Congressional Record, Volume 146 Issue 80 (Thursday, June 22, 2000)

[Congressional Record Volume 146, Number 80 (Thursday, June 22, 2000)]
[Senate]
[Pages S5663-S5684]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Mr. KERRY (for himself and Ms. Collins):
S. 2766. A bill to amend title XVIII of the Social Security Act with
respect to payments made under the prospective payment system for home
health services furnished under the Medicare program; to the Committee
on Finance.

THE EQUAL ACCESS TO HOME HEALTH CARE ACT OF 2000

Mr. KERRY. Mr. President, I am pleased to join my colleague
Senator Collins in introducing the Equal Access to Medicare Home Health
Care Act. This legislation will protect patient access to home health
care under Medicare, and ensure that providers are able to continue
serving seniors who reside in medically underserved areas.
Medicare was enacted in 1965, under the leadership of President
Lyndon Johnson, as a promise to the American people that, in exchange
for their years of hard work and service to our country, their health
care would be protected in their golden years. Today, over 30 million
seniors rely on the Medicare home health benefit to receive the care
they need to maintain their independence and remain in their own homes,
and to avoid the need for more costly hospital or nursing home care.
Home health care is critical. It is a benefit to which all eligible
Medicare beneficiaries, regardless of where they live, should be
entitled. But, this benefit is being seriously undermined. Since
enactment of the Balanced Budget Act, BBA, of 1997, federal funding for
home health care has plummeted. According to the Congressional Budget
Office, CBO, Medicare spending on home health care dropped 45 percent
in the last two fiscal years--from $17.5 billion in 1998 to $9.7
billion in 1999--far beyond the original amount of savings sought by
the BBA. Across the country, these cuts have forced over 2,500 home
health agencies to close and over 500,000 patients to lose their
services.
In my own State of Massachusetts--a state that, because of economic
efficiency, sustained a disproportionate share of the BBA cuts in
Medicare home health funding--28 home health agencies have closed, 6
more have turned in their Medicare provider numbers and chosen to opt
out of the Medicare program, and 12 more have been forced to merge in
order to consolidate their limited resources. The home health agencies
that have continued to serve patients despite the deep cuts in Medicare
funding reported net operating losses of $164 million in 1998. The loss
of home health care providers in Massachusetts has cost 10,000 patients
access to home health services. Consequently, many of the most
vulnerable residents in my state are being forced to enter hospitals
and nursing homes, or going without any help at all.
To compound the problem, without Congressional action, Medicare
payments for home health care will be automatically cut by an
additional 15 percent next year. It is critical that we defend
America's seniors against future cuts in home health services, and this
bill will eliminate the additional 15 percent cut in Medicare home
health payments mandated by the BBA. However, we must do more than
attempt to stop future cuts. Indeed, it is equally as important that we
begin to provide relief to home health providers who are already
struggling to care for patients.
During the first year of implementation of the Interim Payment
System, IPS, thousands of home health care agencies incurred
overpayments because they were not notified of their per beneficiary
limits until long after the limits were imposed. The provisions of this
bill would extend the repayment period for IPS overpayments without
interest for three years, and thereafter at an interest rate lower than
currently mandated.
Under IPS, even agencies which did not incur overpayments were placed
on precarious financial footing because of insufficient payments,
particularly for high-cost and long-term patients. Accordingly, it is
critical that we bolster the efforts of all home health care providers
to transcend their current operating deficits, especially as they
transition from the Interim Payment System to the Prospective Payment
System, PPS.
The BBA specified that, in aggregate, PPS payments to home health
providers must equal IPS payments. This adjustment--the budget
neutrality factor--is expected to reduce PPS payments for home health
services by 22 percent below the average Medicare costs prior to
enactment of the BBA. In order to provide relief to home health
providers in this budget neutral context, the Equal Access to Medicare
Home Health Care Act would establish a 10 percent add-on to the
episodic base payment for patients in rural areas, to reflect the
increasing costs of travel, and a ``reasonable cost'' add-on for
security services utilized by providers in our urban areas. These add-
ons ensure that patients in our medically underserved communities
continue to receive the home care they need and deserve.
Finally, this legislation would encourage the incorporation of
telehealth technology in home care plans by allowing cost reporting of
the telemedicine services utilized by agencies. Telemedicine has
demonstrated tremendous potential in bringing modern health care
services to patients who reside in areas where providers and technology
are scarce. Cost reporting will provide the data necessary to develop a
fair and reasonable Medicare reimbursement policy for telehomecare and

[[Page S5664]]

bring the benefits of modern science and technology to our nation's
underserved.
Unless we increase the federal commitment to the Medicare home health
care benefit, we can only expect to continue to imperil the health of
an entire generation. We must act to deliver on that promise that
President Johnson made 25 years ago--our nation's seniors deserve no
less.
______

By Mr. FEINGOLD (for himself, Mr. Levin, and Mr. Abraham):
S. 2767. A bill to authorize the enforcement by State and local
governments of certain Federal Communications Commission regulations
regarding use of citizens band radio equipment; to the Committee on
Commerce, Science, and Transportation.

cb radio interference legislation

Mr. FEINGOLD. Mr. President, I am pleased to once again
introduce a bill to deal with the all too common problem of
interference with residential home electronic equipment caused by
unlawful use of citizens band, or CB, radios. This is the third
Congress in which I have offered this legislation. In 1998, it was
nearly enacted as part of an anti-slamming bill. I hope that this year,
we can finally put this common sense bill into law.
The problem of CB radio interference can be extremely distressing for
residents who cannot have a telephone conversation, watch television,
or listen to the radio without being interrupted by a neighbor's
illegal use of a CB radio. Unfortunately, under the current law, those
residents have little recourse. The bill I am introducing today will
provide those residents with a practical solution to this problem.
Until recently, the FCC enforced its rules outlining what equipment
may or may not be used for CB radio transmissions, how long
transmissions may be broadcast, what channels may be used, as well as
many other technical requirements. The FCC also used to investigate
neighbor's complaints that a CB radio enthusiast's transmissions
interfered with their use of home electronic and telephone equipment.
The FCC receives thousands of such complaints annually.
For the past five years, I have worked on behalf of constituents
bothered by persistent interference of nearby CB radio transmissions,
in some cases caused by unlawful use of radio equipment. In each case,
the constituents have sought my help in securing an FCC investigation
of the complaint. And in each case, the FCC indicated that due to a
lack of resources, they no longer investigate radio frequency
interference complaints. Instead of investigation and enforcement, the
FCC only provides self-help information which the consumer may use to
limit the interference on their own.
This situation is understandable given the rising number of
complaints for things like slamming. The resources of the FCC are
limited, and there is only so much they can do to address complaints of
radio interference.
Nonetheless, this problem is extremely annoying and frustrating to
those who experience radio interference. Many residents implement the
self-help measures recommended by FCC such as installing filtering
devices to prevent the unwanted interference, working with their
telephone company, or attempting to work with the neighbor they believe
is causing the interference. In many cases these self-help measures are
effective.
However, in some cases filters and other technical solutions fail to
solve the problem because the interference is caused by the unlawful
use of CB radio equipment such as unauthorized linear amplifiers.
Municipal residents, after being denied an investigation or
enforcement from the FCC, frequently contact their city or town
government and ask them to police the interference. However, the
Communications Act of 1934 provides exclusive authority to the Federal
Government for the regulation of radio. This preempts municipal
ordinances or State laws that regulate radio frequency interference
caused by unlawful use of CB radio equipment. This situation creates an
interesting dilemma for municipal governments. They can neither pass
their own ordinances to control CB radio interference, nor can they
rely on the agency with exclusive jurisdiction over interference to
enforce the very Federal law which preempts them.
Let me give an example of the kind of frustrations people have
experienced in attempting to deal with these problems. Shannon Ladwig,
a resident of Beloit, WI is fighting to end CB interference with her
home electronic equipment that has plagued her family for many years.
Shannon worked within the existing system by asking for an FCC
investigation, installing filtering equipment on her telephone,
attempting to work with the neighbor causing the interference, and so
on. Nothing has been effective.
Here are some of the annoyances Shannon has experienced. Her
answering machine picks up calls for which there is no audible ring,
and at times records ghost messages. Often, she cannot get a dial tone
when she or her family members wish to place an outgoing call. During
telephone conversations, the content of the nearby CB transmission can
frequently be heard and on occasion, her phone conversations are
inexplicably cut off. Ms. Ladwig's TV transmits audio from the CB
transmission rather than the television program her family is watching.
Shannon never knows if the TV program she taped with her VCR will
actually record the intended program or whether it will contain
profanity from nearby CB radio conversation.
Shannon did everything she could to solve the problem and years later
she still feels like a prisoner in her home, unable to escape the
broadcasting whims of a CB operator using illegal equipment with
impunity. Shannon even went to her city council to demand action. The
Beloit City Council responded by passing an ordinance allowing local
law enforcement to enforce FCC regulations--an ordinance the council
knows is preempted by Federal law. The bill I am introducing today
would allow Beloit's ordinance to stand.

The problems experienced by Beloit residents are by no means isolated
incidents. I have received very similar complaints from at least 10
other Wisconsin communities in the last several years in which whole
neighborhoods are experiencing persistent radio frequency interference.
Since I have begun working on this issue, my staff has also been
contacted by a number of other congressional offices who are also
looking for a solution to the problem of radio frequency interference
in their States or districts caused by unlawful CB use. The city of
Grand Rapids, Michigan, in particular, has contacted me about this
legislation because they face a persistent interference problem very
similar to that in Beloit. I am pleased that Senators Levin and Abraham
join me today in cosponsoring this legislation.
In all, the FCC receives more than 30,000 radio frequency
interference complaints annually--most of which are caused by CB
radios. Unfortunately, the FCC no longer has the staff, resources, or
the field capability to investigate these complaints and localities are
blocked from exercising any jurisdiction to provide relief to their
residents.
My bill resolves this Catch-22, by allowing states and localities to
enforce statutes or ordinances prohibiting selected violations of the
FCC regulations. This gives local law enforcement the ability to
enforce existing FCC regulations regarding unauthorized CB equipment
and frequencies while maintaining exclusive Federal jurisdiction over
the regulation of radio services. It is a commonsense solution to a
very frustrating and real problem which cannot be addressed under
existing law. Residents should not be held hostage to a Federal law
which purports to protect them but cannot be enforced.
Now this amendment is by no means a panacea for the problem of radio
frequency interference. It is intended only to help localities solve
the most egregious and persistent problems of interference--those
caused by unauthorized use of CB radio equipment and frequencies. In
cases where interference is caused by the legal and licensed operation
of any radio service, residents will need to resolve the interference
using the FCC self-help measures that I mentioned earlier.
In many cases, interference can result from inadequate home
electronic equipment immunity from radio frequency interference. Those
problems can only be resolved by installing filtering equipment and by
improving the

[[Page S5665]]

manufacturing standards of home telecommunications equipment.
The electronic equipment manufacturing industry, represented by the
Telecommunications Industry Association and the Electronics Industry
Association, working with the Federal Communications Commission, has
adopted voluntary standards to improve the immunity of telephones from
interference. Those standards were adopted by the American National
Standards Institute last year. Manufacturers of electronic equipment
should be encouraged to adopt these new ANSI standards. Consumers have
a right to expect that the telephones they purchase will operate as
expected without excessive levels of interference from legal radio
transmissions. Of course, Mr. President, these standards assume legal
operation of radio equipment and cannot protect residents from
interference from illegal operation of CB equipment.
This bill also does not address interference caused by other radio
services, such as commercial stations or amateur stations. I have
worked with the American Radio Relay League (ARRL), an organization
representing amateur radio operators, frequently referred to as ``ham''
operators, to address a number of concerns that they raised about the
original versions of my bill. ARRL was concerned that while the bill
was intended to cover only illegal use of CB equipment, FCC-licensed
amateur radio operators might inadvertently be targeted and prosecuted
by local government and law enforcement. ARRL also expressed concern
that local law enforcement might not have the technical abilities to
distinguish between ham stations and CB stations and might not be able
to determine what CB equipment was FCC-authorized and what equipment is
illegal.
I have worked with the ARRL and amateur operators from Wisconsin to
address these concerns. As a result of those discussions, this
amendment incorporates a number of provisions suggested by the league.
First, the amendment makes clear that the limited authority provided to
localities in no way diminishes or affects the FCC's exclusive
jurisdiction over the regulation of radio.
Second, the amendment clarifies that possession of a FCC license to
operate a radio service for the operation at issue, such as an amateur
station, is a complete protection against any local government action
authorized by this amendment. Unlike CB operators, amateur radio
enthusiasts are not only individually licensed by the FCC but they also
self-regulate. The ARRL is very involved in resolving interference
concerns both among their own members and between ham operators and
residents experiencing problems.
Third, the bill also provides for a FCC appeal process by any radio
operator who is adversely affected by a local government action under
this amendment. The FCC will make determinations as to whether the
locality acted properly within the limited jursidiction this
legislation provides and the FCC will have the power to reverse the
action if they acted improperly. And fourth, my legislation requires
the FCC to provide States and localities with technical guidance on how
to determine whether a CB operator is acting within the law.
In addition, the bill has been modified to address concerns raised by
truckers, who feared that local law enforcement would use reports of CB
interference to indiscriminately stop and search trucks in the area.
The bill now provides specifically that local governments may not seek
to enforce the FCC regulations with respect to a CB radio on board a
commercial motor vehicle unless there is probable cause to believe that
someone in the vehicle is operating a CB radio in violation of the
regulations. This provision should ensure that this new authority is
not used as a pretext to harass truckers.
Again, Mr. President, my bill is narrowly targeted to resolve
persistent interference with home electronic equipment caused by
illegal CB operation. Under my bill, localities cannot establish their
own regulations on CB use outside of the already existing FCC
regulations. This bill will not resolve all interference problems and
it is not intended to do so. Some interference problems require
continued attentions from the FCC, the telecommunications manufacturing
industry, and radio service operators. This bill merely provides
localities with the tools they need to protect their residents while
preserving the FCC's exclusive regulatory jurisdiction over the
regulation of radio services.
I ask that the full text of the bill be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 2767

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

SECTION 1. ENFORCEMENT OF REGULATIONS REGARDING CITIZENS BAND
RADIO EQUIPMENT.

Section 302 of the Communications Act of 1934 (47 U.S.C.
302a) is amended by adding at the end the following:
``(f)(1) Except as provided in paragraph (2), a State or
local government may enact a statute or ordinance that
prohibits a violation of the following regulations of the
Commission under this section:
``(A) A regulation that prohibits a use of citizens band
radio equipment not authorized by the Commission.
``(B) A regulation that prohibits the unauthorized
operation of citizens band radio equipment on a frequency
between 24 MHz and 35 MHz.
``(2) A station that is licensed by the Commission pursuant
to section 301 in any radio service for the operation at
issue shall not be subject to action by a State or local
government under this subsection. A State or local government
statute or ordinance enacted for purposes of this subsection
shall identify the exemption available under this paragraph.
``(3) The Commission shall provide technical guidance to
State and local governments regarding the detection and
determination of violations of the regulations specified in
paragraph (1).
``(4)(A) In addition to any other remedy authorized by law,
a person affected by the decision of a State or local
government enforcing a statute or ordinance under paragraph
(1) may submit to the Commission an appeal of the decision on
the grounds that the State or local government, as the case
may be, enacted a statute or ordinance outside the authority
provided in this subsection.
``(B) A person shall submit an appeal on a decision of a
State or local government to the Commission under this
paragraph, if at all, not later than 30 days after the date
on which the decision by the State or local government
becomes final, but prior to seeking judicial review of such
decision.
``(C) The Commission shall make a determination on an
appeal submitted under subparagraph (B) not later than 180
days after its submittal.
``(D) If the Commission determines under subparagraph (C)
that a State or local government has acted outside its
authority in enforcing a statute or ordinance, the Commission
shall preempt the decision enforcing the statute or
ordinance.
``(5) The enforcement of statute or ordinance that
prohibits a violation of a regulation by a State or local
government under paragraph (1) in a particular case shall not
preclude the Commission from enforcing the regulation in that
case concurrently.
``(6) Nothing in this subsection shall be construed to
diminish or otherwise affect the jurisdiction of the
Commission under this section over devices capable of
interfering with radio communications.
``(7) The enforcement of a statute or ordinance by a State
or local government under paragraph (1) with regard to
citizens band radio equipment on board a `commercial motor
vehicle,' as defined in section 31101 of title 49, United
States Code, shall require probable cause to find that the
commercial motor vehicle or the individual operating the
vehicle is in violation of the regulations described in
paragraph (1). Probable cause shall be defined in accordance
with the technical guidance provided by the Commission under
paragraph (3).''.

Mr. LEVIN. Mr. President, I am pleased to cosponsor
legislation being introduced today by my friend from Wisconsin to
address a problem that is unique to certain areas of Wisconsin and
Michigan.
In the Cities of Grand Rapids and Battle Creek, Michigan and in
several Wisconsin communities, certain individual Citizens Band (CB)
radio operators are using illegal equipment of a capacity which
interferes with the home electronic equipment and telephone service of
their neighbors.
As a result, these neighbors are forced to buy filters in order to
screen out the interference, and in some cases the interference is so
extreme that the filters don't even work. There have also been
complaints that some of these ``illegal'' CB broadcasters are using
profanity which is disturbing to the neighbors and interfering with
legitimate use of CB radios by truckers and others.
The problem is exacerbated by a lack of Federal resources to stop the
problem. In recent years, due to budget and staffing cuts, the FCC has
decreased its enforcement efforts. The legislation being introduced
today would authorize local jurisdictions to enforce the

[[Page S5666]]

FCC regulations regarding use of citizens band radio equipment, while
maintaining the FCC jurisdiction over the regulation of radio services.
The bill provides for an FCC appeal process available to any person
who believes they are adversely affected by local enforcement action.
FCC does not object to this approach or to this legislation.
Mr. President, this legislation offers a simple solution to the
inability of the FCC, due to insufficient resources, to put a stop to
illegal CB equipment use in parts of Michigan and Wisconsin. The
legislation would allow local officials, who are more familiar with the
specific problems and complaints in their areas of jurisdiction, to be
authorized to enforce FCC regulations regarding the use of CB radio
equipment. The legislation has the strong support of local government
officials in the Michigan communities where CB interference occurs.
An identical bill has been introduced in the House of
Representatives. I hope this legislation will be enacted in an
expedited manner so that local officials will have the ability to stop
the use of illegal CB equipment that is interfering with legitimate CB
use and disturbing citizens of the impacted communities.
______

By Ms. COLLINS:
S. 2768. A bill to amend title XVIII of the Social Security Act to
improve the Medicare-dependent, small rural hospital program; to the
Committee on Finance.

small rural hospital program improvement act

Ms. COLLINS. Mr. President, I rise today to introduce the Small Rural
Hospital Program Improvement Act, which is intended to make critically
important changes to Medicare payment policies for rural hospitals.
Mr. President, most hospitals in rural America serve a large number
of Medicare patients. Medicare payments to these hospitals, however,
are not always adequate to cover the cost of the services they provide.
The legislation I am introducing today will increase Medicare payments
to small, rural hospitals in Maine and elsewhere by enabling more of
them to qualify for enhanced reimbursements under the Medicare
Dependent, Small Rural Hospital Program.
Rural hospitals are the anchors of small towns and communities across
America. Not only are they the mainstay of the local health care
delivery system, but they are also often the major employers in their
communities. Rural communities have unique characteristics and special
needs, and their hospitals face tremendous challenges every day as they
work to provide the highest quality health care to their patients in
the face of sometimes discouraging odds.
Rural communities tend to have higher concentrations of elderly
persons and higher levels of poverty. Rural residents also tend to have
higher rates of certain health problems than people living in urban
areas. For example, deaths and disabilities resulting from injury are
more common, and rural residents also tend to experience higher rates
of chronic disease and disability. Rural providers also face unique
challenges in the delivery of health care services, given the great
distances and extreme weather conditions that often prevail,
particularly in states like Maine. Shortages of physicians, nurses and
other health professionals make it difficult to ensure that rural
residents have access to all of the care that they need. And finally,
Medicare reimbursement policies tend to favor urban areas and fail to
take the special needs of rural providers into account.
The Balanced Budget Act of 1997 has posed additional challenges for
rural areas. Deep Medicare payment reductions and mounting regulatory
requirements have damaged our fragile rural health care delivery
system, and, in particular, our rural hospitals and home health
agencies. While the Balanced Budget Refinement Act of 1999 did provide
some much-needed relief, we should take further steps to ensure that
these rural providers receive more equitable Medicare payments.
One relatively simple, but nevertheless important step we can take is
to update the antiquated and arbitrary classification requirements that
prevent otherwise-qualified hospitals from receiving assistance under
the Medicare Dependent, Small Rural Hospital program. Under this
program, small rural hospitals that treat relatively high proportions
of Medicare patients qualify for enhanced Medicare reimbursements. To
qualify as a Medicare Dependent Hospital, a hospital must be located in
a rural area, not be a sole community hospital, have 100 or fewer beds,
and have been dependent on Medicare for at least 60 percent of its
inpatient days or discharges in 1987.
The requirement that the hospital must have had at least 60 percent
of its hospital discharges or patient days attributable to Medicare
beneficiaries in 1987 is what creates the problem. Using 1987 as a base
year erects an arbitrary barrier that prevents many small rural
hospitals that otherwise meet the criteria from participating in this
program. As an example, despite the fact that most of the small rural
hospitals in Maine treat a disproportionate share of Medicare
beneficiaries, none of them currently qualifies for this program. Not a
single one.

