrial hearing.
Tax lawyers said the United States can now appeal the
judge's ruling, continue the case and then appeal the entire
case, or go to Congress for relief or give up.
The case may cause a stampede by other foreign banks to
recover billions of dollars in taxes paid when their interest
deductions were curtailed. More broadly, the case is an
important development in a growing global battle between
multinational corporations, which want to take profits and
pay taxes in countries of their choice, and national
governments that would be protect the integrity of their tax
regimes and maximize tax revenues, a variety of tax lawyers
said yesterday.
``This is a tremendously important decision, although it
specifically involves a backwater of the issues about global
corporate taxation,'' said Richard E. Andersen of the law
firm Jones, Day, Reavis & Pogue. He said the size of the
award, expected to ultimately be the full $180 million plus
interest that NetWest sought, and the ``drubbing'' the I.R.S.
took from the judge ``will force the I.R.S. to think hard
about thumbing their nose at this because if they do, they
will have to devote a lot of legal resources to fighting
other cases on similar issues and they will probably lose.''
Mr. Andersen and other lawyers said that because of its
enormous market the United States had been able to ``get away
with'' ignoring tax treaties. ``The fact is no bank has
withdrawn from the U.S. because of this issue,'' he said.
Arthur D. Pasternak, an international tax specialist at
Gibson, Dunn & Crutcher, said that ``the I.R.S. has this no-
cheating concept that, to its credit, it tends to apply
evenly to American and foreign corporations operating in the
United States.''
``And the I.R.S. has become much more aggressive in recent
years in fighting what it regards as using tax treaties for
aggressive tax avoidance,'' he said. ``The general rule is
that the United States Government has been saying that
statutes passed by Congress can override existing treaties,
but this case shows that mere regulations can't override
treaties.''
Sydney E. Unger, chairman of the tax department at Kaye
Scholer Fierman Hays & Handler in New York, said that foreign
corporations operating in the United States were a convenient
target for American politicians and that the regulation the
judge ruled on illustrated this.
``Fundamentally, there has been a sense at Treasury and
among politicians that foreign entities with operations in
the United States are not paying their far share of tax,''
Mr. Unger said. ``Whether that is true or not, certainly it
is a wonderful issue for American politicians and for
Treasury officials to want to pursue because it's about
taxing someone else, who doesn't vote.''
Inland Revenue, the British tax agency, filed a friend-of-
the-court brief supporting NatWest.
Jerome Libin, a tax specialist in the Washington office of
Sutherland Asbill & Brennan who filed the brief, said that
Inland Revenue believed that even if NatWest's interest
deductions were dubious--and that point was not conceded--the
deductions still had to be allowed under the tax treaty.
Mr. Libin won a similar case three years ago in United
States Tax Court over a tax treaty with Canada, but that case
involved allocating income, while the NatWest case involved
allocating deductions.
He said that in newer tax treaties the United States had
sought to reserve a right to disallow deductions if it could
show that they were abusive.
One of NatWest's lawyers, Jerry Snider of Davis Polk &
Wardwell, called Judge Turner's decision ``a terrific,
thorough and carefully written opinion.''
The Internal Revenue Service declined to comment or even to
make documents available. It referred questions to the
Treasury Department, where a spokeswoman, Maria Ibanez,
offered to make a senior official available for an interview
on condition that he neither be identified nor quoted
directly. That offer was declined.
The Justice Department said last night that senior
officials who could discuss the case had left and could not
be reached for comment.
NatWest sold its American retail branches to the Fleet
Corporation of Boston in December 1995.
Mr. ROTH. Mr. President, I appreciate the courtesy of the Senator
from

[[Page S9931]]

North Carolina in working with us to expedite consideration of the
Taxpayer Refund Act by not asking for a roll call vote in relation to
his amendment. This is certainly an interesting idea, and my staff and
I look forward to working with him in the future to explore the
possibility of a drycleaning equipment tax benefit.

republican tax cut plan

Mr. BYRD. Mr. President, I will vote against this Republican tax cut
plan. I cannot conceive of a more ill-advised fiscal plan for the
Nation over the next 10 years than the Republican tax cut bill. I say
this for a number of reasons.
Having seen the National debt explode from less than $1 trillion on
the day that President Reagan took office to over $5.6 trillion today,
we should have learned that the supply-side economic theories of the
Reagan-Bush years, which called for massive tax cuts together with a
massive defense build-up, while at the same time balancing the federal
budget, are pure, unadulterated hogwash. They didn't work then; they
won't work now.
Thankfully, due to a number of factors--for example, the fiscal
policies of the Federal Reserve, and improvements in the productivity
of the Nation's businesses--we have been able not only to stem the tide
of red ink that ran into the triple-digit billion-dollar levels for
each of the Reagan-Bush years but, if the latest projections of both
the OMB and CBO pan out, we also can look forward to huge federal
surpluses each year as far as the eye can see. That's good news, if
those projections come true and if Congress is able to withstand
another round of tax cut fever.
The Congressional Budget Office projects surpluses over the next ten
years (FY 2000-2009) totaling nearly $3 trillion. Of that amount, about
$2 trillion would be surpluses in the Social Security Trust Fund, and
the other $1 trillion ($996 billion to be exact) would be non-social
security surpluses. However, a closer look at these non-social security
surpluses projected by CBO over the next ten years, reveals that they
rest on a very shaky foundation. The fact is, these non-social security
surpluses which are projected to total $996 billion, are based in large
part on huge cuts in investments and national priorities--such as
national security, veterans' medical care, the FBI and other crime-
fighting programs, the environment, agriculture, border patrol agents,
health research, education, and many other critical programs. Of the
$996 billion in non-social security surpluses projected by CBO for the
next 10 years, $595 billion results from real and devastating cuts in
these national priorities. As if that were not bad enough, the
Republican tax cut plan calls for additional cuts of some $180 billion
to these same programs. That makes a total of $775 billion in cuts in
these national investments over the next 10 years. That is what is
being proposed in the Republican tax cut bill now before the Senate.
Furthermore, the Republican tax cuts of $792 billion would, if enacted,
also result in increased interest on the Federal Debt over the next 10
years totaling $179 billion. In reality, then, the Republican tax cut
bill eats up $971 billion of the $996 billion in projected non-social
security surpluses over the next 10 years, leaving only $25 billion
remaining.
We should heed the advice of Federal Reserve Chairman Greenspan in
his testimony before Congressional Committees when he advised caution
when considering what to do with these projected surpluses. In the
first place, it is extremely unlikely that these projections will come
true. The fact is that CBO's estimates of revenues over the past two
decades have been off by an absolute average of $38 billion per year;
their estimates on spending over that period have been off by $36
billion per year; and their deficit/surplus projections have been off
by an absolute average of $54 billion per year over the past two
decades. If these averages hold up over the next 10 years, the
trillion-dollar non-social security surpluses could be slashed by $540
billion purely due to mis-estimates by the Congressional Budget Office.
Further, as CBO states in virtually every report that they publish,
cyclical disturbances such as recessions, changes in interest rates,
inflation, etc., could have significant effects on their projected
surpluses at any time during the projection period.

