[Congressional Record Volume 147, Number 156 (Tuesday, November 13, 2001)]
[Senate]
[Pages S11678-S11708]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   ECONOMIC RECOVERY AND ASSISTANCE FOR AMERICAN WORKERS ACT OF 2001

  The PRESIDING OFFICER. The clerk will report the bill by title.
  The assistant legislative clerk read as follows:

       A bill (H.R. 3090) to provide tax incentives for economic 
     recovery.

  The Senate proceeded to consider the bill which had been reported 
from the Committee on Finance, with an amendment to strike all after 
the enacting clause and inserting in lieu thereof the following:

     SECTION 1. SHORT TITLE; ETC.

       (a) Short Title.--This Act may be cited as the ``Economic 
     Recovery and Assistance for American Workers Act of 2001''.
       (b) References to Internal Revenue Code of 1986.--Except as 
     otherwise expressly provided, whenever in this Act an 
     amendment or repeal is expressed in terms of an amendment to, 
     or repeal of, a section or other provision, the reference 
     shall be considered to be made to a section or other 
     provision of the Internal Revenue Code of 1986.
       (c) Table of Contents.--

Sec. 1. Short title; etc.

         TITLE I--SUPPLEMENTAL REBATE FOR INDIVIDUAL TAXPAYERS

Sec. 101. Supplemental rebate.

             TITLE II--TEMPORARY BUSINESS RELIEF PROVISIONS

Sec. 201. Special depreciation allowance for certain property.
Sec. 202. Increase in section 179 expensing.
Sec. 203. Carryback of certain net operating losses allowed for 5 
              years.

    TITLE III--TAX INCENTIVES AND RELIEF FOR VICTIMS OF TERRORISM, 
                  DISASTERS, AND DISTRESSED CONDITIONS

   Subtitle A--Tax Incentives for New York City and Distressed Areas

Sec. 301. Expansion of work opportunity tax credit targeted categories 
              to include certain employees in New York City.
Sec. 302. Tax-exempt private activity bonds for rebuilding portion of 
              New York City damaged in the September 11, 2001, 
              terrorist attack.
Sec. 303. Gain or loss from property damaged or destroyed in New York 
              Recovery Zone.
Sec. 304. Reenactment of exceptions for qualified-mortgage-bond-
              financed loans to victims of Presidentially declared 
              disasters.
Sec. 305. One-year expansion of authority for Indian tribes to issue 
              tax-exempt private activity bonds.

              Subtitle B--Victims of Terrorism Tax Relief

Sec. 310. Short title.

Part I--Relief Provisions for Victims of April 19, 1995, and September 
                      11, 2001, Terrorist Attacks

Sec. 311. Income and employment taxes of victims of terrorist attacks.
Sec. 312. Estate tax reduction.
Sec. 313. Payments by charitable organizations treated as exempt 
              payments.
Sec. 314. Exclusion of certain cancellations of indebtedness.

  Part II--General Relief for Victims of Disasters and Terroristic or 
                            Military Actions

Sec. 321. Exclusion for disaster relief payments.
Sec. 322. Authority to postpone certain deadlines and required actions.
Sec. 323. Internal Revenue Service disaster response team.
Sec. 324. Application of certain provisions to terroristic or military 
              actions.
Sec. 325. Clarification of due date for airline excise tax deposits.
Sec. 326. Coordination with Air Transportation Safety and System 
              Stabilization Act.

   Part III--Disclosure of Tax Information in Terrorism and National 
                        Security Investigations

Sec. 331. Disclosure of tax information in terrorism and national 
              security investigations.

        TITLE IV--EXTENSIONS OF CERTAIN EXPIRING TAX PROVISIONS

Sec. 401. Allowance of nonrefundable personal credits against regular 
              and minimum tax liability.
Sec. 402. Work opportunity credit.
Sec. 403. Welfare-to-work credit.
Sec. 404. Credit for electricity produced from renewable resources.
Sec. 405. Taxable income limit on percentage depletion for oil and 
              natural gas produced from marginal properties.
Sec. 406. Qualified zone academy bonds.
Sec. 407. Subpart F exemption for active financing.
Sec. 408. Cover over of tax on distilled spirits.
Sec. 409. Delay in effective date of requirement for approved diesel or 
              kerosene terminals.
Sec. 410. Deduction for clean-fuel vehicles and certain refueling 
              property.
Sec. 411. Credit for qualified electric vehicles.
Sec. 412. Parity in the application of certain limits to mental health 
              benefits.
Sec. 413. Combined employment tax reporting.