The legislation I am introducing today modifies and updates the 60
percent requirement and bases eligibility for the Medicare Dependent,
Small Rural Hospital program on Medicare discharges or patient days
during any of the three most recently audited cost report periods
rather than fiscal year 1987. In addition, the bill would make the
program, which currently is only authorized through FY 2006, permanent.
According to the Maine Hospital Association, if updated in this way,
nine Maine hospitals will be eligible for the program, which would make
them eligible for over $9 million additional Medicare dollars.
Increasing Medicare payment rates is critically important to the
hospitals in Maine. For the past several years, Maine has ranked 49th
or 50th in the nation in terms of Medicare reimbursement-to-cost
ratios. For example, while hospitals in some states received more from
Medicare in 1996 than it cost them to provide care to older and
disabled Medicare patients, Maine's hospitals were only reimbursed 80
cents for every $1.00 they actually spent caring for Medicare
beneficiaries.
As a consequence, Maine's hospitals have experienced a serious
Medicare shortfall in recent years. The Maine Hospital Association
anticipates a $174 million Medicare shortfall in 2002, which will force
Maine's hospitals to shift costs on to other payers in the form of
higher hospital charges. This Medicare shortfall is one of the reasons
that Maine has among the highest insurance premiums in the nation.
Maine's poor Medicare margin is not due to high hospital costs. In
fact, the current system tends to penalize Maine hospitals for their
efficiency. For example, at $5,232, Maine's cost per discharge is
slightly under the national average of $5,241, and is well below the
Northeast average of $5,517.
The legislation I am introducing today will not solve Maine's
Medicare shortfall problem, but it will help to close the gap. It will
also enable many more small rural hospitals across the country to
benefit from this program, which will help to ensure continued access
to high quality hospital care for all rural Americans.
______

By LEAHY (for himself, Mr. Hatch, Mr. Robb, Mr. Durbin, Mr. Kohl,
Mr. Schumer, and Mr. Cleland):
S. 2769. A bill to authorize funding for National Instant Criminal
Background Check System improvement; to the Committee on the Judiciary.

nics partnership act

Mr. LEAHY. Mr. President, I am pleased to introduce the legislation
to improve the National Instant Criminal Background Check System, NICS.
The NICS Partnership Act authorizes the Department of Justice to
reimburse states for serving as points of contact under the NICS. Our
legislation also requires the Attorney General to issue a report to
Congress on the appropriate formula to reimburse states for their
reasonable costs to serve as points of contact for access to the NICS.
I am pleased that Senators Hatch, Robb, Durbin, Kohl, Schumer, and
Cleland are original cosponsors of this bipartisan bill.
The Brady Handgun Violence Prevention Act of 1994 established the
NICS and required federal firearm licensees to conduct a background
check on the

[[Page S5667]]

purchaser of any firearm sale after November 30, 1998. In its first 18
months of operation, the NICS has been a highly effective system for
keeping guns out of the hands of criminals and children. Having
processed 10 million inquires during this time, the NICS has ensured
the timely transfer of firearms to law-abiding citizens, while denying
transfers to more than 179,000 felons, fugitives and other prohibited
persons. That is a remarkable record in preventing crime and protecting
public safety.
This success, however, has come at an unfair cost to many states. The
NICS is mandated by Federal law, the Brady Act, but many states are
picking up the tab for conducting effective Brady background checks.
Congress should remedy this inequity. Effective Brady background checks
are the responsibility of the Federal government under Federal law. As
a result, it is only fair for Congress to reimburse states for their
reasonable costs needed to conduct effective Brady background checks.
Because more comprehensive criminal history records are currently
available at the state and local level in many states, instead of the
Federal level, these states have elected to serve as points of contact
(POCs) to access the NICS. A state POC is a state agency that agrees to
conduct Brady background checks, including NICS checks, on prospective
gun buyers. In states that have agreed to serve as POCs, federal
firearm licensees contact the state POC for a Brady background check
rather than contacting the Federal Bureau of Investigation (FBI). These
POC background checks review more records of people in prohibited
categories, such as people who have been involuntarily committed to a
mental institution or are under a domestic violence restraining order.
Indeed, in my home state of Vermont, for example, which serves as a
POC, approximately 28 percent of all denials of prohibited persons
seeking firearm purchases are based on state charges which would not
have been available for review at the FBI's criminal record repository.
These purchasers were denied because a relief from abuse order had been
issued against them, they had been convicted of a misdemeanor crime of
family violence, they were wanted in the State of Vermont, or they had
been convicted of a felony in Vermont and not fingerprinted. These
results demonstrate the value of having the states act as POCs for
NICS.
Currently, the following 15 states serve as a full POC for NICS:
Arizona, California, Colorado, Connecticut, Florida, Georgia, Hawaii,
Illinois, Nevada, New Jersey, Pennsylvania, Tennessee, Utah, Vermont
and Virginia. Another 11 states serve as partial POCs for NICS by
performing checks for handgun purchases while the FBI processes checks
for long gun purchases: Iowa, Michigan, Nebraska, New York, North
Carolina, Indiana, Maryland, New Hampshire, Oregon, Washington, and
Wisconsin. Thus, more than half the states serve as full or partial
POCs under the NICS.
In fact, of the 8,621,000 background checks conducted last year,
4,538,000 were handled by the FBI and 4,083,000--almost half--were
handled by state POCs. So while some states relied on the FBI to
conduct Brady background checks and paid nothing, the states that
elected to conduct more effective background checks paid the full cost
of them. That is unfair to states that are doing the right thing.
The State of Vermont, for instance, pays about $110,000 a year for
its POC system to run effective Brady background checks on all firearms
purchased through federal firearms licensees. In other POC states, the
burden is higher on state legislatures to come up with funding sources
to pay for effective Brady background checks.
Indeed, the Governor of Florida, Jeb Bush, wrote to me last year in
strong support of Federal funding to pay for the costs of Brady
background checks performed by POC states. Governor Bush empathized
that Florida's POC background checks were more efficient and effective
than background checks performed at the Federal level. Governor Bush
concluded in his letter that: ``Without this funding, it is unlikely
that state legislatures will continue the state programs--the
inequities of charging for the service in some states but getting free
service in others are too obvious.'' I agree. I ask unanimous consent
that Governor Bush's letter be printed in the Record at the conclusion
of my remarks.
The FBI, in its first operations report on the NICS, recommend that
states should be compensated for their costs necessary to serve as
POCs. Specifically, the FBI's report found: ``Based on its first year
of operation, it is clear that the ability of the NICS to stop
prohibited persons from acquiring firearms would be improved by . . . a
means to help states with the cost of performing as a POC state. . .
.''
A recent General Accounting Office report on the implementation of
the NICS also praised the POC state background check system. The GAO
report found: ``According to the FBI, the functioning of the NICS would
be more effective and efficient if more states were full participants.
For instance, FBI officials noted that state law enforcement agencies
have access to more current criminal history records and more data
sources, particularly regarding noncriminal disqualifiers, such as
mental hospital commitments, from their own states than does the FBI,
and have a better understanding of their own state laws and
disqualifying factors.''
Similar legislation to reimburse POC states under the NICS was part
of the Senate-passed Juvenile Justice bill, which has been languishing
in conference for many months. I prefer that we address this issue as
part of the juvenile justice legislation by convening the juvenile
justice conference and finishing the work we started last May when the
Senate passed the Hatch-Leahy juvenile justice bill by a strong
bipartisan vote. But since the congressional leadership appears
unlikely to reconvene the juvenile justice conference, then we should
consider these improvements to the NICS now to protect public safety.
Indeed, the Department of Justice, in comments on the Senate-passed
juvenile justice bill, stated: ``Reimbursing the point-of-contact
states for doing NICS checks could be critical to retaining their
participation, because they have a strong disincentive to preform
checks that the FBI is providing to gun dealers and buyers free of
charge. We believe it is very important to retain point-of-contact
states and increase their number, because states have access to state
records that are not available to the FBI and states have the expertise
to interpret their own records and local laws.''
Mr. President, states are doing the right thing by serving as points
of contact under the NICS for more effective background checks, which
are mandated by Federal law. These background checks prevent crime and
promote the public safety. Congress should do the right thing by
reimbursing these states for their reasonable costs for conducting
these point of conduct background checks.
I ask unanimous consent that the text of the bill be printed in the
Congressional Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 2769

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

SECTION 1. SHORT TITLE.

This Act may be cited as the ``NICS Partnership Act of
2000''.

SEC. 2. NATIONAL INSTANT CRIMINAL BACKGROUND CHECK SYSTEM
IMPROVEMENTS.

(a) Authorization for Reimbursement to States Serving as
Points of Contact.--There are authorized to be appropriated
$40,000,000 for fiscal year 2001, $50,000,000 for fiscal year
2002, and $60,000,000 for fiscal year 2003, to the Department
of Justice to directly reimburse States for the reasonable
costs necessary to serve as points of contact for access to
the National Instant Criminal Background Check System
established under Public Law 103-159.
(b) Report on Reimbursement Formula for States Serving as
Points of Contact.--Not later than 90 days after the date of
enactment of this Act, the Attorney General shall submit to
the Committees on the Judiciary of the Senate and the House
of Representatives a report on the appropriate formula for
the direct reimbursement to States of the reasonable costs
necessary to serve as points of contact for access to the
National Instant Criminal Background Check System established
under Public Law 103-159.
______

By Mr. CLELAND:

[[Page S5668]]

S. 2771. A bill to provide for Federal recognition of the Lower
Muscogee-Creek Indian Tribe of Georgia, and for other purposes; to the
Committee on Indian Affairs.

the lower muscogee-creek indian tribe of georgia recognition act

Mr. CLELAND. Mr President, today I am introducing legislation
which will provide for the Federal recognition of the Lower Muskogee-
Creek Indian Tribe of Georgia.
I realize that Congress has traditionally deferred to the Secretary
of the Interior on matters relating to tribal recognition. Further,
while it is within our jurisdiction, I understand that there is a
reluctance in Congress to federally recognize Indian tribes through
legislation. I would certainly prefer to settle this particular
recognition issue in accordance with the practices and procedures
established by the Bureau of Indian Affairs. However, I am compelled to
introduce this legislation because I believe there has been a
fundamental flaw which, in this case, has prevented the Lower Muskogee
tribe from obtaining a fair and equitable review of its recognition
request. Mr. President, please allow me to elaborate on this statement.
It is my understanding that once a petition has been denied, the
rules prohibit a tribe from petitioning the Secretary of the Interior a
second time. While the intent of the rule may be to eliminate redundant
and frivolous petitions, I believe there are times when we must make an
exception. Further, Mr. President, I would contend that this rule is
especially unfair to those tribes who petitioned the Agency prior to
the finalization of the rules in 1978. This is the case with respect to
the Lower Muskogee tribe in my home State of Georgia.
The Lower Muskogee tribe has tried for over two decades to obtain a
favorable review of their status as a tribe. In 1977, members of the
tribe petitioned the Secretary of the Interior for recognition. Without
the assistance of legal counsel or technical support, the tribe
submitted their petition. While the petition was pending, the
Department of Interior (DOI) proposed and finalized rules relating to
the procedures by which tribes may petition for federal recognition. In
December 1981, the tribe's petition was denied due to technical
omissions.
I understand that there are serious concerns associated with the
federal recognition of tribes by an Act of Congress--the most obvious
being the perception that establishment of a gaming facility may soon
follow. However, members of the Lower Muskogee tribe are not seeking to
open casinos in Georgia. In fact, at the request of the tribe's
Principal Chief, I have included language in the bill to prohibit such
action. Under my bill, federal recognition of the Lower Muskogee tribe
will not permit casinos or any other games of chance. It will simply
recognize these well-deserving people as an Indian tribe, and allow
their participation in programs which should be available to them as
legitimate Native Americans.
Mr. President, I ask unanimous consent that a copy of the bill be
printed in the Record, and urge my colleagues to join me in enacting
this legislation.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 2771

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

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Lower Muscogee-Creek Indian
Tribe of Georgia Recognition Act''.

SEC. 2. FINDINGS.

The Congress declares and finds the following:
(1) The Lower Muscogee-Creek Indian Tribe of Georgia are
descendants of and political successors to those Indians
known as the original Creek Indian Nation at the time of
initial European contact with America.
(2) The Lower Muscogee-Creek Indian Tribe of Georgia are
descendants and political successors to the signatories of
the 1832 Treaty of Washington which was a treaty made while
the Creeks were one nation, before removal. The Treaty
involved all Creeks, including the Upper, Middle, and Lower
Creeks, when the Creek Nation was whole and intact.
(3) The Lower Muscogee-Creek Indian Tribe of Georgia
consists of over 2,500 eligible members, most of whom
continue to reside close to their ancestral homeland within
the State of Georgia. Pursuant to Article XII of the 1832
Treaty of Washington, the Lower Muscogee-Creek Indian Tribe
of Georgia declined to be removed and continued to operate as
a sovereign Indian tribe comprising those Lower Creeks
declining removal under the Treaty of 1832.
(4) The Lower Muscogee-Creek Indian Tribe of Georgia
continues its political and social existence with a viable
tribal government carrying out many of its governmental
functions through its traditional form of collective
decisionmaking and social interaction.
(5) In 1972, when the Lower Muscogee-Creek Indian Tribe of
Georgia (also known as the Muscogee-Creek Indian Tribe East
of the Mississippi River) petitioned the Bureau of Indian
Affairs for Federal recognition, the tribal leaders were not
well educated and the Tribe could not afford competent
counsel adequately versed in Federal Indian law. The Tribe
was unable to obtain technical assistance in its petition
which consequently lacked critical and pertinent historical
information necessary for recognition. Thus, due to technical
omissions, the petition was denied on December 21, 1981.
(6) Despite the denial of the petition, the United States
Government, the government of the State of Georgia, and local
governments, have recognized the political leaders of the
Lower Muscogee-Creek Indian Tribe of Georgia as leaders of a
distinct political governmental entity.

SEC. 3. DEFINITIONS.

In this Act:
(1) Member.--The term ``member'' means an enrolled member
of the Tribe, as of the date of enactment of this Act, or an
individual who has been placed on the membership rolls of the
Tribe in accordance with this Act.
(2) Secretary.--The term ``Secretary'' means the Secretary
of the Interior.
(3) Tribe.--The term ``Tribe'' means the Lower Muscogee-
Creek Indian Tribe of Georgia.

SEC. 4. FEDERAL RECOGNITION.

(a) In General.--Federal recognition is hereby extended to
the Tribe. All laws and regulations of general application to
Indians or nations, tribes, or bands of Indians that are not
inconsistent with any specific provision of this Act shall be
applicable to the Tribe and its members.
(b) Federal Benefits and Services.--The Tribe and its
members shall be eligible, on or after the date of enactment
of this Act, for all Federal benefits and services furnished
to federally recognized Indian tribes and their members
because of their status as Indians without regard to the
existence of a reservation for the Tribe or the residence of
any member on or near an Indian reservation.
(c) Indian Reorganization Act Applicability.--The Act of
June 18, 1934 (25 U.S.C. 461 et seq.) shall be applicable to
the Tribe and its members.

SEC. 5. RESERVATION.

(a) Lands Taken Into Trust.--Notwithstanding any other
provision of law, if, not later than 2 years after the date
of enactment of this Act, the Tribe transfers interest in
land within the boundaries of Grady County, Carroll County,
and such other counties in the State of Georgia to the
Secretary, the Secretary shall take such interests in land
into trust for the benefit of the Tribe.
(b) Reservation Established.--Land taken into trust
pursuant to subsection (a) shall be the initial reservation
land of the Tribe.
(c) Limitation on Gaming.--Gaming as defined and regulated
by the Indian Gaming Regulatory Act (25 U.S.C. 2701 et seq.)
is prohibited on the land taken into trust under subsection
(a).

SEC. 6. BASE MEMBERSHIP ROLL.

(a) In General.--Not later than 120 days after the date of
enactment of this Act, the Tribe shall submit to the
Secretary a membership roll consisting of all individuals who
are members of the Tribe. The qualifications for inclusion in
the membership roll of the Tribe shall be developed and based
upon the membership provisions as contained in the Tribe's
Constitution and Bill of Rights. Upon completion of the
membership roll, the Secretary shall publish notice of such
in the Federal Register. The Tribe shall ensure that such
roll is maintained and kept current.
(b) Future Membership.--The Tribe shall have the right to
determine future membership in the Tribe, however, in no
event may an individual be enrolled as a member of the Tribe
unless the individual is a lineal descendant of a person on
the base membership roll, and has continued to maintain
political relations with the Tribe.

SEC. 7. JURISDICTION.

The reservation established pursuant to this Act shall be
Indian country under Federal and tribal jurisdiction.
______

By Mr. GREGG (for himself, Mr. Kerrey, Mr. Breaux, Mr. Grassley,
Mr. Thompson, Mr. Robb, and Mr. Thomas):
S. 2774. A bill to amend title II of the Social Security Act to
provide for individual savings accounts funded by employee and employer
Social Security payroll deductions, to extend the solvency of the old-
age, survivors, and disability insurance program, and for other
purposes; to the Committee on Finance.

the bipartisan social security reform act of 2000

Mr. GRASSLEY. Mr. President, I rise today in support of legislation
to make

[[Page S5669]]

technical corrections to the Bipartisan Social Security Reform bill my
colleagues and I introduced last summer. The purpose of this
legislation is simple: to conform our previous legislative language to
changes that have been made in the Social Security program--such as
eliminating the earnings limit--since last July; to correct some
inadvertent errors we discovered; and to update our assumptions to
reflect the new reality of the Trust Funds as reported in the 2000
Social Security and Medicare Trustees Report which came out earlier
this year.
Since July 16, 1999 when Senators Gregg, Kerrey, Breaux, Thompson,
Thomas, and Robb and I introduced our legislation to save Social
Security, the issue has taken on new life, due to Governor Bush's
willingness to make Social Security reform a primary issue in his
presidential campaign. He should be commended for his leadership and
for grabbing the third rail of American politics fearlessly in order to
create a truly secure Social Security system so that future generations
will be able to rely on Social Security like their parents and
grandparents.
I want to urge my colleagues to take a serious look at our proposal
to save Social Security. It was designed in a bipartisan, bicameral
manner: four Republicans and three Democrats cosponsored the Bipartisan
Social Security Reform Bill, and Congressmen Kolbe and Stenholm
sponsored similar legislation in the House of Representatives.
The bipartisan plan would maintain a basic floor of protection
through a traditional Social Security benefit, but two percentage
points of the 12.4 percent payroll tax would be redirected to
individual accounts. Individuals could invest their personal accounts
in any combination of the funds offered through the Social Security
system. An individual who invested his or her personal account in a
bond fund would receive a guaranteed interest rate. However,
individuals who wish to pursue a higher rate of return through
investment in a fund including equities could do so.
Our proposal would eliminate the need for future payroll tax
increases by advance funding a portion of future benefits through
personal accounts. With individual accounts, we provide Americans with
the tools necessary to build financial independence in retirement--
especially to those who previously had limited opportunities to create
wealth. The legislation provides incentives for low and middle income
working Americans to save additional funds for retirement by matching
their voluntary contributions to their individual accounts. Under our
plan, they will be able to save for retirement and benefit from
economic growth.
As all the cosponsors have said a hundred times, our proposal offers
no ``free lunch''. In order to save Social Security for future
generations it must be modernized. We have crafted a responsible plan
to save Social Security for generations to come. By making incremental,
steady changes to the Social Security system, we will be able to ensure
the long-term solvency of the program.
With this technical corrections bill we have improved upon our
original legislation and I urge my colleagues to support the bipartisan
proposal to save Social Security.
Mr. President, I ask that the bill be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 2774

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``Bipartisan
Social Security Reform Act of 2000.''
(b) Table of Contents.--The table of contents of this Act
is as follows:

Sec. 1. Short title; table of contents.

