Congressional Record, Volume 147 Issue 10 (Thursday, January 25, 2001)

[Congressional Record Volume 147, Number 10 (Thursday, January 25, 2001)]
[Senate]
[Pages S568-S587]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Mr. WELLSTONE (for himself, Mr. Harkin, Mr. Feingold, Mr.
Conrad, and Mr. Dorgan):
S. 178. A bill to permanently reenact chapter 12 of title 11, United
States Code, relating to family farmers; to the Committee on the
Judiciary.
Mr. WELLSTONE. Mr. President, I rise today along with Senators
Harkin, Feingold, Conrad, and Dorgan to introduce legislation that
would make permanent Chapter 12 of the U.S. Bankruptcy Code.
Chapter 12, the Chapter of the Bankruptcy Code designated for
farmers, provides critical protection for family farmers who find
themselves in desperate economic circumstances. Ideally, the goal of
federal farm policy should be to sustain the ability of family farmers
to produce and sell a competitive product, to preserve healthy and
viable rural communities and to keep family farmers out of bankruptcy.
However, when farmers are forced to seek bankruptcy protection, Chapter
12, because it is tailored specifically to farmers, often allows the
farmer to keep his or her farm while reorganizing debt and making
payments to creditors.
Extension of Chapter 12 is made all the more urgent by the current
state of the farm economy. Prices are now so low that many family
farmers are lucky to stay in business as market prices are lower than
their cost of production. The value of field crops is expected to have
been more than 24 percent lower in 2000 than it was in 1996--42 percent
lower for wheat, 39 percent lower for corn, and 26 percent lower for
soybeans. But farmers' expenses are not falling by the same amount. In
fact, they are not falling at all. Farmers cannot maintain cash flow if
their selling prices are falling through the floor while their buying
prices are shooting through the roof.
Chapter 12 expired on June 30th of last year. Efforts last year to
extend it or to make it permanent were held hostage to controversial
bankruptcy ``reform'' legislation and, as a result, Congress adjourned
in December without taking any action to reinstate this critical safety
net. This legislation would make Chapter 12 a permanent part of the
code, eliminating the need for future extensions. It is also
retroactive to July 1, 2000.
I hope that in the 107th Congress we can stop using farmers as pawns
in the debate over bankruptcy reform. Permanent Chapter 12 is
completely noncontroversial. We could pass this bill by unanimous
consent tomorrow, and we should. I note that a nearly identical measure
has been introduced in the House by Congressman Nick Smith. Given that
the House last year passed two chapter 12 extensions which the Senate
declined to act on, if the Senate this year took leadership on this
issue and passed this bill, the House would swiftly follow. Farmers
have been

[[Page S569]]

without this safety net long enough, and I urge my colleagues to take
action by passing this measure.
______

Mr. DORGAN:
S. 179. A bill to amend the Internal Revenue Code of 1986 to phase in
a full estate tax deduction for family-owned business interests and to
increase the unified credit exemption; to the Committee on Finance.
Mr. DORGAN. Mr. President, today I rise to introduce legislation to
address an estate tax problem that many Americans want fixed without
delay.
Over the years, I have heard from farmers, bankers and other business
people in North Dakota and elsewhere who say it is nearly impossible
for them to pass along the family business to their children to operate
because of the estate taxes they would pay. They say emphatically that
a family should never be forced to sell off any portion of their
business just to pay the estate tax. I think they're absolutely right!
I believe that families who want to pass their business to other
family members to own and operate should never have to worry about
losing that business or farm to taxes. The sale of a portion of a
family business to pay estate taxes does not happen very often, but it
shouldn't happen at all. In fact, families ought to know that our
federal tax laws will be supportive of their enterprises because of the
importance of such businesses to this nation's economic well-being. And
that's exactly what the bill I'm introducing would do.
This legislation is nearly identical to a bill I authored in the last
Congress. It increases the current estate tax exemption for family
business assets to $10 million over the next five years, and then
totally eliminates the tax for them starting in the year 2006. At that
time, family-owned and operated businesses will be completely exempt
from the tax.
I have spoken often on the Senate floor about the importance of the
family as an economic unit as well as a social unit. This nation was
built upon an economy of family-based farms and businesses, and it is
crucial that we strive to keep the family farms and businesses that we
have, and to encourage new ones. I think that is why there's already
wide agreement in the Senate that we should act to reform the estate
tax to help ensure the continuity of family businesses.
We ought to address this critical family business estate tax issue
early in this Congress and save for later, if necessary, those other
parts of the estate tax on which there is still significant
disagreement. My bill offers a common sense approach for changing the
estate tax to help family enterprises survive to the next generation.
The legislation that I'm introducing today differs in two important
ways from the bill, S. 3098, that I authored last year. First, I have
added a provision to increase the general unified estate tax credit
that is available to everyone from $675,000 to $4 million per couple by
the year 2006. This will help families wishing to pass along to the
children or grandchildren significant stock, proceeds from a life
insurance policy or other assets they may have acquired over the years.
Second, my bill makes the general credit and family-owned business
exemption fully portable. This would help ensure that a surviving
spouse will get the full benefit of any unused general credit or
family-owned business exemption without having to have hired a
sophisticated and costly tax advisor.
Let me briefly clarify one point. Together, the provisions of my
legislation would effectively abolish the estate tax for over 99
percent of all taxpayers. But it does not exempt from estate taxes
entirely the heirs of multi-billion dollar investment fortunes and the
like, as the tax bill passed by the majority party last summer would
have done.
Many of us voted against that bill because we believed that complete
estate tax repeal along with the other sizable tax cuts proposed at
that time threatened to put us right back into federal budget deficits
once again. That is certainly something I can not support.
We also were concerned that repealing the estate tax completely would
shift the burden of paying for the federal government even more onto
the working men and women of this country. That is not fair. The gap
between the very rich and everyone else has gotten wider in recent
years, and repealing the estate tax in its entirety would only make it
worse. I also think it is reasonable to ask those who have benefitted
most from our democracy in the past to contribute to its security and
well-being in the future.
I know that there is disagreement on these and other points. But they
do deserve an honest debate, and I expect that we will have such a
debate later in this Congress. But as I have said previously, we should
not hold family based farms and businesses hostage to that debate and
we should move quickly on estate tax reforms where there is already
strong bipartisan agreement.
______

By Mr. FRIST (for himself, Mr. Feingold, Mr. Brownback, Mr.
Lieberman, Mr. DeWine, Mr. Santorum, Mr. Cleland, and Mr.
Sessions):
S. 180. A bill to facilitate famine relief efforts and a
comprehensive solution to the war in Sudan; to the Committee on Foreign
Relations.
Mr. FRIST. Mr. President, I ask unanimous consent that the 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. 180

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 ``Sudan Peace Act''.

SEC. 2. FINDINGS.

Congress makes the following findings:
(1) The Government of Sudan has intensified its prosecution
of the war against areas outside of its control, which has
already cost more than 2,000,000 lives and has displaced more
than 4,000,000.
(2) A viable, comprehensive, and internationally sponsored
peace process, protected from manipulation, presents the best
chance for a permanent resolution of the war, protection of
human rights, and a self-sustaining Sudan.
(3) Continued strengthening and reform of humanitarian
relief operations in Sudan is an essential element in the
effort to bring an end to the war.
(4) Continued leadership by the United States is critical.
(5) Regardless of the future political status of the areas
of Sudan outside of the control of the Government of Sudan,
the absence of credible civil authority and institutions is a
major impediment to achieving self-sustenance by the Sudanese
people and to meaningful progress toward a viable peace
process.
(6) Through manipulation of traditional rivalries among
peoples in areas outside their full control, the Government
of Sudan has effectively used divide and conquer techniques
to subjugate their population, and internationally sponsored
reconciliation efforts have played a critical role in
reducing the tactic's effectiveness and human suffering.
(7) The Government of Sudan is utilizing and organizing
militias, Popular Defense Forces, and other irregular units
for raiding and slaving parties in areas outside of the
control of the Government of Sudan in an effort to severely
disrupt the ability of those populations to sustain
themselves. The tactic is in addition to the overt use of
bans on air transport relief flights in prosecuting the war
through selective starvation and to minimize the Government
of Sudan's accountability internationally.
(8) The Government of Sudan has repeatedly stated that it
intends to use the expected proceeds from future oil sales to
increase the tempo and lethality of the war against the areas
outside its control.
(9) Through its power to veto plans for air transport
flights under the United Nations relief operation, Operation
Lifeline Sudan (OLS), the Government of Sudan has been able
to manipulate the receipt of food aid by the Sudanese people
from the United States and other donor countries as a
devastating weapon of war in the ongoing effort by the
Government of Sudan to subdue areas of Sudan outside of the
Government's control.
(10) The efforts of the United States and other donors in
delivering relief and assistance through means outside OLS
have played a critical role in addressing the deficiencies in
OLS and offset the Government of Sudan's manipulation of food
donations to advantage in the civil war in Sudan.
(11) While the immediate needs of selected areas in Sudan
facing starvation have been addressed in the near term, the
population in areas of Sudan outside of the control of the
Government of Sudan are still in danger of extreme disruption
of their ability to sustain themselves.
(12) The Nuba Mountains and many areas in Bahr al Ghazal,
Upper Nile, and Blue Nile regions have been excluded
completely from relief distribution by OLS, consequently
placing their populations at increased risk of famine.
(13) At a cost which has sometimes exceeded $1,000,000 per
day, and with a primary focus on providing only for the
immediate food needs of the recipients, the current

[[Page S570]]

international relief operations are neither sustainable nor
desirable in the long term.
(14) The ability of populations to defend themselves
against attack in areas outside the Government of Sudan's
control has been severely compromised by the disengagement of
the front-line sponsor states, fostering the belief within
officials of the Government of Sudan that success on the
battlefield can be achieved.
(15) The United States should use all means of pressure
available to facilitate a comprehensive solution to the war
in Sudan, including--
(A) the multilateralization of economic and diplomatic
tools to compel the Government of Sudan to enter into a good
faith peace process;
(B) the support or creation of viable democratic civil
authority and institutions in areas of Sudan outside
government control;
(C) continued active support of people-to-people
reconciliation mechanisms and efforts in areas outside of
government control;
(D) the strengthening of the mechanisms to provide
humanitarian relief to those areas; and
(E) cooperation among the trading partners of the United
States and within multilateral institutions toward those
ends.

SEC. 3. DEFINITIONS.

In this Act:
(1) Government of sudan.--The term ``Government of Sudan''
means the National Islamic Front government in Khartoum,
Sudan.
(2) OLS.--The term ``OLS'' means the United Nations relief
operation carried out by UNICEF, the World Food Program, and
participating relief organizations known as ``Operation
Lifeline Sudan''.

SEC. 4. CONDEMNATION OF SLAVERY, OTHER HUMAN RIGHTS ABUSES,
AND TACTICS OF THE GOVERNMENT OF SUDAN.

Congress hereby--
(1) condemns--
(A) violations of human rights on all sides of the conflict
in Sudan;
(B) the Government of Sudan's overall human rights record,
with regard to both the prosecution of the war and the denial
of basic human and political rights to all Sudanese;
(C) the ongoing slave trade in Sudan and the role of the
Government of Sudan in abetting and tolerating the practice;
and
(D) the Government of Sudan's use and organization of
``murahalliin'' or ``mujahadeen'', Popular Defense Forces
(PDF), and regular Sudanese Army units into organized and
coordinated raiding and slaving parties in Bahr al Ghazal,
the Nuba Mountains, Upper Nile, and Blue Nile regions; and
(2) recognizes that, along with selective bans on air
transport relief flights by the Government of Sudan, the use
of raiding and slaving parties is a tool for creating food
shortages and is used as a systematic means to destroy the
societies, culture, and economies of the Dinka, Nuer, and
Nuba peoples in a policy of low-intensity ethnic cleansing.

SEC. 5. SUPPORT FOR AN INTERNATIONALLY SANCTIONED PEACE
PROCESS.

(a) Findings.--Congress hereby recognizes that--
(1) a single viable, internationally and regionally
sanctioned peace process holds the greatest opportunity to
promote a negotiated, peaceful settlement to the war in
Sudan; and
(2) resolution to the conflict in Sudan is best made
through a peace process based on the Declaration of
Principles reached in Nairobi, Kenya, on July 20, 1994.
(b) United States Diplomatic Support.--The Secretary of
State is authorized to utilize the personnel of the
Department of State for the support of--
(1) the ongoing negotiations between the Government of
Sudan and opposition forces;
(2) any necessary peace settlement planning or
implementation; and
(3) other United States diplomatic efforts supporting a
peace process in Sudan.

SEC. 6. MULTILATERAL PRESSURE ON COMBATANTS.

It is the sense of Congress that--
(1) the United Nations should be used as a tool to
facilitating peace and recovery in Sudan; and
(2) the President, acting through the United States
Permanent Representative to the United Nations, should seek
to--
(A) revise the terms of Operation Lifeline Sudan to end the
veto power of the Government of Sudan over the plans by
Operation Lifeline Sudan for air transport of relief flights
and, by doing so, to end the manipulation of the delivery of
those relief supplies to the advantage of the Government of
Sudan on the battlefield;
(B) investigate the practice of slavery in Sudan and
provide mechanisms for its elimination; and
(C) sponsor a condemnation of the Government of Sudan each
time it subjects civilians to aerial bombardment.

SEC. 7. REPORTING REQUIREMENT.

Section 116 of the Foreign Assistance Act of 1961 (22
U.S.C. 2151n) is amended by adding at the end the following:
``(g) In addition to the requirements of subsections (d)
and (f), the report required by subsection (d) shall
include--
``(1) a description of the sources and current status of
Sudan's financing and construction of oil exploitation
infrastructure and pipelines, the effects on the inhabitants
of the oil fields regions of such financing and construction,
and the Government of Sudan's ability to finance the war in
Sudan;
``(2) a description of the extent to which that financing
was secured in the United States or with involvement of
United States citizens;
``(3) the best estimates of the extent of aerial
bombardment by the Government of Sudan forces in areas
outside its control, including targets, frequency, and best
estimates of damage; and
``(4) a description of the extent to which humanitarian
relief has been obstructed or manipulated by the Government
of Sudan or other forces for the purposes of the war in
Sudan.''.

SEC. 8. CONTINUED USE OF NON-OLS ORGANIZATIONS FOR RELIEF
EFFORTS.

(a) Sense of Congress.--It is the sense of Congress that
the President should continue to increase the use of non-OLS
agencies in the distribution of relief supplies in southern
Sudan.
(b) Report.--Not later than 90 days after the date of
enactment of this Act, the President shall submit a detailed
report to Congress describing the progress made toward
carrying out subsection (a).

SEC. 9. CONTINGENCY PLAN FOR ANY BAN ON AIR TRANSPORT RELIEF
FLIGHTS.