Then, there is the question of emergency spending. As Senators are
aware, under the Budget Enforcement Act, unforeseen emergencies, which
cannot be predicted accurately and, therefore, are not budgeted, are
allowed to be funded outside the spending caps that have been in place
since 1990 and which will remain in place through FY2002. The fact is,
emergency spending over the past decade (other than spending for Desert
Storm/Desert Shield and the $21 billion in emergency spending in the
FY1999 Omnibus Appropriations Act) has averaged $8 billion per year. In
other words, but for those two instances, Congress has enacted spending
outside of the budgetary caps for such things as disaster assistance to
the nation's farmers, relief for victims of floods, hurricanes,
tornadoes, and earthquakes, as well as assistance for victims of
similar occurrences overseas.
That type of assistance has averaged $8 billion per year since 1990.
There is no indication that these natural disasters will suddenly
cease. To the contrary, there is substantial evidence that they have
become more frequent and more severe in the latter part of this
Century. What does this mean? It means that it is highly likely that
over the next decade, at least $80 billion in emergency spending will
be needed. But, keep in mind that the $996 billion in non-social
security surpluses projected by CBO, the large bulk of which results
from real cuts in national priorities, does not allow for any emergency
spending over the next 10 years. That being the case, wouldn't it be
prudent to reduce the $996 billion projection by at least the $80
billion historical average per decade that we have seen in the past?
After so doing, even if Congress and the Administration agreed to the
$775 billion of cuts in purchasing power for national priorities that
the Republican tax cut bill requires, there would not be sufficient
surpluses remaining to cover this Republican tax cut plan without
either reverting back into deficit spending, or repealing the tax cut,
or dipping into the Social Security Trust Fund surpluses.
Next, let's look at the question of whether Congress can, or should,
stay within the existing spending caps for FY2000, much less the more
difficult caps of FY2001 and FY2002. One need only pick up the morning
newspaper on any one of the past several days to find an article or two
discussing the progress, or lack thereof, that the Appropriations
Committees are making in completing action on the FY2000 funding bills.
Recently, it is reported, the House Appropriations Committee found that
the VA-HUD Subcommittee could not stay within its allocations without
declaring some $3 billion in funding for VA medical care, as well as
$2.5 billion in FEMA funding, as ``emergency'' spending, which as I
have explained earlier, does not count against the spending caps, but
will, nonetheless, decrease the surplus. Additionally, some $4.5
billion has been declared emergency spending for the Decennial Census
by the House Appropriations Committee. Those three items alone, if
enacted as emergency spending, will cut the projected FY2000 surplus by
$10 billion. Furthermore, as CBO points out on page 6 of their mid-
Session Review, they have been directed by the Budget Committees to
reduce their outlay projections in FY2000 by $10 billion for defense,
$1 billion for transportation, and $3 billion for other non-defense
programs. That knocks another $14 billion dent in CBO's non-social
security surplus projections for FY2000. On that same page, CBO also
points out that their non-social security surplus projections exclude
some $3 billion per year in spending for the administrative expenses of
the Social Security Administration. When all of these factors are taken
into account, for FY2000, actions by Congress to date have already
added emergency spending of some $10 billion; and have increased
outlays by $14 billion. This $24 billion, together with the $3 billion
in administrative expenses for the Social Security Administration,
means that Congress is likely to not only spend all of the $14 billion
FY2000 non-social security surplus projected by CBO, but, actually, to
exceed it by at least $13 billion. In other words, it is highly likely
that for FY2000 alone, Congress and the Administration will enact
spending levels which will not only use up the entire $14 billion non-
social security surplus projected for that year,

[[Page S9932]]

but will also eat into the Social Security Trust Fund surpluses by at
least $13 billion. So much for the Social Security Lock-box! Congress
has already found the key that unlocks it. What about next year, when
the spending caps are much tougher to stay within? Is one to believe
that Congress will make the Draconian cuts in national priorities that
would be called for to stay within the Republican tax plan? If not,
further erosion of these projected surpluses will occur. Keep in mind
that once tax cuts are enacted, those revenues are gone, and can only
be retrieved by repealing the tax cuts. Does anyone think that Congress
will do that in an Election Year? If not, then it is a foregone
conclusion that the surplus projections for even the upcoming three
fiscal years, to say nothing of the remaining seven years of the next
decade, will be eaten away because they are based on virtually
impossible, and extremely unsound, cuts in spending on national
priorities. Keeping two sets of books, as the Republicans are
attempting to do, won't fool the American people for very long.