TITLE I--INDIVIDUAL SAVINGS ACCOUNTS

Sec. 101. Individual savings accounts.
Sec. 102. Social security KidSave Accounts.
Sec. 103. Adjustments to primary insurance amounts under part A of
title II of the Social Security Act.

TITLE II--SOCIAL SECURITY SYSTEM ADJUSTMENTS

Sec. 201. Adjustments to bend points in determining primary insurance
amounts.
Sec. 202. Adjustment of widows' and widowers' insurance benefits.
Sec. 203. Elimination of earnings test for individuals who have
attained early retirement age.
Sec. 204. Gradual increase in number of benefit computation years; use
of all years in computation.
Sec. 205. Maintenance of benefit and contribution base.
Sec. 206. Reduction in the amount of certain transfers to Medicare
Trust Fund.
Sec. 207. Actuarial adjustment for retirement.
Sec. 208. Improvements in process for cost-of-living adjustments.
Sec. 209. Modification of PIA factors to reflect changes in life
expectancy.
Sec. 210. Mechanism for remedying unforeseen deterioration in social
security solvency.

TITLE I--INDIVIDUAL SAVINGS ACCOUNTS

SEC. 101. INDIVIDUAL SAVINGS ACCOUNTS.

(a) Establishment and Maintenance of Individual Savings
Accounts.--Title II of the Social Security Act (42 U.S.C. 401
et seq.) is amended--
(1) by inserting before section 201 the following:

``Part A--Insurance Benefits'';

and
(2) by adding at the end the following:

``Part B--Individual Savings Accounts

``individual savings accounts

``Sec. 251. (a) Establishment.--
``(1) In general.--
``(A) Establishment in absence of kidsave account.--Except
as provided in subparagraph (B), the Commissioner of Social
Security, within 30 days of the receipt of the first
contribution received pursuant to subsection (b) with respect
to an eligible individual, shall establish in the name of
such individual an individual savings account. The individual
savings account shall be identified to the account holder by
means of the account holder's Social Security account number.
``(B) Use of kidsave account.--If a KidSave Account has
been established in the name of an eligible individual under
section 262(a) before the date of the first contribution
received by the Commissioner pursuant to subsection (b) with
respect to such individual, the Commissioner shall
redesignate the KidSave Account as an individual savings
account for such individual.
``(2) Definition of eligible individual.--In this part, the
term `eligible individual' means any individual born after
December 31, 1937.
``(b) Contributions.--
``(1) Amounts transferred from the trust fund.--The
Secretary of the Treasury shall transfer from the Federal
Old-Age and Survivors Insurance Trust Fund, for crediting by
the Commissioner of Social Security to an individual savings
account of an eligible individual, an amount equal to the sum
of any amount received by such Secretary on behalf of such
individual under section 3101(a)(2) or 1401(a)(2) of the
Internal Revenue Code of 1986.
``(2) Other contributions.--For provisions relating to
additional contributions credited to individual savings
accounts, see sections 531(c)(2) and 6402(l) of the Internal
Revenue Code of 1986.
``(c) Designation of Investment Type of Individual Savings
Account.--
``(1) Designation.--Each eligible individual who is
employed or self-employed shall designate the investment type
of individual savings account to which the contributions
described in subsection (b) on behalf of such individual are
to be credited.
``(2) Form of designation.--The designation described in
paragraph (1) shall be made in such manner and at such
intervals as the Commissioner of Social Security may
prescribe in order to ensure ease of administration and
reductions in burdens on employers.
``(3) Special rule for 2001.--Not later than January 1,
2001, any eligible individual that is employed or self-
employed as of such date shall execute the designation
required under paragraph (1).
``(4) Designation in absence of designation by eligible
individual.--In any case in which no designation of the
individual savings account is made, the Commissioner of
Social Security shall make the designation of the individual
savings account in accordance with regulations that take into
account the competing objectives of maximizing returns on
investments and minimizing the risk involved with such
investments.
``(d) Treatment of Incompetent Individuals.--Any
designation under subsection (c)(1) to be made by an
individual mentally incompetent or under other legal
disability may be made by the person who is constituted
guardian or other fiduciary by the law of the State of
residence of the individual or is otherwise legally vested
with the care of the individual or his estate. Payment under
this part due an individual mentally incompetent or under
other legal disability may be made to the person who is
constituted guardian or other fiduciary by the law of the
State of residence of the claimant or is otherwise legally
vested with the care of the claimant or his estate. In any
case in which a guardian or other fiduciary of the individual
under legal disability has not been appointed under the law
of the State of residence of the individual, if any other
person, in the judgment of the Commissioner, is responsible
for the care of such individual, any designation under
subsection (c)(1)

[[Page S5670]]

which may otherwise be made by such individual may be made by
such person, any payment under this part which is otherwise
payable to such individual may be made to such person, and
the payment of an annuity payment under this part to such
person bars recovery by any other person.

``definition of individual savings account; treatment of accounts

``Sec. 252. (a) Individual Savings Account.--In this part,
the term `individual savings account' means any individual
savings account in the Individual Savings Fund (established
under section 254) which is administered by the Individual
Savings Fund Board.
``(b) Treatment of Account.--Except as otherwise provided
in this part and in section 531 of the Internal Revenue Code
of 1986, any individual savings account described in
subsection (a) shall be treated in the same manner as an
individual account in the Thrift Savings Fund under
subchapter III of chapter 84 of title 5, United States Code.

``individual savings account distributions

``Sec. 253. (a) Date of Initial Distribution.--Except as
provided in subsection (c), distributions may only be made
from an individual savings account of an eligible individual
on and after the earliest of--
``(1) the date the eligible individual attains normal
retirement age, as determined under section 216 (or early
retirement age (as so determined) if elected by such
individual), or
``(2) the date on which funds in the eligible individual's
individual savings account are sufficient to provide a
monthly payment over the life expectancy of the eligible
individual (determined under reasonable actuarial
assumptions) which, when added to the eligible individual's
monthly benefit under part A (if any), is at least equal to
an amount equal to \1/12\ of the poverty line (as defined in
section 673(2) of the Community Services Block Grant Act (42
U.S.C. 9902(2) and determined on such date for an individual)
and adjusted annually thereafter by the adjustment determined
under section 215(i).
``(b) Forms of Distribution.--
``(1) Required monthly payments.--Except as provided in
paragraph (2), beginning with the date determined under
subsection (a), the balance in an individual savings account
available to provide monthly payments not in excess of the
amount described in subsection (a)(2) shall be paid, as
elected by the account holder (in such form and manner as
shall be prescribed in regulations of the Individual Savings
Fund Board), by means of the purchase of annuities or equal
monthly payments over the life expectancy of the eligible
individual (determined under reasonable actuarial
assumptions) in accordance with requirements (which shall be
provided in regulations of the Board) similar to the
requirements applicable to payments of benefits under
subchapter III of chapter 84 of title 5, United States Code,
and providing for indexing for inflation.
``(2) Payment of excess funds.--To the extent funds remain
in an eligible individual's individual savings account after
the application of paragraph (1), such funds shall be payable
to the eligible individual in such manner and in such amounts
as determined by the eligible individual, subject to the
provisions of subchapter III of chapter 84 of title 5, United
States Code.
``(c) Distribution in the Event of Death Before the Date of
Initial Distribution.--If the eligible individual dies before
the date determined under subsection (a), the balance in such
individual's individual savings account shall be distributed
in a lump sum, under rules established by the Individual
Savings Fund Board, to the individual's heirs.

``individual savings fund

``Sec. 254. (a) Establishment.--There is established and
maintained in the Treasury of the United States an Individual
Savings Fund in the same manner as the Thrift Savings Fund
under sections 8437, 8438, and 8439 (but not section 8440) of
title 5, United States Code.
``(b) Individual Savings Fund Board.--
``(1) In general.--There is established and operated in the
Social Security Administration an Individual Savings Fund
Board in the same manner as the Federal Retirement Thrift
Investment Board under subchapter VII of chapter 84 of title
5, United States Code.
``(2) Specific investment and reporting duties.--
``(A) In general.--The Individual Savings Fund Board shall
manage and report on the activities of the Individual Savings
Fund and the individual savings accounts of such Fund in the
same manner as the Federal Retirement Thrift Investment Board
manages and reports on the Thrift Savings Fund and the
individual accounts of such Fund under subchapter VII of
chapter 84 of title 5, United States Code.
``(B) Study and report on increased investment options.--
``(i) Study.--The Individual Savings Fund Board shall
conduct a study regarding ways to increase an eligible
individual's investment options with respect to such
individual's individual savings account and with respect to
rollovers or distributions from such account.
``(ii) Report.--Not later than 2 years after the date of
enactment of the Bipartisan Social Security Reform Act of
2000, the Individual Savings Fund Board shall submit a report
to the President and Congress that contains a detailed
statement of the results of the study conducted pursuant to
clause (i), together with the Board's recommendations for
such legislative actions as the Board considers appropriate.

``budgetary treatment of individual savings fund and accounts

``Sec. 255. The receipts and disbursements of the
Individual Savings Fund and any accounts within such fund
shall not be included in the totals of the budget of the
United States Government as submitted by the President or of
the congressional budget and shall be exempt from any general
budget limitation imposed by statute on expenditures and net
lending (budget outlays) of the United States Government.''.
(b) Modification of FICA Rates.--
(1) Employees.--Section 3101(a) of the Internal Revenue
Code of 1986 (relating to tax on employees) is amended to
read as follows:
``(a) Old-Age, Survivors, and Disability Insurance.--
``(1) In general.--
``(A) Individuals covered under part a of title ii of the
social security act.--In addition to other taxes, there is
hereby imposed on the income of every individual who is not a
part B eligible individual a tax equal to 6.2 percent of the
wages (as defined in section 3121(a)) received by him with
respect to employment (as defined in section 3121(b)).
``(B) Individuals covered under part b of title ii of the
social security act.--In addition to other taxes, there is
hereby imposed on the income of every part B eligible
individual a tax equal to 4.2 percent of the wages (as
defined in section 3121(a)) received by such individual with
respect to employment (as defined in section 3121(b)).
``(2) Contribution of oasdi tax reduction to individual
savings accounts.--
``(A) In general.--In addition to other taxes, there is
hereby imposed on the income of every part B eligible
individual an individual savings account contribution equal
to the sum of--
``(i) 2 percent of the wages (as so defined) received by
such individual with respect to employment (as so defined),
plus
``(ii) so much of such wages (not to exceed $2,000) as
designated by the individual in the same manner as described
in section 251(c) of the Social Security Act.
``(B) Inflation adjustment.--
``(i) In general.--In the case of any calendar year
beginning after 2001, the dollar amount in subparagraph
(A)(ii) 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 the calendar year, determined by
substituting `calendar year 2000' for `calendar year 1992' in
subparagraph (B) thereof.

``(ii) Rounding.--If any dollar amount after being
increased under clause (i) is not a multiple of $10, such
dollar amount shall be rounded to the nearest multiple of
$10.''.
(2) Self-employed.--Section 1401(a) of the Internal Revenue
Code of 1986 (relating to tax on self-employment income) is
amended to read as follows:
``(a) Old-Age, Survivors, and Disability Insurance.--
``(1) In general.--
``(A) Individuals covered under part a of the social
security act.--In addition to other taxes, there shall be
imposed for each taxable year, on the self-employment income
of every individual who is not a part B eligible individual
for the calendar year ending with or during such taxable
year, a tax equal to 12.40 percent of the amount of the self-
employment income for such taxable year.
``(B) Individuals covered under part b of title ii of the
social security act.--In addition to other taxes, there is
hereby imposed for each taxable year, on the self-employment
income of every part B eligible individual, a tax equal to
10.4 percent of the amount of the self-employment income for
such taxable year.
``(2) Contribution of oasdi tax reduction to individual
savings accounts.--
``(A) In general.--In addition to other taxes, there is
hereby imposed for each taxable year, on the self-employment
income of every individual, an individual savings account
contribution equal to the sum of--
``(i) 2 percent of the amount of the self-employment income
for each individual for such taxable year, and
``(ii) so much of such self-employment income (not to
exceed $2,000) as designated by the individual in the same
manner as described in section 251(c) of the Social Security
Act.
``(B) Inflation adjustment.--
``(i) In general.--In the case of any taxable year
beginning after 2001, the dollar amount in subparagraph
(A)(ii) 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 the calendar year in which the taxable
year begins, determined by substituting `calendar year 2000'
for `calendar year 1992' in subparagraph (B) thereof.

``(ii) Rounding.--If any dollar amount after being
increased under clause (i) is not a multiple of $10, such
dollar amount shall be rounded to the nearest multiple of
$10.''.
(3) Part b eligible individual.--
(A) Taxes on employees.--Section 3121 of such Code
(relating to definitions) is amended by inserting after
subsection (s) the following:
``(t) Part B Eligible Individual.--For purposes of this
chapter, the term `part B eligible individual' means, for any
calendar year, an individual who is an eligible individual

[[Page S5671]]

(as defined in section 251(a)(2) of the Social Security Act)
for such calendar year.''.
(B) Self-employment tax.--Section 1402 of such Code
(relating to definitions) is amended by adding at the end the
following:
``(k) Part B Eligible Individual.--The term `part B
eligible individual' means, for any calendar year, an
individual who is an eligible individual (as defined in
section 251(a)(2) of the Social Security Act) for such
calendar year.''.
(4) Effective dates.--
(A) Employees.--The amendments made by paragraphs (1) and
(3)(A) apply to remuneration paid after December 31, 2000.
(B) Self-employed individuals.--The amendments made by
paragraphs (2) and (3)(B) apply to taxable years beginning
after December 31, 2000.
(c) Matching Contributions.--
(1) In general.--Part IV of subchapter A of chapter 1 of
the Internal Revenue Code of 1986 (relating to credits
against tax) is amended by adding at the end the following:

``Subpart H--Individual Savings Account Credits

``Sec. 54. Individual savings account credit.''.

``SEC. 54. INDIVIDUAL SAVINGS ACCOUNT CREDIT.

``(a) Allowance of Credit.--Each part B eligible individual
is entitled to a credit for the taxable year in an amount
equal to the sum of--
``(1) $100, plus
``(2) 100 percent of the designated wages of such
individual for the taxable year, plus
``(3) 100 percent of the designated self-employment income
of such individual for the taxable year.
``(b) Limitations.--
``(1) Amount.--The amount determined under subsection (a)
with respect to such individual for any taxable year may not
exceed the excess (if any) of--
``(A) an amount equal to 1 percent of the contribution and
benefit base for such taxable year (as determined under
section 230 of the Social Security Act), over
``(B) the sum of the amounts received by the Secretary on
behalf of such individual under sections 3101(a)(2)(A)(i) and
1401(a)(2)(A)(i) for such taxable year.
``(2) Failure to make voluntary contributions.--In the case
of a part B eligible individual with respect to whom the
amount of wages designated under section 3101(a)(2)(A)(ii)
plus the amount self-employment income designated under
section 1401(a)(2)(A)(ii) for the taxable year is less that
$1, the credit to which such individual is entitled under
this section shall be equal to zero.
``(c) Definitions.--For purposes of this section--
``(1) Part b eligible individual.--The term `part B
eligible individual' means, for any calendar year, an
individual who--
``(A) is an eligible individual (as defined in section
251(a)(2) of the Social Security Act) for such calendar year,
and
``(B) is not an individual with respect to whom another
taxpayer is entitled to a deduction under section 151(c).
``(2) Designated wages.--The term `designated wages' means
with respect to any taxable year the amount designated under
section 3101(a)(2)(A)(ii).
``(3) Designated self-employment income.--The term
`designated self-employment income' means with respect to any
taxable year the amount designated under section
1401(a)(2)(A)(ii) for such taxable year.
``(d) Credit Used Only for Individual Savings Account.--For
purposes of this title, the credit allowed under this section
with respect to any part B eligible individual--
``(1) shall not be treated as a credit allowed under this
part, but
``(2) shall be treated as an overpayment of tax under
section 6401(b)(3) which may, in accordance with section
6402(l), only be transferred to an individual savings account
established under part B of title II of the Social Security
Act with respect to such individual.''.
(2) Contribution of credited amounts to individual savings
account.--
(A) Credited amounts treated as overpayment of tax.--
Subsection (b) of section 6401 of such Code (relating to
excessive credits) is amended by adding at the end the
following:
``(3) Special rule for credit under section 54.--Subject to
the provisions of section 6402(l), the amount of any credit
allowed under section 54 for any taxable year shall be
considered an overpayment.''.
(B) Transfer of credit amount to individual savings
account.--Section 6402 of such Code (relating to authority to
make credits or refunds) is amended by adding at the end the
following:
``(l) Overpayments Attributable to Individual Savings
Account Credit.--In the case of any overpayment described in
section 6401(b)(3) with respect to any individual, the
Secretary shall transfer for crediting by the Commissioner of
Social Security to the individual savings account of such
individual, an amount equal to the amount of such
overpayment.''.
(3) Conforming amendments.--
(A) Section 1324(b)(2) of title 31, United States Code, is
amended by inserting before the period at the end ``, or
enacted by the Bipartisan Social Security Reform Act of
2000''.
(B) The table of subparts for part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 is amended by
adding at the end the following:

``Subpart H. Individual Savings Account Credits.''.
(4) Effective date.--The amendments made by this subsection
shall apply to refunds payable after December 31, 2000.
(d) Tax Treatment of Individual Savings Accounts.--
(1) In general.--Subchapter F of chapter 1 of the Internal
Revenue Code of 1986 (relating to exempt organizations) is
amended by adding at the end the following:

``PART IX--INDIVIDUAL SAVINGS FUND AND ACCOUNTS

``Sec. 531. Individual Savings Fund and Accounts.

``SEC. 531. INDIVIDUAL SAVINGS FUND AND ACCOUNTS.

``(a) General Rule.--The Individual Savings Fund and
individual savings accounts shall be exempt from taxation
under this subtitle.
``(b) Individual Savings Fund and Accounts Defined.--For
purposes of this section, the terms `Individual Savings Fund'
and `individual savings account' means the fund and account
established under sections 254 and 251, respectively, of part
B of title II of the Social Security Act.
``(c) Contributions.--
``(1) In general.--No deduction shall be allowed for
contributions credited to an individual savings account under
section 251 of the Social Security Act or section 6402(l).
``(2) Rollover of inheritance.--Any portion of a
distribution to an heir from an individual savings account
made by reason of the death of the beneficiary of such
account may be rolled over to the individual savings account
of the heir after such death.
``(d) Distributions.--
``(1) In general.--Any distribution from an individual
savings account under section 253 of the Social Security Act
shall be included in gross income under section 72.
``(2) Period in which distributions must be made from
account of decedent.--In the case of amounts remaining in an
individual savings account from which distributions began
before the death of the beneficiary, rules similar to the
rules of section 401(a)(9)(B) shall apply to distributions of
such remaining amounts.
``(3) Rollovers.--Paragraph (1) shall not apply to amounts
rolled over under subsection (c)(2) in a direct transfer by
the Commissioner of Social Security, under regulations which
the Commissioner shall prescribe.''.
(2) Clerical amendment.--The table of parts for subchapter
F of chapter 1 of such Code is amended by adding after the
item relating to part VIII the following:

``Part IX. Individual savings fund and accounts.''.
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after December 31,
2000.