(a) Plan.--The President shall develop a contingency plan
to provide, outside United Nations auspices if necessary, the
greatest possible amount of United States Government and
privately donated relief to all affected areas in Sudan,
including the Nuba Mountains, Upper Nile, and Blue Nile, in
the event the Government of Sudan imposes a total, partial,
or incremental ban on OLS air transport relief flights.
(b) Reprogramming Authority.--Notwithstanding any other
provision of law, in carrying out the plan developed under
subsection (a), the President may reprogram up to 100 percent
of the funds available for support of OLS operations (but for
this subsection) for the purposes of the plan.
______

By Mr. SHELBY:
S. 181. A bill to amend the Internal Revenue Code of 1986 to phase
out the taxation of Social Security benefits; to the Committee on
Finance.
Mr. SHELBY. Mr. President, I rise today to introduce the Older
Americans Tax Fairness Act of 2001. My bill would completely eliminate
the unjust taxation of Social Security benefits by the end of 2005. The
premise of my legislation is simple: Social Security benefits were
never intended to be taxed. At its inception and continuing on for the
next fifty years, Social Security benefits were exempt from taxation.
Budgetary shortfalls in 1984 and 1993, however, led to the taxation of
these benefits. The economic situation of America is now such that the
continued taxation of Social Security benefits is wasteful and
unnecessary.
Under the current law, beneficiaries of Social Security are taxed on
as much as 85 percent of their benefits. Furthermore, under the latest
changes made by the Clinton Administration, some older Americans find
themselves in a situation where for every dollar they earn over a
threshold amount, $1.85 is subject to tax. In addition to being
fundamentally and logically unfair, I believe such taxation provides
senior citizens with a strong disincentive to work. In other words,
taxation of benefits creates a situation where many senior citizens
decide to not work rather than to earn additional income which may
trigger taxation of their Social Security benefits.
Working senior citizens add a wealth of knowledge and experience to
the workplace. As such, we must make sure that our American workforce
is not deprived of these valuable assets. Our laws should encourage,
not discourage, older Americans with a desire to work to continue
contributing to our society. Unfortunately, that is not what is
happening today.
Despite disincentives to work, many older Americans are forced to do
so to be able to pay for living expenses, healthcare, prescription
drugs and other essentials. To these people, every penny counts in
determining whether they are able to meet these costs. However, when we
tax Social Security benefits, we make it virtually impossible for
millions of older Americans to make ends meet. In effect, taxation of
Social Security benefits forces many Americans to endure stressful
situations in what should be a special time of their lives. Clearly, we
cannot allow such an unjust situation to continue.
The taxation of Social Security benefits impacts a wide segment of
society, including a large portion of the middle class. For example, a
person with $35,000 in income and $10,000 in benefits pays almost
$1,000 more in taxes than he or she would, had the Clinton-Gore
increase not been enacted. By repealing the 1993 Clinton-Gore increase,
as well

[[Page S571]]

as the 1984 tax on Social Security benefits, my bill would give
millions of Americans the financial freedom and security they deserve.
Mr. President, every day my office receives letters and calls from
older Americans throughout the country voicing their opinions on the
taxation of Social Security benefits. Their message is clear--stop the
unfair taxation of these benefits. I ask my colleagues to listen to
their constituents and to do the right thing by joining me in support
of this bill.
______

By Ms. SNOWE (for herself and Mr. Kerry):
S. 182. A bill to amend the Small Business Act with respect to the
microloan program; to the Committee on Small Business.
Ms. SNOWE. Mr. President, I rise today to reintroduce legislation I
first offered during the 106th Congress during the Senate Small
Business Committee's consideration of legislation to reauthorize the
Small Business Administration.
This legislation is very simple and straight forward. It is designed
to enhance the SBA Microloan program, which provides small, short-term
loans for purchase of machinery and equipment, furniture and fixtures,
inventory, supplies, and working capital for small businesses. These
loans are made through SBA-approved nonprofit groups or intermediaries,
which also provide counseling and educational assistance to firms or
individuals.
Under the Microloan program, intermediaries operate both as lenders
and as technical asistance providers. Through technical assistance, the
intermediaries help the borrower to develop a business plan, to secure
financing and to learn how to operate a business. I am very proud of
the four Microloan intermediaries in my home state of Maine: Coastal
Enterprises, Northern Maine Development Company, Eastern Maine
Development Company, and Community Concepts. Mr. President, these
organizations do great work in my state, and I am pleased to have this
opportunity to recognize them.
I have long been a supporter of the Microloan program, and I am proud
to sponsor this legislation today, which is designed to enhance and
expand the program. The purpose of the legislation I am introducing
today is to support efforts to increase the reach of and the number of
Microlenders by authorizing peer-to-peer mentoring where experienced
lending intermediaries can share their knowledge and experience with
other intermediaries or organizations looking to develop a mcirolending
program.
Currently, there are no resources to support such activities. Under
this legislation, industry would develop a network of intermediaries
with training experience and develop a system to match them with
intermediaries seeking assistance. Under my bill, the program would
authorize $1 million annually, and the funding would come out of
already-authorized funding for Microloan technical assistance.
I hope this legislation will be a constructive step in the ongoing
effort to improve the successful Microloan program, and I urge my
colleagues to join me in supporting this effort.
______

By Ms. SNOWE:
S. 183. A bill to enhance Department of Education efforts to
facilitate the involvement of small business owners in State and local
initiatives to improve education; to the committee on Finance.
Ms. SNOWE. Mr. President, I rise to introduce legislation, the Small
Business Employment and Education Act of 2001, which is designed to
enhance federal efforts to facilitate the involvement of small business
owners and entrepreneurs in state and local initiatives to improve the
quality of education programs for our young people.
In 1999, the Small Business Committee, of which I am a member, held a
hearing chaired by Senator Bond, chairman of the committee, on the
challenges facing the small business community as a result of the
failure of many of our educational institutions to teach students the
basic skills that are necessary to succeed in today's work environment.
The committee heard testimony from a number of small businesses and
organizations about this growing problem.
And just how big is the problem? A 1999 American Management
Association survey on workplace testing found that approximately 36
percent of employees tested for basic skills were found to be deficient
in these skills, and small businesses reported deficiency rates well
above the national average. Sixty percent of AMA-member companies
reported that the availability of skilled manpower was scarce, and 67
percent believe that the shortages will continue.
A 1999 NFIB report found that 18 percent of NFIB members report that
finding qualified labor is the single most important problem facing
their business today.
Likewise, a 1999 poll of U.S. Chambers of Commerce found that 83
percent reported the ability--or lack thereof--to find qualified
workers was among their biggest concerns, and 53 percent said education
is the single most pressing public policy issue to them.
This information clearly illustrates that the business community, and
small businesses in particular, have an important stake in the
education of our youth. One of the most fundamental needs that any
growing business faces is the need for employees with basic skills, and
concerns have been expressed by the small business community that many
students are not graduating with the basic skills in reading, writing,
mathematics, and science--skills they need to succeed in today's
workplace or become the entrepreneurs of tomorrow.
The fact of the matter is, Mr. President, the growth of high-skilled
jobs is outpacing growth in all other fields. We must not allow basic
skills to slip away if we are to remain competitive in an increasingly
aggressive and technology-based global market.
Small business is the driving force behind our economy, and as we
authorize the Elementary and Secondary Education Act, we must take into
account the needs of businesses, and small businesses in particular. To
that end, locally-driven initiatives are crucial. In order to create
jobs, we must encourage small business expansion and foster small
business entrepreneurship and, and I believe that education initiatives
are key to this.
Under the Small Business Employment and Education Enhancement Act,
the Department of Education would disseminate information and
facilitate the sharing of information designed to assist small
businesses in working with school systems in an effort to improve our
educational institutions. For example, the agency would
publish guidance materials, best practices, checklists and other
materials on the World Wide Web, in Department of Education
publications and articles, letters, links to related World Wide Web
sites, public service announcements, and through other means at the
Department's disposal.

The Department of Education would establish a centralized database of
materials and act as a clearinghouse for information on initiatives
that have proven successful.
The Secretary of the Department of Education would also establish an
Office of Small Business Education to promote efforts to address the
needs of small businesses though education programs. This division
would work to remove any existing impediments to partnerships between
school systems and small businesses, and propose solutions to
education-related problems facing small businesses.
The goal of the bill I am introducing today is to facilitate
partnerships between communities and businesses. I believe it should be
easy for communities that are interested in designing business/school
partnerships to get the information they need on how to do so. With
access to the kinds of sources envisioned in this legislation,
communities would be able to model a program after a proven approach.
In addition, my bill authorizes technical assistance to be
administered by the Office of Small Business Education to be used to
provide guidance to small businesses, small business organizations,
school systems, and communities working cooperatively to enhance the
teaching of basic skills.
The bill would also establish tax credits to encourage companies to
provide work study, internship, or fellowship opportunities for
students and teachers.
Finally, the bill includes a provision directing the Department of
Education

[[Page S572]]

to conduct a study and report to Congress on the challenges facing
small businesses in obtaining workers with adequate skills; an
assessment of the impact on small businesses of the skills shortage;
the costs to small businesses associated with this shortage; and the
recommendations of the Secretary on how to address these challenges.
Mr. President, I hope this legislation will provide a foundation for
cooperative initiatives between small businesses and school systems,
and I look forward to working with the Small Business Committee, the
Senate Health, Education, Labor, and Pensions Committee and others as
we work to reauthorize the Elementary and Secondary Education Act.
______

By Mr. DORGAN (for himself and Mr. Craig):
S. 184. A bill to amend title 18, United States Code, to eliminate
good time credits for prisoners serving a sentence for a crime of
violence, and for other purposes; to the Committee on the Judiciary.
S. 185. A bill to provide incentives to encourage stronger truth in
sentencing of violent offenders, and for other purposes; to the
Committee on the Judiciary.
Mr. DORGAN. Mr. President, I offer legislation today that would
strengthen our Trust in Sentencing guidelines and limit the ability of
violent criminals to be released early due to ``good time'' credits.
Let me tell you why we need these bills. If you commit murder in this
country, on average, you are going to be sentenced to about 21 years in
jail but that criminal will serve, on average, only 10 years behind
bars.
Most people will be startled to hear that. And why is this the case?
Because people are let out early. Murderers go to prison, and they get
``good time,'' time off for good behavior: If you want to get out
early, just be good in prison, and we will put you back on the streets.
A murderer can get credit for good behavior. That sounds like an
oxymoron to me.
And what happens when you are put back on the streets? You read the
stories. These people commit crimes again. They rape or they rob or
they kill. They molest children. They repeat their crimes.
I am introducing legislation today, along with my friend Senator
Craig of Idaho to address this problem. The point of it is very simple.
I believe that in the criminal justice system we ought to have
different standards for those who commit acts of violence. Everyone in
this country who commits acts of violence ought to understand: You go
to prison, and your address is going to be your jail cell until the end
of your sentence.
I do not mind early release for nonviolent offenders. If prison
officials want to use ``good time'' as a management tool for nonviolent
criminals, fine. But for violent offenders, we ought to have a society
in which everyone understands: If you commit an act of violence, the
prison cell is your address to the end of your sentence. No good time
off for good behavior, no getting back to the streets early. You are
going to be in prison to serve your term. My legislation says, this is
an important standard for state and federal prisons.
We know the current system isn't working. Too many violent offenders
are sent back to America's streets. There is a way to stop that. My
legislation will do so.
______

By Mr. JOHNSON:
S. 186. A bill to provide access and choice for use of generic drugs
instead of nongeneric drugs under Federal health care programs, and for
other purposes; to the Committee on Health, Education, Labor, and
Pensions.
Mr. JOHNSON. Mr. President, today, I am introducing legislation as
one more step in my fight to combat rising prescription drug prices and
reduce the cost of medication for consumers in this country. My
legislation, called the Generic Pharmaceutical Access and Choice For
Consumers Act of 2001, aims to reduce the cost of prescription
medication to American taxpayers and the U.S. government by encouraging
the use of Food and Drug Administration (FDA) approved, therapeutically
equivalent generic prescription drugs within the federal health care
programs, except if the non-generic form is either ordered by the
prescribing physician or requested by the patient.
The Generic Pharmaceutical Access and Choice For Consumers Act of
2001 establishes a straightforward and cost-effective means of
increasing consumers' access and choice to safe, affordable generic
prescription drugs under federal health care programs which could
result in savings of millions of dollars.
The Federal Employee Health Benefits Program (FEHBP), which spends
approximately $18.4 billion providing health insurance coverage to its'
estimated nine million enrollees, including employees, retirees and
their families, spends nearly twenty percent, $3.6 billion, of their
insurance program costs on pharmaceutical benefits alone. This year
brought little relief when the Office of Personnel Management (OPM)
announced that FEHBP premium increases for the year 2001 were on
average 10.5 percent, mostly attributable to the cost increase in
prescription drug plans to fill prescriptions with FDA approved,
therapeutically equivalent generic prescription drugs. In fact, the
rising cost of prescription drugs accounts for about 40 percent of the
total rise in premiums for this year alone.
In 1997, about one-third of all prescriptions under the FEHBP were
for generic drugs. The Office of Personnel Management (OPM), which
administers the FEHBP, estimated that total costs for prescription
drugs would drop by about fifteen percent if half of all prescriptions
were for generic drugs.
A 1998 study conducted by the Congressional Budget Office estimates
that generic pharmaceutical substitution saves consumers nationwide
approximately eight to ten billion dollars a year.
Some FEHBP plans and other federal health care programs do to some
extent encourage the use of generic prescription drugs but the practice
is not mandatory or universally incorporated into all programs. The
Generic Pharmaceutical Access and Choice For Consumers Act simply
directs all federal health care programs that provide prescription drug
plans to fill prescriptions with FDA approved, therapeutically
equivalent generic prescription drugs, except if the non-generic form
is either ordered by the prescribing physician or requested by the
patient.
I believe we can take greater steps to increase the utilization of
high-quality, FDA approved generic drugs, which cost between twenty-
five and sixty percent less than brand-name drugs, resulting in an
estimated average savings of fifteen to thirty dollars on each
prescription filled. In fact, independent studies have even estimated
that generics provide an average savings of $45.50 for each
prescription drug sold.
Generic pharmaceutical drugs are widely accepted by both consumers
and the medical profession, as the market share held by generic drugs
compared to brand-name prescription drugs has more than doubled during
the last decade, from approximately nineteen to forty-three percent,
according to the Congressional Budget Office. Yet, despite accounting
for just over forty percent of the prescriptions drugs dispensed,
generic drugs represent only 8 percent of the total dollar volume spent
on drugs in this country. Studies have shown that consumers can save an
additional $1.32 billion per year for every one percent increase in the
use of generic drugs. That is why I strongly believe that generic
pharmaceutical utilization can help both consumers and the government
reduce the cost of prescription drugs.
Since there exists no current coverage for outpatient prescription
drugs under the Medicare program, a second component of my bill
includes a sense-of-the-Senate that, to the extent feasible, a
preference for the safe and cost-effective use of generic drugs be
considered in conjunction with any legislation that adds a prescription
drug benefit to the Medicare program. I strongly believe that the
utilization of high-quality, safe generic pharmaceutical drugs in a
Medicare prescription drug benefit would provide a built in cost
control mechanism that would help ensure the economic feasibility and
sustainability of any new benefit.
And third, the bill I am introducing today works to prevent a tactic
used by the brand drug industry to prevent generics from reaching the
consumer by convincing state legislatures to pass unwarranted
restrictions to the substitution of generic versions of brand name
drugs. The campaign that some brand name drug companies lobby in

[[Page S573]]

some states is nothing more than an attempt by the brand name companies
to protect their market share. The Generic Pharmaceutical Access and
Choice For Consumers Act increases the level playing field for generic
drugs by requiring the Food and Drug Administration (FDA), where
appropriate, to determine that a generic pharmaceutical is the
therapeutic equivalent of its' brand-name counterpart, and affording
national uniformity to that determination.
The legislation would also prevent a State from establishing or
continuing any requirement that keeps generic pharmaceutical drugs off
the market once FDA has determined that a generic drug is
``therapeutically equivalent'' to a brand name drug. This provision
will ensure that generic prescription drugs get to the market in a
timely fashion and provide consumers with access and choice to low
cost, high-quality alternatives.
As the year continues, I hope that we will move forward in a
constructive debate about providing relief from the escalating costs of
prescription drugs. However, I believe that minimizing cost through
full access to generic drugs must be part of any effort to address the
prescription drug pricing issue. I introduced the Generic
Pharmaceutical Access and Choice For Consumers Act of 2001 to lay the
ground work early in these discussions and take some constructive steps
in the right direction so that the American public can get the full
benefit of safe, affordable generic prescription drugs and taxpayers
are treated right at the same time.
I ask unanimous consent that the full text of the legislation be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 186

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 ``Generic
Pharmaceutical Access and Choice for Consumers Act of 2001''.
(b) Table of Contents.--The table of contents of this Act
is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings and purposes.

TITLE I--REQUIRING THE USE OF GENERIC DRUGS

Sec. 101. Requiring the use of generic drugs under the Public Health
Service Act.
Sec. 102. Application to Federal employees health benefits program.
Sec. 103. Application to medicare program.
Sec. 104. Application to medicaid program.
Sec. 105. Application to Indian Health Service.
Sec. 106. Application to veterans programs.
Sec. 107. Application to recipients of uniformed services health care.
Sec. 108. Application to Federal prisoners.

TITLE II--THERAPEUTIC EQUIVALENCE REQUIREMENTS FOR GENERIC DRUGS

Sec. 201. Therapeutic equivalence of generic drugs.

TITLE III--GENERIC PHARMACEUTICALS AND MEDICARE REFORM

Sec. 301. Sense of the Senate on requiring the use of generic
pharmaceuticals under the medicare program.

SEC. 2. FINDINGS AND PURPOSES.

(a) Findings.--Congress makes the following findings:
(1) Generic pharmaceuticals are approved by the Food and
Drug Administration on the basis of scientific testing and
other information establishing that such pharmaceuticals are
therapeutically equivalent to brand-name pharmaceuticals,
ensuring consumers a safe, efficacious, and cost-effective
alternative to brand-name innovator pharmaceuticals.
(2) The pharmaceutical market has become increasingly
competitive during the last decade because of the increasing
availability and accessibility of generic pharmaceuticals.
(3) The Congressional Budget Office estimates that--
(A) the substitution of generic pharmaceuticals for brand-
name pharmaceuticals will save purchasers of pharmaceuticals
between $8,000,000,000 and $10,000,000,000 each year; and
(B) quality generic pharmaceuticals cost between 25 percent
and 60 percent less than brand-name pharmaceuticals,
resulting in an estimated average savings of $15 to $30 on
each prescription filled.
(4) Independent studies have estimated that generics
provide an average savings of $45.50 for each prescription
drug sold.
(5) Generic pharmaceuticals are widely accepted by both
consumers and the medical profession, as the market share
held by generic pharmaceuticals compared to brand-name
pharmaceuticals has more than doubled during the last decade,
from approximately 19 percent to 43 percent, according to the
Congressional Budget Office.
(6) Generic pharmaceuticals can save consumers an
additional $1,320,000,000 each year for each 1 percent
increase in the use of such pharmaceuticals.
(7) Generic pharmaceutical use can help both consumers and
the Government reduce the cost of prescription drugs.
(b) Purposes.--The purposes of this Act are--
(1) to reduce the cost of prescription drugs to the United
States Government and to beneficiaries under Federal health
care programs while maintaining the quality of health care by
requiring the use of generic drugs rather than nongeneric
drugs, unless no therapeutically equivalent generic drug has
been approved under the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 301 et seq.) or the nongeneric drug is
specifically--
(A) ordered by the prescribing provider; or
(B) requested by the individual for whom the drug is
prescribed; and
(2) to increase the utilization of generic pharmaceuticals
by requiring the Food and Drug Administration, where
appropriate, to determine that a generic pharmaceutical is
the therapeutic equivalent of its brand-name counterpart, and
by affording national uniformity to that determination.