In closing, Mr. President, let me quote from the text of a recent
statement by 50 of the Nation's most revered economists, including six
Nobel laureates, concerning the tax cuts now before the Senate.

The federal budget is projected to show substantial
surpluses over the next 15 years. These surpluses offer an
exceptional opportunity to pay down government debt and
thereby strengthen Social Security and Medicare in order to
prepare for the retirement of the baby boomers. . . .
In contrast, a massive tax cut that encourages consumption
would not be good economic policy. With the unemployment rate
at its lowest point in a generation, now is the wrong time to
stimulate the economy through tax cuts. Moreover, an ever
growing tax cut would drain government resources just when
the aging of the population starts to put substantial stress
on Social Security and Medicare. Further, the projections
assume substantial undesirable reductions in real spending
for non-entitlement programs, including important public
investments. Given the uncertainty of long-term budget
projections, committing to a large tax cut would create
significant risks to the budget and the economy.

Mr. President, it could not be any clearer to any rational human
being that this Republican tax cut plan is exactly the wrong fiscal
blueprint for the Nation as we enter the next Millennium. As I have
shown, it is highly unlikely that these forecasts will come true. Even
if they do, some $80 billion in emergency spending for natural
disasters has not been accounted for; another $30 billion in
administrative costs of the Social Security Administration has not been
accounted for; and the budget caps for FY2000 alone are likely to be
exceeded by over $20 billion. Now is not the time to return to the
failed economic policies that prevailed during the Reagan-Bush years.
Rosy Scenario in all her splendor could not make their policies work.
The same is true of the policies that would be undertaken if we were to
enact this Republican tax cut.
Mr. KENNEDY. Mr. President, very few decisions we make in Congress
will have more impact on the long-term economic well-being of our
nation than how we allocate the projected surplus. By our votes this
week, we are setting priorities that will determine whether the
American economy is on firm ground or dangerously shifting sand as we
enter the 21st century. These votes will determine whether we have the
financial capacity to meet our responsibilities to future generations,
and whether we have fairly shared the economic benefits of our current
prosperity. Sadly, the legislation before us today fails all of these
standards. We should vote to reject it.
A tax cut of the enormous magnitude proposed by our Republican
colleagues would reverse the sound fiscal management which has created
the inflation-free economic growth of recent years. That is the clear
view of the two principal architects of our current prosperity--Robert
Rubin and Alan Greenspan. Devoting the entire on-budget surplus to tax
cuts will deprive us of the funds essential to preserve Medicare and
Social Security for future generations of retirees. It will force harsh
cuts in education, in medical research, and in other vital domestic
priorities. This tax cut jeopardizes our financial future--and it also
dismally flunks the test of fairness. When fully implemented, the
Republican plan would give 75% of the tax cuts to the wealthiest 20% of
the population. The richest 1%--those earning over $300,000 a year--
would receive tax breaks as high as $23,000 a year, while working men
and women would receive an average of only $139 a year.
Republicans claim that the ten year surplus is three trillion dollars
and that they are setting two-thirds of it aside for Social Security,
and only spending one-third on tax cuts. That explanation is grossly
misleading. The two trillion dollars they say they are giving to Social
Security already belongs to Social Security. It consists of payroll tax
dollars expressly raised for the purpose of paying future Social
Security benefits. Using those dollars to fund tax cuts or new spending
would be to raid the Social Security Trust Fund. The Republicans are
not providing a single new dollar to help fund Social Security benefits
for future generations. They are not extending the life of the Trust
Fund for even one day. It is a mockery to characterize those payroll
tax dollars as part of the surplus.
That leaves the $996 billion on-budget surplus as the only funds
available to address all of the nation's unmet needs over the next ten
years. Republicans propose to use that entire amount to fund their tax
cut scheme. Since CBO projections assume that all surplus dollars are
devoted to debt reduction, the $996 billion figure includes nearly $200
billion in debt service savings. The amount which is available to be
spent--either to address public needs or to cut taxes--is only slightly
above $800 billion. Their $792 billion tax cut will consume the entire
surplus.
Even more troubling, the Republican tax cut has been designed to
expand dramatically beyond the tenth year. The cost between 2010 and
2019 will dwarf the cost in the first decade. It will rise from $800
billion to $2 trillion dollars. And the cost of the debt service
payments necessitated by a tax cut of that magnitude will grow
exponentially as well. The GOP plan will usher in a new era of
deficits--just as the baby boom generation is reaching retirement age.
While the Senate Rules have been invoked to prevent the current tax
cut from going beyond ten years, the Republican leadership has made
clear their intent to make these massive cuts permanent. If these tax
cuts were to become permanent, they would precipitate a genuine fiscal
crisis.
Most Americans understand the word ``surplus'' to mean dollars
remaining after all financial obligations have been met. If that common
sense definitions is applied to the federal budget, the surplus would
be far smaller than $996 billion.
We have existing obligations which should be our first
responsibility. We have an obligation to preserve Medicare for future
generations of retires, and to modernize Medicare benefits to include
prescription drug assistance. The Republican budget does not provide
one additional dollar to meet these needs.
The American people clearly believe that strengthening Social
Security and Medicare should be our highest priorities for using the
surplus. By margins of more than two to one, they view preserving
Social Security and Medicare as more important than cutting taxes.
We should use the surplus to meet these existing responsibilities
first, in order to fulfill the promise of a secure retirement with
access to needed medical care.
If we do nothing, Medicare will become insolvent by 2015. The surplus
gives us a unique opportunity to preserve Medicare, without reducing
medical care or raising premiums. The Republican tax cut would take
that opportunity away. It would leave nothing for Medicare.
We must seize this opportunity. Senate Democrats have proposed
committing one-third of the surplus--$290 billion over the next ten
years--to strengthening Medicare and to assisting senior citizens with
the cost of prescription drugs. The Administration's 15 year budget
plan provides an additional $500 billion for Medicare between 2010 and
2014. Enactment of the Republican tax cut would make this $800 billion
transfer to Medicare impossible. If we squander the entire surplus on
tax breaks, there will be no money left to keep our commitment to the
nations' elderly.
Unless we use a portion of the surplus to strengthen Medicare, senior
citizens