SEC. 102. SOCIAL SECURITY KIDSAVE ACCOUNTS.

Title II of the Social Security Act (42 U.S.C. 401 et
seq.), as amended by section 101(a), is amended by adding at
the end the following:

``Part C--KidSave Accounts

``kidsave accounts

``Sec. 261. (a) Establishment.--The Commissioner of Social
Security shall establish in the name of each individual born
on or after January 1, 1995, a KidSave Account upon the later
of--
``(1) the date of enactment of this part, or
``(2) the date of the issuance of a Social Security account
number under section 205(c)(2) to such individual.
The KidSave Account shall be identified to the account holder
by means of the account holder's Social Security account
number.
``(b) Contributions.--
``(1) In general.--There are authorized to be appropriated
and are appropriated such sums as are necessary in order for
the Secretary of the Treasury to transfer from the general
fund of the Treasury for crediting by the Commissioner to
each account holder's KidSave Account under subsection (a),
an amount equal to the sum of--
``(A) in the case of any individual born on or after
January 1, 2001, $1,000, on the date of the establishment of
such individual's KidSave Account, and
``(B) in the case of any individual born on or after
January 1, 1995, $500, on the 1st, 2nd, 3rd, 4th, and 5th
birthdays of such individual occurring on or after January 1,
2001.
``(2) Adjustment for inflation.--For any calendar year
after 2001, each of the dollar amounts under paragraph (1)
shall be increased by the cost-of-living adjustment using the
wage increase percentage determined under section 215(i) for
the calendar year.
``(c) Designations Regarding KidSave Accounts.--
``(1) Initial designations of investment vehicle.--A person
described in subsection (d) shall, on behalf of the
individual described in subsection (a), designate the
investment vehicle for the KidSave Account to which
contributions on behalf of such individual are to be
deposited. Such designation shall be made on the application
for such individual's Social Security account number.
``(2) Changes in investment vehicles.--The Commissioner
shall by regulation provide the time and manner by which an
individual or a person described in subsection (d) on behalf
of such individual may change 1 or more investment vehicles
for a KidSave Account.

[[Page S5672]]

``(d) Treatment of Minors and Incompetent Individuals.--Any
designation under subsection (c) to be made by a minor, or an
individual mentally incompetent or under other legal
disability, may be made by the person who is constituted
guardian or other fiduciary by the law of the State of
residence of the individual or is otherwise legally vested
with the care of the individual or his estate. Payment under
this part due a minor, or an individual mentally incompetent
or under other legal disability, may be made to the person
who is constituted guardian or other fiduciary by the law of
the State of residence of the claimant or is otherwise
legally vested with the care of the claimant or his estate.
In any case in which a guardian or other fiduciary of the
individual under legal disability has not been appointed
under the law of the State of residence of the individual, if
any other person, in the judgment of the Commissioner, is
responsible for the care of such individual, any designation
under subsection (c) which may otherwise be made by such
individual may be made by such person, any payment under this
part which is otherwise payable to such individual may be
made to such person, and the payment of an annuity payment
under this part to such person bars recovery by any other
person.

``definitions and special rules

``Sec. 262. (a) Kidsave Accounts.--In this part, the term
`KidSave Account' means any KidSave Account in the Individual
Savings Fund (established under section 254) which is
administered by the Individual Savings Fund Board.
``(b) Treatment of Accounts.--
``(1) In general.--Except as provided in paragraph (2), any
KidSave Account described in subsection (a) shall be treated
in the same manner as an individual savings account under
part B.
``(2) Distributions.--Notwithstanding any other provision
of law, distributions may only be made from a KidSave Account
of an individual on or after the earlier of--
``(A) the date on which the individual begins receiving
benefits under this title, or
``(B) the date of the individual's death.''.

SEC. 103. ADJUSTMENTS TO PRIMARY INSURANCE AMOUNTS UNDER PART
A OF TITLE II OF THE SOCIAL SECURITY ACT.

(a) In General.--Section 215 of the Social Security Act (42
U.S.C. 415) is amended by adding at the end the following:

``Adjustment of Primary Insurance Amount in Relation to Deposits Made
to Individual Savings Accounts and KidSave Accounts

``(j)(1) Except as provided in paragraph (2), an
individual's primary insurance amount as determined in
accordance with this section (before adjustments made under
subsection (i)) shall be equal to--
``(A) the amount which would be so determined without the
application of this subsection, multiplied by
``(B) 1 minus the ratio of--
``(i) the sum of--
``(I) the total of all amounts which have been credited
pursuant to sections 3101(a)(2)(A)(i) and 1401(a)(2)(A)(i) of
the Internal Revenue Code of 1986 to the individual savings
account held by such individual, plus
``(II) 50 percent of the accumulated value of the KidSave
Account (established on behalf of such individual under
section 261(a)) determined on the date such KidSave Account
is redesignated as an individual savings account held by such
individual under section 251(a)(1)(B), plus
``(III) accrued interest on such amounts compounded
annually up to the date of initial benefit entitlement based
on the individual's earnings, assuming an interest rate equal
to the projected interest rate of the Federal Old-Age and
Survivors Trust Fund, to
``(ii) the expected present value of all future benefits
paid based on the individual's earnings, as of the date of
initial benefit entitlement based on such earnings, assuming
future mortality and interest rates for the Federal Old-Age
and Survivors Trust Fund used in the intermediate projections
of the most recent Board of Trustees report under section
201.
``(2) In the case of an individual who becomes entitled to
disability insurance benefits under section 223, such
individual's primary insurance amount shall be determined
without regard to paragraph (1).''.
(b) Conforming Amendment to Railroad Retirement Act of
1974.--Section 1 of the Railroad Retirement Act of 1974 (45
U.S.C. 231) is amended by adding at the end the following:
``(s) In applying applicable provisions of the Social
Security Act for purposes of determining the amount of the
annuity to which an individual is entitled under this Act,
section 215(j) of the Social Security Act and part B of title
II of such Act shall be disregarded.''.
(c) Effective Date.--The amendments made by this section
shall apply with respect to computations and recomputations
of primary insurance amounts occurring after December 31,
2000.

TITLE II--SOCIAL SECURITY SYSTEM ADJUSTMENTS

SEC. 201. ADJUSTMENTS TO BEND POINTS IN DETERMINING PRIMARY
INSURANCE AMOUNTS.

(a) Additional Bend Point.--Section 215(a)(1)(A) of the
Social Security Act (42 U.S.C. 415(a)(1)(A)) is amended--
(1) in clause (ii), by striking ``and'' at the end;
(2) in clause (iii)--
(A) by striking ``15 percent'' and inserting ``32
percent'';
(B) by striking ``clause (ii),'' and inserting the
following: ``clause (ii) but do not exceed the amount
established for purposes of this clause by subparagraph (B),
and''; and
(3) by inserting after clause (iii) the following:
``(iv) 15 percent of the individual's average indexed
monthly earnings to the extent that such earnings exceed the
amount established for purposes of clause (iii),''.
(b) Initial Level of Additional Bend Point.--Section
215(a)(1)(B)(i) of such Act (42 U.S.C. 415(a)(1)(B)(i)) is
amended--
(1) by striking ``clause (i) and (ii)'' and inserting
``clauses (i) and (iii)''; and
(2) by adding at the end the following: ``For individuals
who initially become eligible for old-age or disability
insurance benefits, or who die (before becoming eligible for
such benefit), in the calendar year 2001, the amount
established for purposes of clause (ii) of subparagraph (A)
shall be equal to 197.5 percent of the amount established for
purposes of clause (i).''.
(c) Adjustments to PIA Formula Factors.--Section
215(a)(1)(B) of such Act (42 U.S.C. 415(a)(1)(B)) is amended
further--
(1) by redesignating clause (iii) as clause (iv);
(2) by inserting after clause (ii) the following:
``(iii) For individuals who initially become eligible for
old-age or disability insurance benefits, or who die (before
becoming eligible for such benefits), in any calendar year
after 2005, effective for such calendar year--
``(I) the percentage in effect under clause (ii) of
subparagraph (A) shall be equal to the percentage in effect
under such clause for calendar year 2005 increased the
applicable number of times by 3.8 percentage points,
``(II) the percentage in effect under clause (iii) of
subparagraph (A) shall be equal to the percentage in effect
under such clause for calendar year 2005 decreased the
applicable number of times by 1.2 percentage points, and
``(III) the percentage in effect under clause (iv) of
subparagraph (A) shall be equal to the percentage in effect
under such clause for calendar year 2005 decreased the
applicable number of times by 0.5 percentage points.
For purposes of the preceding sentence, the term `applicable
number of times' means a number equal to the lesser of 10 or
the number of years beginning with 2006 and ending with the
year of initial eligibility or death.''; and
(3) in clause (iv) (as redesignated), by striking
``amount'' and inserting ``dollar amount''.
(d) Effective Date.--The amendments made by this section
shall apply with respect to primary insurance amounts of
individuals attaining early retirement age (as defined in
section 216(l) of the Social Security Act), or dying, after
December 31, 2000.

SEC. 202. ADJUSTMENT OF WIDOWS' AND WIDOWERS' INSURANCE
BENEFITS.

(a) Widow's Benefit.--Section 202(e)(2)(A) of the Social
Security Act (42 U.S.C. 402(e)(2)(A)) is amended by striking
``equal to'' and all that follows and inserting ``equal to
the greater of--
``(i) the primary insurance amount (as determined for
purposes of this subsection after application of
subparagraphs (B) and (C)) of such deceased individual, or
``(ii) the lesser of--
``(I) the applicable percentage of the joint benefit which
would have been received by the widow or surviving divorced
wife and the deceased individual for such month if such
individual had not died, or
``(II) the benefit which would have been received by the
widow or surviving divorced wife if such individual's
contributions were based on the maximum contribution and
benefit base amount (determined under section 230) for each
contribution base year (as determined under section
215(b)(2)(B)(ii)) of such individual.
For purposes of clause (ii)(I), the applicable percentage is
equal to 50 percent in 2001, increased (but not above 75
percent) by 1 percentage point in every second year
thereafter.''.
(b) Widower's Benefit.--Section 202(f)(3)(A) of the Social
Security Act (42 U.S.C. 402(b)(3)(A)) is amended by striking
``equal to'' and all that follows and inserting ``equal to
the greater of--
``(i) the primary insurance amount (as determined for
purposes of this subsection after application of
subparagraphs (B) and (C)) of such deceased individual, or
``(ii) the lesser of--
``(I) the applicable percentage of the joint benefit which
would have been received by the widow or surviving divorced
wife and the deceased individual for such month if such
individual had not died, or
``(II) the benefit which would have been received by the
widower or surviving divorced husband if such individual's
contributions were based on the maximum contribution and
benefit base amount (determined under section 230) for each
contribution base year (as determined under section
215(b)(2)(B)(ii)) of such individual.
For purposes of clause (ii)(II), the applicable percentage is
equal to 50 percent in 2001, increased (but not above 75
percent) by 1 percentage point in every second year
thereafter.''.
(c) Effective Date.--The amendments made by this section
shall apply individuals entitled to benefits after the date
of enactment of this Act.

[[Page S5673]]

SEC. 203. ELIMINATION OF EARNINGS TEST FOR INDIVIDUALS WHO
HAVE ATTAINED EARLY RETIREMENT AGE.

(a) In General.--Section 203 of the Social Security Act (42
U.S.C. 403) is amended--
(1) in subsection (c)(1), by striking ``retirement age''
and inserting ``early retirement age'';
(2) in paragraphs (1)(A) and (2) of subsection (d), by
striking ``retirement age'' each place it appears and
inserting ``early retirement age'';
(3) in subsection (f)(1)(B), by striking ``retirement age''
and inserting ``early retirement age'';
(4) in subsection (f)(3)--
(A) by striking ``33\1/3\ percent'' and all that follows
through ``any other individual,'' and inserting ``50 percent
of such individual's earnings for such year in excess of the
product of the exempt amount as determined under paragraph
(8),''; and
(B) by striking ``retirement age'' and inserting ``early
retirement age'';
(5) in subsection (f)(5)(D)(i), by striking ``retirement
age'' and inserting ``early retirement age'';
(6) in subsection (f)(9)--
(A) by striking ``, (5)(D)(i), and (8)(D)'' and inserting
``and (5)(D)(i)''; and
(B) by striking ``retirement age'' both places it appears
and inserting ``early retirement age'';
(7) in subsection (h)(1)(A), by striking ``retirement age
(as defined in section 216(l))'' each place it appears and
inserting ``early retirement age (as defined in section
216(l))''; and
(8) in subsection (j)--
(A) in the heading, by striking ``Retirement Age'' and
inserting ``Early Retirement Age''; and
(B) by striking ``having attained retirement age (as
defined in section 216(l))'' and inserting ``having attained
early retirement age (as defined in section 216(l))''.
(b) Conforming Amendments Eliminating the Special Exempt
Amount for Individuals Who Have Attained Age 62.--
(1) Uniform exempt amount.--Section 203(f)(8)(A) of the
Social Security Act (42 U.S.C. 403(f)(8)(A)) is amended by
striking ``the new exempt amounts (separately stated for
individuals described in subparagraph (D) and for other
individuals) which are to be applicable'' and inserting ``a
new exempt amount which shall be applicable''.
(2) Conforming amendments.--Section 203(f)(8)(B) of the
Social Security Act (42 U.S.C. 403(f)(8)(B)) is amended--
(A) in the matter preceding clause (i), by striking
``Except'' and all that follows through ``whichever'' and
inserting ``The exempt amount which is applicable for each
month of a particular taxable year shall be whichever'';
(B) in clauses (i) and (ii), by striking ``corresponding''
each place it appears; and
(C) in the last sentence, by striking ``an exempt amount''
and inserting ``the exempt amount''.
(3) Repeal of basis for computation of special exempt
amount.--Subparagraphs (D) and (E) of section 203(f)(8) of
the Social Security Act (42 U.S.C. 403(f)(8)) are repealed.
(c) Additional Conforming Amendments.--
(1) Elimination of redundant references to retirement
age.--Section 203 of the Social Security Act (42 U.S.C. 403)
is amended--
(A) in subsection (c), in the last sentence, by striking
``nor shall any deduction'' and all that follows and
inserting ``nor shall any deduction be made under this
subsection from any widow's or widower's insurance benefit if
the widow, surviving divorced wife, widower, or surviving
divorced husband involved became entitled to such benefit
prior to attaining age 60.''; and
(B) in subsection (f)(1), by striking clause (D) and
inserting the following: ``(D) for which such individual is
entitled to widow's or widower's insurance benefits if such
individual became so entitled prior to attaining age 60,''.
(2) Provisions relating to earnings taken into account in
determining substantial gainful activity of blind
individuals.--The second sentence of section 223(d)(4) of
such Act (42 U.S.C. 423(d)(4)) is amended by striking ``if
section 102 of the Senior Citizens' Right to Work Act of 1996
had not been enacted'' and inserting the following: ``if the
amendments to section 203 made by section 102 of the Senior
Citizens' Right to Work Act of 1996 and by the Bipartisan
Social Security Reform Act of 2000 had not been enacted''.
(d) Study of the Effect of Taking Earnings Into Account in
Determining Substantial Gainful Activity of Disabled
Individuals.--
(1) In general.--Not later than February 15, 2001, the
Commissioner of Social Security shall conduct a study on the
effect that taking earnings into account in determining
substantial gainful activity of individuals receiving
disability insurance benefits has on the incentive for such
individuals to work and submit to Congress a report on the
study.
(2) Contents of study.--The study conducted under paragraph
(1) shall include the evaluation of--
(A) the effect of the current limit on earnings on the
incentive for individuals receiving disability insurance
benefits to work;
(B) the effect of increasing the earnings limit or changing
the manner in which disability insurance benefits are reduced
or terminated as a result of substantial gainful activity
(including reducing the benefits gradually when the earnings
limit is exceeded) on--
(i) the incentive to work; and
(ii) the financial status of the Federal Disability
Insurance Trust Fund;
(C) the effect of extending eligibility for the Medicare
program to individuals during the period in which disability
insurance benefits of the individual are gradually reduced as
a result of substantial gainful activity and extending such
eligibility for a fixed period of time after the benefits are
terminated on--
(i) the incentive to work; and
(ii) the financial status of the Federal Hospital Insurance
Trust Fund and the Federal Supplementary Medical Insurance
Trust Fund; and
(D) the relationship between the effect of substantial
gainful activity limits on blind individuals receiving
disability insurance benefits and other individuals receiving
disability insurance benefits.
(3) Consultation.--The analysis under paragraph (2)(C)
shall be done in consultation with the Administrator of the
Health Care Financing Administration.
(e) Effective Date.--The amendments and repeals made by
subsections (a), (b), and (c) shall apply with respect to
taxable years ending after December 31, 2002.

SEC. 204. GRADUAL INCREASE IN NUMBER OF BENEFIT COMPUTATION
YEARS; USE OF ALL YEARS IN COMPUTATION.

(a) In General.--Section 215(b)(2)(A) of the Social
Security Act (42 U.S.C. 415(b)(2)(A)) is amended--
(1) in clause (i), by striking ``5 years'' and inserting
``the applicable number of years for purposes of this
clause''; and
(2) by striking ``Clause (ii),'' in the matter following
clause (ii) and inserting the following:
``For purposes of clause (i), the applicable number of years
is the number of years specified in connection with the year
in which such individual reaches early retirement age (as
defined in section 216(l)(2)), or, if earlier, the calendar
year in which such individual dies, as set forth in the
following table:

The applicable number of years is:
2002...............................................................4.
2003...............................................................4.
2004...............................................................3.
2005...............................................................3.
2006...............................................................2.
2007...............................................................2.
2008...............................................................1.
2009...............................................................1.
After 2009.........................................................0.
Notwithstanding the preceding sentence, the applicable number
of years is 5, in the case of any individual who is entitled
to old-age insurance benefits, and has a spouse who is also
so entitled (or who died without having become so entitled)
who has greater total wages and self-employment income
credited to benefit computation years than the individual.
Clause (ii),''.
(b) Use of All Years in Computation.--
(1) In general.--Section 215(b)(2)(B) of the Social
Security Act (42 U.S.C. 415(b)(2)(B)) is amended by striking
clauses (i) and (ii) and inserting the following:
``(i)(I) for calendar years after 2001 and before 2010, the
term `benefit computation years' means those computation base
years equal in number to the number determined under
subparagraph (A) plus the applicable number of years
determined under subclause (III), for which the total of such
individual's wages and self-employment income, after
adjustment under paragraph (3), is the largest;
``(II) for calendar years after 2009, the term `benefit
computation years' means all of the computation base years;
and
``(III) for purposes of subclause (I), the applicable
number of years is the number of years specified in
connection with the year in which such individual reaches
early retirement age (as defined in section 216(l)(2)), or,
if earlier, the calendar year in which such individual dies,
as set forth in the following table:

The applicable number of years is:
Before 2002........................................................0.
2002...............................................................1.
2003...............................................................1.
2004...............................................................2.
2005...............................................................2.
2006...............................................................3.
2007...............................................................3.
2008...............................................................4.
2009...............................................................4;
``(ii) the term `computation base years' means the calendar
years after 1950, except that such term excludes any calendar
year entirely included in a period of disability; and''.
(2) Conforming amendment.--Section 215(b)(1)(B) of the
Social Security Act (42 U.S.C. 415(b)(1)(B)) is amended by
striking ``in those years'' and inserting ``in an
individual's computation base years determined under
paragraph (2)(A)''.
(c) Effective Date.--
(1) Subsection (a).--The amendments made by subsection (a)
shall apply with respect to individuals attaining early
retirement age (as defined in section 216(l)(2) of the Social
Security Act) after December 31, 2001.
(2) Subsection (b).--The amendment made by subsection (b)
shall apply to benefit computation years beginning after
December 31, 2000.

SEC. 205. MAINTENANCE OF BENEFIT AND CONTRIBUTION BASE.