    TITLE V--EXTENSION OF CERTAIN TRADE PROVISIONS EXPIRING IN 2001.

Sec. 501. Generalized System of Preferences.
Sec. 502. Andean Trade Preference Act.
Sec. 503. Reauthorization of trade adjustment assistance.

  TITLE VI--HEALTH INSURANCE COVERAGE OPTIONS FOR RECENTLY UNEMPLOYED 
                     INDIVIDUALS AND THEIR FAMILIES

Sec. 601. Premium assistance for COBRA continuation coverage for 
              individuals and their families.
Sec. 602. State option to provide temporary medicaid coverage for 
              certain uninsured individuals.
Sec. 603. State option to provide temporary coverage under medicaid for 
              the unsubsidized portion of COBRA continuation premiums.
Sec. 604. Temporary increases of medicaid FMAP for fiscal year 2002.
Sec. 605. Definitions.

          TITLE VII--TEMPORARY ENHANCED UNEMPLOYMENT BENEFITS

Sec. 701. Short title.
Sec. 702. Federal-State agreements.
Sec. 703. Temporary supplemental unemployment compensation account.
Sec. 704. Payments to States having agreements under this title.
Sec. 705. Financing provisions.
Sec. 706. Fraud and overpayments.
Sec. 707. Definitions.
Sec. 708. Applicability.

              TITLE VIII--EMERGENCY AGRICULTURE ASSISTANCE

                    Subtitle A--Crop Loss Assistance

Sec. 801. Crop loss assistance.
Sec. 802. Livestock assistance program.
Sec. 803. Commodity purchases.

                     Subtitle B--Rural Development

Sec. 811. Rural community facilities and utilities.
Sec. 812. Rural telecommunications loans.
Sec. 813. Telemedicine and distance learning services.
Sec. 814. Environmental quality incentives program.
Sec. 815. Farmland protection program.

                       Subtitle C--Administration

Sec. 821. Commodity Credit Corporation.
Sec. 822. Administrative expenses.
Sec. 823. Regulations.

                    TITLE IX--ADDITIONAL PROVISIONS

Sec. 901. Credit to holders of qualified Amtrak bonds.
Sec. 902. Broadband Internet access tax credit.
Sec. 903. Citrus tree canker relief.
Sec. 904. Allowance of electronic 1099s.
Sec. 905. Clarification of excise tax exemptions for agricultural 
              aerial applicators.
Sec. 906. Recovery period for certain wireless telecommunications 
              equipment.
Sec. 907. No impact on social security trust funds.
Sec. 908. Emergency designation.

         TITLE I--SUPPLEMENTAL REBATE FOR INDIVIDUAL TAXPAYERS

     SEC. 101. SUPPLEMENTAL REBATE.

       (a) In General.--Section 6428 (relating to acceleration of 
     10 percent income tax rate bracket benefit for 2001) is 
     amended by adding at the end the following new subsection:
       ``(f) Supplemental Rebate.--
       ``(1) In general.--Each individual who was an eligible 
     individual for such individual's first taxable year beginning 
     in 2000 and who, before October 16, 2001--
       ``(A) filed a return of tax imposed by subtitle A for such 
     taxable year, or
       ``(B) filed a return of income tax with the government of 
     American Samoa, Guam, the Commonwealth of the Northern 
     Mariana Islands, the Commonwealth of Puerto Rico, or the 
     Virgin Islands of the United States,
     shall be treated as having made a payment against the tax 
     imposed by chapter 1 for such first taxable year in an amount 
     equal to the supplemental refund amount for such taxable 
     year.
       ``(2) Supplemental refund amount.--For purposes of this 
     subsection, the supplemental refund amount is an amount equal 
     to the excess (if any) of--
       ``(A)(i) $600 in the case of taxpayers to whom section 1(a) 
     applies,
       ``(ii) $500 in the case of taxpayers to whom section 1(b) 
     applies, and
       ``(iii) $300 in the case of taxpayers to whom subsections 
     (c) or (d) of section 1 applies, over
       ``(B) the amount of any advance refund amount paid to the 
     taxpayer under subsection (e).