TITLE I--REQUIRING THE USE OF GENERIC DRUGS

SEC. 101. REQUIRING THE USE OF GENERIC DRUGS UNDER THE PUBLIC
HEALTH SERVICE ACT.

(a) In General.--Part B of title II of the Public Health
Service Act (42 U.S.C. 238 et seq.) is amended by adding at
the end the following new section:

``SEC. 247. USE OF GENERIC DRUGS REQUIRED.

``(a) Requirement.--Each grant or contract entered into
under this Act that involves the provision of health care
items or services to individuals shall include provisions to
ensure that any prescription drug provided for under such
grant or contract is filled by providing the generic form of
the drug involved, unless no generic form of the drug has
been approved under the Federal Food, Drug, and Cosmetic Act
or the nongeneric form of the drug is specifically--
``(1) ordered by the prescribing provider; or
``(2) requested by the individual for whom the drug is
prescribed.
``(b) Definitions.--In this section:
``(1) Generic form of the drug.--The term `generic form of
the drug' means a drug that is the subject of an application
approved under subsection (b)(2) or (j) of section 505 of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355), for
which the Secretary has made a determination that the drug is
the therapeutic equivalent of a listed drug under section
505(o) of that Act (21 U.S.C. 355(o)).
``(2) Nongeneric form of the drug.--The term `nongeneric
form of the drug' means a drug that is the subject of an
application approved under--
``(A) section 505(b)(1) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355(b)(1)); or
``(B) section 505(b)(2) of such Act and that has been
determined to be not therapeutically equivalent to any listed
drug.
``(3) Prescription drug.--The term `prescription drug'
means a drug that is subject to the provisions of section
503(b) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
353(b)).''.
(b) Effective Date.--The amendment made by this section
shall apply with respect to any drug furnished on or after
the date of enactment of this Act.

SEC. 102. APPLICATION TO FEDERAL EMPLOYEES HEALTH BENEFITS
PROGRAM.

(a) In General.--Section 8902 of title 5, United States
Code, is amended by adding at the end the following new
subsection:
``(p) If a contract under this chapter provides for the
provision of, the payment for, or the reimbursement of the
cost of any prescription drug (as defined in paragraph (3) of
section 247(b) of the Public Health Service Act), the carrier
shall provide, pay, or reimburse the cost of the generic form
of the drug (as defined in paragraph (1) of such section),
except that this subsection shall not apply if the nongeneric
form of the drug (as defined in paragraph (2) of such
section) is specifically--
``(1) ordered by the prescribing provider; or
``(2) requested by the individual for whom the drug is
prescribed.''.
(b) Effective Date.--The amendment made by this section
shall apply to any prescription drug furnished during
contract years beginning on or after January 1, 2002.

SEC. 103. APPLICATION TO MEDICARE PROGRAM.

(a) In General.--Section 1861(t) of the Social Security Act
(42 U.S.C. 1395x(t)) is amended by adding at the end the
following new paragraph:
``(3) For purposes of paragraph (1), the term `drugs' means
the generic form of the drug (as defined in section 247(b)(1)
of the Public Health Service Act), unless no generic form of
the drug has been approved under the Federal Food, Drug, and
Cosmetic Act or the nongeneric form of such drug (as defined
in section 247(b)(2) of such Act) is specifically--
``(A) ordered by the health care provider; or
``(B) requested by the individual to whom the drug is
provided.''.
(b) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendment made by this section shall apply with respect to
any prescription drug furnished on or after the date of
enactment of this Act.

[[Page S574]]

(2) Medicare+choice plans.--In the case of a
Medicare+Choice plan offered by a Medicare+Choice
organization under part C of title XVIII of the Social
Security Act (42 U.S.C. 1395w-21 et seq.), the amendment made
by this section shall apply to any prescription drug
furnished during contract years beginning on or after January
1, 2002.

SEC. 104. APPLICATION TO MEDICAID PROGRAM.

(a) In General.--Section 1902(a) of the Social Security Act
(42 U.S.C. 1396a(a)) is amended--
(1) in paragraph (64), by striking ``and'' at the end;
(2) in paragraph (65), by striking the period at the end
and inserting ``; and''; and
(3) by adding the following new paragraph:
``(66) provide that the State shall, in conjunction with
the program established under section 1927(g), provide for
the use of a generic form of a drug (as defined in paragraph
(1) of section 247(b) of the Public Health Service Act),
unless no generic form of the drug has been approved under
the Federal Food, Drug, and Cosmetic Act or the nongeneric
form of the drug (as defined in paragraph (2) of such
section) is specifically--
``(A) ordered by the provider; or
``(B) requested by the individual to whom the drug is
provided.''.
(b) Effective Date.--The amendment made by this section
shall apply with respect to any prescription drug furnished
under State plans that are approved or renewed on or after
the date of enactment of this Act.

SEC. 105. APPLICATION TO INDIAN HEALTH SERVICE.

(a) In General.--Title II of the Indian Health Care
Improvement Act (25 U.S.C. 1621 et seq.) is amended by adding
at the end the following new section:

``SEC. 225. USE OF GENERIC DRUGS REQUIRED.

``In providing health care items or services under this
Act, the Indian Health Service shall ensure that any
prescription drug (as defined in paragraph (3) of section
247(b) of the Public Health Service Act) that is provided
under this Act is the generic form of the drug (as defined in
paragraph (1) of such section) involved, unless no generic
form of the drug has been approved under the Federal Food,
Drug, and Cosmetic Act or the nongeneric form of the drug (as
defined in paragraph (2) of such section) is specifically--
``(1) ordered by the prescribing provider; or
``(2) requested by the individual for whom the drug is
prescribed.''.
(b) Effective Date.--The amendment made by this section
shall apply with respect to any prescription drug furnished
on or after the date of enactment of this Act.

SEC. 106. APPLICATION TO VETERANS PROGRAMS.

(a) Use of Generic Drugs Required.--Subchapter III of
chapter 17 of title 38, United States Code, is amended by
inserting after section 1722A the following new section:

``Sec. 1722B. Use of generic drugs required

``When furnishing a prescription drug (as defined in
paragraph (3) of section 247(b) of the Public Health Service
Act) under this chapter, the Secretary shall furnish a
generic form of the drug (as defined in paragraph (1) of such
section), unless no generic form of the drug has been
approved under the Federal Food, Drug, and Cosmetic Act or
the nongeneric form of the drug (as defined in paragraph (2)
of such section) is specifically--
``(1) ordered by the prescribing provider; or
``(2) requested by the individual for whom the drug is
prescribed.''.
(b) Clerical Amendment.--The table of sections at the
beginning of chapter 17 of such title is amended by inserting
after the item relating to section 1722A the following new
item:

``1722B. Use of generic drugs required.''.

(c) Effective Date.--The amendments made by this section
shall apply with respect to any prescription drug furnished
on or after the date of enactment of this Act.

SEC. 107. APPLICATION TO RECIPIENTS OF UNIFORMED SERVICES
HEALTH CARE.

(a) Use of Generic Drugs Required.--Chapter 55 of title 10,
United States Code, as amended by section 751(b) of the Floyd
D. Spence National Defense Authorization Act for Fiscal Year
2001 (as enacted into law by Public Law 106-398), is amended
by adding at the end the following new section:

``Sec. 1111. Use of generic drugs required

``The Secretary of Defense shall ensure that each health
care provider who furnishes a prescription drug (as defined
in paragraph (3) of section 247(b) of the Public Health
Service Act) furnishes the generic form of the drug (as
defined in paragraph (1) of such section), unless no generic
form of the drug has been approved under the Federal Food,
Drug, and Cosmetic Act or the nongeneric form of the drug (as
defined in paragraph (2) of such section) is specifically--
``(1) ordered by the prescribing provider; or
``(2) requested by the individual for whom the drug is
prescribed.''.
(b) Clerical Amendment.--The table of sections at the
beginning of such chapter is amended by inserting after the
item relating to section 1109 the following new item:

``1111. Use of generic drugs required.''.

(c) Effective Date.--The amendments made by this section
shall apply with respect to any drug furnished on or after
the date of enactment of this Act.

SEC. 108. APPLICATION TO FEDERAL PRISONERS.

(a) In General.--Section 4006(b) of title 18, United States
Code, is amended by adding at the end the following new
paragraph:
``(3) Use of generic drugs required.--The Attorney General
shall ensure that each health care provider who furnishes a
prescription drug (as defined in paragraph (3) of section
247(b) of the Public Health Service Act) to a prisoner
charged with or convicted of an offense against the United
States furnishes the generic form of the drug (as defined in
paragraph (1) of such section), unless no generic form of the
drug has been approved under the Federal Food, Drug, and
Cosmetic Act or the nongeneric form of the drug (as defined
in paragraph (2) of such section) is specifically--
``(A) ordered by the prescribing provider; or
``(B) requested by the prisoner for whom the drug is
prescribed.''.
(b) Effective Date.--The amendment made by this section
shall apply with respect to any prescription drug furnished
on or after the date of enactment of this Act.

TITLE II--THERAPEUTIC EQUIVALENCE REQUIREMENTS FOR GENERIC DRUGS

SEC. 201. THERAPEUTIC EQUIVALENCE OF GENERIC DRUGS.

(a) In General.--Section 505 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355) is amended--
(1) by adding at the end the following new subsection:
``(o)(1) For each application filed under subsection (b)(2)
or subsection (j), the Secretary shall determine whether the
drug for which the application is filed is the therapeutic
equivalent of the drug for which the investigations have been
made under subsection (b)(1)(A) (in this subsection referred
to as the `reference drug') or the listed drug referred to in
subsection (j)(2)(A)(i). For applications approved after the
date of enactment of this subsection, the Secretary's
determination shall be made before the approval of the
application. For such applications approved before such date,
the most recent determination made by the Secretary shall be
confirmed.
``(2) For purposes of paragraph (1), a drug is the
therapeutic equivalent of a reference drug or a listed drug
if--
``(A) each active ingredient of the drug and either the
reference drug or the listed drug is the same;
``(B) the drug and either the reference drug or the listed
drug--
``(i) are of the same dosage form;
``(ii) have the same route of administration;
``(iii) are identical in strength or concentration; and
``(iv) are expected to have the same clinical effect and
safety profile when administered to patients under conditions
specified in the labeling; and
``(C) the drug does not present a known bioequivalence
problem, or if the drug presents such a problem, the drug is
shown to meet an appropriate bioequivalence standard.
``(3) With respect to a drug for which a therapeutic
equivalence determination has been made or confirmed under
this subsection, no State or political subdivision of a State
may establish or continue in effect with respect to
therapeutic equivalence of the drug to either a reference
drug or a listed drug, any requirement which is different
from, or in addition to, or is otherwise not identical with,
the Secretary's determination or confirmation under this
subsection.''; and
(2) in subsection (j)(7)(A), by adding at the end the
following:
``(iv) The Secretary shall include in each revision of the
list under clause (ii) on or after the date of enactment of
this clause the official and proprietary name of each
reference drug or listed drug that is therapeutically
equivalent to a drug approved under subsection (b)(2) or
under this subsection during the preceding 30-day period, as
determined under subsection (o).''.
(b) Effective Date.--The amendments made by this section
shall take effect on the date of enactment of this Act.

TITLE III--GENERIC PHARMACEUTICALS AND MEDICARE REFORM

SEC. 301. SENSE OF THE SENATE ON REQUIRING THE USE OF GENERIC
PHARMACEUTICALS UNDER THE MEDICARE PROGRAM.

It is the sense of the Senate that legislative language
requiring the safe and cost-effective use of generic
pharmaceuticals should be considered in conjunction with any
legislation that adds a comprehensive prescription drug
benefit to the medicare program under title XVIII of the
Social Security Act (42 U.S.C. 1395 et seq.).
______

By Ms. SNOWE (for herself and Mr. Grassley):
S. 187. A bill to establish the position of Assistant United States
Trade Representative for Small Business, and for other purposes; to the
Committee on the Budget and the Committee on Governmental Affairs,
jointly, pursuant to the order of August 4, 1977, with instructions
that if one committee reports, the other committee has thirty days to
report or be discharged.
Ms. SNOWE. Mr. President, I rise today to introduce legislation on
behalf of our Nation's small business community. This legislation will
benefit small businesses by requiring an

[[Page S575]]

estimate of the cost of each piece of congressional legislation on
small businesses before Congress enacts the legislation, and also by
creating an assistant U.S. Trade Representative for Small Business.
Small business is the driving force behind our economy, and in order
to create jobs--both in my home State of Maine and across the Nation--
we must encourage small business expansion.
Nationwide, an estimated 13 to 16 million small businesses account
for over 99 percent of all employers. They also employ over 50 percent
of the workers. Small businesses account for virtually all of the new
jobs being created. Maine, in particular, is a state with a historical
record of self-reliance and small business enterprise. In Maine, of the
roughly 36,660 employers, 97.6 percent are small businesses. Maine also
boasts an estimated 71,000 self-employed persons. Surveys credit small
businesses with all of the new jobs in Maine as well.
I believe that small businesses are the most successful tool we have
for job creation. They provide a substantial majority of the initial
job opportunities in this country, and are the original--and finest--
job training program. Unfortunately, as much as small businesses help
our own economy--and the Federal Government--by creating jobs and
building economic growth, government often gets in the way. Instead of
assisting small business, government too often frustrates small
business efforts.
Federal regulations create more than 1 billion hours of paperwork for
small businesses each year, according to the Small Business
Administration. Moreover, because of the size of some of the largest
American corporations, U.S. commerce officials too often devote a
disproportionate amount of time to the needs and jobs in corporate
America rather than in small businesses.
My legislation will address these two challenges facing small
businesses, and I hope it will both encourage small business expansion
and fuel further job creation.
One, this legislation will require a cost analysis of legislative
proposals before new requirements are imposed on small businesses. Too
often, Congress approves well-intended legislation that shifts the
costs of programs to small businesses. This proposal will help avert
such unintended consequences.
According to the U.S. Small Business Administration, small business
owners spend at least 1 billion hours a year filling our government
paperwork, at an annual cost that exceeds $100 billion. Before we place
yet another obstacle in the path of small business job creation, we
should understand the costs our proposals will impose on small
businesses.
This bill will require the Director of the Congressional Budget
Office to prepare for each committee an analysis of the costs to small
businesses that would be incurred in carrying out provisions contained
in new legislation. This cost analysis will include an estimate of
costs incurred in carrying out the bill or resolution for a 4-year
period, as well as an estimate of the portion of these costs that would
be borne by small businesses. This provision will allow us to fully
consider the impact of our actions on small businesses--and through
careful planning, we may succeed in mitigating unintended costs.
Two, this legislation will direct the U.S. Trade Representative to
establish a position of Assistant U.S. Trade Representative for Small
Business. The Office of the U.S. Trade Representative is overburdened,
and too often overlooks the needs of small business. This is a concern
that I have heard time and again from those in the small business
community. A new Assistant U.S. Trade Representative would promote
exports by small businesses and work to remove foreign impediments to
exports.
Mr. President, I am convinced that this legislation will truly assist
small businesses, resulting not only in additional entrepreneurial
potential but also in good new jobs. I urge my colleagues to join me in
supporting this legislation.
______

By Ms. COLLINS (for herself and Mrs. Boxer):
S. 188. A bill to amend the Internal Revenue Code of 1986 to modify
the tax credit for electricity produced from certain renewable
resources; to the Committee on Finance.
Ms. COLLINS. Mr. President, I rise today to introduce the Biomass
Energy Equity Act of 2001. I am pleased to be joined in this effort by
Senator Boxer, my colleague from California. This legislation makes a
commonsense change to the renewable energy production tax credit by
expanding it to include additional types of biomass plants. I would
like to take a few minutes now to discuss the need for this important
bill and to describe what it would do.
Simply put, biomass energy production uses combustion to turn wood
and organic waste into energy in an environmentally sound process.
Biomass takes a public liability, organic waste, and converts it into a
public asset, energy.
The renewable energy production tax credit enacted in 1992 provides
incentives to the solid-fuel biomass and wind energy industry to
develop economically viable and environmentally responsible renewable
sources of electricity. In enacting that legislation, Congress
recognized that biomass energy offers substantial environmental
benefits, specifically a reduced dependence on oil and coal, a
desirable alternative to open field burnings and the landfilling of
organic material, and a net reduction of greenhouse gas emissions.
Unfortunately, the 1992 legislation was drafted too narrowly to
realize the full benefits of biomass energy production. The 1992 act
narrowly defined an eligible biomass facility as including only so-
called closed-loop biomass plants. Closed-loop biomass is a
hypothetical form of electricity generation where the fuel is planted,
grown, and harvested specifically and solely for the fuel of the power
plant. This definition rules out the significant environmental benefit
of disposal of organic waste otherwise destined for a landfill or
field-burning and, therefore, remains unused. Since the biomass tax
credit was passed, no taxpayer, not one, has taken advantage of the tax
benefit.
Simply put, the closed-loop tax credit is not a sufficient incentive
to develop a costly ``fuel plantation,'' which entails large-scale land
purchases, property taxes, and growing material for the sole purpose of
burning it. By demanding that newly grown material be used rather than
organic waste, the closed-loop biomass definition flies in the face of
the commonly accepted environmental principle that products should be
put to as many ``highest value'' uses as possible.
The legislation that I introduce today would expand the eligibility
of the biomass tax credit to include conventional biomass plants. This
legislation is designed to encourage a source of energy generation that
offers substantial air quality, waste management, and greenhouse gas
reduction benefits. The national biomass industry currently uses over
22,000,000 tons of wood waste a year. The waste the biomass industry
converts into energy otherwise would be disposed of in one of three
ways: burned in an open field, which generates pollution instead of
energy; landfilled, where it fills limited landfill space and
biodegrades, emitting methane, carbon dioxide, and other greenhouse
gases; or left in the woods or fields, increasing the risk and severity
of forest fires.
The air quality benefits of biomass energy are of particular
importance. According to the Northeast States for Coordinated Air Use
Management, an organization of all the Northeastern States' Air Quality
Bureaus, biomass energy produces less nitrogen oxide than alternatives
and generates virtually no sulfur dioxide, particulate matter, or
mercury. Biomass energy production also results in a net reduction of
greenhouse gases.