(a) In General.--Section 230 of the Social Security Act (42
U.S.C. 430) is amended to read as follows:

[[Page S5674]]

maintenance of the contribution and benefit base

``Sec. 230. (a) The Commissioner of Social Security shall
determine and publish in the Federal Register on or before
November 1 of each calendar year the contribution and benefit
base determined under subsection (b) which shall be effective
with respect to remuneration paid after such calendar year
and taxable years beginning after such year.
``(b) For purposes of this section, for purposes of
determining wages and self-employment income under sections
209, 211, 213, and 215 of this Act and sections 54, 1402,
3121, 3122, 3125, 6413, and 6654 of the Internal Revenue Code
of 1986, and for purposes of section 4022(b)(3)(B) of Public
Law 93-406, the contribution and benefit base with respect to
remuneration paid in (and taxable years beginning in) any
calendar year is an amount equal to 84.5 percent of the total
wages and self-employment income for the preceding calendar
year (within the meaning of section 209).''.
(b) Effective Date.--The amendment made by this section
shall apply to remuneration paid in (and taxable years
beginning in) any calendar year after 2000.

SEC. 206. REDUCTION IN THE AMOUNT OF CERTAIN TRANSFERS TO
MEDICARE TRUST FUND.

Subparagraph (A) of section 121(e)(1) of the Social
Security Amendments of 1983 (42 U.S.C. 401 note), as amended
by section 13215(c)(1) of the Omnibus Budget Reconciliation
Act of 1993, is amended--
(1) in clause (ii), by striking ``the amounts'' and
inserting ``the applicable percentage of the amounts''; and
(2) by adding at the end the following: ``For purposes of
clause (ii), the applicable percentage for a year is equal to
100 percent, reduced (but not below zero) by 10 percentage
points for each year after 2004.''.

SEC. 207. ACTUARIAL ADJUSTMENT FOR RETIREMENT.

(a) Early Retirement.--
(1) In general.--Section 202(q) of the Social Security Act
(42 U.S.C. 402(q)) is amended--
(A) in paragraph (1)(A), by striking ``\5/9\'' and
inserting ``the applicable fraction (determined under
paragraph (12))''; and
(B) by adding at the end the following:
``(12) For purposes of paragraph (1)(A), the `applicable
fraction' for an individual who attains the age of 62 in--
``(A) any year before 2001, is \5/9\;
``(B) 2001, is \7/12\;
``(C) 2002, is \11/18\;
``(D) 2003, is \23/36\;
``(E) 2004, is \2/3\; and
``(F) 2005 or any succeeding year, is \25/36\.''.
(2) Months beyond first 36 months.--Section 202(q) of such
Act (42 U.S.C. 402(q)(9)) (as amended by paragraph (1)) is
amended--
(A) in paragraph (9)(A), by striking ``five-twelfths'' and
inserting ``the applicable fraction (determined under
paragraph (13))''; and
(B) by adding at the end the following:
``(13) For purposes of paragraph (9)(A), the `applicable
fraction' for an individual who attains the age of 62 in--
``(A) any year before 2001, is \5/12\;
``(B) 2001, is \16/36\;
``(C) 2002, is \16/36\;
``(D) 2003, is \17/36\;
``(E) 2004, is \17/36\; and
``(F) 2005 or any succeeding year, is \1/2\.''.
(3) Effective date.--The amendments made by paragraphs (1)
and (2) shall apply to individuals who attain the age of 62
in years after 2000.
(b) Delayed Retirement.--Section 202(w)(6) of the Social
Security Act (42 U.S.C. 402(w)(6)) is amended--
(1) in subparagraph (C), by striking ``and'' at the end;
(2) in subparagraph (D), by striking ``2004.'' and
inserting ``2004 and before 2007;''; and
(3) by adding at the end the following:
``(E) \17/24\ of 1 percent in the case of an individual who
attains the age of 62 in a calendar year after 2006 and
before 2009;
``(F) \3/4\ of 1 percent in the case of an individual who
attains the age of 62 in a calendar year after 2008 and
before 2011;
``(G) \19/24\ of 1 percent in the case of an individual who
attains the age of 62 in a calendar year after 2010 and
before 2013; and
``(H) \5/6\ of 1 percent in the case of an individual who
attains the age of 62 in a calendar year after 2012.''.

SEC. 208. IMPROVEMENTS IN PROCESS FOR COST-OF-LIVING
ADJUSTMENTS.

(a) Annual Declarations of Persisting Upper Level
Substitution Bias, Quality-Change Bias, and New-Product
Bias.--Not later than December 1, 2000, and annually
thereafter, the Commissioner of the Bureau of Labor
Statistics shall publish in the Federal Register an estimate
of the upper level substitution bias, quality-change bias,
and new-product bias retained in the Consumer Price Index,
expressed in terms of a percentage point effect on the annual
rate of change in the Consumer Price Index determined through
the use of a superlative index that accounts for changes that
consumers make in the quantities of goods and services
consumed.
(b) Modification of Cost-of-Living Adjustment.--
(1) In general.--Notwithstanding any other provision of
law, for each calendar year after 2000 any cost-of-living
adjustment described in subsection (f) shall be further
adjusted by the greater of--
(A) the applicable percentage point, or
(B) the correction for the upper level substitution bias,
quality-change bias, and new-product bias (as last published
by the Commissioner of the Bureau of Labor Statistics
pursuant to subsection (a)).
(2) Applicable percentage point.--For purposes of paragraph
(1)(A), the applicable percentage point shall be determined
in accordance with the following table:

Applicable
Calendar year: Percentage Point:
2001.........................................................0.1 ....

2002.........................................................0.2 ....

2003.........................................................0.3 ....

2004 and thereafter.........................................0.33.....

(c) Funding for CPI Improvements.--
(1) In general.--There is hereby appropriated to the Bureau
of Labor Statistics in the Department of Labor, for each of
fiscal years 2001, 2002, and 2003, $60,000,000 for use by the
Bureau for the following purposes:
(A) Research, evaluation, and implementation of a
superlative index to estimate upper level substitution bias,
quality-change bias, and new-product bias in the Consumer
Price Index.
(B) Expansion of the Consumer Expenditure Survey and the
Point of Purchase Survey.
(2) Reports.--The Commissioner of the Bureau of Labor
Statistics shall submit reports regarding the use of
appropriations made under paragraph (1) to the Committee on
Appropriations of the House of Representative and the
Committee on Appropriations of the Senate upon the request of
each Committee.
(d) Information Sharing.--The Commissioner of the Bureau of
Labor Statistics may secure directly from the Secretary of
Commerce information necessary for purposes of calculating
the Consumer Price Index. Upon request of the Commissioner of
the Bureau of Labor Statistics, the Secretary of Commerce
shall furnish that information to the Commissioner.
(e) Administrative Advisory Committee.--The Bureau of Labor
Statistics shall, in consultation with the National Bureau of
Economic Research, the American Economic Association, and the
National Academy of Statisticians, establish an
administrative advisory committee. The advisory committee
shall periodically advise the Bureau of Labor Statistics
regarding revisions of the Consumer Price Index and conduct
research and experimentation with alternative data collection
and estimating approaches.
(f) Cost-of-Living Adjustment Described.--A cost-of-living
adjustment described in this subsection is any cost-of-living
adjustment for a calendar year after 2000 determined by
reference to a percentage change in a consumer price index or
any component thereof (as published by the Bureau of Labor
Statistics of the Department of Labor and determined without
regard to this section) and used in any of the following:
(1) The Internal Revenue Code of 1986.
(2) The provisions of this Act (other than programs under
title XVI and any adjustment in the case of an individual who
attains early retirement age before January 1, 2001).
(3) Any other Federal program.
(g) Recapture of CPI Reform Revenues Deposited Into the
Federal Old-Age and Survivors Insurance Trust Fund.--Section
201 of the Social Security Act (42 U.S.C. 401) is amended by
adding at the end the following:
``(n) On July 1 of each calendar year specified in the
following table, the Secretary of the Treasury shall
transfer, from the general fund of the Treasury to the
Federal Old-Age and Survivors Insurance Trust Fund, an amount
equal to the applicable percentage for such year, specified
in such table, of the total wages paid in and self-employment
income credited to such year.

The applicable percentage for the year is--
0.4 percent.efore 2020.............................................
0.53 percent.fore 2040.............................................
0.67 percent.fore 2060.............................................
0.8 percent.''.....................................................

SEC. 209. MODIFICATION OF PIA FACTORS TO REFLECT CHANGES IN
LIFE EXPECTANCY.

(a) Modification of PIA Factors.--Section 215(a)(1) of the
Social Security Act (42 U.S.C. 415(a)(1)(B)) is amended by
redesignating subparagraph (D) as subparagraph (F) and by
inserting after subparagraph (C) the following:
``(D)(i) For individuals who initially become eligible for
old-age insurance benefits in any calendar year after 2005,
each of the percentages under clauses (i), (ii), (iii), and
(iv) of subparagraph (A) shall be multiplied the applicable
number of times by the applicable factor.
``(ii) For purposes of clause (i)--
``(I) the term `applicable number of times' means a number
equal to the sum of--
``(aa) the number of years beginning with 2006 and ending
with the earlier of 2016 or the year of initial eligibility;
plus
``(bb) if the year of initial eligibility has not occurred,
the number of years beginning with 2023 and ending with the
earlier of 2053 or the year of initial eligibility; and
``(II) the term `applicable factor' means .988 with respect
to the first 6 applicable number of times and .997 with
respect to the applicable number of times in excess of 6.
``(E) For any individual who initially becomes eligible for
disability insurance benefits in any calendar year after
2005, the primary insurance amount for such individual shall
be equal to the greater of--
``(i) such amount as determined under this paragraph, or
``(ii) such amount as determined under this paragraph
without regard to subparagraph (D) thereof.''.

[[Page S5675]]

(b) Study of the Effect of Increases in Life Expectancy.--
(1) Study plan.--Not later than February 15, 2001, the
Commissioner of Social Security shall submit to Congress a
detailed study plan for evaluating the effects of increases
in life expectancy on the expected level of retirement income
from social security, pensions, and other sources. The study
plan shall include a description of the methodology, data,
and funding that will be required in order to provide to
Congress not later than February 15, 2006--
(A) an evaluation of trends in mortality and their
relationship to trends in health status, among individuals
approaching eligibility for social security retirement
benefits;
(B) an evaluation of trends in labor force participation
among individuals approaching eligibility for social security
retirement benefits and among individuals receiving
retirement benefits, and of the factors that influence the
choice between retirement and participation in the labor
force;
(C) an evaluation of changes, if any, in the social
security disability program that would reduce the impact of
changes in the retirement income of workers in poor health or
physically demanding occupations;
(D) an evaluation of the methodology used to develop
projections for trends in mortality, health status, and labor
force participation among individuals approaching eligibility
for social security retirement benefits and among individuals
receiving retirement benefits; and
(E) an evaluation of such other matters as the Commissioner
deems appropriate for evaluating the effects of increases in
life expectancy.
(2) Report on results of study.--Not later than February
15, 2006, the Commissioner of Social Security shall provide
to Congress an evaluation of the implications of the trends
studied under paragraph (1), along with recommendations, if
any, of the extent to which the conclusions of such
evaluations indicate that projected increases in life
expectancy require modification in the social security
disability program and other income support programs.

SEC. 210. MECHANISM FOR REMEDYING UNFORESEEN DETERIORATION IN
SOCIAL SECURITY SOLVENCY.

(a) In General.--Section 709 of the Social Security Act (42
U.S.C. 910) is amended--
(1) by redesignating subsection (b) as subsection (c); and
(2) by striking ``Sec. 709. (a) If the Board of Trustees''
and all that follows through ``any such Trust Fund'' and
inserting the following:
``Sec. 709. (a)(1)(A) If the Board of Trustees of the
Federal Old-Age and Survivors Insurance Trust Fund and the
Federal Disability Insurance Trust Fund determines at any
time, using intermediate actuarial assumptions, that the
balance ratio of either such Trust Fund during any calendar
year within the succeeding period of 75 calendar years will
attain zero, the Board shall promptly submit to each House of
the Congress and to the President a report setting forth its
recommendations for statutory adjustments affecting the
receipts and disbursements of such Trust Fund necessary to
maintain the balance ratio of such Trust Fund at not less
than 20 percent, with due regard to the economic conditions
which created such inadequacy in the balance ratio and the
amount of time necessary to alleviate such inadequacy in a
prudent manner. The report shall set forth specifically the
extent to which benefits would have to be reduced, taxes
under section 1401, 3101, or 3111 of the Internal Revenue
Code of 1986 would have to be increased, or a combination
thereof, in order to obtain the objectives referred to in the
preceding sentence.
``(B) In addition to any reports under subparagraph (A),
the Board shall, not later than May 30, 2001, prepare and
submit to Congress and the President recommendations for
statutory adjustments to the disability insurance program
under title II of this Act to modify the changes in
disability benefits under the Bipartisan Social Security
Reform Act of 2000 without reducing the balance ratio of the
Federal Disability Insurance Trust Fund. The Board shall
develop such recommendations in consultation with the
National Council on Disability, taking into consideration the
adequacy of benefits under the program, the relationship of
such program with old age benefits under such title, and
changes in the process for determining initial eligibility
and reviewing continued eligibility for benefits under such
program.
``(2)(A) The President shall, no later than 30 days after
the submission of the report to the President, transmit to
the Board and to the Congress a report containing the
President's approval or disapproval of the Board's
recommendations.
``(B) If the President approves all the recommendations of
the Board, the President shall transmit a copy of such
recommendations to the Congress as the President's
recommendations, together with a certification of the
President's adoption of such recommendations.
``(C) If the President disapproves the recommendations of
the Board, in whole or in part, the President shall transmit
to the Board and the Congress the reasons for that
disapproval. The Board shall then transmit to the Congress
and the President, no later than 60 days after the date of
the submission of the original report to the President, a
revised list of recommendations.
``(D) If the President approves all of the revised
recommendations of the Board transmitted to the President
under subparagraph (C), the President shall transmit a copy
of such revised recommendations to the Congress as the
President's recommendations, together with a certification of
the President's adoption of such recommendations.
``(E) If the President disapproves the revised
recommendations of the Board, in whole or in part, the
President shall transmit to the Board and the Congress the
reasons for that disapproval, together with such revisions to
such recommendations as the President determines are
necessary to bring such recommendations within the
President's approval. The President shall transmit a copy of
such recommendations, as so revised, to the Board and the
Congress as the President's recommendations, together with a
certification of the President's adoption of such
recommendations.
``(3)(A) This paragraph is enacted by Congress--
``(i) as an exercise of the rulemaking power of the Senate
and the House of Representatives, respectively, and as such
it is deemed a part of the rules of each House, respectively,
but applicable only with respect to the procedure to be
followed in that House in the case of a joint resolution
described in subparagraph (B), and it supersedes other rules
only to the extent that it is inconsistent with such rules;
and
``(ii) with full recognition of the constitutional right of
either House to change the rules (so far as relating to the
procedure of that House) at any time, in the same manner, and
to the same extent as in the case of any other rule of that
House.
``(B) For purposes of this paragraph, the term `joint
resolution' means only a joint resolution which is introduced
within the 10-day period beginning on the date on which the
President transmits the President's recommendations, together
with the President's certification, to the Congress under
subparagraph (B), (D), or (E) of paragraph (2), and--
``(i) which does not have a preamble;
``(ii) the matter after the resolving clause of which is as
follows: `That the Congress approves the recommendations of
the President as transmitted on __ pursuant to section 709(a)
of the Social Security Act, as follows: ____', the first
blank space being filled in with the appropriate date and the
second blank space being filled in with the statutory
adjustments contained in the recommendations; and
``(iii) the title of which is as follows: `Joint resolution
approving the recommendations of the President regarding
social security.'.
``(C) A joint resolution described in subparagraph (B) that
is introduced in the House of Representatives shall be
referred to the Committee on Ways and Means of the House of
Representatives. A joint resolution described in subparagraph
(B) introduced in the Senate shall be referred to the
Committee on Finance of the Senate.
``(D) If the committee to which a joint resolution
described in subparagraph (B) is referred has not reported
such joint resolution (or an identical joint resolution) by
the end of the 20-day period beginning on the date on which
the President transmits the recommendation to the Congress
under paragraph (2), such committee shall be, at the end of
such period, discharged from further consideration of such
joint resolution, and such joint resolution shall be placed
on the appropriate calendar of the House involved.
``(E)(i) On or after the third day after the date on which
the committee to which such a joint resolution is referred
has reported, or has been discharged (under subparagraph (D))
from further consideration of, such a joint resolution, it is
in order (even though a previous motion to the same effect
has been disagreed to) for any Member of the respective House
to move to proceed to the consideration of the joint
resolution. A Member may make the motion only on the day
after the calendar day on which the Member announces to the
House concerned the Member's intention to make the motion,
except that, in the case of the House of Representatives, the
motion may be made without such prior announcement if the
motion is made by direction of the committee to which the
joint resolution was referred. All points of order against
the joint resolution (and against consideration of the joint
resolution) are waived. The motion is highly privileged in
the House of Representatives and is privileged in the Senate
and is not debatable. The motion is not subject to amendment,
or to a motion to postpone, or to a motion to proceed to the
consideration of other business. A motion to reconsider the
vote by which the motion is agreed to or disagreed to shall
not be in order. If a motion to proceed to the consideration
of the joint resolution is agreed to, the respective House
shall immediately proceed to consideration of the joint
resolution without intervening motion, order, or other
business, and the joint resolution shall remain the
unfinished business of the respective House until disposed
of.
``(ii) Debate on the joint resolution, and on all debatable
motions and appeals in connection therewith, shall be limited
to not more than 2 hours, which shall be divided equally
between those favoring and those opposing the joint
resolution. An amendment to the joint resolution is not in
order. A motion further to limit debate is in order and not
debatable. A motion to postpone, or a motion to proceed to
the consideration of other business, or a motion to recommit
the joint resolution is not in order. A motion to reconsider
the vote by which the joint resolution is agreed to or
disagreed to is not in order.

[[Page S5676]]

``(iii) Immediately following the conclusion of the debate
on a joint resolution described in subparagraph (B) and a
single quorum call at the conclusion of the debate if
requested in accordance with the rules of the appropriate
House, the vote on final passage of the joint resolution
shall occur.
``(iv) Appeals from the decisions of the Chair relating to
the application of the rules of the Senate or the House of
Representatives, as the case may be, to the procedure
relating to a joint resolution described in subparagraph (B)
shall be decided without debate.
``(F)(i) If, before the passage by one House of a joint
resolution of that House described in subparagraph (B), that
House receives from the other House a joint resolution
described in subparagraph (B), then the following procedures
shall apply:
``(I) The joint resolution of the other House shall not be
referred to a committee and may not be considered in the
House receiving it except in the case of final passage as
provided in subclause (II).
``(II) With respect to a joint resolution described in
subparagraph (B) of the House receiving the joint resolution,
the procedure in that House shall be the same as if no joint
resolution had been received from the other House, but the
vote on final passage shall be on the joint resolution of the
other House.
``(ii) Upon disposition of the joint resolution received
from the other House, it shall no longer be in order to
consider the joint resolution that originated in the
receiving House.
``(b) If the Board of Trustees of the Federal Hospital
Insurance Trust Fund or the Federal Supplementary Medical
Insurance Trust Fund determines as any time that the balance
ratio of either such Trust Fund.''.
(b) Conforming Amendments.--
(1) Section 709(b) of the Social Security Act (42 U.S.C.
910(b)) (as amended by subsection (a) of this section) is
amended by striking ``any such'' and inserting ``either
such''.
(2) Section 709(c) of such Act (42 U.S.C. 910(c)) (as
redesignated by subsection (a) of this section) is amended by
inserting ``or (b)'' after ``subsection (a)''.
______

By Mr. DORGAN (for himself, Mr. Enzi, Mr. Voinovich, Mr. Breaux,
Mr. Graham, Mr. Hutchinson, Mrs. Lincoln, Mr. Bennett, Mr.
Bryan, Mr. Cleland, and Mr. Thomas):
S. 2775. To foster innovation and technological advancement in the
development of the Internet and electronic commerce, and to assist the
States in simplifying their sales and use taxes; to the Committee on
Finance.