[[Page S11679]]

       ``(3) Timing of payments.--In the case of any overpayment 
     attributable to this subsection, the Secretary shall, subject 
     to the provisions of this title, refund or credit such 
     overpayment as rapidly as possible.
       ``(4) No interest.--No interest shall be allowed on any 
     overpayment attributable to this subsection.
       ``(5) Special rule for certain nonresidents.--The 
     determination under subsection (c)(2) as to whether an 
     individual who filed a return of tax described in paragraph 
     (1)(B) is a nonresident alien individual shall, under rules 
     prescribed by the Secretary, be made by reference to the 
     possession or Commonwealth with which the return was filed 
     and not the United States.''.
       (b) Technical Correction.--
       (1) In general.--Subsection (b) of section 6428 is amended 
     to read as follows:
       ``(b) Credit Treated as Nonrefundable Personal Credit.--For 
     purposes of this title, the credit allowed under this section 
     shall be treated as a credit allowable under subpart A of 
     part IV of subchapter A of chapter 1.''.
       (2) Conforming amendments.--
       (A) Subsection (d) of section 6428 is amended to read as 
     follows:
       ``(d) Coordination with Advance Refunds of Credit.--
       ``(1) In general.--The amount of credit which would (but 
     for this paragraph) be allowable under this section shall be 
     reduced (but not below zero) by the aggregate refunds and 
     credits made or allowed to the taxpayer under subsection (e). 
     Any failure to so reduce the credit shall be treated as 
     arising out of a mathematical or clerical error and assessed 
     according to section 6213(b)(1).
       ``(2) Joint returns.--In the case of a refund or credit 
     made or allowed under subsection (e) with respect to a joint 
     return, half of such refund or credit shall be treated as 
     having been made or allowed to each individual filing such 
     return.''.
       (B) Paragraph (2) of section 6428(e) is amended to read as 
     follows:
       ``(2) Advance refund amount.--For purposes of paragraph 
     (1), the advance refund amount is the amount that would have 
     been allowed as a credit under this section for such first 
     taxable year if--
       ``(A) this section (other than subsections (b) and (d) and 
     this subsection) had applied to such taxable year, and
       ``(B) the credit for such taxable year were not allowed to 
     exceed the excess (if any) of--
       ``(i) the sum of the regular tax liability (as defined in 
     section 26(b)) plus the tax imposed by section 55, over
       ``(ii) the sum of the credits allowable under part IV of 
     subchapter A of chapter 1 (other than the credits allowable 
     under subpart C thereof, relating to refundable credits).''.
       (c) Conforming Amendments.--
       (1) Paragraph (1) of section 6428(d), as amended by 
     subsection (b), is amended by striking ``subsection (e)'' and 
     inserting ``subsections (e) and (f)''.
       (2) Paragraph (2) of section 6428(d), as amended by 
     subsection (b), is amended by striking ``subsection (e)'' and 
     inserting ``subsection (e) or (f)''.
       (3) Paragraph (3) of section 6428(e) is amended by striking 
     ``December 31, 2001'' and inserting ``the date of the 
     enactment of the Economic Recovery and Assistance for 
     American Workers Act of 2001''.
       (d) Reporting Requirement.--For purposes of determining the 
     individuals who are eligible for the supplemental rebate 
     under section 6428(f) of the Internal Revenue Code of 1986, 
     the governments of American Samoa, Guam, the Commonwealth of 
     the Northern Mariana Islands, the Commonwealth of Puerto 
     Rico, and the Virgin Islands of the United States shall 
     provide, at such time and in such manner as provided by the 
     Secretary of the Treasury, the names, addresses, and taxpayer 
     identifying numbers (within the meaning of section 6109 of 
     the Internal Revenue Code of 1986) of residents who filed 
     returns of income tax with such governments for 2000.
       (e) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall take effect on the date 
     of the enactment of this Act.
       (2) Technicals.--The amendments made by subsection (b) 
     shall take effect as if included in the amendment made by 
     section 101(b)(1) of the Economic Growth and Tax Relief 
     Reconciliation Act of 2001.