In addition to their environmental benefits, biomass plants
contribute to the economy of many rural towns throughout America.
Because of their dependence on organic waste, biomass facilities are
usually located in rural areas where they are often important engines
of economic growth. For example, in the small town of Sherman, Maine, a
biomass facility provides 56 percent of the property tax base. It also
directly employs 24 individuals and indirectly provides work for
hundreds of truck drivers, wood operators, mill workers and maintenance
contractors.
In another small town of Maine, Athens, a biomass facility provides a
third

[[Page S576]]

of that small town's tax base and directly employs 20 people, while
supporting a local wood operator who, in turn, employs 40 people.
The point is, the economy in many of the small towns in Maine, in
towns such as Livermore, Ashland, Greenville, Fort Fairfield, Stratton,
and West Enfield benefit considerably from these biomass facilities. In
total, there are over 100 biomass facilities in the United States,
representing an investment in excess of $7 billion. These facilities
contribute jobs, property taxes and a disposal point for waste
products. In addition, rural biomass facilities provide ash for use by
local farmers, reducing their purchases of lime. I understand there is
regularly more demand for the ash produced by these biomass plants than
there is supply.
With biomass energy production, nothing is wasted. Biomass turns
waste products--the byproducts of timber, paper or farming operations--
into needed energy, wasting nothing. Even the ash is returned to the
earth to grow organic matter yielding both crops and waste to generate
still more electricity.
We in Congress often discuss ways to help rural America. This
proposal offers an opportunity to do so in a manner that not only
benefits the economy of small towns in rural America but also in a way
that generates considerable environmental benefits.
This measure makes both economic and environmental sense. I urge my
colleagues to join Senator Boxer and me in supporting this important
legislation and working for its passage.
______

By Mr. BOND:
S. 189. A bill to amend the Internal Revenue Code of 1986 to provide
tax relief for small businesses, and for other purposes; to the
Committee on Finance.
Mr. BOND. Mr. President, I rise because I have just come from a very
interesting and informative hearing in the Budget Committee. Federal
Reserve Chairman Alan Greenspan came in today to talk about what he has
seen as the tremendous productivity growth in this economy. The
productivity growth essentially has come about because of the
investment in information technology which has allowed our country to
produce more in less time and to increase the output of the many
sources of goods and services in this country. It has brought with it,
as Chairman Greenspan noted, a significant increase in revenues to the
Federal Government, which are allowing us to pay down even more rapidly
than previously thought the debt now held by the public.
Last year, Chairman Greenspan was adamant. He said the best thing we
could do was to pay down the debt. He said, ``I have absolutely zero
concern that we are going to pay the debt down too fast.'' Remarkably,
today he has said that there is a real danger: We are potentially
paying down the debt too quickly. He said if we get to the point where
we have paid down the debt and the Federal Government is starting to
accumulate private assets--in other words, having to put its surpluses
into investments in the country--we could have a serious political
problem. He therefore said that, in addition to continuing debt
reduction, it is time to take ``surplus-lowering policy initiatives.''
Now sometimes the Chairman doesn't speak in the clearest language,
and we questioned him as to what he meant. He indicated that a
reduction in taxes beginning now, prior to the time we get to the point
where there is no debt held by the public, is a good idea. He said,
from an economist's standpoint, the most effective way to generate
growth in the economy is to reduce marginal rates.
Well, this was very informative and useful testimony. I urge my
colleagues to read it. He also warned that we are in serious trouble if
we follow the path we have followed in this Congress and in the last
several years of spending explosions, going above the budget and
continuing to spend more. He said that spending too much can be a real
danger. There is much less danger of cutting taxes too much because
there are limits on how much taxes can be cut.
Mr. President, I introduce the Small Business Works Act of 2001. This
legislation is built on one inescapable fact--small business ``works''
in this country. The men and women who venture into small businesses
take incredible risks. They work countless hours, often seven days a
week, just to see their businesses break even. They risk their life
savings and often capital put up by family and friends. And they forego
valuable time with their families all for the promise of working for
themselves and creating prosperous businesses in their communities.
Our country also reaps the benefits of successful small enterprises.
According to the Small Business Administration, small businesses
represent more than 99 percent of all employers, employ 53 percent of
the private work force, and create about 75 percent of the new jobs in
this country. In addition, these small firms contribute 47 percent of
all sales in this country, and they are responsible for 51 percent of
the private gross domestic product. With these kinds of results, it is
quite clear that small business works for America.
Despite their success in recent years, one thing clearly does not
work for small business--the Internal Revenue Code. Instead of
collecting the lowest amount of taxes necessary in the least burdensome
manner, the current tax law represents a morass of rules, regulations,
forms, and, of course, penalties, with which the self-employed must
contend. Just to put this into perspective, by some estimates, small
business owners spend more than 5 percent of their revenues just to
comply with the tax laws. In fact, a small business owner from Kansas
City testified before the Senate Committee on Small Business that his
business routinely spends more than 16 percent of the company's net
income just to keep the records and file the appropriate tax forms. And
that's even before he writes the tax check.
These revenues are taken away from the business and spent on
accountants, bookkeepers, and lawyers to sort out all the rules and
filing requirements. In addition, small business owners must dedicate
valuable time and energy on day-to-day recordkeeping and other
compliance requirements, all of which keep them from doing what they do
best--running their business.
And then there are the taxes themselves. As the chairman of the
Committee on Small Business, I have heard from small business owners in
Missouri and across this country that they are more than willing to pay
their fair share of taxes. What they object to, however, is paying high
tax bills and vast amounts for professional tax assistance only to end
up the victim of an unfair tax code.
Mr. President, the legislation I introduce today continues my long-
standing commitment to helping small businesses obtain much needed tax
relief and common-sense simplifications of our tax laws. For their
unending contribution to the prosperity of this country, they deserve
no less.
The bill is designed to complement the broad-based tax stimulus
package that President Bush has proposed. With an economy that appears
to be slowing, small businesses are likely to be among the first
affected. We need to ensure that they benefit from any tax stimulus we
enact this year to secure their continued vitality in the future.
The Small Business Works Act also draws from the priorities of the
nation's small business organizations including the National Federation
of Independent Business, the Small Business Legislative Council, and
many others. While there are too many organizations to name them all
individually, I am grateful for their ideas, their insights, and their
support, without which this bill would not have been possible.
This legislation also includes recommendations from the National
Women's Small Business Summit, which I chaired in Kansas City,
Missouri, last June. That summit brought together hundreds of women
business owners who focused on specific areas of concern to their
businesses, one of which was taxes. As the Summit's final report
concludes, ``the Congress and the Executive Branch have a new mandate--
listen to what women small-business owners have said and answer their
call to action.'' During the Summit, I listened carefully to the views
and recommendations of the participants, and with this legislation I am
taking steps to answer their needs.
Lastly, this bill incorporates a number of the recommendations that
the Internal Revenue Service (IRS) National Taxpayer Advocate set out
in

[[Page S577]]

his Annual Report to Congress for 2001. The Taxpayer Advocate has
become an invaluable resource for identifying problems facing small
business taxpayers and offering legislative proposals to address them.
Mr. President, the Small Business Works Act recognizes the incredible
contribution that entrepreneurs, farmers and ranchers, and home-based
business owners continually make to our economy despite the financial
and paperwork headaches they face at every turn. To ease those burdens,
the legislation provides tax relief for the self-employed and small
firms, includes broad ranging tax simplifications for small
enterprises, and accords small businesses greater protection as they
strive to comply with our increasingly complex tax code.
When it comes to paying taxes, small business really works for the
government. According to recent IRS data, small business owners pay
approximately 40 percent of the nearly $2 trillion that the Federal
government collects each year. With the growing budget surpluses, small
businesses, like American families, are clearly paying more than the
government needs to carry out its programs and obligations. So when we
talk about a tax cut, small enterprises cannot be left behind. The
Small Business Works Act embraces that fact by reducing the tax burden
on small firms in several ways.
First, the bill includes the legislation that I introduced earlier
this week to provide 100 percent deductibility of health insurance for
the self-employed beginning this year. This was among the top
priorities named by the National Women's Small Business Summit last
summer, and it has been identified by the IRS National Taxpayer
Advocate as a legislative recommendation for small business taxpayers.

With the self-employed able to deduct only 60 percent of their
health-insurance costs today, and only 70 percent next year, it comes
as no surprise that 24.2 percent of the self-employed still do not have
health insurance. In fact, 4.8 million Americans live in families
headed by a self-employed individual and have no health insurance. A
full deduction will make health insurance more affordable to the self-
employed and help them and their families get the health-insurance
coverage that they need and deserve today--not years in the future.
Full deductibility also levels the playing field for the self-
employed, who for too long have only had partial deductibility while
their large corporate competitors have been able to deduct all of their
insurance costs. Full deductibility against income taxes, however, is
only part of the battle. My bill also corrects an additional
peculiarity of the tax code, which prevents the self-employed from
deducting their health-insurance premiums against their self-employment
taxes. As the Taxpayer Advocate noted in his 2001 Report to Congress,
``[a]lthough self- employed individuals can reduce their taxable income
by the cost of their health insurance, they still must pay self-
employment taxes on this amount.'' In contrast, the Taxpayer Advocate
continues, ``Wage earners who participate in pre-tax plans do not pay
Social Security tax on their health insurance payments.'' My bill
eliminates this narrow disparity in the law and allows the self-
employed to exclude their health-insurance premiums from their self-
employment tax.
As a result, the self-employed will truly be on an equal footing with
owners and employees of corporations whose health-insurance benefits
are not subject to income or employment taxes. It is a simple matter of
fairness.
Second, the Small Business Works Act addresses the increasingly
onerous consequences of the individual and corporate Alternative
Minimum Tax (AMT). For the sole proprietors, partners, and S
corporation shareholders, the individual AMT increases their tax
liability by, among other things, reducing depreciation and depletion
deductions, limiting net operating loss treatment, eliminating the
deductibility of state and local taxes, and curtailing the expensing of
research and experimentation costs. In addition, because of its
complexity, this tax forces small business owners to waste precious
funds on tax professionals to determine whether the AMT even applies.
For these reasons, the bill includes the recommendation of the Taxpayer
Advocate to repeal the individual AMT. This will be accomplished by
eliminating 20 percent of the tax each year until it is completely
repealed in 2006.
For small corporations, the AMT story is much the same--high
compliance costs and additional taxes draining away scarce capital from
the business. In fact, the Committee on Small Business heard at a
hearing in the last Congress that the corporate AMT resulted in a
$95,000 tax bill for one small business in Kansas City, all because the
company purchased life insurance on the father, who was the primary
owner of the business, to prevent the estate tax from closing the
company down. That type of nonsense must come to an end here and now.
Accordingly, for small corporate taxpayers, the bill increases the
current exemption from the corporate AMT. As a result, a small
corporation will initially qualify for the exemption if its average
gross receipts are $7.5 million or less (up from the current $5
million) during its first three taxable years. Thereafter, a small
corporation will continue to qualify for the AMT exemption for as long
as its average gross receipts for the prior three-year period do not
exceed $10 million (up from the current $7.5 million).
Third, the Small Business Works Act, repeals the unemployment surtax.
Since 1976, small businesses have had to bear the burden of a 0.2
percent surtax on the unemployment taxes they pay for their employees.
This surtax was enacted to repay loans from the Federal unemployment
fund made during the 1974 recession. Those loans were fully repaid in
1987, and yet the surtax continues to be extended, adding to the tax
burden facing small employers. With the Federal surplus proving that
small businesses are paying too much, this tax clearly should go.
Fourth, the Small Business Works Act incorporates a central piece of
President Bush's tax plan to help businesses dedicated to developing
new products and technology; it permanently extends the research and
experimentation tax credit. Over the years this credit has stimulated
research and development in this country and has contributed to the
leadership of American businesses in the technological revolution.
Unfortunately, this credit has also had a checkered history of
expiration and reauthorization, which is simply untenable for
businesses trying to plan for long-term research programs. It is time
to end the on-again/off-again nature of this credit and provide
businesses the certainty of knowing it will be available for the
future.
Finally, the bill responds to the recommendation from the National
Women's Small Business Summit to enhance the business-meals deduction.
Unlike their large competitors, small enterprises often sell their
products and services by word of mouth and close many business
transactions on the road or in a local diner. In many ways the business
breakfast with a potential customer is akin to formal advertising that
larger businesses purchase in newspapers or on radio or television.
While the newspaper ad is fully deductible, however, the business meal
is only 50 percent deductible for the small business owner.
In addition, individuals who are subject to the Federal hours-of-
service limitations of the Department of Transportation (such as truck
drivers) are currently able to deduct 60 percent of their business
meals and are on schedule to deduct up to 80 percent in coming years.
As a result, small business owners have a significant lack of parity
with individuals subject to hours-of-service limitations. Accordingly,
the Small Business Works Act increases the limitation on the
deductibility of business meals from the current 50 percent to 80
percent beginning in 2001.
As chairman of the Committee on Small Business, I spent considerable
time in the last Congress examining the paperwork and filing burdens on
small enterprises. According to research completed by the General
Accounting Office at my request, there are more than 200 forms and
schedules that a small business owner could have to file. That's a
daunting universe of forms, which boils down to more than 8,000 lines,
boxes, and data requirements. These forms are also accompanied by more
than 700 pages of instructions--not including the countless pages of
the tax code, regulations, rulings, and other IRS guidance.