Internet Tax Moratorium and Equity Act

Mr. DORGAN. Mr. President, if the Internet and E-commerce are
to continue to grow and flourish then Congress must address the
difficult tax issues that these have posed. To that end, Senator
Voinovich and I, along with Senators Graham, Enzi, Breaux and six of
our distinguished colleagues are introducing the Internet Tax
Moratorium and Equity Act.
First and foremost, this legislation extends for four additional
years the existing moratorium on punitive and discriminatory Internet
taxes, and on access taxes. Internet technology is becoming a real
growth engine for our economy. Governments should not be allowed to
impose new taxes on access, or to enact discriminatory tax plans that
would apply to the Internet and E-commerce but not to other kinds of
transactions. I believe that such policies could foolishly hurt the
future growth of the Internet industry, and this legislation prevents
that from happening anytime soon.
At the same time, however, this legislation moves toward a solution
to the growing web of tax compliance problems that faces virtually
everyone who would do business across state lines --sellers and
customers alike. Our approach also would help to create a climate in
which Web-based firms and Main Street businesses can co-exist and
compete on fair and even terms.
Any new form of commerce presents a challenge to the rules and
structures that have grown up around the old. The Internet is no
exception. The Internet has raised vexing questions regarding both
privacy and the protection of property rights in writing and music. It
has raised similar questions regarding the revenue systems of the
states and localities of this nation. Not surprisingly, the Internet
simply does not fit neatly into these systems as they have evolved over
the last two hundred years.
This disconnect has created tensions on all sides. On one side are
the vital new businesses--Internet service providers, Web-based
businesses and the rest--worried that they will be singled out as cash
cows and subjected to new and unfair taxes. On the other side are state
and local governments worried about the erosion of their tax bases and
their ability to pay for the schools, police, garbage collection and
more that their taxpayers need and expect. In between are Main Street
merchants who collect sales taxes from their customers and worry about
unfair competition from Web-based business that avoid collecting these
taxes. Let us not forget the citizens and taxpayers, who appreciate the
convenience and opportunities of the Web but who also care about their
Main Street merchants, and about their schools and other local
services.
All of these concerns are valid. There are no bad guys in the drama.
Rather, it is the kind of conflict that a new technology inevitably
poses. The automobile required the reform of traffic-control rules
designed for the horse-and-buggy era. So today the rise of E-commerce
requires an update of tax compliance rules designed primarily for local
commerce. Our job in Congress is not to point fingers but rather to try
to address the problem in a fair and constructive way.
The solution must begin by putting the worries of Web-based
entrepreneurs to rest. They should not be concerned about new and
discriminatory tax burdens, and they should not be singled out as cash
cows. Congress should make this clear. We have enacted a moratorium to
prohibit state and local governments from enacting tax plans that
discriminate against the E-commerce or impose a levy on Internet
access. This existing moratorium is set to expire next year. We should
extend that moratorium to December 2005. That will help clear the air
and also make possible the development of a real solution for the sales
and use tax compliance problems now facing many businesses and and
their customers.
The solution begins with a recognition of the problem. Collecting a
sales tax in a face-to-face transaction on Main Street or at the mall
is a relatively simple process. The seller collects the tax and remits
it to the state or local government. But with remote sales--such as
catalog and Internet sales--it's more difficult. States can not require
a seller to collect a sales tax unless the business has an actual
location or sales people in the state. So most states, and many
localities, have laws that require the local buyer to send an
equivalent ``use tax'' to the state or local government when he or she
did not pay taxes at the time of purchase.
The reality, of course, is that customers almost never do that. It
would be a major inconvenience, and people are not accustomed to paying
sales taxes in that way. So, despite the requirement in the law, most
simply don't do it. This tax, which is already owed, is not paid. For
years, state and local governments could accept this loss because
catalog sales were a relatively minor portion of overall commerce. The
Internet, however, will change that.
Internet and catalog sellers argue that collecting sales taxes would
be a significant burden for them. They contend that they would have to
comply with tax laws from thousands of different jurisdictions--46
states and thousands of local governments have sales taxes. They would
have to deal with many different tax rates and all of the
idiosyncracies regarding what is taxable and what is non-taxable. They
have a point.
However, there are some remote sellers who know they enjoy an
advantage over Main Street businesses and simply do not want to lose
it. They can sell a product without collecting the tax, whereas Main
Street businesses must collect the local sales tax. Main Street
businesses claim that is unfair, and they have a point, too.
As I said, all sides in this debate have valid points, and that is
the premise of the bill we introduce today. There are three basic
principles underlying the Internet Tax Moratorium and Equity Act.
First, we believe that this new Internet technology is becoming a real
growth engine for our economy. Governments should not impose access or
discriminatory taxes that might jeopardize its growth. That's why the
legislation we are introducing extends the current moratorium on
Internet access and multiple and discriminatory taxes on electronic
commerce for over four additional years.

[[Page S5677]]

Second, state and local governments should be encouraged to simplify
their sales tax systems as they apply to remote sellers. And third,
once States have done this, then it is only fair that remote sellers do
their part and collect any use tax that is owed, just as local
merchants collect sales taxes. This simple step would free the consumer
from the burden of having to report such taxes individually. It would
level the playing field for local retailers and others that already
collect and remit such taxes, and it would protect the ability of state
and local governments to provide necessary services for their residents
in the future.
Specifically, the Internet Tax Moratorium and Equity Act would do the
following:
Extend the existing moratorium on Internet access, multiple and
discriminatory taxes through December 31, 2005.
Put Congress on record as urging States and localities to develop a
streamlined sales and use tax system with the advice of the National
Conference of Commissioners on Uniform State Laws. Among other things,
such a system would include a single, blended tax rate with which all
remote sellers could comply. It should also include within each state a
uniform tax base on which remote sellers apply the tax, as well as a
uniform list of exempt items.
Authorize States to enter into an Interstate Sales and Use Tax
Compact through which member States would adopt the streamlined sales
and use tax system. Congressional authority and consent to enter into
such a Compact would expire if it has not occurred by January 1, 2006.
Authorize adopting States to require remote sellers with more than $5
million in annual gross sales to collect and remit sales and use taxes
on remote sales, once twenty States have adopted such Compact, unless
Congress has acted to disapprove the Compact by law within a period of
120 days after the Congress receives it.
Prohibit states that have not adopted the simplified sales and use
tax system from gaining benefit from the authority extended in the bill
to require sellers to collect and remit sales and use taxes on remote
sales.
In my view, it would be a mistake for Congress to adopt a lengthy
extension of the current Internet tax moratorium without addressing the
underlying problem. If we don't, then the growth of the Internet, which
should be a benefit to Americans, will instead mean a major erosion of
funds available to build and maintain schools and roads, finance police
departments and garbage collection, and all the other services that
citizens in this country want and need. One study suggests that states
and local governments soon could be losing more than $20 billion
annually if the Internet industry continues its rapid growth, and if
sales and use tax collection rules are left unchanged.
The competitive crisis facing local retailers is also growing more
urgent. Testimony at a recent congressional hearing makes that clear: A
representative of Wal-Mart testified recently that that company is
incorporating a separate business to put Wal-Mart on the Internet. It
will do so in a manner that will enable them to avoid sales and use
taxes. The reason? Even though Wal-Mart has locations in every state
and therefore would be required to collect such taxes on Internet
sales, it recognizes that other large competitors will be making those
sales tax-free. The company regards such avoidance as a matter of
necessity to remain competitive.
This scenario will play out over and over again. The large retailers
like Wal-Mart will survive; the small Main Street businesses will
struggle. And, there will be a massive loss of revenues to fund schools
and other basic services.
Mr. President, this is an important issue that Congress must address
now. We believe that this legislation strikes a balance between the
interests of the Internet industry, state and local governments, local
retailers and remote sellers. It is workable and fair.
I urge my colleagues to cosponsor this much-needed bipartisan
legislation.
Mr. ENZI. Mr. President, I rise in strong support of the Internet Tax
Moratorium and Equity Act of 2000 introduced today by Senator Dorgan. I
am an original cosponsor and I encourage each of my colleagues to join
me as a cosponsor of this bill. We had to take a look at the Internet
sales tax issue for people who might be using legislative vehicles to
develop huge loopholes in our current system. We are federally
mandating states into a sales tax exemption. We need to preserve the
system for those cities, towns, counties, and states that rely on the
ability to collect the sales tax they are currently getting.
There are some critical issues here that have to be solved to keep
the stability of state and local government--just the stability of it--
not to increase sales tax, just protect what is there right now. I
believe the Internet Tax Moratorium and Equity Act of 2000 is a
monumental step forward in protecting, yet enhancing, the current
system.
Certainly, no Senator wants to take steps that will unreasonably
burden the development and growth of the Internet. At the same time, we
must also be sensitive to issues of basic competitive fairness and the
negative effect our action or inaction can have on brick-and-mortar
retailers, a critical economic sector and employment force in all
American society, especially in rural states like Wyoming. In addition,
we must consider the legitimate need of state and local governments to
have the flexibility they need to generate resources to adequately fund
their programs and operations.
If the loophole exists, I can share a method for local retailers to
avoid sales tax collection too--but creating this loophole will lead to
others--pay attention here. Sales tax collection and federal and state
income tax could be in the same boat, if sole tax collection is no
longer necessary on Internet sales purely by virtue of the sale over
the Internet. Why shouldn't an employee whose check is written on the
Internet and transmitted directly to his bank account not owe any
income tax? Both would be Internet tax loopholes--tax collection
exemptions forced by an all-knowing Federal Government.
As the only accountant in the Senate, I have a unique perspective on
the dozens of tax proposals that are introduced in Congress each year.
In addition, my service on the State and local level and my experiences
as a small business owner enable me to consider these bills from more
than one viewpoint.
I understand the importance of protecting and promoting the growth of
Internet commerce because of its potential economic benefits. It is a
valuable resource because it provides access on demand. In addition, it
is estimated that the growth of online businesses will create millions
of new jobs nationwide in the coming years. Therefore, I do not support
a tax on the use of Internet itself.
I do, however, have concerns about using the Internet as a sales tax
loophole. Sales taxes go directly to state and local governments and I
am very leery of any federal legislation that bypasses their
traditional ability to raise revenue to perform needed services such as
school funding, road repair and law enforcement. I will not force
states into a huge new exemption. While those who advocate a permanent
loophole on the collection of a sales tax over the Internet claim to
represent the principles of tax reduction, they are actually advocating
a tax increase. Simply put, if Congress continues to allow sales over
the Internet to go untaxed and electronic commerce continues to grow as
predicted, revenues to state and local governments will fall and
property taxes will have to be increased to offset lost revenue or
States who do not have or believe in State income taxes will be forced
to start one.

After months of hard work, negotiations, and compromise, the Internet
Tax Moratorium and Equity Act of 2000 has been introduced. I would like
to commend Senator Dorgan on his commitment to finding a solution and
working all parties to find that solution. The bill extends the
existing moratorium on Internet access, multiple, and discriminatory
taxes for an additional four years through December 31, 2005.
Throughout the past several years, we have heard that catalog and
Internet companies say they are willing to allow and collect sales tax
on interstate sales (regardless of traditional or Internet sales) if
States will simplify

[[Page S5678]]

collections to one rate per State sent to one location in that State. I
think that is a reasonable request. I have heard the argument that
computers make it possible to handle several thousand tax entities, but
from an auditing standpoint as well as simplicity for small business, I
support one rate per State. I think the States should have some
responsibility for redistribution not a business forced to do work for
government. Therefore, the bill would put Congress on record as urging
States and localities to develop a streamlined sales and use tax
system, which would include a single, blended tax rate with which all
remote sellers can comply. You need to be aware that States are
prohibited from gaining benefit from the authority extended in the bill
to require sellers to collect and remit sales and use taxes on remote
sales if the States have not adopted the simplified sales and use tax
system.
Further, the bill would authorize States to enter into an Interstate
Sales and Use Tax Compact through which members would adopt the
streamlined sales and use tax system. Congressional authority and
consent to enter into such a compact would expire if it has not
occurred by January 1, 2006. The bill also authorizes States to require
all other sellers to collect and remit sales and use taxes on remote
sales unless Congress has acted to disapprove the compact by law within
a period of 120 days after the Congress receives it.
We introduce this bill because we do not think there is adequate
protection now. It is very important we do not build electronic
loopholes on the Internet, an ever-changing Internet, one that is
growing by leaps and bounds, one that is finding new technology
virtually every day. What we know as the Internet today is not what we
will be using by the time the moratorium is finalized. More and more
people are using the Internet everyday.
Mr. President, I recognize this body has a constitutional
responsibility to regulate interstate commerce. Furthermore, I
understand the desire of several Senators to protect and promote the
growth of Internet commerce. Internet commerce is an exciting field. It
has a lot of growth potential. The new business will continue to create
millions of new jobs in the coming years.
The exciting thing about that for Wyomingites is that our merchants
do not have to go where the people are. For people in my State, that
means their products are no longer confined to a local market. They do
not have to rely on expensive catalogs to sell merchandise to the big
city folks. They do not have to travel all the way to Asia to display
their goods. The customer can come to us on the Internet. It is a
remarkable development, and it will push more growth for small
manufacturers in rural America, especially in my State. We have seen
some of the economic potential in the Internet and will continue this
progress. It is a valuable resource because it provides access on
demand. It brings information to your fingertips when you want it and
how you want it.
I was the mayor of a small town, Gillette, WY, for 8 years. I later
served in the State house for 5 years and the State senate for 5 years.
Throughout my public life I have always worked to reduce taxes, to
return more of people's hard-earned wages to them.
I am not here to argue in favor of taxes. There were times in
Gillette when we had to make tough decisions. I was mayor during the
boom time when the size of our town doubled in just a few years. We had
to be very creative to be sure that our revenue sources would cover the
necessary public services--important services like sewer, water, curb
and gutter, filling in potholes, shoveling snow, collecting garbage,
and mostly water. It is a tough job because the impact of your decision
is felt by all of your neighbors. Hardly any of these problems is
solved without money. When you are the mayor of a small town, you are
on call 24 hours a day. You are in the phone book. People can call you
at night and tell you that the city sewer is backing up into their
house. I was fascinated how they were always sure that it was the
city's sewer that was doing it. Therefore, it is important that we do
not cut towns out of a historic source of revenue. They provides
services you really depend on. Remember you cannot flush your toilet
over the Internet.
The point is that the government that is closest to the people is
also on the shortest time line to get results. I think it is the
hardest work. I am very concerned with any piece of legislation that
mandates or restricts local government's ability to meet the needs of
its citizens. This has the potential to provide electronic loopholes
that will take away all of their revenue. The Internet Tax Moratorium
and Equity Act of 2000 would designate a level playing field for all
involved--business, government, and the consumer.
If the loophole exists, I can share a method for local retailers to
avoid sales tax collection too--but creating this loophole will lead to
others--pay attention here. Sales tax collection and federal and state
income tax could be in the same boat, if sole tax collection is no
longer necessary on Internet sales purely by virtue of the sale over
the Internet. Why shouldn't an employee whose check is written on the
Internet and transmitted directly to his bank account not owe any
income tax? Both would be Internet tax loopholes--tax collection
exemptions forced by an all-knowingly federal government.
I do strongly support this bill. The current system of collecting
revenues for those towns and states should be preserved--preserved on a
level playing field for all involved. I do not think we have all the
answers, or we would not be asking for this bill. So whatever we do, we
have to have a bill that will preserve the way that small business and
small towns function at the present at the present time. Our bill is
critical for towns, small businesses, and you and me. I urge my
colleagues to support it.
I yield the floor.
Mr. GRAHAM. Mr. President, earlier this year, the Senate began
consideration of the Elementary and Secondary Education Act
reauthorization. As its name suggests, that legislation governs how
Federal dollars that go to the States for education will be spent. It
is a very important bill, and I regret that the Senate was unable to
complete consideration of it.
As important as the ESEA reauthorization bill is, however, it is not
the most significant education bill that Congress will deal with in the
next two years. In fact, the most important education bill Congress
will consider won't mention schools or students. It won't reference
classroom size or teacher salaries.
In 1998, Congress passed the Internet Tax Freedom Act. That bill
imposed a three year moratorium on specific state taxes applicable to
the Internet. The legislation didn't affect the states' ability to
impose sales tax on Internet purchases, nor did it fix the unfair
advantage ``e-tailers'' currently have over their main street
competitors with respect to their responsibility to collect sales and
use taxes.
As a result of two Supreme Court rulings, a state is prohibited from
requiring out-of-state retailers from collecting sales tax on purchases
made by its residents if the business has no presence in the state. The
sales tax still applies, it just has to be collected directly from the
purchaser. For a variety of reasons, very little of this tax is ever
collected.
The Internet Tax Freedom Act created the Advisory Commission on
Electronic Commerce which was supposed to come up with a solution to
this problem. Instead the Commission was hijacked by a small group who
opted to demagogue this issue to further their ``anti-tax'' agenda. The
result was a year-long study of an issue with little in the form of
useful recommendations.
The House has passed a five year extension of the moratorium put in
place by the Internet Tax Freedom Act. The Senate also may soon
consider a proposal to extend the temporary ban imposed in 1998. The
game plan of the forces supporting this extended moratorium is clear:
delay, delay, delay. Keep extending the moratorium until there is a
sufficiently large political constituency to permanently block the
collection of sales taxes on purchases made over the Internet.
This is not a hidden agenda. Governor Gilmore, Chairman of the
Advisory Commission on Electronic Commerce stated it clearly when he
said that ``I believe America should ban sales and use taxes on the
Internet permanently, for all time. If we secure tax freedom on the
Internet through 2006, tax freedom on the Internet will become an
entitlement for the American

[[Page S5679]]

people and a political inevitability. No tax collector will be welcome
on the Internet after 2006.''