             TITLE II--TEMPORARY BUSINESS RELIEF PROVISIONS

     SEC. 201. SPECIAL DEPRECIATION ALLOWANCE FOR CERTAIN 
                   PROPERTY.

       (a) In General.--Section 168 (relating to accelerated cost 
     recovery system) is amended by adding at the end the 
     following new subsection:
       ``(k) Special Allowance for Certain Property Acquired After 
     September 10, 2001, and Before September 11, 2002.--
       ``(1) Additional allowance.--In the case of any qualified 
     property--
       ``(A) the depreciation deduction provided by section 167(a) 
     for the taxable year in which such property is placed in 
     service shall include an allowance equal to 10 percent of the 
     adjusted basis of the qualified property, and
       ``(B) the adjusted basis of the qualified property shall be 
     reduced by the amount of such deduction before computing the 
     amount otherwise allowable as a depreciation deduction under 
     this chapter for such taxable year and any subsequent taxable 
     year.
       ``(2) Qualified property.--For purposes of this 
     subsection--
       ``(A) In general.--The term `qualified property' means 
     property--
       ``(i)(I) to which this section applies which has an 
     applicable recovery period of 20 years or less or which is 
     water utility property,
       ``(II) which is computer software (as defined in section 
     167(f)(1)(B)) for which a deduction is allowable under 
     section 167(a) without regard to this subsection,
       ``(III) which is qualified leasehold improvement property, 
     or
       ``(IV) which is eligible for depreciation under section 
     167(g),
       ``(ii) the original use of which commences with the 
     taxpayer after September 10, 2001,
       ``(iii) which is--

       ``(I) acquired by the taxpayer after September 10, 2001, 
     and before September 11, 2002, but only if no written binding 
     contract for the acquisition was in effect before September 
     11, 2001, or
       ``(II) acquired by the taxpayer pursuant to a written 
     binding contract which was entered into after September 10, 
     2001, and before September 11, 2002, and

       ``(iv) which is placed in service by the taxpayer before 
     January 1, 2003.
       ``(B) Exceptions.--
       ``(i) Alternative depreciation property.--The term 
     `qualified property' shall not include any property to which 
     the alternative depreciation system under subsection (g) 
     applies, determined--

       ``(I) without regard to paragraph (7) of subsection (g) 
     (relating to election to have system apply), and
       ``(II) after application of section 280F(b) (relating to 
     listed property with limited business use).

       ``(ii) Election out.--If a taxpayer makes an election under 
     this clause with respect to any class of property for any 
     taxable year, this subsection shall not apply to all property 
     in such class placed in service during such taxable year.
       ``(C) Special rules.--
       ``(i) Self-constructed property.--In the case of a taxpayer 
     manufacturing, constructing, or producing property for the 
     taxpayer's own use, the requirements of clause (iii) of 
     subparagraph (A) shall be treated as met if the taxpayer 
     begins manufacturing, constructing, or producing the property 
     after September 10, 2001, and before September 11, 2002.
       ``(ii) Sale-leasebacks.--For purposes of subparagraph 
     (A)(ii), if property--