[[Page S578]]

Since entrepreneurs usually open their own businesses to work for
themselves, not to waste valuable time and resources on government
filing and recordkeeping requirements, the Small Business Works Act
includes several provisions to simplify the tax code and let small
business owners get on with their work.
First, in continuation of my effort in the last Congress, the bill
includes my Small Business Tax Accounting Simplification Act, with some
improvements. This provision allows a small business to use the cash
method of accounting, rather than the more onerous accrual method, if
the business' average annual gross receipts are less than $5 million.
This proposal has been strongly endorsed by small business
associations, including the National Federation of Independent Business
and the Associated Builders and Contractors, and most recently by the
Taxpayer Advocate stressing the need for simplifying the tax accounting
rules.
More critically, the bill allows businesses that require merchandise
in the performance of their services to use the cash method of
accounting for all purposes. This provision responds to the pleas for
help from small service providers, such as painters and contractors,
who have recently become the focus of the IRS' attention, to the tune
of thousands of dollars in taxes and penalties, not to mention
accounting fees. And for what? A difference in timing, when the small
business will ultimately pay the same amount of taxes? This change in
the tax code is long overdue and will dramatically simplify the tax
rules for countless small businesses.
At the National Women's Small Business Summit last summer, the
participants raised another area of complexity for America's
entrepreneurs--depreciation. The Small Business Works Act addresses
this issue, in large part, by increasing the amount of equipment that
small firms can expense each year to $50,000 and thereby avoid the
complex depreciation rules. This bill also adjusts the phase-out
limitation on expensing to permit more small businesses to purchase
basic equipment without losing the benefit of immediate expensing. This
limitation has not been increased since 1986, and as a result it is
sorely out of step with the cost of new technology, which has risen
dramatically over the past decade.
In addition, the bill responds to another recommendation of the
Taxpayer Advocate by permitting computer software to be expensed. For
computers and software purchased over the new $50,000 expensing limit,
the bill modifies the present law to allow this technology to be
depreciated over two years. Currently, computer equipment is generally
depreciated over a five- year period and software is usually
depreciated over three years. Any small business owner will tell you
that a computer is largely obsolete well before three years of use, let
alone five years. And computer software becomes outdated even faster.
As a result, small business owners are left with thousands of dollars
of depreciation on their books well after the equipment or software is
obsolete. The bill makes the tax code in this area more consistent with
the technological reality of the business world.
The Small Business Works Act also amends the limitations on the
amount of depreciation that business owners may claim for vehicles used
for business purposes. Under current law, a business loses a portion of
its depreciation deduction if the vehicle placed in service in 2000
costs more than $14,400. Although these limitations have been subject
to inflation adjustments, they have not kept pace with the actual cost
of new cars and vans in most cases. For many small businesses, the use
of a car or van is an essential asset for transporting personnel to
sales and service appointments and for delivering their products.
Accordingly, the bill adjusts the thresholds so that a business will
not lose any of its depreciation deduction for vehicles costing less
than $25,000, which will continue to be indexed for inflation.
Mr. President, another source of complexity for many small business
owners are the estimated tax rules and the differing thresholds
depending on the owner's income level. In fact, this issue was the
number three legislative recommendation of the Taxpayer Advocate this
year. The Small Business Works Act restores the simple two-option rule
to avoid the interest penalty for underpayment of estimated taxes,
which has been repeatedly altered in recent years primarily to raise
revenues. To end that headache for the self-employed, the bill allows
an individual to satisfy the requirements of the code if his estimated
taxes are equal to 90 percent of the current year's tax bill or 100% of
last year's tax bill--a simple and straightforward rule so small
business owners can stop wasting time on tax preparation and get back
to work.
The Small Business Works Act also addresses a complexity issue raised
by the IRS National Taxpayer Advocate concerning small businesses
jointly owned by a husband and wife. As noted by the Advocate in his
2001 Report to Congress: ``A married couple operating a small business
must comply with the complex partnership reporting requirements. Even
though the married couple files a joint tax return, the law requires
them to treat the business as a partnership rather than a sole
proprietorship. . . . [the] IRS estimates it takes over 200 hours
longer to complete a partnership return than a Sole Proprietorship
Schedule C.'' In light of this situation, the bill amends the tax code
to permit married couples who jointly own a small business to opt out
of the partnership rules and file as a sole proprietorship.
Mr. President, in the 105th Congress, we took bold steps to
restructure the IRS and improve the quality of service that taxpayers
receive. Since the IRS Restructuring and Reform Act was enacted in
1998, the IRS made great strides to redirect the agency and balance its
dual mission of collecting tax revenues and serving taxpayers in a fair
and respectful manner.
With the growing complexity of our tax code, however, opportunities
abound for small businesses to make honest mistakes. The IRS
Restructuring and Reform Act provided important protections for all
taxpayers, but work remains to ensure that small businesses are treated
justly under the tax laws. The Small Business Works Act addresses
several issues that small businesses continue to report as major
problems.
A top concern is the excessive nature of penalties and interest
imposed on taxpayers who make mistakes. Far too often, a minor tax bill
grows into an unmanageable liability because of the interest on the tax
owed, the penalties for negligence and late payment, and the interest
on the penalties. Frequently, these penalties can prevent a small
business owner from settling his account and getting back into good
standing.

Penalties were included in the tax code to encourage taxpayers to
comply with our voluntary assessment system, and interest was intended
to compensate the government for the lost use of tax dollars. But the
multiplicity of penalties and hidden punishments disguised as interest
on those penalties seriously undermines Americans' confidence that our
system is fair.
The Small Business Works Act stops the runaway freight train of
excessive penalties and interest in two ways. First, the bill
eliminates the failure-to-pay penalty, which is part of the multiple
penalties often applied to the same error. Penalties should punish bad
behavior, not honest errors that even well-intentioned people are bound
to make now and then. Second, the bill stops the practice of charging
interest on penalties. Instead, interest will only be applied to the
taxes due, just like interest is charged on a credit card for unpaid
balances. Both of these changes implement recommendations of the
Taxpayer Advocate. Again, it's simply a matter of fairness.
The bill also addresses the issue of electronic filing of tax
returns. In the 1998 IRS Restructuring and Reform Act, we set a goal
for the IRS to make electronic filing the most practical and preferred
method of filing so that 80 percent of taxpayers would choose to file
electronically by 2007. While I continue to support that goal, I am
concerned that the temptation for ensuring that the goal is reached
will lead to mandatory electronic filing. At a time when small firms
are already faced with daunting government mandates just in completing
their tax returns, the last thing they need is a new mandate for filing
them. To prevent that

[[Page S579]]

result, my bill makes clear that expanded electronic filing of tax and
information returns will be a voluntary option for small businesses,
not another government mandate.
The taxpayer protections included in the bill are intended to strike
a balance for small business taxpayers. On the one hand, the bill eases
the excessive punishment imposed for honest errors and reduces the
burdens faced by taxpayers subject to an audit by the IRS. On the
other, it preserves the agency's authority to enforce the tax laws and
prevent individuals from cheating the tax system, which in the end
increases the tax burden on all Americans.
Mr. President, the legislation I introduce today is a commonsense
package of tax relief, simplification, and protections for America's
small businesses who work so hard. As we strive in the coming weeks to
enact tax-relief legislation, I urge my colleagues to remember that
small business works in America, the jobs they provide in our local
communities are too important, and they simply cannot be left behind.
I ask unanimous consent to have printed in the Record following the
text of my statement a description of the bill's provisions, and
letters I have received from small business organizations supporting
the Small Business Works Act.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Self Business Works Act of 2001

title I--small business tax relief

Self-Employed Health Insurance Deductibility
The bill amends section 162(l)(1) of the Internal Revenue
Code to increase the deduction for health-insurance costs for
self-employed individuals to 100 percent beginning on January
1, 2001. Currently the self-employed can only deduct 60
percent of these costs. The deduction is not scheduled to
reach 100 percent until 2003, under the provisions signed
into law in October 1998. The bill is designed to place self-
employed individuals on an equal footing with large
businesses, which can currently deduct 100 percent of the
health-insurance costs for all of their employees.
In addition, the bill corrects a disparity under current
law that bars a self-employed individual from deducting any
of his or her health-insurance costs if the individual is
eligible to participate in another health-insurance plan.
This provision affects self-employed individuals who are
eligible for, but do not participate in, a health-insurance
plan offered through a second job or through a spouse's
employer. That insurance plan may not be adequate for the
self-employed business owner, and this provision prevents the
self-employed from deducting the costs of insurance policies
that do meet the specific needs of their families. In
addition, this provision provides a significant disincentive
for self-employed business owners to provide group health
insurance for their employees. The bill ends this disparity
by clarifying that a self-employed person loses the deduction
only if he or she actually participates in another health-
insurance plan.
The bill also levels the playing field by permitting self-
employed individuals to deduct the cost of their health
insurance against their self-employment taxes. This change
will put the self-employed on an equal footing with owners
and employees of corporations whose health-insurance benefits
are not subject to employment taxes.
Alternative Minimum Tax Relief
The bill repeals the individual Alternative Minimum Tax
(AMT) by 2006. For individual taxpayers, the individual AMT
has become an increasingly burdensome tax. For the sole
proprietors, partners, and S corporation shareholders, the
individual AMT increases their tax liability by, among other
things, limiting depreciation and depletion deductions, net
operating loss treatment, the deductibility of state and
local taxes, and expensing of research and experimentation
costs. In addition, because of its complexity, this tax
forces small business owners to waste precious funds on tax
professionals to determine whether the AMT even applies.
The bill addresses these issues by eliminating 20 percent
of the individual AMT each year until complete repeal is
achieved in 2006. During the phase-out period, the bill
extends the current exclusion of personal tax credits from
the AMT, and it coordinates the farm income-averaging rules
with the AMT to ensure that farmers and ranchers do not lose
the benefits of income averaging.
For small corporate taxpayers, the bill increases the
current exemption from the corporate AMT, under section 55(e)
of the Internal Revenue Code. Under the bill, a small
corporation will initially qualify for the exemption if its
average gross receipts are $7.5 million or less (up from the
current $5 million) during its first three taxable years.
Thereafter, a small corporation will continue to qualify for
the AMT exemption for so long as its average gross receipts
for the prior three-year period do not exceed $10 million (up
from the current $7.5 million). The increased limits for the
small-corporation exemption from the corporate AMT will be
effective for taxable years beginning after December 31,
2000.
Repeal of Federal Unemployment Surtax
In 1976, a surtax of 0.2 percent was added to the Federal
Unemployment Tax to repay loans from the Federal unemployment
fund made during the 1974 recession. Those loans were fully
repaid in 1987. Accordingly, the bill repeals the 0.2 percent
surtax beginning in taxable year 2001.
Extend Research and Experimentation Tax Credit Permanently
The bill permanently extends the research and
experimentation (R&E) tax credit, which has been a valuable
resource for businesses developing new products. Under
current law, the R&E tax credit is set to expire on June 30,
2004.
Increased Deduction for Business Meal Expenses
The bill increases the limitation on the deductibility of
business meals from the current 50 percent to 80 percent
beginning in 2001. Unlike their large competitors, small
enterprises often sell their products and services by word of
mouth and close many business transactions on the road or in
a local diner. In addition, individuals who are subject to
the Federal hours-of-service limitations of the Department of
Transportation (such as truck drivers) are currently able to
deduct 60 percent of their business meals and are on schedule
to deduct up to 80 percent in coming years. Accordingly, the
bill corrects this significant lack of parity for small-
business owners by putting them on par with individuals
subject to hours-of-service limitations and their large
competitors.

title II--small business tax simplification

Clarification of Cash Accounting Rules for Small Businesses
The bill amends section 446 of the Internal Revenue Code to
provide a clear threshold for small businesses to use the
cash receipts and disbursements method of accounting, instead
of accrual accounting. To qualify, the business must have $5
million or less in average annual gross receipts based on the
preceding three years. Thus, even if the production,
purchase, or sale of merchandise is an income-producing
factor in the taxpayer's business, the taxpayer will not
be required to use an accrual method of accounting if the
taxpayer meets the average annual gross receipts test.
In addition, the bill provides that a taxpayer meeting the
average annual gross receipts test is not required to account
for inventories under section 471. The taxpayer will be
required to treat such inventory in the same manner as
materials or supplies that are not incidental. Accordingly,
the taxpayer may deduct the expenses for such inventory that
are actually consumed and used in the operation of the
business during that particular taxable year.
The bill indexes the $5 million average annual gross
receipts threshold for inflation. The cash-accounting safe
harbor will be effective for taxable years beginning after
December 31, 2000.
Increase in Expense Treatment for Small Businesses
The bill amends section 179 of the Internal Revenue Code to
increase the amount of equipment purchases that small
businesses may expense each year from the current $24,000 to
$50,000. This change will eliminate the burdensome
recordkeeping involved in depreciating such equipment and
free up capital for small businesses to grow and create jobs.
The bill also increases the phase-out limitation for
equipment expensing from the current $200,000 to $400,000,
thereby expanding the type of equipment that can qualify for
expensing treatment. This limitation along with the annual
expensing amount will be indexed for inflation under the
bill.
Following the recommendation of the National Taxpayer
Advocate, the bill also amends section 179 to permit
expensing in the year that the property is purchased or the
year that the property is placed in service, whichever is
earlier. This will eliminate the difficulty that many small
firms have encountered when investing in new equipment in one
tax year (e.g., 2000) that cannot be placed in service until
the following year (e.g., 2001). The bill also expands
section 179 to permit the expensing of computer software up
to the new $50,000 limit.
The equipment-expensing provisions will be effective for
taxable years beginning after December 31, 2000.
Modification of Depreciation Rules
The bill modifies the outdated depreciation rules to permit
taxpayers to depreciate computer equipment and software over
a two-year period. Under present law, computer equipment is
generally depreciated over a five-year period and software is
usually depreciated over three years. With the rapid
advancements in technology, these depreciation periods are
sorely out of date and can result in small businesses having
to exhaust their depreciation deductions well after the
equipment or software is obsolete. The bill makes the tax
code in this area more consistent with the technological
reality of the business world.
The bill also amends section 280F of the Internal Revenue
Code, which limits the amount of depreciation that a business
may claim with respect to a vehicle used for business
purposes. Under the current thresholds, a business loses a
portion of its depreciation deduction if the vehicle placed
in service in 2000 costs more than $14,400. Although these
limitations have been subject to inflation

[[Page S580]]

adjustments, they have not kept pace with the actual cost of
new cars and vans in most cases. For many small businesses,
the use of a car or van is an essential asset for
transporting personnel to sales and service appointments and
for delivering their products. Accordingly, the bill adjusts
the thresholds so that a business will not lose any of its
depreciation deduction for automobiles costing less than
$25,000, which will continue to be indexed for inflation.
Simplification of Estimated Tax Rules
The bill simplifies the current rules for calculating the
level of estimated taxes necessary to avoid the interest
penalty for underpayment of estimated taxes. Currently, small
business owners can avoid the interest penalty if they pay
estimated taxes equal to at least 90 percent of their tax
liability for the current year. Alternatively, for taxable
year 2001, small business owners who earned more than
$150,000 in taxable year 2000 can avoid the interest penalty
if they pay estimated taxes equal to 112 percent of their
2000 tax liability. For taxable years 2002 and beyond, the
threshold will be 110 percent. In contrast, taxpayers earning
$150,000 or less, can avoid the penalty by paying estimated
taxes equal to 100 percent of their prior year's tax
liability.
The bill simplifies the estimated-tax rules by providing a
consistent test for avoiding the interest penalty: taxpayers
must deposit estimated taxes equal to 90 percent of the
current year's or 100 percent of the prior year's tax
liability. This change will eliminate complex calculations
currently required of small business owners and ease strains
on the business' cashflow. These changes will be effective
for tax years beginning after the date of enactment.
Exemption from Partnership Rules for Sole Proprietorships
Jointly Owned by Spouses
The Internal Revenue Service (IRS) National Taxpayer
Advocate's Annual Report to Congress for 2001 identified a
problem facing married couples operating a small business.
Although these couples file a joint tax return, they are
currently required to comply with the onerous partnership
rules instead of being permitted to treat the business as a
sole proprietorship. According to IRS estimates, the
additional burden of the partnership rules can add more than
200 hours to the time required to prepare the business' tax
return than would be necessary if it were treated as a sole
proprietorship.
The bill amends section 761 of the Internal Revenue Code to
permit married couples who file joint tax returns to opt out
of the partnership rules and treat their jointly owned
business as a sole proprietorship. It also amends the self-
employment tax rules to allow such married couples to receive
Social Security credits on an individual basis, which they
currently receive when filing a partnership return.