Let me be clear: this is not about whether purchases made over the
Internet are subject to sales tax. They already are. The question is
whether Internet sellers should have the same responsibility to collect
the sales tax as their Main Street competitors.
If we answer this question with a ``no,'' funding for education will
suffer. Why? Because states have the fundamental responsibility for
financing public education in our country For most states, sales tax
revenue is the primary means by which states fulfill this
responsibility. Because many states rely on sales taxes for their
general revenue, the equation is simple--no collection of sales tax on
the Internet means less money for new schools, teacher salaries, or
textbooks. Six states--Florida, Nevada, South Dakota, Tennessee, Texas
and Washington rely on sales taxes for more than half of their total
tax revenue.
Over the next four years, Internet sales are expected to grow by
nearly $500 billion. If state and local governments are prohibited from
collecting sales taxes on those new sales, they stand to lose close to
$17.5 billion in revenue. Florida's share of that lost revenue could be
$1 billion. When asked why he robbed banks, Willie Sutton replied,
``that's where the money is.'' Today, the money is increasingly on the
Internet.
There is another reason to fix this issue: fairness. No one would
seriously consider a proposal that barred state and local governments
from collecting sales and use taxes from retailers who operate from
green buildings. That would be unfair to those businesses that aren't
located in green buildings. Proposals to arbitrarily benefit the
Internet, however, somehow receive a great deal of attention and
support.
Our position should be clear: no more delays. No more moratoriums
until Congress agrees to a process whereby states can simplify their
sales tax systems and receive the authority they need to require remote
sellers to collect their sales taxes.
The legislation we are introducing today takes the first positive
step in this direction. The bill extends the current moratorium on
Internet access taxes and multiple or discriminatory taxes on the
Internet, a prohibition that virtually all agree should be imposed.
More importantly, however, it establishes a process whereby states
can cooperatively create a model sales and use tax system. Sales tax
laws must be made significantly more uniform across the states, and the
administration of the tax must be substantially overhauled and
simplified. The goal of this legislation is to develop a simple,
uniform, and fair system of sales tax collection. It will reduce the
burden on remote sellers and protect state and local sovereignty.
Once states have adopted this simplified system, they would then have
the authority to require remote sellers to collect and remit sales and
use taxes to the state.
Previous attempts to require remote sellers to collect sales and use
taxes have been criticized on the grounds that it was unreasonable to
require businesses to keep track of the nearly 7,500 state and local
governments levying sales and use taxes. That is a suspect criticism,
particularly for those. Nevertheless, this bill dramatically simplifies
the system for businesses by establishing uniform definitions and fewer
rates.
The streamlined sales and use tax system envisioned by this
legislation follows the guidance offered by the Advisory Commission on
Electronic Commerce. The attributes of this streamlined system include:
A centralized, one-stop, multi-state registration system for sellers;
Uniform definitions for goods or services that would be included in
the tax base;
Uniform and simple rules for attributing transactions to particular
taxing jurisdictions;
Uniform rules for the designation and identification of purchasers
exempt from tax;
Uniform certification procedures for software that sellers may rely
on to determine state and local taxes;
Uniform bad debt rules;
Uniform returns and remittance forms;
Consistent electronic filing and remittance methods;
State administration of State and local sales taxes;
Uniform audit procedures;
Reasonable compensation for tax collection by remote sellers;
Exemption for remote sellers with less than $5 million in annual
sales for the previous year;
Appropriate protections for consumer privacy; and
Such other features that member states deem warranted to promote
simplicity.
Critics of this legislation will argue that it is anti-technology,
and that the Internet must be protected from this threat. That is not
true. The sponsors of this bill yield to no one in their support and
enthusiasm for a vibrant information technology era. But that support
does not necessitate special breaks for companies doing business over
the Internet.
A more appropriate characterization for this legislation is that it
will both assure fairness to all sellers and protect states' abilities
to collect the resources necessary to make the education investments
that will pave the way for the next technological breakthrough--the
next Internet. I hope my colleagues will join us and support this
approach.
______

By Mr. COVERDELL (for himself and Mr. Torricelli):
S. 2776. A bill to amend the Internal Revenue Code of 1986 to
encourage charitable contributions to public charities for the use in
medical research; to the Committee on Finance.

the medical research investment act of 2000

Mr. COVERDELL. Mr. President, today I rise to introduce bipartisan
legislation, the Medical Research Investment Act, or MRI Act, and
privileged to be joined today by Senator Torricelli. The American
people are unique in the world in their spirit of volunterism and
charitable efforts. Unfortunately, the Federal Tax Code quite often
gets in the way.
Congress has made impressive strides to increase resources for
medical research. Last year we passed and enacted an increase of $2.7
billion in funding for the National Institutes of Health. This fourteen
percent increase means this Congress is well on its way to doubling the
Federal support for medical research, as we promised. At the same time,
however, we should not diminish the critical role of private donations.
This is why the MRI Act is so necessary.
While researchers have indeed made impressive breakthroughs in
finding cures. The fight is far from over. For instance, 16 million
Americans live with diabetes mellitus. In fact, I met today a
courageous child, Caity Rigg, who suffers from Juvenile diabetes and
requires four shots of insulin a day just to survive. Diabetes is the
leading cause of kidney failure, blindness, and amputations, and is a
major factor for heart disease, stroke, and birth defects. It shortens
average life expectancy by 15 years and costs the nation in excess of
$100 billion annually.
Cardiovascular diseases, heart attacks and strokes, claimed nearly 1
million lives in the United States in 1997. A third of these deaths
were premature. In 1996, a third of all hospitalization expenditures
were made to Medicare beneficiaries for hospital expenses due to
cardiovascular problems.
This year approximately half a million Americans will die of cancer--
more than 1,500 people per day. It is the second leading cause of death
in the United States, and since 1990, approximately 13 million new
cases have been diagnosed. In 2000, over 1 million new patients will be
stricken.
The MRI Act makes very simple, but very significant changes. First,
it encourages charitable gifts of cash or property for medical research
by increasing the limitations on deductibility from the current 50
percent cap to 80 percent of adjusted gross income. Individuals could
give 30 percent for medical research and 50 percent of income for other
purposes. Or they could give as much as 80 percent of income for
medical research alone. Not only would this benefit medical research,
but it presents the opportunity for other charities to similarly
receive greater support. Further, those who can give more than 80
percent in a year

[[Page S5680]]

may extent the carry-forward for excess charitable gifts for medical
research from five years to ten years.
Second, the MRI Act allows medical research to benefit from incentive
stock option, or ISO's, giving by ending disincentives for taxpayers
who contribute stock from ISO's to medical research. Current law taxes
such transactions at a rate of almost forty percent if stocks are not
held for more than a year. Because of the tax on their gifts, many
taxpayers find they must sell $140 in stock for every $100 they wish to
donate because of the taxes on their gifts. In addition to this change,
no ordinary income, capital gains or alternative minimum tax would be
imposed on medical research gifts.
Accordingly to an estimate by Price Waterhouse Coopers, the MRI Act
would release more than 1 billion in new donations to medical research
over the next 5 years. For many research efforts, it could mean the
difference between finding cures or not. Our proposal enjoys broad
support from the medical research community.
Alliance for Aging Research, American Association for Cancer
Research, ALS Association (Lou Gehrigs's Disease), American Society of
Cell Biologists, Cancer Treatment Research Foundation, Coalition of
National Cancer Cooperative Groups, Cure for Lymphoma, Friends of
Cancer Research, International Foundation for Anticancer Drug
Discovery, Juvenile Diabetes Foundation for Parkinson's Research,
Oncology Nursing Society, Prevent Blindness America, Research to
Prevent Blindness, and Society for Women's Health Research.
In closing, I encourage my colleagues to join us in supporting the
MRI Act and look forward to its consideration. I ask unanimous consent
that a copy of my proposed legislation appear in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 2776

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

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Medical Research Investment
Act of 2000''.

SEC. 2. INCREASE IN LIMITATION ON CHARITABLE DEDUCTION FOR
CONTRIBUTIONS FOR MEDICAL RESEARCH.

(a) In General.--Paragraph (1) of section 170(b) of the
Internal Revenue Code of 1986 (relating to percentage
limitations) is amended by adding at the end the following
new subparagraph:
``(G) Special limitation with respect to certain
contributions for medical research.--
``(i) In general.--Any medical research contribution shall
be allowed to the extent that the aggregate of such
contributions does not exceed the lesser of--

``(I) 80 percent of the taxpayer's contribution base for
any taxable year, or
``(II) the excess of 80 percent of the taxpayer's
contribution base for the taxable year over the amount of
charitable contributions allowable under subparagraphs (A)
and (B) (determined without regard to subparagraph (C)).

``(ii) Carryover.--If the aggregate amount of contributions
described in clause (i) exceeds the limitation of such
clause, such excess shall be treated (in a manner consistent
with the rules of subsection (d)(1)) as a medical research
contribution in each of the 10 succeeding taxable years in
order of time.
``(iii) Treatment of capital gain property.--In the case of
any medical research contribution of capital gain property
(as defined in subparagraph (C)(iv)), subsection (e)(1) shall
apply to such contribution.
``(iv) Medical research contribution.--For purposes of this
subparagraph, the term `medical research contribution' means
a charitable contribution--

``(I) to an organization described in clauses (ii), (iii),
(v), or (vi) of subparagraph (A), and
``(II) which is designated for the use of conducting
medical research.

``(v) Medical research.--For purposes of this subparagraph,
the term `medical research' has the meaning given such term
under the regulations promulgated under subparagraph (A)(ii),
as in effect on the date of the enactment of this
subparagraph.''.
(b) Conforming Amendments.--
(1) Section 170(b)(1)(A) of the Internal Revenue Code of
1986 is amended in the matter preceding clause (i) by
inserting ``(other than a medical research contribution)''
after ``contribution''.
(2) Section 170(b)(1)(B) of such Code is amended by
inserting ``or a medical research contribution'' after
``applies''.
(3) Section 170(b)(1)(C)(i) of such Code is amended by
striking ``subparagraph (D)'' and inserting ``subparagraph
(D) or (G)''.
(4) Section 170(b)(1)(D)(i) of such Code is amended--
(A) in the matter preceding subclause (I), by inserting
``or a medical research contribution'' after ``applies'', and
(B) in the second sentence, by inserting ``(other than
medical research contributions)'' before the period.
(c) Effective Date.--The amendments made by this section
shall apply--
(1) to contributions made in taxable years beginning after
December 31, 2000, and
(2) to contributions made on or before December 31, 2000,
but only to the extent that a deduction would be allowed
under section 170 of the Internal Revenue Code of 1986 for
the taxable years beginning after December 31, 1999, had
section 170(b)(1)(G) of such Code (as added by this section)
applied to such contributions when made.

SEC. 3. TREATMENT OF CERTAIN INCENTIVE STOCK OPTIONS.

(a) Amt Adjustments.--Section 56(b)(3) of the Internal
Revenue Code of 1986 (relating to treatment of incentive
stock options) is amended--
(1) by striking ``Section 421'' and inserting the
following:
``(A) In general.--Except as provided in subparagraph (B),
section 421'', and
(2) by adding at the end the following new subparagraph:
``(B) Exception for certain medical research stock.--

``(i) In general.--This paragraph shall not apply in the
case of a medical research stock transfer.
``(ii) Medical research stock transfer.--For purposes of
clause (i), the term `medical research stock transfer' means
a transfer--

``(I) of stock which is traded on an established securities
market,
(II) of stock which is acquired pursuant to the exercise of
an incentive stock option within the same taxable year as
such transfer occurs, and
``(III) which is a medical research contribution (as
defined in section 170(b)(1)(G)(iv)).''.
(b) Nonrecognition of Certain Incentive Stock Options.--
Section 422(c) of the Internal Revenue Code of 1986 (relating
to special rules) is amended by adding at the end the
following new paragraph:
``(8) Medical research contributions.--For purposes of this
section and section 421, the transfer of a share of stock
which is a medical research stock transfer (as defined in
section 56(b)(3)(B)) shall be treated as meeting the
requirements of subsection (a)(1).''.
(c) Effective Date.--The amendments made by this section
shall apply to transfers of stock made after the date of the
enactment of this Act.
______

By Mr. SARBANES (for himself, Mr. Warner, Mr. Robb, and Ms.
Mikulski):
S. 2777. A bill to amend the National Oceanic and Atmospheric
Administration Authorization Act of 1992 to revise and enhance
authorities, and to authorize appropriations, for the Chesapeake Bay
Office, and for other purposes; to the Committee on Commerce, Science,
and Transportation.

THE NOOA CHESAPEAKE BAY OFFICE REAUTHORIZATION ACT OF 2000

Mr. SARBANES. Mr. President, today I am introducing legislation,
together with my colleagues, Senators Warner, Robb and Mikulski, to
reauthorize and enhance the NOAA Chesapeake Bay Program office. This
office, which was first established in 1992 pursuant to Public Law 102-
567, serves as the focal point for all of NOAA's activities within the
Chesapeake Bay watershed and is a vital part of the effort to achieve
the long-term goal of the Bay Program--restoring the Bay's living
resources to healthy and balanced levels.
As the lead Federal agency responsible for marine science, NOAA has
played a critical role in the restoration of the Chesapeake Bay and its
living marine resources. Since 1984, when the Agency first signed a
Memorandum of Understanding with EPA to participate in the Chesapeake
Bay Program as a full Federal partner, NOAA has supported scientific
investigations and conducted other important activities ranging from
fisheries stock assessments to monitoring of algal blooms and tracking
changes in tidal wetlands. This research has been essential to
improving our understanding of the impacts of climate, harvest and
pollution on the decline of anadromous fish, oysters and other marines
species in the Bay and helping to develop management strategies for
restoring living resources.
In order to better integrate NOAA's diverse efforts in the Bay region
and provide a clear focal point within NOAA for Chesapeake Bay
initiatives, in 1991 I introduced legislation to create a NOAA
Chesapeake Bay Office or NCBO. The legislation authorized $2.5 million
a year for the program and prescribed the office's principal functions
as coordination, strategy development, technical and financial
assistance and research dissemination. That legislation was
incorporated in an overall

[[Page S5681]]

NOAA authorization bill and became Public Law 102-567. To implement the
initiative, NOAA established an office in Annapolis under the
administration of the National Marine Fisheries Service and has been
funding peer-reviewed research directed at the Bay's living resource
problems, providing scientific expertise and technical assistance to
Bay Program partners, working to involve other relevant NOAA elements
in the Bay restoration and participating in a wide variety of Bay
Program projects and activities. During the past eight years, the NCBO
has made great strides in realizing the objectives of the NOAA
Authorization Act of 1992 and the overall Bay Program living resource
goals. Working with other Bay Program Partners, important progress has
been made in surveying and assessing fishery resources in the Bay,
developing fishery management plans for selected species, undertaking
habitat restoration projects, removing barriers to fish passage, and
undertaking important remote sensing and data analysis activities.
NOAA's responsibilities to the Bay restoration effort are far from
complete, however. Some populations of major species of fish and
shellfish in Chesapeake Bay such as shad and oysters, remain severely
depressed, while others, such as blue crab are at risk. Bay-wide, some
16 of 25 ecologically important species are in decline or severe
decline, due to disease, habitat loss, over-fishing and other factors.
The underwater grasses that once sustained these fisheries are only at
a fraction of their historic levels. Research and monitoring must be
continued and enhanced to track living resource trends, evaluate the
responses of the estuary's biota to changes in their environment and
establish clear management goals and progress indicators for restoring
the productivity, diversity and abundance of these species. Chesapeake
2000, the soon-to-be-signed new Bay Agreement, has identified several
living resource goals which will require strong NOAA involvement to
achieve.

The legislation which I am introducing would provide NOAA with
additional resources and authority necessary to ensure its continued
full participation in the Bay's restoration and in meeting with goals
and objectives of Chesapeake 2000. First, this measure would move
administration and oversight of the NOAA Bay Office from the National
Marine Fisheries Service (NMFS) to the Office of the Undersecretary to
help facilitate the pooling of all of NOAA's talents and take better
advantage of NOAA's multiple capabilities. In addition to NMFS there
are four other line offices within NOAA with programs and
responsibilities critical to the Bay restoration effort--the Office of
Oceanic and Atmospheric Research, National Ocean Service, National
Weather Service, and National Environmental Satellite, Data and
Information Service. Getting these different line offices to pool their
resources and coordinate their activities is a serious challenge when
they do not have a direct stake or clear line of responsibility to the
Chesapeake Bay Program. Placing the NOAA Bay office within the Under
Secretary's Office will help assure the coordination of activities
across all line organizations of NOAA.
Second, the legislation authorizes and directs NOAA to undertake a
special five-year study, in cooperation with the scientific community
of the Chesapeake Bay and appropriate other federal agencies, to
develop the knowledge base required for understanding multi-species
interactions and developing multi-species management plans. To date,
fisheries management in Chesapeake Bay and other waters, has been
largely based upon single-species plans that often ignore the critical
relationships between water and habitat quality, ecosystem health and
the food webs that support the Bay's living resources. There is a
growing consensus between scientific leaders and managers alike that we
must move beyond the one-species-at-a-time approach toward a wider,
multi-species and ecosystem perspective. Chesapeake 2000 calls for
developing multi-species management plans for targeted species by the
year 2005 and implementing the plans by 2007. In order to achieve these
goals, NOAA must take a leadership role and support a sustained
research and monitoring program.
Third, the legislation authorizes NOAA to carry out a small-scale
fishery and habitat restoration grant and technical assistance program
to help citizens organizations and local governments in the Chesapeake
Bay watershed undertake habitat, fish and shellfish restoration
projects. Experience has shown that, with the proper tools and
training, citizens' groups and local communities can play a tremendous
role in fisheries and habitat protection and restoration efforts. The
Chesapeake Bay Foundation's oyster gardening program, for example, has
proven to be highly successful in training citizens to grow oysters at
their docks to help restore oysters' populations in the Bay. The new
Bay Agreement has identified a critical need to not only to expand and
promote community-based programs but to restore historic levels of
oyster production, restore living resource habitat and submerged
aquatic vegetation. The NOAA small-grants program, which this bill
would authorize, would complement EPA's Chesapeake Bay small watershed
program, and make ``seed'' grants available on a competitive, cost-
sharing basis to local governments and nonprofit organizations to
implement hands-on projects such as improvement of fish passageways,
creating artificial or natural reefs, restoring wetlands and sea-grass
beds, and producing oysters for restoration projects.
Fourth, the legislation would establish an internet-based Coastal
Predictions Center for the Chesapeake Bay. Resource managers and
scientists alike agree that we must make better use of the various
modeling and monitoring systems and new technologies to improve
prediction capabilities and response to physical and chemical events
within the Bay and tributary rivers. There are substantial amounts of
data collected and compiled by Federal, state and local government
agencies and academic institutions including information on weather,
tides, currents, circulation, climate, land use, coastal environmental
quality, aquatic living resources and habitat conditions.
Unfortunately, little of this data is coordinated and organized in a
manner that is useful to the wide range of potential users. The Coastal
Predictions Center would serve as a knowledge bank for assembling
monitoring and modeling data from relevant government agencies and
academic institutions, interpreting that data, and organizing it into
products that are useful to resource managers, scientists and the
public.
Finally, the legislation would increase the authorization for the
NOAA Bay Program from the current level of $2.5 million to $6 million
per year to enhance current activities and to carry out these new
initiatives. For more than a decade, funding for NOAA's Bay Program has
remained static at an annual average of $1.9 million. If we are to
achieve the ultimate, long-term goal of the Bay Program--protecting,
restoring and maintaining the health of the living resources of the
Bay--additional financial resources must be provided.
Mr. President, this legislation will provide an important boost to
our efforts to restore the Bay's living resources. It is strongly
supported by the Chesapeake Bay Commission, the Chesapeake Bay
Foundation and members of the scientific community. I ask unanimous
consent that the full text of the measure and supporting letters be
printed in the Record immediately following my statement.
There being no objection, the material was ordered to be printed in
the Record, as follows:

S. 2777

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

SECTION 1. SHORT TITLE.

This Act may be cited as the ``NOAA Chesapeake Bay Office
Reauthorization Act of 2000''.

SEC. 2. CHESAPEAKE BAY OFFICE.

(a) Establishment.--Section 307(a) of the National Oceanic
and Atmospheric Administration Authorization Act of 1992 (15
U.S.C. 1511d(a)) is amended--
(1) in paragraph (1), by striking ``Estuarine Resources'';
and
(2) by striking paragraph (2) and inserting the following:
``(2) Administration.--
``(A) In general.--Beginning not later than 60 days after
the date of enactment of this subparagraph, the Office shall
be administered by the Office of the Under Secretary of
Commerce for Oceans and Atmosphere.

[[Page S5682]]

``(B) Director.--The Secretary of Commerce shall appoint as
Director of the Office an individual who has knowledge of and
experience in research or resource management efforts in the
Chesapeake Bay.''.
(b) Functions.--Section 307(b) of the National Oceanic and
Atmospheric Administration Authorization Act of 1992 (15
U.S.C. 1511d(b)) is amended--
(1) by striking paragraph (3) and inserting the following:
``(3) coordinate the programs and activities of the various
organizations within the National Oceanic and Atmospheric
Administration and the Chesapeake Bay Regional Sea Grant
Programs, including--
``(A) programs and activities in--
``(i) coastal and estuarine research, monitoring, and
assessment;
``(ii) fisheries research and stock assessments;
``(iii) data management;
``(iv) remote sensing;
``(v) coastal management;
``(vi) habitat conservation and restoration; and
``(vii) atmospheric deposition; and
``(B) programs and activities of the Cooperative Oxford
Laboratory of the National Ocean Service with respect to--
``(i) nonindigenous species;
``(ii) marine species pathology;
``(iii) human pathogens in marine environments; and
``(iv) ecosystems health;''; and
(2) in paragraph (7), by striking the period at the end and
inserting the following: ``, which report shall include an
action plan consisting of--
``(A) a list of recommended research, monitoring, and data
collection activities necessary to continue implementation of
the strategy described in paragraph (2); and
``(B) proposals for--
``(i) continuing and new National Oceanic and Atmospheric
Administration activities in the Chesapeake Bay; and
``(ii) the integration of those activities with the
activities of the partners in the Chesapeake Bay Program to
meet the commitments of the Chesapeake 2000 agreement and
subsequent agreements.''.
(c) Conforming Amendment.--Section 307 of the National
Oceanic and Atmospheric Administration Authorization Act of
1992 (15 U.S.C. 1511d) is amended by striking the section
heading and inserting the following:

``SEC. 307. CHESAPEAKE BAY OFFICE.''.

SEC. 3. MULTIPLE SPECIES MANAGEMENT STRATEGY; CHESAPEAKE BAY
FISHERY AND HABITAT RESTORATION SMALL GRANTS
PROGRAM; COASTAL PREDICTION CENTER.