       ``(I) is originally placed in service after September 10, 
     2001, by a person, and
       ``(II) sold and leased back by such person within 3 months 
     after the date such property was originally placed in 
     service,

     such property shall be treated as originally placed in 
     service not earlier than the date on which such property is 
     used under the leaseback referred to in subclause (II).
       ``(D) Coordination with section 280f.--For purposes of 
     section 280F--
       ``(i) Automobiles.--In the case of a passenger automobile 
     (as defined in section 280F(d)(5)) which is qualified 
     property, the Secretary shall increase the limitation under 
     section 280F(a)(1)(A)(i) by $1,600.
       ``(ii) Listed property.--The deduction allowable under 
     paragraph (1) shall be taken into account in computing any 
     recapture amount under section 280F(b)(2).
       ``(3) Qualified leasehold improvement property.--For 
     purposes of this subsection--
       ``(A) In general.--The term `qualified leasehold 
     improvement property' means any improvement to an interior 
     portion of a building which is nonresidential real property 
     if--
       ``(i) such improvement is made under or pursuant to a lease 
     (as defined in subsection (h)(7))--

       ``(I) by the lessee (or any sublessee) of such portion, or
       ``(II) by the lessor of such portion,

       ``(ii) such portion is to be occupied exclusively by the 
     lessee (or any sublessee) of such portion, and
       ``(iii) such improvement is placed in service more than 3 
     years after the date the building was first placed in 
     service.
       ``(B) Certain improvements not included.--Such term shall 
     not include any improvement for which the expenditure is 
     attributable to--
       ``(i) the enlargement of the building,
       ``(ii) any elevator or escalator,
       ``(iii) any structural component benefiting a common area, 
     and
       ``(iv) the internal structural framework of the building.
       ``(C) Definitions and special rules.--For purposes of this 
     paragraph--
       ``(i) Binding commitment to lease treated as lease.--A 
     binding commitment to enter into a lease shall be treated as 
     a lease, and the parties to such commitment shall be treated 
     as lessor and lessee, respectively.
       ``(ii) Related persons.--A lease between related persons 
     shall not be considered a lease. For purposes of the 
     preceding sentence, the term `related persons' means--

       ``(I) members of an affiliated group (as defined in section 
     1504), and
       ``(II) persons having a relationship described in 
     subsection (b) of section 267; except that, for purposes of 
     this clause, the phrase `80 percent or more' shall be 
     substituted for the phrase `more than 50 percent' each place 
     it appears in such subsection.

       ``(D) Improvements made by lessor.--In the case of an 
     improvement made by the person who was the lessor of such 
     improvement when such improvement was placed in service, such 
     improvement shall be qualified leasehold improvement property 
     (if at all) only so long as such improvement is held by such 
     person.''.
       (b) Allowance Against Alternative Minimum Tax.--
       (1) In general.--Section 56(a)(1)(A) (relating to 
     depreciation adjustment for alternative minimum tax) is 
     amended by adding at the end the following new clause:
       ``(iii) Additional allowance for certain property acquired 
     after september 10, 2001,

[[Page S11680]]

     and before september 11, 2002.--The deduction under section 
     168(k) shall be allowed.''.
       (2) Conforming amendment.--Clause (i) of section 
     56(a)(1)(A) is amended by striking ``clause (ii)'' both 
     places it appears and inserting ``clauses (ii) and (iii)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after September 10, 
     2001, in taxable years ending after such date.

     SEC. 202. INCREASE IN SECTION 179 EXPENSING.

       (a) In General.--The table contained in section 179(b)(1) 
     (relating to dollar limitation) is amended to read as 
     follows:

                                                  ``If thThe applicable
                                                             amount is:
      2001.....................................................$24,000 
      2002.....................................................$35,000 
      2003 or thereafter....................................$25,000.''.
       (b) Temporary Increase in Amount of Property Triggering 
     Phaseout of Maximum Benefit.--Paragraph (2) of section 179(b) 
     is amended by inserting before the period ``($325,000 in the 
     case of taxable years beginning during 2002)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 203. CARRYBACK OF CERTAIN NET OPERATING LOSSES ALLOWED 
                   FOR 5 YEARS.