[[Page S9933]]

will be confronted with nearly a trillion dollars in health care cuts
and premium increases. We know who the people are who will be asked by
the Republicans to carry this enormous burden.
The typical Medicare beneficiary is a widow, seventy-six years old,
with an annual income of $10,000. She has one or more chronic
illnesses. She is a mother and a grandmother. Yet the Republican budget
would force deep cuts in her Medicare benefits, in order to pay for new
tax breaks for the wealthy. As a result, elderly women will be unable
to see their doctor. They will go without needed prescription drugs, or
without meals or heat, so that wealthy Americans earning hundreds of
thousands of dollars a year can have additional thousands of dollars a
year in tax breaks.

The projected surplus also assumes drastic cuts in a wide range of
existing programs over the next decade--cuts in domestic programs such
as education, medical research, and environmental cleanup; and cuts in
national defense. We have an obligation to adequately fund these
programs. If existing programs merely grow at the rate of inflation
over the next decade and no new programs are created and no existing
programs are expanded, the surplus would be reduced by $584 billion
dollars. That is the amount it will cost to merely continue funding
current discretionary programs at their inflation-adjusted level. In
fact, the real surplus over the next ten years is only slightly above
$200 billion, roughly one-quarter the size of the proposed Republican
tax cut.
In other words, the Republican tax cut would necessitate more than a
twenty percent across the board cut in discretionary spending--in both
domestic and national defense--by the end of the next decade. If
defense is funded at the Administration's proposed level, and it is
highly unlikely that the Republican Congress will do less, domestic
spending would have to be cut 38% by 2009. No one can reasonably argue
that cuts that deep should be made, or will be made.
We know what cuts of this magnitude would mean in human terms by the
end of the decade. We know who will be hurt: 375,000 fewer children
will receive a Head Start; 6.5 million fewer children will participate
in Title I education programs; 14,000 fewer biomedical research grants
will be available from the National Institutes of Health; 1,431,000
fewer veterans will receive V.A. medical care; and there will be 6,170
fewer Border Patrol agents and 6,342 fewer FBI agents insuring safer
communities. These are losses that the American people are not willing
to accept.
The Democratic alternative would restore $290 billion, substantially
reducing the size of the proposed cuts. A significant reduction would
still be required over the decade. One thing is clear--even with a bare
bones budget, we cannot afford a tax cut of the magnitude the
Republicans are proposing.
Our Republican friends claim that these enormous tax cuts will have
no impact on Social Security, because they are not using payroll tax
revenues. On the contrary, the fact that the Republican budget commits
every last dollar of the on-budget surplus to tax cuts does imperil
Social Security.
First, revenue estimates projected ten years into the future are
notoriously unreliable. As the Director of the Congressional Budget
Office candidly acknowledged:

Ten year budget projections are highly uncertain. In the
space of only six months, CBO's estimate of the cumulative
surplus has increased by nearly $300 billion. Further changes
of that or a greater magnitude are likely--in either
direction--as a result of economic fluctuations,
administrative and judicial actions, and other developments.

Despite this warning, the Republican tax cut leaves no margin for
error. If we commit the entire surplus to tax cuts and the full surplus
does not materialize, Social Security revenues will be required to
cover the shortfall.
Second, even if the projected surplus does materialize, the cost of
the Republican budget exceeds the surplus in five of the next ten
years--2005, 2006, 2007, 2008, and 2009. Unless the Republican proposal
is restructured, Social Security revenues will be required to cover the
shortfall in each of those years.
Third, the Republican tax cut leaves no money to pay for emergency
spending, which has averaged $9 billion a year in recent years. Over
the next decade, we are likely to need approximately $90 billion to
cover emergency needs. That money has to come from somewhere. With the
entire surplus spent on tax cuts, the Social Security Trust Fund will
have to fund these emergency costs as well.
The three threats to Social Security I have described are very real.
However, there is an even greater impact of the Republican plan on the
future of Social Security. As I noted earlier, that plan does not
provide Social Security with a single new dollar to fund future benefit
payments.
In contrast, the Administration has proposed using a major portion of
the surplus to strengthen Social Security for future generations of
retirees. Beginning in 2011, the President's budget allocates to Social
Security the savings which will result from debt reduction. Between
2011 and 2014, the Social Security Trust Fund would receive 543 billion
new dollars from the surplus, and it would receive an additional $189
billion each year after that. As a result, the solvency of Social
Security would be extended for a generation, to well beyond 2050.
The Republican tax cut proposal, which costs over $2 trillion between
2010 and 2019, will consume all of the surplus dollars which were
intended for Social Security. There will be nothing left for Social
Security. As a result, no new dollars will flow into the Trust Fund,
and the future of Social Security will remain clouded.
For two-thirds of America's senior citizens, Social Security
retirement benefits provide more than 50% of their annual income.
Without Social Security, half the nation's elderly would be living in
poverty. Social Security enables millions of senior citizens to spend
their retirement years in security and dignity. A Republican tax cut of
the magnitude proposed here today will put their retirement security in
serious jeopardy.
The votes which we cast this week--the choices which we are required
to make--will say a great deal about our values. We should use the
surplus as an opportunity to help those in need--senior citizens living
on small fixed incomes, children who need educational opportunities,
millions of men and women whose lives may well depend on medical
research and access to quality health care. We should not use the
surplus to further enrich those among us who are already the most
affluent. The issue is a question of fundamental values and fundamental
fairness.
The Republican tax cut would consume the entire surplus, and
distribute the overwhelming majority of it to those with the highest
incomes. The authors of the Republican plan have highlighted the
reduction of the 15% tax bracket to 14%. They have pointed to this as
middle class tax relief. But that relief is only a small part of the
overall tax breaks in their bill. It accounts for only $216 billion of
the $792 billion in GOP tax cuts. Most of the remaining provisions are
heavily weighted toward the highest income taxpayers.
If the Republican plan were enacted and fully implemented, nearly 50%
of the tax benefits would go to the richest 5% of taxpayers, and more
than 75% of the benefits would go to the wealthiest 20%. Those with
annual incomes exceeding $300,000 would receive tax breaks of $23,000
per year. The lowest 60% of wage-earners would share less than 11% of
the total tax cuts--they would receive an average tax cut of only $139
per year. That gross disparity is unfair and unacceptable.
This is not the way the American people want to spend their surplus.
I urge my colleagues to reject this bill. The American people deserve
better than this.
Mr. DASCHLE. Mr. President, as the debate on the Senate's version of
the reconciliation tax bill winds down, I wanted to come to the floor
and say a few words about where we are in this process, how we got
here, and where I think we ought to go.
Let me begin by saying that the discussions we have seen on the
Senate floor these past few days should lead all of my colleagues--
Democratic and Republican alike--to agree on one thing: the issues
affected by this bill--Social Security, Medicare, education, tax
relief--are serious and should not fall prey to political gamesmanship.
It is not an overstatement to say that the nation's economic and fiscal
health are