Title III--Small Business Taxpayer Protections

Taxpayer's right to have an IRS examination take place at
another site
The bill provides that the IRS must accept a taxpayer's
request that an audit be moved away from his or her home or
business premises if the off-site location (e.g., an
accountant's office) is accessible to the auditor and the
taxpayer's books and records are available at such a
location. This provision will enable the IRS to conduct an
audit but without the fear and disruption resulting from the
auditor being present in a family home and among a business'
employees and customers for days or weeks.
Clarification that Electronic Filing is a Goal, not a Mandate
The bill amends the IRS Restructuring and Reform Act of
1998 (Public Law 105-206) to clarify that the IRS should set
as a goal, but not a mandate, that paperless filing should be
the preferred and most convenient means of filing tax and
information returns in 80 percent of cases by the year 2007.
Concerns have been raised that in order to reach this goal,
the IRS may have to require certain taxpayers to file
electronically. The bill makes clear that electronic filing
should be a voluntary option for taxpayers, not a new
government mandate.
Taxpayer's election with respect to recovery of costs and
certain fees
Under the Internal Revenue Code, a taxpayer may recover
costs and fees, including attorney's fees, against the IRS if
he or she prevails and the IRS' litigation position was not
substantially justified. The Equal Access to Justice Act
(EAJA) permits a small business to recover such costs when an
unreasonable agency demand for fines or civil penalties is
not sustained in court or in an administrative proceeding. In
addition, a small business may also recover such costs and
fees under the EAJA when it is the prevailing party and the
agency enforcement action is not substantially justified.
Currently, the EAJA prohibits a taxpayer seeking to recover
costs and fees in an IRS enforcement action from doing so
under the EAJA if the fees and costs can be recovered under
the Internal Revenue Code.
The bill permits taxpayers to elect whether to pursue
recovery of attorney's fees and expenses under the EAJA or
the Internal Revenue Code.
Repeal of the failure-to-pay penalty
The failure-to-pay penalty was originally enacted in the
1960s to compensate for the low rate of interest applied to
an individual's tax liability, and for the fact that such
interest was not compounded. Today, with interest compounded
daily and adjusted for changes in the interest rate, this
penalty is no longer needed and serves only as another
hidden, second penalty. In addition, this penalty is often
applied on top of accuracy-related penalties, resulting in
total punishment of as much as 45 percent in non-criminal
cases. To simplify the tax rules and reduce the multiplicity
of punishment on taxpayers, the bill repeals the failure-to-
pay penalty.
Limit Compounded Interest to Underlying Tax
Under current law, when a taxpayer fails to pay the correct
amount of taxes, interest is applied and compounded not only
on the underlying tax liability, but also on any penalties
assessed. As a result, compound interest becomes an
additional penalty. In many cases the interest on penalties
can substantially increase the total amount of tax due and
jeopardize the small business taxpayer's ability to pay its
tax debt. In addition, calculating the interest on penalties
adds an additional layer of complexity and compliance costs
for small businesses. The bill alleviates this situation by
limiting the application of interest to only the underlying
tax assessment.
____

Small Business

Legislative Council,

Washington, DC, January 22, 2001.
Hon. Kit Bond,
Chairman, Committee on Small Business, U.S. Senate,
Washington, DC.
Dear Mr. Chairman: First, let me take the opportunity on
behalf of SBLC, to thank you for your tireless efforts on
behalf of small business. I have no doubt that in future
Congresses we will be holding up your stewardship of the
Small Business Committee as the model for future chairs.
My primary reason in writing is to offer our unqualified
support for your initiative to bring fairness and
simplification to the current tax system. As you know,
perhaps better than anyone in Congress, the current tax code
remains a minefield of problems for small business. Your
legislation is a comprehensive blueprint for how to sweep it
clean.
While we endorse all of your initiatives, I do want to take
the opportunity to single out four items.
We are absolutely convinced settling the issue of whether
small businesses can use cash accounting is not only a matter
of fairness, but that it will also significantly simplify
small business compliance. We have had a hard time
understanding why the IRS has been so intent on chasing the
opportunity to collect a few tax dollars just a little
sooner. Using cash accounting is not about tax avoidance. The
costs to small business productivity must surely outweigh the
time value of revenue to the government.
SBLC was one of the original champions of the concept of
direct expensing. We wholeheartedly endorse your efforts to
``modernize'' the concept. The amount needs to be increased.
The other important reason to address cost recovery is that
our depreciation system is no longer in sync with the pace of
technology obsolescence.
One of the ticking time bombs of the tax code is the
personal Alternative Minimum Tax (AMT). We believe in the
near future it may do more harm to small business than any
other provision of the tax code. It swallows up any profits
that can be reinvested in the business.
Finally, Section 280F of the tax code and regulations
thereunder, reflect a different time and different philosophy
with respect to business vehicles. It is time to move the
clock ahead two decades and simplify the process of dealing
with this provision.
We look forward, as always, to working with you on behalf
of small business.
As you know, the SBLC is a permanent, independent coalition
of 80 trade and professional associations that share a common
commitment to the future of small business. Our members
represent the interests of small businesses in such diverse
economic sectors as manufacturing, retailing, distribution,
professional and technical services, construction,
transportation, tourism and agriculture. Our policies are
developed through a consensus among our membership.
Individual associations may express their own views. For your
information, a list of our members is enclosed.
Sincerely,
John S. Satagaj,
President and General Counsel.

Members of the Small Business Legislative Council

ACIL
Air Conditioning Contractors of America
Alliance of Independent Store Owners and Professionals
Alliance of Affordable Services
American Association of Equine Practitioners
American Bus Association
American Consulting Engineers Council
American Machine Tool Distributors Association
American Moving and Storage Association
American Nursery and Landscape Association
American Road & Transportation Builders Association
American Society of Interior Designers
American Society of Travel Agents, Inc.
American Subcontractors Association
Associated Landscape Contractors of America
Association of Small Business Development Centers

[[Page S581]]

Association of Sales and Marketing Companies
Automotive Recyclers Association
Bowling Proprietors Association of America
Building Service Contractors Association International
Business Advertising Council
CBA
Council of Fleet Specialists
Council of Growing Companies
Cremation Association of North America
Direct Selling Association
Electronics Representatives Association
Health Industry Representatives Association
Helicopter Association International
Independent Bankers Association of America
Independent Medical Distributors Association
International Association of Refrigerated Warehouses
International Franchise Association
Machinery Dealers National Association
Mail Advertising Service Association
Manufacturers Agents for the Food Service Industry
Manufacturers Agents National Association
Manufacturers Representatives of America, Inc.
National Association for the Self-Employed
National Association of Plumbing-Heating-Cooling Contractors
National Association of Realtors
National Association of RV Parks and Campgrounds
National Association of Small Business Investment Companies
National Association of the Remodeling Industry
National Community Pharmacists Association
National Electrical Contractors Association
National Electrical Manufacturers Representatives Association
National Lumber & Building Material Dealers Association
National Ornamental & Miscellaneous Metals Association
National Paperbox Association
National Retail Hardware Association
National Society of Accountants
National Tooling and Machining Association
National Wood Flooring Association
Organization for the Promotion and Advancement of Small
Telephone Companies
Painting and Decorating Contractors of America
Petroleum Marketers Association of America
Printing Industries of America, Inc.
Professional Lawn Care Association of America
Promotional Products Association International
The Retailer's Bakery Association
Saturation Mailers Coalition
Small Business Council of America, Inc.
Small Business Exporters Association
Small Business Exporters Association
SMC Business Councils
Society of American Florists
Tire Association of North America
Turfgrass Producers International
United Motorcoach Association
Washington Area New Automotive Dealers Association
____

National Federation of

Independent Business,

Washington, DC, January 24, 2001.
Hon. Kit Bond,
Chairman, Senate Small Business Committee, Washington, DC.
Dear Chairman Bond: On behalf of the 600,000 members of the
National Federation of Independent Business (NFIB), I want to
express our strong support for the ``Small Business Works Act
of 2001'' which would provide badly needed tax relief to
America's small business. NFIB urges the Senate to quickly
support its adoption.
While economic conditions for small business remain
relatively strong, economic activity has cooled over the past
few months. According to NFIB's monthly Small Business
Economic Trends (SBET) index, confidence in the economy is
approximately half as strong as it was a year ago. Over the
coming months, it appears likely that the problem of the
slowing economy will only continue.
Small businesses are forced by Washington to spend an
overwhelming amount of time, money, and energy complying with
the tax and regulatory burdens. With the economy showing
signs of slowing, tax relief will significantly help spur
immediate economic recovery for America's small businesses.
Your bill goes a long way towards providing America's small
business owners valuable tax relief.
Cash vs. Accrual Accounting--Clarifying the IRS code to
state clearly that small business owners with gross revenues
below $5 million are eligible to use cash accounting methods
would save small business owners from spending valuable
resources on high-priced tax accountants and lawyers.
Accelerate 100% Self-Employed Health Insurance Deduction--
Currently, self-employed workers can only deduct 60% of their
health-insurance costs from their taxable income. Raising
that threshold to 100% in 2001 would cut health-care costs
for the typical small-business owner by hundreds of dollars
per year.
Increase Section 179 Expensing--A majority of NFIB members
exceed the current small-business expensing limits in only
three months. The limit for 2001 is only $24,000. Raising the
threshold to $50,000 and indexing it with inflation will
allow additional investments in the business to be expensed
thus helping small businesses expand and create new jobs.
This provision lowers the cost of capital for tangible
property and eliminates depreciation record-keeping
requirements. Updating our tax code to reflect the reality of
today's technology-based workplace is critical to the
continued success of our economy and to the daily advancement
of small business in America. Allowing small business to
depreciate software assets while they are still useful and
efficient technologies is critical to future technological
development in the job producing engines of our economy. This
change would provide small business owners the opportunity to
compete in today's high technology markets.
Increase Deduction for Business Meals--For many self-
employed and small business owners, discussing business over
lunch is an efficient use of time and an absolute necessity
when courting new clients. Increasing the deductibility
reduces a large and disproportionate tax on small-business
owners who rely on mealtime to conduct business.
Federal Unemployment Insurance Surtax Repeal--The .2%
surtax was adopted in 1976 to repay loans to the federal
unemployment fund during the 1974 recession. This debt was
fully repaid in 1987. This so-called temporary surtax has
long outlived its original purpose and is now used to pay for
government programs totally unrelated to the unemployment
compensation system.
AMT Relief and Repeal--According to the Joint Committee on
Taxation, fewer than 1 in 150 taxpayers is subjected to the
AMT today. By 2007, however, that number if expected to grow
to 1 in 14, with the largest increase coming from taxpayers
earning between $50,000 and $100,000. The individual AMT is a
remarkably complex and obtuse provision in a tax code not
known for its clarity. It literally requires taxpayers to
calculate their taxes twice, and then pay the larger amount.
While originally designed to ensure that wealthy Americans
pay a reasonable level of their income in taxes, the AMT has
the side effect of hitting taxpayers--increasingly middle-
class taxpayers--when they can least afford the bill. The AMT
literally kicks taxpayers when they are down. NFIB supports
abolishing the individual Alternative Minimum Tax. NFIB also
supports your efforts to increase the exemption for small
businesses from the heavily burdensome corporate AMT.
Mr. Chairman, we applaud your proactive efforts to reduce
the tax burden on small business. We thank you for your
continued support of small businesses, and we look forward to
working with you to see the ``Small Business Works Act of
2001'' enacted into law.
Sincerely,

Dan Danner,

Senior Vice President,
Federal Public Policy.
______

By Mr. FEINGOLD:
S. 191. A bill to abolish the death penalty under Federal Law; to the
Committee on the Judiciary.
Mr. FEINGOLD. Mr. President, I rise today to introduce the Federal
Death Penalty Abolition Act of 2001. This bill will abolish the death
penalty at the Federal level. It will put an immediate halt to
executions and forbid the imposition of the death penalty as a sentence
for violations of Federal law.
The most recent Gallup poll shows that, while a majority of Americans
continue to support capital punishment, this support has reached a
nearly 20-year low. This diminished support comes amid rising concern
that the system by which we impose the sentence of death is seriously
flawed. In the last year or so since I first introduced this bill, the
American people have learned about the risk of executing innocent
people and other fairness and reliability concerns with the
administration of the death penalty. I am confident that in the weeks
and months to come, the American people will continue to learn and
continue to question the fairness of our death penalty system.
In recent years, this Chamber has echoed with debate on violence in
America. We've heard about violence in our schools and neighborhoods.
Some say it's because of the availability of guns to minors. Some say
Hollywood has contributed to a culture of violence. Others argue that
the roots of the problem are far deeper and more complex. Whatever the
causes, a culture of violence has certainly infected our nation. As
schoolhouse killings have shown, our children are now reached by that
culture of violence, not merely as casual observers, but as
participants and victims.
But, I'm not so sure that we in government don't contribute to this
casual attitude we sometimes see toward killing and death. With each
new death penalty statute enacted and each execution carried out, our
executive, judicial and legislative branches, at both the state and
federal level, add to a culture of violence and killing. With each
person executed, we're teaching

[[Page S582]]

our children that the way to settle scores is through violence, even to
the point of taking a human life. Sadly, total executions in the last
two years--98 in 1999 and 85 in 2000--mark the highest number of total
annual executions since the death penalty was reinstated in 1976.
At the same time, I am pleased that the public debate on the death
penalty, which was an intense national debate not very long ago,
appears to have been revived. In the wake of recent controversies
involving DNA technology and the discovery of condemned innocents, we
are once again having a national debate on this important issue of
justice. Those who favor the death penalty should be pressed to explain
why fallible human beings should presume to use the power of the state
to extinguished the life of a fellow human being on our collective
behalf. Those who oppose the death penalty should demand that
explanation adamantly, and at every turn. But only a zealous few try.
Our Nation is a great Nation. We have the strongest democracy in the
world. We have expended blood and treasure to protect so many
fundamental human rights at home and abroad and not always for only our
own interests. But we can do better. We should do better. Courtesy of
the Internet and CNN International, the world observes, perplexed and
sometimes horrified, the violence in our nation. Across the globe, with
every American who is executed, the entire world watches and asks how
can the Americans, the champions of human rights, compromise their own
professed beliefs in this way.
Religious groups and leaders express their revulsion at the continued
practice of capital punishment. Pope John Paul II frequently appeals to
American governors when a death row inmate is about to die. I am
pleased that in one case in January 1999, involving an inmate on death
row in Missouri, the late Missouri Governor Mel Carnahan heeded the
good advice of the pontiff and commuted the killer's sentence to life
without parole. That case generated a lot of press--but only as a
political issue, rather than a moral question or a human rights
challenge.
But the Pope is not standing alone against the death penalty. He is
joined by the chorus of voices of various people of faith who abhor the
death penalty. Religious groups from the National Conference of
Catholic Bishops, the United Methodist Church, the Presbyterian Church,
the Evangelical Lutheran Church in America, the Mennonites, the Central
Conference of American Rabbis, and so many more people of faith have
proclaimed their opposition to capital punishment. And, I might add,
even conservative Pat Robertson protested the execution in 1998 of
Karla Faye Tucker, a born-again Christian on Texas death row. Mr.
President, I would like to see the commutation of sentences to life
without parole for all death row inmates--whether they are Christians,
Muslims, Jews, Buddhists, or some other faith, or no faith at all.
The United States' imposition of capital punishment is abhorrent not
only to people of faith. Our use of the death penalty also stands in
stark contrast to the majority of nations that have abolished the death
penalty in law or practice. Even South Africa and Russia--nations that
for years were violators of basic human rights and liberties--have
abolished the death penalty or are moving toward abolition of the death
penalty, respectively. The United Nations Commission on Human Rights
has called for a worldwide moratorium on the use of the death penalty.
The European Union denies membership in the alliance to those nations
that use the death penalty. In fact, it passed a resolution calling for
the immediate and unconditional global abolition of the death penalty,
and it specifically called on all states within the United States to
abolish the death penalty. This is significant because it reflects the
unanimous view of the nations with which the United States enjoys its
closet relationships--nations that so often follow our lead.

What is even more troubling in the international context is that the
United States is now one of only six countries that imposes the death
penalty for crimes committed by children. I'll repeat that because it
is remarkable. We are one of only six nations on this earth that puts
to death people who were under 18 years of age when they committed
their crimes. The others are Iran, Pakistan, Nigeria, Saudi Arabia and
Yemen. These are countries that are often criticized for human rights
abuses. When will we rectify this clear human rights violation--the
execution of people who were not even adults when they committed the
crimes for which they were sentenced to die?
Let's look at the numbers. Since 1990, the United States has executed
14 child offenders. That's more than all of the five aforementioned
nations combined. In 2000, the rest of the world watched as the United
States not only executed four juvenile offenders, but was the only
nation to engage in such an egregious practice at all. Even China--the
country that many members of Congress, including myself, have
criticized for its human rights abuses--apparently has the decency not
to execute its children. This is embarrassing. Is this the kind of
company we want to keep? Is this the kind of world leader we want to
be? But these are the facts, from the last decade of the 20th century
to the present. No one, Mr. President, no one can reasonably argue that
based on this data, executing child offenders is a normal or acceptable
practice in the world community. And I don't think we should be proud
of the fact that the United States is the world leader in the execution
of child offenders.
Is the death penalty a deterrent for our children's conduct, as well
as that of adult Americans? The numbers prove that those who believe
that capital punishment is an effective deterrent are sadly, sadly
mistaken. The Federal Government and most States in the U.S. have a
death penalty, while our European counterparts do not. Following the
logic of death penalty supporters who believe it is a deterrent, you
would think that our European allies, who don't use the death penalty,
would have a higher murder rate than the United States. Yet, they don't
and it's not even close. In fact, the murder rate in the U.S. is six
times higher than the murder rate in Britain, seven times higher than
in France, and five times higher than in Sweden.
But we don't even need to look across the Atlantic to see that
capital punishment has no deterrent effect on crime. The geographical
disparities within the United States lead to the same conclusion. Let's
compare Wisconsin and Texas. I'm proud of the fact that in 1853, my
home state of Wisconsin became the first state in the nation to abolish
the death penalty completely. Wisconsin has been death penalty-free for
nearly 150 years. In contrast, Texas is the most prodigious user of the
death penalty, having executed 241 people since 1976. Let's look at the
murder rate in Wisconsin and Texas. During the period 1995 to 1998,
Texas has had a murder rate that is nearly double the murder rate in
Wisconsin. The same trend can also be detected on a regional scale. The
Southern region of the United States has a higher murder rate than any
other region. Yet, executions taking place in that region constituted
almost 90 percent of executions in the nation as a whole. These and
countless other data continue to call into question the argument that
the death penalty is a deterrent to murder.
In fact, according to a 1995 Hart Research poll, the majority of our
nation's police chiefs do not believe the death penalty is a
particularly effective law enforcement tool. When asked to rank the
various factors in reducing crime, police chiefs rank the death penalty
last. Rather, the police chiefs--the people who deal with hardened
criminals day in and day out--cite reducing drug abuse as the primary
factor in reducing crime, along with a better economy and jobs,
simplifying court rules, longer prison sentences, more police officers,
and reducing guns. It looks like most police chiefs recognize what our
European allies and a few states like Wisconsin have known all along;
the death penalty is not an effective deterrent.
Let me be clear. I believe murderers and other violent offenders
should be severely punished. I'm not seeking to open the prison doors
and let murderers come rushing out into our communities. I don't want
to free them. The question is: should the death penalty be a means of
punishment in our

[[Page S583]]

society? One of the most frequent refrains from death penalty
supporters is the claim that the majority of Americans support the
death penalty. But Mr. President, an August 2000 Gallup poll shows that
while 67 percent of Americans support the death penalty, only 28
percent do so without reservations. In contrast, 37 percent support the
death penalty with reservations and 26 percent of Americans do not
support the death penalty at all.