       (a) In General.--Paragraph (1) of section 172(b) (relating 
     to years to which loss may be carried) is amended by adding 
     at the end the following new subparagraph:
       ``(H) In the case of a taxpayer which has a net operating 
     loss for any taxable year ending in 2001, subparagraph (A)(i) 
     shall be applied by substituting `5' for `2' and subparagraph 
     (F) shall not apply.''.
       (b) Election To Disregard 5-Year Carryback.--Section 172 
     (relating to net operating loss deduction) is amended by 
     redesignating subsection (j) as subsection (k) and by 
     inserting after subsection (i) the following new subsection:
       ``(j) Election To Disregard 5-Year Carryback for Certain 
     Net Operating Losses.--Any taxpayer entitled to a 5-year 
     carryback under subsection (b)(1)(H) from any loss year may 
     elect to have the carryback period with respect to such loss 
     year determined without regard to subsection (b)(1)(H). Such 
     election shall be made in such manner as may be prescribed by 
     the Secretary and shall be made by the due date (including 
     extensions of time) for filing the taxpayer's return for the 
     taxable year of the net operating loss. Such election, once 
     made for any taxable year, shall be irrevocable for such 
     taxable year.''.
       (c) Temporary Suspension of 90 Percent Limit on Certain NOL 
     Carrybacks.--Subparagraph (A) of section 56(d)(1) (relating 
     to general rule defining alternative tax net operating loss 
     deduction) is amended to read as follows:
       ``(A) the amount of such deduction shall not exceed the sum 
     of--
       ``(i) the lesser of--

       ``(I) the amount of such deduction attributable to net 
     operating losses (other than the deduction attributable to 
     carrybacks described in clause (ii)(I)), or
       ``(II) 90 percent of alternative minimum taxable income 
     determined without regard to such deduction, plus

       ``(ii) the lesser of--

       ``(I) the amount of such deduction attributable to 
     carrybacks of net operating losses for taxable years ending 
     in 2001, or
       ``(II) alternative minimum taxable income determined 
     without regard to such deduction reduced by the amount 
     determined under clause (i), and''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to net operating losses for taxable years ending 
     in 2001.

    TITLE III--TAX INCENTIVES AND RELIEF FOR VICTIMS OF TERRORISM, 
                  DISASTERS, AND DISTRESSED CONDITIONS

   Subtitle A--Tax Incentives for New York City and Distressed Areas

     SEC. 301. EXPANSION OF WORK OPPORTUNITY TAX CREDIT TARGETED 
                   CATEGORIES TO INCLUDE CERTAIN EMPLOYEES IN NEW 
                   YORK CITY.

       (a) In General.--For purposes of section 51 of the Internal 
     Revenue Code of 1986 (relating to work opportunity credit), a 
     New York Recovery Zone business employee shall be treated as 
     a member of a targeted group.
       (b) New York Recovery Zone Business Employee.--For purposes 
     of this section--
       (1) In general.--The term ``New York Recovery Zone business 
     employee'' means, with respect to the period beginning after 
     September 10, 2001, and ending before January 1, 2003, any 
     employee of a New York Recovery Zone business if--
       (A) substantially all the services performed during such 
     period by such employee for such business are performed in a 
     trade or business of such business located in an area 
     described in paragraph (2), and
       (B) with respect to any employee of such business described 
     in paragraph (2)(B), such employee is certified by the New 
     York State Department of Labor as not exceeding, when added 
     to all other employees previously certified with respect to 
     such period as New York Recovery Zone business employees with 
     respect to such business, the number of employees of such 
     business on September 11, 2001, in the New York Recovery 
     Zone.
       (2) New york recovery zone business.--The term ``New York 
     Recovery Zone business'' means any business establishment 
     which is--
       (A) located in the New York Recovery Zone, or
       (B) located in the City of New York, New York, outside the 
     New York Recovery Zone, as the result of the destruction or 
     damage of such establishment by the September 11, 2001, 
     terrorist attack.
       (3) New york recovery zone.--The term ``New York Recovery 
     Zone'' means the area located on or south of Canal Street, 
     East Broadway (east of its intersection with Canal Street), 
     or Grand Street (east of its intersection with East Broadway) 
     in the Borough of Manhattan in the City of New York, New 
     York.
       (4) Special rules for determining amount of credit.--For 
     purposes of applying subpart E of part IV of subchapter B of 
     chapter 1 of the Internal Revenue Code of 1986 to wages paid 
     or incurred to any New York Recovery Zone business employee--
       (A) section 51(a) of such Code shall be applied by 
     substituting ``qualified wages'' for ``qualified first-year 
     wages'',
       (B) section 51(d)(12)(A)(i) of such Code shall be applied 
     to the certification of individuals employed by a New York 
     Recovery Zone business before April 1, 2002, by substituting 
     ``on or before May 1, 2002'' for ``on or before the day on 
     which such individual begins work for the employer'',
       (C) subsections (c)(4) and (i)(2) of section 51 of such 
     Code shall not apply, and
       (D) in determining qualified wages, the following shall 
     apply in lieu of section 51(b) of such Code:
       (i) Qualified wages.--The term ``qualified wages'' means 
     the wages paid or incurred by the employer for work performed 
     during the period beginning on September 11, 2001, and ending 
     on December 31, 2002, to individuals who are New York 
     Recovery Zone business employees of such employer.
       (ii) Only first $12,000 of wages per taxable year taken 
     into account.--The amount of the qualified wages which may be 
     taken into account with respect to any individual shall not 
     exceed $12,000 per taxable year of the employer.
       (c) Credit Allowed Against Regular and Minimum Tax.--
       (1) In general.--Subsection (c) of section 38 (relating to 
     limitation based on amount of tax) is amended by 
     redesignating paragraph (3) as paragraph (4) and by inserting 
     after paragraph (2) the following new paragraph:
       ``(3) Special rules for new york recovery zone business 
     employee credit.--
       ``(A) In general.--In the case of the New York Recovery 
     Zone business employee credit--
       ``(i) this section and section 39 shall be applied 
     separately with respect to such credit, and
       ``(ii) in applying paragraph (1) to such credit--