[[Page S9934]]

at stake. What we do on these issues will affect the lives of millions
of Americans for decades to come.
The discussion has also revealed another truth. The debate on the
proper course for this nation and its people as we head into the 21st
century is really a tale of two paradigms.
The Republican vision for the future is to replay the past. They
would have us follow their economic policies of the 1980s, a course
that can best be characterized as one of both wishful thinking and
fiscal disaster. This is a course of irresponsible tax breaks for the
wealthiest among us. This is a course of voodoo economics, where
providing huge tax breaks to the wealthiest was to somehow benefit
everyone and reduce government deficits.
As history demonstrates, this really was a course of rosy scenarios
and disastrous results. The benefits of their tax breaks were, not
surprisingly, essentially confined to the wealthiest. Small deficits
turned into massive ones. Government debt exploded, quadrupling in the
1980s. Unemployment averaged 7.1 percent in the previous decade. Median
family income fell $1,825 in just four years. Welfare rolls were up 22
percent.
The Democratic vision for the future is to continue along the path we
set forth in 1993, a path marked by fiscal responsibility and economic
prosperity. Just to remind my colleagues of what we have accomplished
since we embarked on this road, let me talk about the state of our
economy when President Clinton took office. The deficit in 1992 was
$290 billion and projected to grow to over $500 billion by the end of
the decade and to continue rising each year thereafter. Again,
unemployment was up, and family income was down. Welfare rolls were
growing.
The Democratic-led Congress enacted a comprehensive economic plan in
1993. This plan was approved without a single Republican vote. And
today, the results are clear. Economists have said this is the
strongest U.S. economy they have seen in a generation. The record
deficits have turned into record surpluses--$120 billion this year and
larger every year thereafter for at least a decade. We are experiencing
the longest peacetime economic expansion in this nation's history and,
if it continues for several additional months, the longest in history,
period. Economic growth during this period has averaged 3.5 percent--
nearly double that experienced during the Reagan-Bush years.
Unemployment is just over four percent--roughly one-half the level
during the Reagan-Bush years. Median income for a family of four is up
$3,500 since 1993. Welfare rolls are down 35 percent since 1994.
These are the two choices presented during this debate--whether we
step back into a past filled with record deficits and debt or continue
moving forward to sustain the economic and fiscal progress we have
achieved since 1993. The question for the Congress and the American
people is which road will we take--the dangerous one or the responsible
one? Will we build on our success or put our national health at risk?
After carefully listening to the debate, it is apparent to me that
many on the other side of the aisle would like to do it all over again.
I have heard some of the same old, dangerous rhetoric and false rosy
scenarios I heard in the early 1980s. Like then, I have heard
misleading representations of government spending--both current and
future. I have again heard talk of irresponsible tax cuts tilted to the
wealthy and special interests. Once again, my Republican colleagues are
proposing that we give short shrift to Medicare and, in a new twist, a
prescription drug benefit as well. And finally, Republicans are again
proposing massive cuts in education, veterans' health, defense and
agriculture. These cuts are as unprecedented as they are unrealistic.
If one assumes the Republicans simply match the President's defense
spending proposals, all remaining discretionary programs would have to
be cut by 38 percent below today's levels. If we follow the new,
phantom baseline created expressly for the floor debate by Senators
Domenici and Frist, and again exempt defense, the cuts to all remaining
programs will easily exceed 50 percent.
Mr. President, it is all the more disappointing to me that in the
face of the historic opportunity afforded this body by our unmatched
fiscal strength, the Senate is about to fail on three counts. The
Republican majority is about to prevail and pass an irresponsible
fiscal policy. Their tax cuts would reverse the progress of the 1990s
and lead to us back to huge deficits and more debt. The Republican
position also constitutes irresponsible national policy. The cost of
the Republican tax cut would explode in the second decade of the 21st
century--precisely when the baby boomer generation is retiring and
resources are needed if the federal government is to keep its
commitments on Social Security and Medicare. Finally, the majority has
chosen to pursue this course in the face of a certain Presidential
veto, should the bill reach the President's desk in something even
close to its current form.
Instead of wasting the precious time of this Congress and the
American people, it would have been better if Republicans had opted to
work together with Democrats to develop a fiscally responsible plan
that could get the President's signature. Democrats have offered the
major parts of such a plan during the debate. Our plan consists of five
components. Democrats protect the entire $1.9 trillion Social Security
surplus; every dollar, every year. Democrats strengthen and modernize
Medicare by setting aside a portion of the on-budget surplus to extend
solvency and provide a prescription drug benefit for Medicare
beneficiaries. Democrats pay down the federal government's publicly
held debt, and, if our course is followed, eventually eliminate it.
Democrats invest some of the non-Social Security surplus in critical
priorities, such as defense, education, veterans' health, agriculture,
and NIH. Finally, Democrats believe in a significant, responsible tax
cut.
It is projected there will be sufficient resources to do all of this.
Yet, Republicans refuse to do most of it. Instead, they choose to
follow a course that has become all too familiar to Americans.
Republicans again choose to pursue ideologically extreme positions that
best serve special interests instead of the needs of ordinary, hard-
working Americans. The Senate has seen this before, on the overall
budget plan, on juvenile justice, and, most recently, on the Patients'
Bill of Rights.
This is not a political game. We face serious challenges and historic
opportunities. We have wasted precious time. The list of unresolved
items that the Senate should address is a long one. And time is short.
I hope that when we come back next week and in September, Republicans
will discard their agenda written by special interests and pursue the
people's agenda. If they do so, we can accomplish much together. If
they do not, the American people will be the losers.
Mr. ROTH. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. ROTH. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ROTH. Mr. President, we are now ready for final passage.
I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on the engrossment and third
reading of the bill.
The bill was ordered to be engrossed for a third reading and was read
the third time.
The PRESIDING OFFICER. The bill having been read the third time, the
question is, Shall the bill pass?
The yeas and nays are ordered, and the clerk will call the roll.
The legislative clerk called the roll.
The result was announced--yeas 57, nays 43, as follows:

[Rollcall Vote No. 247 Leg.]

YEAS--57

Abraham
Allard
Ashcroft
Bennett
Bond
Breaux
Brownback
Bunning
Burns
Campbell
Chafee
Cochran
Collins
Coverdell
Craig
Crapo
DeWine
Domenici
Enzi
Fitzgerald
Frist
Gorton
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Jeffords
Kerrey
Kyl
Landrieu

[[Page S9935]]

Lott
Lugar
Mack
McCain
McConnell
Murkowski
Nickles
Roberts
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Stevens
Thomas
Thompson
Thurmond
Torricelli
Warner

NAYS--43

Akaka
Baucus
Bayh
Biden
Bingaman
Boxer
Bryan
Byrd
Cleland
Conrad
Daschle
Dodd
Dorgan
Durbin
Edwards
Feingold
Feinstein
Graham
Harkin
Hollings
Inouye
Johnson
Kennedy
Kerry
Kohl
Lautenberg
Leahy
Levin
Lieberman
Lincoln
Mikulski
Moynihan
Murray
Reed
Reid
Robb
Rockefeller
Sarbanes
Schumer
Specter
Voinovich
Wellstone
Wyden
The bill (S. 1429), as amended, was passed.
Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
Mr. ROTH. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. ROTH. Mr. President, I want to give my thanks to the many staff
members on both sides of the aisle, including my good friend and
colleague, Pat Moynihan, and all the many people who made this
possible. This afternoon, I think we took a giant step toward getting
the American people a tax break.
I would like to thank the following staff on this bill; Frank Polk,
Joan Woodward, Mark Prater, Brig Pari, Jeff Kupfer, Bill Sweetnam, Tom
Roesser, Ed McClellan, John Duncan, Connie Foster, and Jane
Butterfield.
I also thank:
Frank Polk, Chief of Staff and Chief Counsel;
Joan Woodward, Deputy Staff Director;
Mark Prater, Chief Tax Counsel;
Alexander Vachen, Chief Social Security Analyst;
Brig Pari, Tax Counsel;
Tom Roesser, Tax Counsel;
Bill Sweetnam, Tax Counsel;
Jeff Kupfer, Tax Counsel;
Ed McClellan, Tax Counsel;
Kathy Means, Chief Health Analyst;
DeDe Spitznagel, Health Analyst;
Monica Tencate, Health Analyst;
Darcel Savage;
Jane Butterfield; and
Mark Blair.
Further, I wish to thank:
Carolyn D. Abraham, Secretary;
Robert (Greg) Bailey, Legislation Counsel;
Carl E. Bates, Refund Counsel;
B. Jean Best, Secretary;
John H. Bloyer, Chief Clerk;
Michael E. Boren, Administrative Assistant;
Mary Ann Borrelli, Economist;
Norman J. Brand, Senor Refund Counsel;
Tanya Butler, Secretary;
William J. Dahl, Senior Computer Specialist;
Debbie A. Davis, Secretary;
Kathleen Dorn, Executive Assistant;
Timothy Dowd, Economist;
Patrick A. Driessen, Senior Economist;
Christopher P. Giosa, Economist;
Robert C. Gotwald, Refund Counsel;
Richard A. Grafmeyer, Deputy Chief of Staff;
H. Benjamin Hartley, Senior Legislation Counsel;
Robert P. Harvey, Economist;
David P. Hering, Accountant;
Harold E. Hirsch, Senior Legislation Counsel;
Thomas Holtmann, Economist;
Melani M. Houser, Statistical Analyst;
Allison M. Ivory, Economist;
Deidre James, Legislation Counsel;
M.L. Sharon Jedlicka, Secretary;
Ronald A. Jeremias, Senior Economist;
John L. Kirkland, Jr., Staff Assistant;
Leon W. Klud, Special Assistant;
Gary Koenig, Economist;
Thomas F. Koerner, Associate Deputy Chief of Staff;
Debra L. McMullen, Senior Staff Assistant;
Neval E. McMullen, Staff Assistant;
David R. Macall, Intern/Tax Policy;