Furthermore, surveys show that when sentencing alternatives are
offered, support for the death penalty drops to below 50 percent. And a
plurality of Americans prefer life without parole plus restitution for
the victim's family to the death penalty. According to a 1993 national
poll, 44 percent of Americans supported the alternative of life without
parole plus restitution. Only 41 percent preferred the death penalty
and 15 percent were unsure. This is remarkable. Sure, if you ask
Americans the simple, isolated question of whether they support the
death penalty, a majority of Americans will agree. But if you ask them
whether they support the death penalty or a realistic, practical
alternative sentence like life without parole plus restitution, support
for the death penalty falls dramatically to below 50 percent. More
Americans support the alternative sentence than the death penalty.
The fact that our society relies on killing as punishment is
disturbing enough. Even more disturbing, however, is the fact that the
States' and federal use of the death penalty is often not consistent
with principles of due process, fairness and justice. These principles
are the foundation of our criminal justice system and, in a broader
sense, the stability of our nation. It is clearer than ever before that
we have put innocent people on death row. In addition, statistics show
that those States that have the death penalty are more likely to put
people to death for killing white victims than for killing black
victims.
Are we certain that innocent persons are not being executed?
Obviously not. Are we certain that racial bias is not infecting the
criminal justice system and the administration of the death penalty? I
doubt it.
It simply cannot be disputed that we are sending innocent people to
death. Since the modern death penalty was reinstated in the 1970s, we
have released 93 men and women in 22 states from death row. Why?
Because they were innocent. Ninety-three men and women sitting on death
row, awaiting a firing squad, lethal injection or electrocution, but
later found innocent. That's one death row inmate found innocent for
every seven executed. One in seven! That's a pretty poor performance
for American justice. A wrongful conviction means that the real killer
may have gotten away. What an injustice that the victims' loved ones
cannot rest because the killer is still not caught. What an injustice
that an innocent man or woman has to spend even one day in jail. What a
staggering injustice that innocent people are sentenced to death for
crimes they did not commit. What a disgrace when we carry out those
sentences, actually taking the lives of innocent people in the name of
justice.
I call my colleagues' attention to the recent example of an Illinois
death row inmate, Anthony Porter, who was freed in 1999 after 16 years
of his life were wasted awaiting execution for a crime he did not
commit. Mr. Porter came within two days of execution when his life was
spared only because of questions regarding his mental competency. Mr.
Porter owes his freedom, as some previous Illinois death row inmates
do, to investigation by Northwestern University journalism students.
They persuaded the true killer to confess on videotape. A statement by
the true killer's estranged wife that Chicago police pressured her into
testifying against Porter further represents the level of unreliability
and failures in the administration of the death penalty surrounding
this case. College students were able to successfully spare the lives
of innocent men. Men were freed from death row not because of
technicalities, but because they were truly innocent. Mr. President, it
is clear that our criminal justice system is sometimes far from just
and sometimes just plain wrong.
One is left with the inescapable conclusion that even if it is not
absolutely certain, it is very possible that innocent people have been
executed. Why? We can all agree that it is profoundly wrong to convict
and condemn innocent people to death. But sadly, that's what's
happening. With the greater accuracy and sophistication of DNA testing
available today compared to even a couple of years ago, states like
Illinois are finding that people sitting on death row did not commit
the crimes to which earlier, less accurate DNA tests appeared to link
them. This DNA technology should be further reviewed and compared to
other tests. We should make sure that the most sophisticated, modern
DNA tests are made available to those on death row.
Some argue that the discovery of the innocence of a death row inmate
proves that the system works. This is absurd. How can you say the
criminal justice system works when a group of students--not lawyers or
investigators but students with no special powers, who were very much
outside the system--discover that a man about to be executed was, in
fact, innocent? A recent NBC News/Wall Street Journal Poll shows that
63 percent of Americans favor suspending capital punishment until
fairness questions can be adequately studied. Americans recognize the
failures of our justice system and are demanding answers.
A primary reason why our justice system has sometimes been less than
just is a series of U.S. Supreme Court decisions that seem to fail to
grasp the significance and responsibility of their task when a human
life is at stake. The Supreme Court has been narrowly focused on
procedural technicalities, ignoring the fact that the death penalty is
a unique punishment that cannot be undone to correct mistakes. In Jones
v. United States, which involved an inmate on death row in Texas and
the interpretation of the 1994 Federal Death Penalty Act, the judge
refused to tell the jury that if they deadlocked on the sentence, the
law required the judge to impose a sentence of life without possibility
of parole. As a result, some jurors were under the grave
misunderstanding that lack of unanimity would mean the judge could give
a sentence where the defendant might one day go free. The jurors
therefore returned a sentence of death. The Supreme Court upheld the
lower court's imposition of the death penalty. And one more person will
lose a life, when a simple correction of a misunderstanding could have
resulted in a severe, yet morally correct, sentence of life without
parole.

As legal scholar Ronald Dworkin recently observed, ``[t]he Supreme
Court has become impatient, and super due process has turned into due
process-lite. Its impatience is understandable, but is also
unacceptable.'' Mr. President, America's impatience with the protracted
appeals of death row inmates is understandable. But this impatience is
unacceptable. The ruse to judgment is unacceptable. And the rush to
execute men, women and children who might well be innocent is
horrifying.
The discovery of the innocence of death row inmates and misguided
Supreme Court decisions disallowing potentially dispositive and/or
exculpatory evidence, however, aren't the only reasons we need to
abolish the death penalty. Another reason we need to abolish the death
penalty is the continuing evidence of racial bias in our criminal
justice system. Our nation is facing a crucial test. A test of moral
and political will. We have come a long way through this nation's
history, and especially in this century, to dismantle state-sponsored
and societal racism. Brown v. Board of Education, ensuring the right to
equal educational opportunities for whites and blacks, was decided
almost half a century ago. Unfortunately, however, we are still living
with vestiges of institutional racism. In some cases, racism can be
found at every stage of a capital trial--in the selection of jurors,
during the presentation of evidence, when the prosecutor contrasts the
race of the victim and defendant to appeal to the prejudice of the
jury, and sometimes during jury deliberations.
After the 1976 Supreme Court Gregg decision upholding the use of the
death penalty, the death penalty was first enacted as a sentence at the
federal level with passage of the Drug Kingpin Statute in 1988. Since
that time, numerous additional Federal crimes have become

[[Page S584]]

death penalty-eligible, bringing the total to about 60 federal crimes
today. At the federal level, 20 people currently sit on death row.
Another seven men sit on the military's death row. Of those 2
defendants on the federal government's death row, 14 are black and only
4 are white. One defendant is Hispanic and another Asian. That means 16
of the 20 people on federal death row are members of a racial or ethnic
minority. That's 80 percent. And the numbers are worse on the
military's death row. Six of the seven, or 86 percent, on military
death row are minorities.
Some of my colleagues may remember the debates of the late 1980's and
early 1990's, when Congress considered the Racial Justice Act and other
attempts to eradicate racial bias in the administration of capital
punishment. A noted study evaluating the role of race in death penalty
cases was frequently discussed. This was the study by David Baldus, a
professor at the University of Iowa College of Law. The Baldus study
found that defendants who kill white victims are more than four times
more likely to be sent to death row than defendants who kill black
victims. An argument against the Baldus study was made by some
opponents of the Racial Justice Act. They argued that we just needed to
``level up'' the playing field. In other words, send all the defendants
who killed black victims to death row, too. They argued that
legislative remedies were not needed, just tell prosecutors and judges
to go after perpetrators of black homicide as strong as against
perpetrators of white homicide. I believe such arguments displayed a
shocking insensitivity to racial bias in our criminal justice system.
Problems with bias and arbitrariness have not escaped the federal
death penalty system. In September 2000, the Department of Justice
released a report on the federal death penalty system. That report that
whether one will live or die in the federal system appears to be
related to the color of one's skin or the federal district in which the
prosecution takes place. I think we can all agree that the report is
deeply disturbing. There is a glaring lack of uniformity in the
application of the federal death penalty. Why do these disparities
exist? How can they be addressed? The Justice Department report doesn't
have answers to these and other questions. I am pleased that Attorney
General Janet Reno initiated additional, internal reviews, and it is my
fervent hope that the next Attorney General will follow through on this
important further study and analysis.
One thing is clear: no matter how hard we try, we cannot overcome the
inevitable fallibility of being human. That fallibility means that we
will be unable to apply the death penalty in a fair and just manner.
The risk that we will condemn innocent people to death will always
lurk. Mr. President, let's restore some certainty, fairness, and
justice to our criminal justice system. Let's have the courage to
recognize human fallibility.

The American Bar Association has also raised fairness and due process
concerns. In 1997, the American Bar Association became the first
organization to call for a moratorium on the death penalty. Several
states are finally beginning to recognize the great injustice when the
ultimate punishment is carried out in a biased and unfair way. In
January 2000, Governor George Ryan became the first chief executive to
place a moratorium on executions. Moratorium bills have been considered
by the legislatures of at least ten states over the last two years.
I am glad to see that some states are finally taking steps to correct
the practice of legalized killing that was again unleashed by the
Supreme Court's Gregg decision in 1976. The first post-Gregg execution
took place in 1977 in Utah, when Gary Gilmore did not challenge and
instead aggressively sought his execution by a firing squad. The first
post-Gregg involuntary execution took place on May 25, 1979. I vividly
remember that day. I had just finished my last law school exam that
morning. Later that day, I recall turning on the television and
watching the news report that Florida had just executed John
Spenkelink. I was overcome with a sickening feeling. Here I was, fresh
out of law school and firm in my belief that our legal system was
advancing through the latter quarter of the twentieth century. Instead,
to my great dismay, I was witnessing a throwback to the electric chair,
the gallows, and the routine executions of our Nation's earlier
history.
I haven't forgotten that experience or what I thought and felt on
that day. At the beginning of 2001, at the end of a remarkable century
and millennium of progress and at the beginning of a new century and
millennium with hopes for even greater progress, I cannot help but
believe that our progress has been tarnished by our Nation's not only
continuing, but increasing use of the death penalty. As of today, the
United States has executed 690 people since the reinstatement of the
death penalty in 1976. This is astounding and it is embarrassing. We
are a Nation that prides itself on the fundamental principles of
justice, liberty, equality and due process. We are a Nation that
scrutinizes the human rights records of other nations. We are one of
the first nations to speak out against torture and killings by foreign
governments. It is time for us to look in the mirror.
Two former Supreme Court justices did just that. Justice Harry
Blackmun penned the following eloquent dissent in 1994:

From this day forward, I no longer shall tinker with the
machinery of death. For more than 20 years I have
endeavored--indeed, I have struggled--along with a majority
of this Court, to develop procedural and substantive rules
that would lend more than the mere appearance of fairness to
the death penalty endeavor. Rather than continue to coddle
the Court's delusion that the desired level of fairness has
been achieved and the need for regulation eviscerated, I feel
morally and intellectually obligated simply to concede that
the death penalty experiment has failed. It is virtually
self-evident to me now that no combination of procedural
rules or substantive regulations ever can save the death
penalty from its inherent constitutional deficiencies. The
basic question--does the system accurately and consistently
determine which defendants ``deserve'' to die?--cannot be
answered in the affirmative. . . . The problem is that the
inevitability of factual, legal, and moral error gives us a
system that we know must wrongly kill some defendants, a
system that fails to deliver the fair, consistent, and
reliable sentences of death required by the Constitution.

Justice Lewis Powell also had a similar change of mind. Justice
Powell dissented from the Furman decision in 1972, which struck down
the death penalty as a form of cruel and unusual punishment. He also
wrote the decision in McCleskey v. Kemp in 1987, which denied a
challenge to the death penalty on the grounds that it was applied in a
discriminatory manner against African Americans. In 1991, however,
Justice Powell told his biographer that he had decided that capital
punishment should be abolished.
After sitting on our Nation's highest court for over 20 years,
Justices Blackmun and Powell came to understand the randomness and
unfairness of the death penalty. Mr. President, it is time for our
Nation to follow the lead of these two distinguished jurists and re-
visit its support for this form of punishment.
At the beginning of 2001, as we enter a new millennium, our society
is still far from fully just. The continued use of the death demenas
us. The penalty is at odds with our best traditions. It is wrong and it
is immoral. The adage ``two wrongs do not make a right,'' could not be
more appropriate here. Our Nation has long ago done away with other
barbaric punishments like whipping and cutting off the ears of
suspected criminals. Just as our nation did away with these punishments
as contrary to our humanity and ideals, it is time to abolish the death
penalty as we enter the next century. And it's not just a matter of
morality. The continued viability of our justice system as a truly just
system requires that we do so. And in the world's eyes, the ability of
our nation to say truthfully that we are the leader and defender of
freedom, liberty and equality demands that we do so.

I close with the following remarks from Aundre Herron, an attorney
who was recently honored in California for her outstanding service in
defense of those charged with capital crimes:

. . . [T]he death penalty is America's dark underbelly--
the worst of America--the part we seek desperately to hide
from public view. . . . It is here--in the worst of America--
that the death penalty finds its truest and most sinister
meaning--the death penalty is where all the contradictions
converge. It is this country's way of destroying the evidence
of its failures, its hypocrisy, its shame. It is the last
relic of America's worst

[[Page S585]]

legacies--slavery, segregation, lynching, racism, classism
and violence.

Abolishing the death penalty will not be an easy task. It will take
patience, persistence and courage. As we head to a new millennium, let
us leave this archaic practice behind.
I ask my colleagues to join me in taking the first step in abolishing
the death penalty in our great nation. I also call on each state that
authorizes the use of the death penalty to cease this practice. Let us
step away from the culture of violence and restore fairness and
integrity to our criminal justice system.
I ask that the text of the bill be printed in the Record following my
remarks.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 191

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 ``Federal Death Penalty
Abolition Act of 2001''.

SEC. 2. REPEAL OF FEDERAL LAWS PROVIDING FOR THE DEATH
PENALTY.