The National Oceanic and Atmospheric Administration
Authorization Act of 1992 is amended by inserting after
section 307 (15 U.S.C. 1511d) the following:

``SEC. 307A. MULTIPLE SPECIES MANAGEMENT STRATEGY.

``(a) In General.--Not later than 180 days after the date
of enactment of this section, the Director of the Chesapeake
Bay Office of the National Oceanic and Atmospheric
Administration shall commence a 5-year study, in cooperation
with the scientific community of the Chesapeake Bay and
appropriate Federal agencies--
``(1) to determine and expand the understanding of the role
and response of living resources in the Chesapeake Bay
ecosystem; and
``(2) to develop a multiple species management strategy for
the Chesapeake Bay.
``(b) Required Elements of Study.--In order to improve the
understanding necessary for the development of the strategy
under subsection (a), the study shall--
``(1) determine the current status and trends of fish and
shellfish that live in the Chesapeake Bay estuaries and are
selected for study;
``(2) evaluate and assess interactions among the fish and
shellfish described in paragraph (1) and other living
resources, with particular attention to the impact of changes
within and among trophic levels; and
``(3) recommend management actions to optimize the return
of a healthy and balanced ecosystem for the Chesapeake Bay.

``SEC. 307B. CHESAPEAKE BAY FISHERY AND HABITAT RESTORATION
SMALL GRANTS PROGRAM.

``(a) In General.--The Director of the Chesapeake Bay
Office of the National Oceanic and Atmospheric Administration
(referred to in this section as the `Director'), in
cooperation with the Chesapeake Executive Council (as defined
in section 307(e)), shall carry out a community-based fishery
and habitat restoration small grants and technical assistance
program in the Chesapeake Bay watershed.
``(b) Projects.--
``(1) Support.--The Director shall make grants under the
program under subsection (a) to pay the Federal share of the
cost of projects that are carried out by eligible entities
described in subsection (c) for the restoration of fisheries
and habitats in the Chesapeake Bay.
``(2) Federal share.--The Federal share under paragraph (1)
shall not exceed 75 percent.
``(3) Types of projects.--Projects for which grants may be
made under the program include--
``(A) the improvement of fish passageways;
``(B) the creation of natural or artificial reefs or
substrata for habitats;
``(C) the restoration of wetland or sea grass;
``(D) the production of oysters for restoration projects;
and
``(E) the restoration of contaminated habitats in the
Chesapeake Bay watershed.
``(c) Eligible Entities.--The following entities are
eligible to receive grants under the program under this
section:
``(1) The government of a political subdivision of a State
in the Chesapeake Bay watershed and the government of the
District of Columbia.
``(2) An organization in the Chesapeake Bay watershed (such
as an educational institution or a community organization)
that is described in section 501(c) of the Internal Revenue
Code of 1986 and is exempt from taxation under section 501(a)
of that Code.
``(d) Additional Requirements.--The Director may prescribe
any additional requirements, including procedures, that the
Director considers necessary to carry out the program under
this section.

``SEC. 307C. COASTAL PREDICTION CENTER.

``(a) Establishment.--
``(1) In general.--Not later than 1 year after the date of
enactment of this section, the Director of the Chesapeake Bay
Office of the National Oceanic and Atmospheric Administration
(referred to in this section as the `Director'), in
collaboration with regional scientific institutions, shall
establish a coastal prediction center for the Chesapeake Bay
(referred to in this section as the `center').
``(2) Purpose of center.--The center shall serve as a
knowledge bank for--
``(A) assembling, integrating, and modeling coastal
information and data from appropriate government agencies and
scientific institutions;
``(B) interpreting the data; and
``(C) organizing the data into predictive products that are
useful to policy makers, resource managers, scientists, and
the public.
``(b) Activities.--
``(1) Information and prediction system.--The center shall
develop an Internet-based information system for integrating,
interpreting, and disseminating coastal information and
predictions concerning--
``(A) climate;
``(B) land use;
``(C) coastal pollution;
``(D) coastal environmental quality;
``(E) ecosystem health and performance;
``(F) aquatic living resources and habitat conditions; and
``(G) weather, tides, currents, and circulation that affect
the distribution of sediments, nutrients, and organisms,
coastline erosion, and related physical and chemical events
within the Chesapeake Bay and the tributaries of the
Chesapeake Bay.
``(2) Agreements to provide data, information, and
support.--The Director may enter into agreements with other
entities of the National Oceanic and Atmospheric
Administration, other appropriate Federal, State, and local
government agencies, and academic institutions, to provide
and interpret data and information, and provide appropriate
support, relating to the activities of the center.
``(3) Agreements relating to information products.--The
Director may enter into grants, contracts, and interagency
agreements with eligible entities for the collection,
processing, analysis, interpretation, and electronic
publication of information products for the center.''.

SEC. 4. AUTHORIZATION OF APPROPRIATIONS.

(a) In General.--Section 307 of the National Oceanic and
Atmospheric Administration Authorization Act of 1992 (15
U.S.C. 1511d) is amended by striking subsection (d) and
inserting the following:
``(d) Authorization of Appropriations.--
``(1) In general.--There is authorized to be appropriated
to the Department of Commerce for the Chesapeake Bay Office
$6,000,000 for each of fiscal years 2001 through 2004.
``(2) Amounts for new programs.--Of the amount authorized
to be appropriated for each fiscal year under paragraph (1)--
``(A) not more than $2,500,000 shall be available to carry
out section 307A;
``(B) not more than $1,000,000 shall be available to carry
out section 307B; and
``(C) not more than $500,000 shall be available to carry
out section 307C.''.
(b) Conforming Amendment.--Section 2 of the National
Oceanic and Atmospheric Administration Marine Fisheries
Program Authorization Act (Public Law 98-210; 97 Stat. 1409)
is amended by striking subsection (e) (106 Stat. 4285).

SEC. 5. TECHNICAL CORRECTION.

Section 307(b) of the National Oceanic and Atmospheric
Administration Authorization Act of 1992 (15 U.S.C. 1511d(b))
is amended by striking ``Chesapeake Bay Executive Council''
and inserting ``Chesapeake Executive Council''.

Chesapeake Bay Commission,

June 12, 2000.
Hon. Paul S. Sarbanes,
U.S. Senate, Hart Senate Office Building, Washington, DC
Dear Senator Sarbanes: We understand that you will soon be
introducing legislation to reauthorize NOAA's Chesapeake Bay
Program. This broadened, $6 million reauthorization would
allow NOAA to better address multi-species management issues,
to establish a complementary grants program in support of
local community projects throughtout the Bay, and to make
additional contributions that enhance the restoration of
oysters in the estuary.

[[Page S5683]]

This legislation provides another enhanced mechanism for
meeting the ambitious restoration and protection goals
contained in the Chesapeake 2000 agreement that we and our
Bay partners are signing on June 28. The members of the
Chesapeake Bay Commission look forward to the enactment on
this NOAA reauthorization and offer our full support and
assistance as it moves through the Congress.
Sincerely,
Bill Bolling,
Chairman.
Brian E. Frosh,
Vice-Chairman.
Arthur D. Hershey,
Vice-Chairman.
____

Chesapeke Bay Foundation,

June 20, 2000.
Hon. Paul S. Sarbanes,
Hart Building,
Washington, DC.
Dear Senator Sarbanes: The Chesapeake Bay Foundation fully
supports your new bill that would reauthorize and enhance the
NOAA Chesapeake Bay Program. We greatly appreciate your
leadership on this legislation and your persistent pursuit of
a restored Bay.
The NOAA Bay Program originally was authorized in 1992 and
has been a major contributor in protecting and restoring the
Bay. The NOAA Bay office has provided a clear focal point
within NOAA for Chesapeake Bay initiatives, involving all
relevant NOAA entities in Bay restoration efforts, managing
peer-reviewed research, and strengthening NOAA's interactions
with Chesapeake Bay partners.
One of the NOAA Bay Program's yearly achievements is its
fishery stock assessment. This work is crucial to gauging and
managing the health of the Bay's fisheries. In addition, the
NOAA Bay Program contributes to ecosystem management,
community-based restoration activities, data analysis, and
information management. NOAA Bay Program employees
participate on Chesapeake Bay Program committees and they
chair the Chesapeake Bay Environmental Effects Committee and
the Chesapeake Bay Stock Assessment Committee.
Recently, the NOAA Bay Program made a major commitment to
restoring the Bay's oyster population, which provides vital
filtering of polluted water and unique habitat for marine
life. CBF views restoring the oyster population as one of the
most important steps we can take to restore the health of the
Bay.
This new bill would consolidate authority for the Program's
base funding with other line item programs, such as oyster
recovery and multi-species initiatives. Moreover, the bill
requires the NOAA Bay Program to help the Bay states meet the
goals of the Chesapeake 2000 Agreement. The small watershed
grants section, which is a new initiative, would be used for
projects like Susquehanna River fish passages, oyster reef
reconstruction, and other citizen-led, hands-on projects.
Lastly, the bill increases authorization to $6 million each
year to carry out these activities. The Chesapeake Bay is the
most productive estuary in the world and its vast fisheries
and marine resources deserve that level of commitment from
the federal government.
This bill represents a tremendous boost for CBF's and
NOAA's efforts to Save the Bay. We look forward to working
with you to secure passage of this exciting new legislation.
Very Truly Yours,
Michael F. Hirshfield, PhD.,
Vice-President, Resource Protection.
______

By Mr. KOHL (for himself, Mr. DeWine, Mr. Specter, Mr. Leahy, Mr.
Grassley, and Mr. Feingold):
S. 2778. A bill to amend the Sherman Act to make oil-producing and
exporting cartels illegal; to the Committee on the Judiciary.

the no oil producing and exporting cartels (nopec) act of 2000

Mr. KOHL. Mr. President, we have all watched in the last few weeks as
gas prices have skyrocketed across the country, reaching an average
price for regular gas of $ 1.68 per gallon. The situation is even worse
in Wisconsin and other Midwestern states. The Milwaukee Journal
Sentinel reported on June 21 that the average price in Milwaukee for
regular gas has reached $2.05 per gallon, and reports of consumers
paying as much as $2.30 or more are not uncommon. We need to take
action, and take action now, to combat this unjustified rise in gas
prices that takes hard-earned dollars away from average citizens every
time they visit the gas pump. It is for this reason that I rise today,
with my colleagues Senators DeWine, Specter, Leahy, and Grassley, to
introduce the ``No Oil Producing and Exporting Cartels Act of 2000'',
``NOPEC''.
We have all heard many explanations offered for this rise in gas
prices. Some say that the oil companies are gouging consumers. Some
blame disruptions in supply. Others point to the EPA requirement
mandating use of a new and more expensive type of ``reformulated'' gas
in the Midwest. Some even claim that refiners and distributors are
illegally fixing prices, and I am glad to see that the Federal Trade
Commission, at the request of the Wisconsin delegation and Senator
DeWine, has now launched an investigation to figure out if these
allegations are true. And these are just a few of the reasons that have
been offered.
But one cause of these escalating prices is indisputable. This is the
price fixing conspiracy of the OPEC nations, a conspiracy that for
years has unfairly driven up the cost of imported crude oil to satisfy
the greed of the oil exporters. We have long decried OPEC but, sadly,
until now no one has tried to take any action to put it out of
business. NOPEC will, for the first time, establish, clearly and
plainly, that when a group of competing oil producers like OPEC agrees
to act together to restrict supply or set prices they are violating
U.S. law, and it will authorize the Attorney General or FTC to file
suit under the antitrust laws for redress. Our bill will also make
plain that the nations of OPEC cannot hide behind the doctrines of
``Sovereign Immunity'' or ``Act of State'' to escape the reach of
American justice.
Even under current law, there is no doubt that the actions of the
international oil cartel would be in gross violation of our most basic
principles of antitrust law as nothing more than an illegal price
fixing scheme if this cartel was a group of international private
companies rather than foreign governments. But OPEC members have used
the shield of ``sovereign immunity'' to escape accountability for their
price-fixing. The Federal Sovereign Immunities Act, though, already
recognizes that the ``commercial'' activity of nations is not protected
by sovereign immunity. And it is hard to imagine an activity that is
more obviously commercial than selling oil for profit, as the OPEC
nations do. Our legislation will correct one erroneous twenty-year-old
lower federal court holding and establish that sovereign immunity
doctrine will not divest a U.S. court from jurisdiction to hear a
lawsuit alleging that members of the oil cartel are violating antitrust
law.
Mr. President, in recent years a consensus has developed in
international law that certain basic standards are universal, and that
the international community can, and should, take action when a nation
violates these fundamental standards. The response of the international
community to ethnic cleansing in the former Yugoslavia and action by
the courts of Britain to recognize that Mr. Pinochet could be held
accountable in Britain for allegations of human rights abuses and
torture that occurred when he was President of Chile are two prominent
examples. The rogue actions of the international oil cartel should be
treated no differently. The most fundamental principle of a free market
is that competitors cannot be permitted to conspire to limit supply or
fix price. This principle is the foundation upon which the entire body
of competition law rests. In this era of increasing globalization, when
we truly need to open international markets to ensure the prosperity of
all, we should not permit any nation to flout this fundamental
principle.
Our NOPEC legislation will, for the first time, enable our
authorities to take legal action to combat the illegitimate price-
fixing conspiracy of the oil cartel and will, at a minimum, have a real
deterrent effect on nations that seek to join forces to fix oil prices
to the detriment of consumers. For these reasons, I urge that my
colleagues support this bill so that our nation will finally have an
effective means to combat this selfish conspiracy of oil-rich nations.
Mr. DeWINE. Mr. President, today Senators Kohl, Specter, Leahy,
Grassley, Feingold, and I have introduced the ``No Oil Producing and
Exporting Cartels Act of 2000'', NOPEC. We do so to address the long-
standing problem of foreign governments acting in the commercial arena
to fix, allocate, and establish production and price levels of
petroleum products.
More than two months ago, Senators Specter, Kohl, Thurmond, Schumer,
Biden, and I sent a letter to the President asking him to seriously
consider legal action to put an end to the cartel behavior of OPEC
nations. The White House has failed to take any action,

[[Page S5684]]

and it appears that there are some within the Administration who
believe there may be legal stumbling blocks to such a lawsuit. During
the time in which the Administration has failed to take action, we have
witnessed gas prices begin to rise again. Most notable are the
unexplainable, sharp price increases in several Midwestern states.
These price increases have harmed many in Ohio and across the Midwest.
There is no relief in sight. Many are speculating about the cause of
the price-spikes. One cause is indisputable--the unacceptably high
price of imported crude oil set by the OPEC cartel.
Nation after nation has adopted antitrust enforcement principles that
recognize the illegality of price fixing and other restraints of trade.
Yet OPEC is undeterred, and continues to flout broadly accepted legal
principles and artificially restrains the production of oil. It is time
for internationally recognized principles of competition to operate in
the oil and petroleum industry--just as they do in other markets.
The purpose of NOPEC is simple and straightforward. It makes clear
that the U.S. enforcement agencies may bring antitrust enforcement
actions against foreign states which violate antitrust laws in the
production and sale of oil and other petroleum products, and it
establishes that the district courts have jurisdiction and authority to
consider such cases.
NOPEC does this by amending the Sherman Antitrust Act and the Foreign
Sovereign Immunities Act, ``FSIA''. Under FSIA, the governmental
activities of foreign governments are immune from the jurisdiction of
the federal courts. A lower federal court has ruled--we believe
erroneously--that the conduct of OPEC nations in relation to oil
production and exportation are governmental, not commercial activities,
and thus immune. NOPEC corrects this ruling, and clarifies the law,
specifically removing immunity from foreign governments when they are
engaged in the limitation of the production or distribution of oil and
other petroleum products. NOPEC also makes clear that the federal
courts should not decline to make a determination on the merits of an
action brought under NOPEC based on the ``act of state'' doctrine.
This legislation will send a strong signal to OPEC nations that their
agreements restrain trade and harm American consumers. This will no
longer be accepted. Our legislation will allow the U.S. enforcement
agencies to do their jobs and enforce the antitrust laws.
______

By Mr. SANTORUM (for himself, Mr. Lieberman, Mr. Abraham, Mr.
Kohl, Mr. Hutchinson, Mr. Torricelli, and Mr. Kerry):
S. 2779. A bill to provide for the designation of renewal communities
and to provide tax incentives relating to such communities, to provide
a tax credit to taxpayers investing in entities seeking to provide
capital to create new markets in low-income communities, and to provide
for the establishment of Individual Development Accounts (IDAs), and
for other purposes; to the Committee on Finance.

the american community renewal and new markets empowerment act

Mr. KERRY. Mr. President, today I am joining colleagues on both sides
of the aisle to introduce the American Community Renewal and New
Markets Empowerment Act. Demonstrating that Congress can constructively
work together and find common ground, we--Senators Lieberman,
Torricelli, Kohl, Santorum, Abraham, and Hutchinson--unveiled a plan
that creates economic incentives to help close America's wealth gap.
Among many important initiatives, our plan includes my new markets
legislation that I introduced last September, S. 1594, the Community
Development and Venture Capital Act, and full funding for Round II of
Empowerment Zones.
This plan builds on the President's and Speaker's agreement by
securing full, mandatory funding for Massachusett's Empowerment Zone.
So far, the money has dribbled in--only $6.6 million of the $100
million authorized over ten years--and made it impossible for the city
to implement a plan for economic self-sufficiency. Some 80 public and
private entities, from universities to technology companies to banks to
local government, showed incredible community spirit and committed to
matching the EZ money, eight to one. Let me say it another way--these
groups agreed to match the $100 million in Federal Empowerment Zone
money with $800 million. Yet, regrettably, in spite of this incredible
alliance, the city of Boston has not been able to tap into that
leveraged money and implement the strategic plan because Congress
hasn't held its part of the bargain. I am extremely pleased that we
were able to work together and find a way to provide full, steady
funding to these zones. That money means education, daycare,
transportation and basic health care in areas--in Massachusetts that
includes 57,000 residents who live in Roxbury, Dorchester and
Mattipan--where almost 50 percent of the children are living in poverty
and nearly half the residents over 25 don't even have a high school
diploma.
Mr. President, this bill also includes an initiative that I
introduced last year called the Community Development and Venture
Capital Act. Its purpose is to stimulate economic development through
public-private partnerships that invest venture capital in smaller
businesses that are located in impoverished rural and urban areas,
known as new markets, or that employ low-income people. We call these
areas new markets because of the overlooked business opportunities.
According to Michael Porter, a respected professor at Harvard and
business analyst who has written extensively on competitiveness, ``. .
. inner cities are the largest underserved market in America, with many
tens of billions of dollars of unmet consumer and business demand.''
Both innovative and fiscally sound, my new markets initiative is
financially structured similar to Small Business Administration
(SBA's), successful Small Business Investment Company (SBIC), program,
and incorporates a technical assistance component similar to that
successfully used in SBA's microloan program. However, unlike the SBIC
program which focuses solely on small businesses with high-growth
potential and claims successes such as Staples and Calaway Golf, the
New Markets Venture Capital program will focus on smaller businesses
that show promise of financial and social returns, such as jobs--what
we call a ``double bottomline.''
To get at the complex and deep-rooted economic problems in new market
areas, my initiative has three parts: a venture capital program to
funnel investment money into our poorest communities, a program to
expand the number of venture capital firms that are devoted to
investing in such communities, and a mentoring program to link
established, successful businesses with businesses and entrepreneurs in
stagnant or deteriorating communities in order to facilitate the
learning curve.
What I'm trying to do as Ranking Member of the Small Business
Committee, and have been working with the SBA to achieve, is expand
investment in our neediest communities by building on the economic
activity created by loans. I think one of the most effective ways to do
that is to spur venture capital investment in our neediest communities.
But, Mr. President, this bill even goes further than funding
empowerment zones and establishing incentives to attract venture
capital into distressed communities. It enhances education
opportunities, creates individual development accounts to help low-
income families save and invest in their future, increases affordable
housing, improves access to technology in our classrooms and creates
incentives to help communities remediate brownfields.
Before closing, I want to thank my colleauges for working so hard on
this compromise and for their admirable willingness to put aside our
differences for a larger purpose.

____________________