Laurie A. Matthews, Senior Legislation Counsel;
Pamela H. Moomau, Senior Economist;
Tracy S. Nadel, Director of Tax Resources;
John F. Navratil, Economist;
Joseph W. Nega, Legislation Counsel;
Diana L. Nelson, Computer Specialist;
Hal G. Norman, Computer Specialist;
Melissa A. O'Brien, Tax Resource Specialist;
Samuel Olchyk, Legislation Counsel;
Christopher J. Overend, Economist;
Lindy L. Paull, Chief of Staff;
Oren S. Penn, Legislation Counsel;
Cecily W. Rock, Senior Legislation Counsel;
Lucia J. Rogers, Secretary;
Paul Schmidt, Legislation Counsel;
Bernard A. Schmitt, Deputy Chief of Staff;
Mary M. Schmitt, Deputy Chief of Staff;
Melbert E. Schwarz, Accountant;
Todd Simmens, Legislation Counsel;
Christine J. Simmons, Secretary;
Carolyn E. Smith, Associate Deputy Chief of Staff;
Thomas A. St. Clair, Jr., Staff Assistant;
William T. Sutton, Senior Economist;
Peter M. Taylor, Senior Economist;
Melvin C. Thomas, Jr., Senior Legislation Counsel;
Michael A. Udell, Economist;
Carolyn (Morey) Ward, Legislation Counsel;
Barry L. Wold, Legislation Counsel; and
Joanne Yanusz, Secretary.
Mr. MOYNIHAN. Mr. President, I first express my great appreciation to
the chairman. Members may have seen the affection with which he is held
on our side of the aisle. I have said I will never fail to seek
opportunities to congratulate his generosity.
I have the names of members of our staff we thank, including David
Podoff, Russell Sullivan, and Maury Passman, who is leaving, and others
who have worked so hard. I particularly thank Frank Polk and Joan
Woodward on your side.
I also wish to thank
Dr. David Podoff, Staff Director and Chief Economist;
Russell Sullivan, Chief Tax Counsel;
Chuck Konigsberg, Chief Health Counsel and General Counsel;
Maury Passman, Tax Counsel;
Stan Fendley, Tax Counsel;
Anita Horn, Tax Professional Staff Member;
Mitchell Kent, Tax Legislative Research Assistant;
Kristen Testa, Medicaid Professional Staff Member;
Jon Resnick, Health Legislative Research Assistant;
Liz Fowler, Medicare Professional Staff Member;
Julianne Fisher, Assistant to the Minority Staff Director;
Jewel Harper, Receptionist; and our interns: Alison Egan, Patricia
Daugherty, and Noam Mohr.

Further Modification to Amendment No. 1426

Mr. ROTH. Mr. President, I ask unanimous consent that the Coverdell-
Torricelli previously agreed to amendment be modified as follows, and I
send it to the desk.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment (No. 1426), as further modified, is as follows:
On page 32, strike lines 6 through 11, and insert:
(1) In general.--Subparagraph (E) of section 56(b)(1) is
amended to read as follows:
``(E) Special rule for certain deductions.--The standard
deduction under section 63(c) shall not be allowed and the
deduction for personal exemptions under section 151 and the
deduction under section 642(b) shall each be allowed, but
shall each be reduced by $_____.''
On page 32, strike lines 12 through 14, insert the
following:
(2) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after December 31,
2005.

SEC. __. LONG-TERM CAPITAL GAINS DEDUCTION FOR INDIVIDUALS.

``SEC. 1202. CAPITAL GAINS DEDUCTION FOR INDIVIDUALS.

[[Page S9936]]