(a) Homicide-Related Offenses.--
(1) Murder related to the smuggling of aliens.--Section
274(a)(1)(B)(iv) of the Immigration and Nationality Act (8
U.S.C. 1324(a)(1)(B)(iv)) is amended by striking ``punished
by death or''.
(2) Destruction of aircraft, motor vehicles, or related
facilities resulting in death.--Section 34 of title 18,
United States Code, is amended by striking ``to the death
penalty or''.
(3) Murder committed during a drug-related drive-by
shooting.--Section 36(b)(2)(A) of title 18, United States
Code, is amended by striking ``death or''.
(4) Murder committed at an airport serving international
civil aviation.--Section 37(a) of title 18, United States
Code, is amended, in the matter following paragraph (2), by
striking ``punished by death or''.
(5) Civil rights offenses resulting in death.--Chapter 13
of title 18, United States Code, is amended--
(A) in section 241, by striking ``, or may be sentenced to
death'';
(B) in section 242, by striking ``, or may be sentenced to
death'';
(C) in section 245(b), by striking ``, or may be sentenced
to death''; and
(D) in section 247(d)(1), by striking ``, or may be
sentenced to death''.
(6) Murder of a member of congress, an important executive
official, or a supreme court justice.--Section 351 of title
18, United States Code, is amended--
(A) in subsection (b)(2), by striking ``death or''; and
(B) in subsection (d)(2), by striking ``death or''.
(7) Death resulting from offenses involving transportation
of explosives, destruction of government property, or
destruction of property related to foreign or interstate
commerce.--Section 844 of title 18, United States Code, is
amended--
(A) in subsection (d), by striking ``or to the death
penalty'';
(B) in subsection (f)(3), by striking ``subject to the
death penalty, or'';
(C) in subsection (i), by striking ``or to the death
penalty''; and
(D) in subsection (n), by striking ``(other than the
penalty of death)''.
(8) Murder committed by use of a firearm during commission
of a crime of violence or a drug trafficking crime.--Section
924(j)(1) of title 18, United States Code, is amended by
striking ``by death or''.
(9) Genocide.--Section 1091(b)(1) of title 18, United
States Code, is amended by striking ``death or''.
(10) First degree murder.--Section 1111(b) of title 18,
United States Code, is amended by striking ``by death or''.
(11) Murder by a federal prisoner.--Section 1118 of title
18, United States Code, is amended--
(A) in subsection (a), by striking ``by death or''; and
(B) in subsection (b), in the third undesignated
paragraph--
(i) by inserting ``or'' before ``an indeterminate''; and
(ii) by striking ``, or an unexecuted sentence of death''.
(12) Murder of a state or local law enforcement official or
other person aiding in a federal investigation; murder of a
state correctional officer.--Section 1121 of title 18, United
States Code, is amended--
(A) in subsection (a), by striking ``by sentence of death
or''; and
(B) in subsection (b)(1), by striking ``or death''.
(13) Murder during a kidnaping.--Section 1201(a) of title
18, United States Code, is amended by striking ``death or''.
(14) Murder during a hostage-taking.--Section 1203(a) of
title 18, United States Code, is amended by striking ``death
or''.
(15) Murder with the intent of preventing testimony by a
witness, victim, or informant.--Section 1512(a)(2)(A) of
title 18, United States Code, is amended by striking ``the
death penalty or''.
(16) Mailing of injurious articles with intent to kill or
resulting in death.--Section 1716(i) of title 18, United
States Code, is amended by striking ``to the death penalty
or''.
(17) Assassination or kidnaping resulting in the death of
the president or vice president.--Section 1751 of title 18,
United States Code, is amended--
(A) in subsection (b)(2), by striking ``death or''; and
(B) in subsection (d)(2), by striking ``death or''.
(18) Murder for hire.--Section 1958(a) of title 18, United
States Code, is amended by striking ``death or''.
(19) Murder involved in a racketeering offense.--Section
1959(a)(1) of title 18, United States Code, is amended by
striking ``death or''.
(20) Willful wrecking of a train resulting in death.--
Section 1992(b) of title 18, United States Code, is amended
by striking ``to the death penalty or''.
(21) Bank robbery-related murder or kidnaping.--Section
2113(e) of title 18, United States Code, is amended by
striking ``death or''.
(22) Murder related to a carjacking.--Section 2119(3) of
title 18, United States Code, is amended by striking ``, or
sentenced to death''.
(23) Murder related to aggravated child sexual abuse.--
Section 2241(c) of title 18, United States Code, is amended
by striking ``unless the death penalty is imposed,''.
(24) Murder related to sexual abuse.--Section 2245 of title
18, United States Code, is amended by striking ``punished by
death or''.
(25) Murder related to sexual exploitation of children.--
Section 2251(d) of title 18, United States Code, is amended
by striking ``punished by death or''.
(26) Murder committed during an offense against maritime
navigation.--Section 2280(a)(1) of title 18, United States
Code, is amended by striking ``punished by death or''.
(27) Murder committed during an offense against a maritime
fixed platform.--Section 2281(a)(1) of title 18, United
States Code, is amended by striking ``punished by death or''.
(28) Terrorist murder of a united states national in
another country.--Section 2332(a)(1) of title 18, United
States Code, is amended by striking ``death or''.
(29) Murder by the use of a weapon of mass destruction.--
Section 2332a of title 18, United States Code, is amended--
(A) in subsection (a), by striking ``punished by death
or''; and
(B) in subsection (b), by striking ``by death, or''.
(30) Murder by act of terrorism transcending national
boundaries.--Section 2332b(c)(1)(A) of title 18, United
States Code, is amended by striking ``by death, or''.
(31) Murder involving torture.--Section 2340A(a) of title
18, United States Code, is amended by striking ``punished by
death or''.
(32) Murder related to a continuing criminal enterprise or
related murder of a federal, state, or local law enforcement
officer.--Section 408 of the Controlled Substances Act (21
U.S.C. 848) is amended--
(A) in each of subparagraphs (A) and (B) of subsection
(e)(1), by striking ``, or may be sentenced to death'';
(B) by striking subsections (g) and (h) and inserting the
following:
``(g) [Reserved.]
``(h) [Reserved.]'';
(C) in subsection (j), by striking `` and as to
appropriateness in that case of imposing a sentence of
death'';
(D) in subsection (k), by striking ``, other than death,''
and all that follows before the period at the end and
inserting ``authorized by law''; and
(E) by striking subsections (l) and (m) and inserting the
following:
``(l) [Reserved.]
``(m) [Reserved.]''.
(33) Death resulting from aircraft hijacking.--Section
46502 of title 49, United States Code, is amended--
(A) in subsection (a)(2), by striking ``put to death or'';
and
(B) in subsection (b)(1)(B), by striking ``put to death
or''.
(b) Non-Homicide Related Offenses.--
(1) Espionage.--Section 794(a) of title 18, United States
Code, is amended by striking ``punished by death or'' and all
that follows before the period and inserting ``imprisoned for
any term of years or for life''.
(2) Treason.--Section 2381 of title 18, United States Code,
is amended by striking ``shall suffer death, or''.
(c) Repeal of Criminal Procedures Relating To Imposition of
Death Sentence.--
(1) In general.--Chapter 228 of title 18, United States
Code, is repealed.
(2) Technical and conforming amendment.--The table of
chapters for part II of title 18, United States Code, is
amended by striking the item relating to chapter 228.

SEC. 3. PROHIBITION ON IMPOSITION OF DEATH SENTENCE.

(a) In General.--Notwithstanding any other provision of
law, no person may be sentenced to death or put to death on
or after the date of enactment of this Act for any violation
of Federal law .
(b) Persons Sentenced Before Date of Enactment.--
Notwithstanding any other provision of law, any person
sentenced to death before the date of enactment of this Act
for any violation of Federal law shall serve a sentence of
life imprisonment without the possibility of parole.
______

By Mr. FEINGOLD (for himself and Mr. Leahy):

[[Page S586]]

S. 192. A bill to amend title 9, United States Code, with respect to
consumer credit transactions; to the Committee on the Judiciary.
Mr. FEINGOLD. Mr. President, I rise today to introduce the Consumer
Credit Fair Dispute Resolution Act of 2001, a bill that will protect
and preserve American consumers' right to take their disputes with
creditors to court. I first introduced this legislation last year, both
as a bill and as an amendment to the bankruptcy reform bill. I am
pleased that my distinguished colleague from Vermont, the ranking
member of the Judiciary Committee, Senator Leahy, has joined me again
as an original cosponsor of this important legislation.
Credit card companies and consumer credit lenders are increasingly
requiring their customers to use binding arbitration when a dispute
arises. Consumers are barred by contract from taking a dispute to
court, even small claims court. While arbitration can be an efficient
tool to settle claims, it is credible and effective only when consumers
enter into it knowingly, intelligently and voluntarily. Unfortunately,
that's not happening in the credit card and consumer credit lending
arenas.
One of the most fundamental principles of our justice system is the
constitutional right to take a dispute to court. Indeed, all Americans
have the right in civil and criminal cases to a trial by jury. The
right to a jury trial in civil cases in Federal court is contained in
the Seventh Amendment to the Constitution. Many States provide a
similar right to a jury trial in civil matters filed in state court.
Some argue that Americans are over-using the courts. Court dockets
across the country are congested with civil cases. In part as a
response to these concerns, various ways to resolve disputes, short of
going to court, have been developed. Alternatives to court litigation
are collectively known as alternative dispute resolution, or ADR. ADR
includes mediation and arbitration. Mediation and arbitration are often
efficient ways to resolve disputes because the parties can have their
case heard well before they would have received a trial date in court.
Arbitration, like a court proceeding, involves a third party--an
arbitrator or arbitration panel. The arbitrator issues a decision after
reviewing the arguments by all parties. Arbitration uses rules of
evidence and procedure, although it may use rules that are simpler or
more flexible than the evidentiary and procedural rules that the
parties would follow in a court proceeding.
Arbitration can be either binding or non-binding. Non-binding
arbitration means that the decision issued by the arbitrator or
arbitration panel takes effect only if the parties agree to it after
they know what the decision is. In binding arbitration, parties agree
in advance to accept and abide by the decision, whatever it is.
Some contracts contain clauses that require arbitration to be used to
resolve disputes that arise after the contract is signed. This is
called ``mandatory arbitration.'' This means that if there is a
dispute, the complaining party cannot file suit in court and instead is
required to pursue arbitration. ``Mandatory, binding arbitration''
therefore means that under the contract, the parties must use
arbitration to resolve a future disagreement and the decision of the
arbitrator or arbitration panel is final. The parties have no ability
to seek relief in court or through mediation. In fact, if they are not
satisfied with the arbitration outcome, they are probably stuck with
the decision.
Under mandatory, binding arbitration, even if a party believes that
the arbitrator did not consider all the facts or follow the law, the
party cannot file a suit in court. The only basis for challenging a
binding arbitration decision is fairly narrow: if there is reason to
believe that the arbitrator committed actual fraud, or was partial,
corrupt or guilty of misconduct, or exceeded his or her powers. In
contrast, if a dispute is resolved by a court, the parties can have
broader grounds upon which to pursue an appeal of the lower court's
decision.
Because mandatory, binding arbitration is so conclusive, it is a
credible means of dispute resolution only when all parties understand
the full ramifications of agreeing to it. But that's not what's
happening in a variety of contexts--from motor vehicle franchise
agreements, to employment agreements, to credit card agreements. I'm
proud to have sponsored legislation addressing employment agreements
and motor vehicle franchise agreements. Many of my colleagues have
joined as cosponsor of one or both bills. And just last spring, my
distinguished colleague from Iowa, Senator Grassley, chaired a hearing
in the Judiciary Subcommittee on Administrative Oversight and the
Courts on contractual mandatory, binding arbitration. That hearing
included a discussion of mandatory arbitration in the consumer credit
agreement context.
There is a growing, menacing trend of credit card companies and
consumer credit lenders inserting mandatory, binding arbitration
clauses in agreements with consumers. Companies like First USA Bank,
American Express, and Green Tree Discount Company unilaterally insert
mandatory, binding arbitration clauses in their agreements with
consumers, often without the consumer's knowledge or consent.
The most common way credit card companies have done this is through
the use of a ``bill stuffer.'' Bill stuffers are the advertisements and
other materials that credit card companies insert into envelopes with
the customers' monthly statements. Some credit card issuers like
American Express have placed mandatory arbitration clauses in bill
stuffers. The arbitration provision is usually buried in fine print in
a mailing that includes a bill and various advertising materials. It is
often described in a lengthy legal document that most consumers
probably don't even skim, much less read carefully.

American Express's mandatory arbitration provision took effect on
June 1, 1999. So, if you're an American Express cardholder and you have
a dispute with American Express, as of June 1999, you can't take your
claim to court, even small claims court. You are bound to use
arbitration, and you are bound to the final arbitration decision. In
this case, you are also bound to use an arbitration organization
selected by American Express, the National Arbitration Forum.
American Express is not the only credit card company imposing
mandatory arbitration on its customers. First USA Bank, the largest
issuer of Visa cards, with 58 million customers, has been doing the
same thing since 1997. First USA also alerted its cardholders with a
bill stuffer, containing a condensed set of terms and conditions in
fine print. The cardholder, by virtue of continuing to use the First
USA card, gave up the right to go to court, even small claims court, to
resolve a dispute.
This growing practice extends beyond credit cards into the consumer
loan industry. Consumer credit lenders like Green Tree Consumer
Discount Company are inserting mandatory, binding arbitration clauses
in their loan agreements. The problem is that these loan agreements are
usually adhesion contracts, which means that consumers must either sign
the agreement as is, or forego a loan. In other words, consumers lack
the bargaining power to have the clause removed.
More importantly, when signing on the dotted line of the loan
agreement, consumers may not even understand what mandatory arbitration
means. In all likelihood, they do not understand that they have just
signed away a right to go to court to resolve a dispute with the
lender. It might be argued that if consumers are not pleased with being
subjected to a mandatory arbitration clause, they can cancel their
credit card, or not execute on their loan agreement, and take their
business elsewhere. Unfortunately, that's easier said than done. As I
mentioned, First USA Bank, the nation's largest Visa card issuer, is
part of this questionable practice. In fact, the practice is becoming
so pervasive that consumers may soon no longer have an alternative,
unless they forego use of a credit card or a consumer loan entirely.
Consumers should not be forced to make that choice.
Companies like First USA, American Express and Green Tree argue that
they rely on mandatory arbitration to resolve disputes faster and
cheaper than in court litigation. The claim may be resolved faster but
is it really cheaper? Is it as fair as a court of law? I don't think
so. Arbitration organizations often charge exorbitant fees to

[[Page S587]]

the consumer who brings a dispute. These costs can be much higher than
bringing the matter to small claims court and paying a court filing
fee. Or, the fees could very well be greater than the consumer's claim.
So as a result, a consumer's claim is not necessarily resolved more
efficiently with arbitration. It is resolved either at greater cost to
the consumer or not at all, if the consumer cannot afford the costs, or
the costs outweigh the amount in dispute.
In December 2000, in Green Tree Financial Corp. Alabama et. al. v.
Randolph, the U.S. Supreme Court found that an arbitration clause that
is silent as to the costs and fees of arbitration is enforceable. It,
however, left unanswered the question of whether large arbitration
costs, which effectively preclude a litigant from vindicating federal
statutory rights in the arbitral forum, render the arbitration clause
unenforceable.
Another significant problem with mandatory, binding arbitration is
that the lender gets to decide in advance who the arbitrator will be.
In the case of American Express and First USA, they have chosen the
National Arbitration Forum. All credit card disputes with consumers
involving American Express or First USA are handled by that entity.
There would seem to be a significant danger that this would result in
an advantage for the lenders who are ``repeat players.'' After all, if
the National Arbitration Forum develops a pattern of reaching decisions
that favor cardholders, American Express or First USA may very well
decide to take their arbitration business elsewhere. A system where the
arbitrator has a financial interest in reaching an outcome that favors
the credit card company is not a fair alternative dispute resolution
system.
At least one state court has found that mandatory arbitration
provisions in credit card bill stuffers are unenforceable. A suit filed
in California state court arose out of a mandatory arbitration
provision announced in mailings by Bank of America to its credit card
and deposit account holders. In 1998, the California Court of Appeals
ruled that the mandatory arbitration clauses unilaterally imposed on
the Bank's customers were invalid and unenforceable. The California
Supreme Court refused to review the decision of the lower court. As a
result, credit card companies in California cannot invoke mandatory
arbitration in their disputes with customers. In fact, the American
Express bill stuffer notes that the mandatory, binding arbitration
provision will not apply to California residents until further notice
from the company. The California appellate court decision was wise and
well-reasoned, but consumers in other states cannot be sure that all
courts will reach the same conclusion.
My bill extends the wisdom of the California appellate decision to
every credit cardholder and consumer loan borrower. It amends the
Federal Arbitration Act to invalidate mandatory, binding arbitration
provisions in consumer credit agreements. Now, let me be clear. I
believe that arbitration can be a fair and efficient way to settle
disputes. I agree we ought to encourage alternative dispute resolution.
But I also believe that arbitration is a fair way to settle disputes
between consumers and lenders only when it is entered into knowingly
and voluntarily by both parties to the dispute after the dispute has
arisen. Pre-dispute agreements to take disputes to arbitration cannot
be voluntary and knowing in the consumer lending context because the
bargaining power of the parties is so unequal. My bill does not
prohibit arbitration of consumer credit transactions. It merely
prohibits mandatory, binding arbitration provisions in consumer credit
agreements.
Credit card companies and consumer credit lenders are increasingly
slamming the courthouse doors shut on consumers, often unbeknownst to
them. This is grossly unjust. We need to restore fairness to the
resolution of consumer credit disputes. I urge my colleagues to support
the Consumer Credit Fair Dispute Resolution Act.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record following my statement.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 192

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 ``Consumer Credit Fair Dispute
Resolution Act of 2001''.

SEC. 2. CONSUMER CREDIT TRANSACTIONS.

(a) Definitions.--Section 1 of title 9, United States Code,
is amended--
(1) in the section heading, by striking ``AND `COMMERCE'
DEFINED'' and inserting ``, `COMMERCE', `CONSUMER CREDIT
TRANSACTION', AND `CONSUMER CREDIT CONTRACT' DEFINED''; and
(2) by inserting before the period at the end the
following: ``; `consumer credit transaction', as herein
defined, means the right granted to a natural person to incur
debt and defer its payment, where the credit is intended
primarily for personal, family, or household purposes; and
`consumer credit contract', as herein defined, means any
contract between the parties to a consumer credit
transaction.''.
(b) Agreements To Arbitrate.--Section 2 of title 9, United
States Code, is amended--
(1) by striking ``A written'' and inserting ``(a) In
General.--A written''; and
(2) by adding at the end the following:
``(b) Consumer Credit Contracts.--
``(1) In general.--Notwithstanding the preceding sentence,
a written provision in any consumer credit contract
evidencing a transaction involving commerce to settle by
arbitration a controversy thereafter arising out of the
contract, or the refusal to perform the whole or any part
thereof, shall not be valid or enforceable.
``(2) Limitation.--Nothing in this section shall prohibit
the enforcement of any written agreement to settle by
arbitration a controversy arising out of a consumer credit
contract, if such written agreement has been entered into by
the parties to the consumer credit contract after the
controversy has arisen.''.

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