applying section 1250 to any disposition of section 1250
property, all depreciation adjustments in respect of the
property shall be treated as additional depreciation.
``(d) Section Not To Apply to Certain Taxpayers.--No
deduction shall be allowed under this section to--
``(1) an individual with respect to whom a deduction under
section 151 is allowable to another taxpayer for a taxable
year beginning in the calendar year in which such
individual's taxable year begins,
``(2) a married individual (within the meaning of section
7703) filing a separate return for the taxable year, or
``(3) an estate or trust.
``(e) Special Rule for Pass-Thru Entities.--
``(1) In general.--In applying this section with respect to
any pass-thru entity, the determination of when the sale or
exchange occurs shall be made at the entity level.
``(2) Pass-thru entity defined.--For purposes of paragraph
(1), the term `pass-thru entity' means--
``(A) a regulated investment company,
``(B) a real estate investment trust,
``(C) an S corporation,
``(D) a partnership,
``(E) an estate or trust, and
``(F) a common trust fund.''
(b) Coordination With Maximum Capital Gains Rate.--
Paragraph (3) of section 1(h) (relating to maximum capital
gains rate) is amended to read as follows:
``(3) Coordination with other provisions.--For purposes of
this subsection, the amount of the net capital gain shall be
reduced (but not below zero) by the sum of--
``(A) the amount of the net capital gain taken into account
under section 1202(a) for the taxable year, plus
``(B) the amount which the taxpayer elects to take into
account as investment income for the taxable year under
section 163(d)(4)(B)(iii).''
(c) Deduction Allowable in Computing Adjusted Gross
Income.--Subsection (a) of section 62 (defining adjusted
gross income) is amended by inserting after paragraph (17)
the following new paragraph:
``(18) Long-term capital gains.--The deduction allowed by
section 1202.''
(d) Treatment of Collectibles.--
(1) In general.--Section 1222 (relating to other terms
relating to capital gains and losses) is amended by inserting
after paragraph (11) the following new paragraph:
``(12) Special rule for collectibles.--
``(A) In general.--Any gain or loss from the sale or
exchange of a collectible shall be treated as a short-term
capital gain or loss (as the case may be), without regard to
the period such asset was held. The preceding sentence shall
apply only to the extent the gain or loss is taken into
account in computing taxable income.
``(B) Treatment of certain sales of interest in
partnership, etc.--For purposes of subparagraph (A), any gain
from the sale or exchange of an interest in a partnership, S
corporation, or trust which is attributable to unrealized
appreciation in the value of collectibles held by such entity
shall be treated as gain from the sale or exchange of a
collectible. Rules similar to the rules of section 751(f)
shall apply for purposes of the preceding sentence.
``(C) Collectible.--For purposes of this paragraph, the
term `collectible' means any capital asset which is a
collectible (as defined in section 408(m) without regard to
paragraph (3) thereof).''
(2) Charitable deduction not affected.--
(A) Paragraph (1) of section 170(e) is amended by adding at
the end the following new sentence: ``For purposes of this
paragraph, section 1222 shall be applied without regard to
paragraph (12) thereof (relating to special rule for
collectibles).''
(B) Clause (iv) of section 170(b)(1)(C) is amended by
inserting before the period at the end the following: ``and
section 1222 shall be applied without regard to paragraph
(12) thereof (relating to special rule for collectibles)''.
(e) Conforming Amendments.--
(1) Section 57(a)(7) is amended by striking ``1202'' and
inserting ``1203''.
(2) Clause (iii) of section 163(d)(4)(B) is amended to read
as follows:
``(iii) the sum of--

``(II) so much of the gain described in subclause (I) which
is not taken into account under section 1202 and which the
taxpayer elects to take into account under this clause.''

``Sec. 1202. Capital gains deduction.
``Sec. 1203. 50-percent exclusion for gain from certain small business
stock.''
(f) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 2005.
(2) Collectibles.--The amendments made by subsection (d)
shall apply to sales and exchanges after December 31, 2005.

AMENDMENT NO. 1496

(Purpose: To provide a manager's amendment)

The PRESIDING OFFICER. Under the previous order, amendment No. 1496
is agreed to.
(The text of the amendment is printed in today's Record under
``amendments submitted.'')
Mr. ROTH. I ask unanimous consent that the Senate proceed to the
consideration of the House companion bill, Calendar No. 234, H.R. 2480.
I further ask consent that all after the enacting clause be stricken,
and the text of the Senate bill be inserted in lieu thereof, the bill
then be read for the third time and passed, with a motion to reconsider
laid upon the table. I also ask consent that the Senate then insist on
its amendment and request a conference with the House. I finally ask
consent that the passage of S. 1429 be vitiated and the bill be placed
back on the calendar.
The PRESIDING OFFICER. Without objection, it is so ordered.
The bill (H.R. 2480), as amended, was passed.
(The bill will be printed in a future edition of the Record.)
Mr. BIDEN. Mr. President, I rise first to compliment my senior
colleague from Delaware on his effectiveness. We agree on an awful lot
of things. We disagreed on this tax bill, but that in no way diminishes
my admiration for his effectiveness. As a matter of fact, this is one
of the few occasions I wish he were not as effective as he has been.
I compliment him and I echo the comments of my friend from New York
who said he is held in affection by Members on both sides of the aisle.
I am first among those. I congratulate him for his success. I will not
use the word ``deplore,'' but I disagree strongly with the outcome.
However, I admire the way in which he--and maybe only he--could have
been able to put this together.
Mr. ENZI. Mr. President, I congratulate the chairman of the Finance
Committee and the ranking member of the Finance Committee for the
outstanding work they have done together through this week to bring
together a bill that could have bipartisan support in the Senate.
I particularly thank Senator Roth for the depth of understanding he
has on tax issues, the way he has worked across the aisle, the way he
has worked through such a variety of measures. There were over 126
amendments we have just done. He understood and worked through and
negotiated those into a package that I hope will be accepted by the
House and signed by the President.
As the accountant in the Senate, I have been fascinated by the debate
we have had this week. I volunteered to serve late a couple of nights.
For us accountants, what we have seen here this week has been live
entertainment--some of the finest stuff you can see on television.
I know my fellow accountants across the Nation have been watching.
While we did not get the simplification we would have liked to have
had, and that simplification is necessary for the American people, we
have gotten some

[[Page S9937]]

very exciting, necessary provisions, some provisions where all
Americans taxpayer will receive back part of the overpayment they paid
in.
We have made a dent in the death taxes. We fixed the marriage
penalty--eventually, with a start immediately, and a myriad of other
provisions in there that will affect the lives of literally every
person in the United States.
I thank the chairman of the committee who has been a part of the last
great tax relief that was done as well as this great tax relief.
I thank the chairman and my colleagues who worked on and supported
this measure.
I yield the floor.
Mr. HUTCHINSON. Mr. President, I also associate myself with the
remarks of the Senator from Wyoming commending Senator Roth and the
Finance Committee for their work on this very important landmark tax
relief legislation the Senate passed today. I believe, in taking the
step we did today, in lowering the tax burden upon the American people
from 21 percent of GDP to 20 percent of the gross domestic product, we
have taken a modest but a very important step in providing relief to
all Americans. I commend the Senate today, and the staff, and ask the
President to reconsider his proposed veto.

____________________