       ``(I) the tentative minimum tax shall be treated as being 
     zero, and
       ``(II) the limitation under paragraph (1) (as modified by 
     subclause (I)) shall be reduced by the credit allowed under 
     subsection (a) for the taxable year (other than the New York 
     Recovery Zone business employee credit).

       ``(B) New york recovery zone business employee credit.--For 
     purposes of this subsection, the term `New York Recovery Zone 
     business employee credit' means the portion of work 
     opportunity credit under section 51 determined under section 
     301 of the Economic Recovery and Assistance for American 
     Workers Act of 2001.''.
       (2) Conforming amendment.--Subclause (II) of section 
     38(c)(2)(A)(ii) is amended by inserting ``or the New York 
     Recovery Zone business employee credit'' after ``employment 
     credit''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to taxable years ending after September 11, 2001.
       (d) Coordination With Emergency Appropriations.--
     Notwithstanding any other provision of law, any amount 
     otherwise available for disaster recovery activities and 
     assistance related to the September 11, 2001, terrorist 
     attack in the City of New York, New York, under the 2001 
     Emergency Supplemental Appropriations Act for Recovery from 
     and Response to Terrorist Attacks on the United States 
     (Public Law 107-38) shall be reduced by the aggregate 10-year 
     cost to the United States Treasury resulting from the credits 
     allowed under this section, as estimated for purposes of 
     determining whether this Act complies with the Congressional 
     Budget Act of 1974.

     SEC. 302. TAX-EXEMPT PRIVATE ACTIVITY BONDS FOR REBUILDING 
                   PORTION OF NEW YORK CITY DAMAGED IN THE 
                   SEPTEMBER 11, 2001, TERRORIST ATTACK.

       (a) Treatment as Qualified Bonds.--For purposes of the 
     Internal Revenue Code of 1986, any qualified NYC recovery 
     bond shall be treated as an exempt facility bond under 
     section 141(e) of such Code.
       (b) Qualified NYC Recovery Bond.--For purposes of this 
     section, the term ``qualified NYC recovery bond'' means any 
     bond which--
       (1) is issued by the State of New York or any political 
     subdivision thereof (or any agency, instrumentality or 
     constituted authority on behalf thereof), and
       (2) meets the requirements of subsections (c) through (f).
       (c) Designation Requirements.--A bond meets the 
     requirements of this subsection if it is issued as part of an 
     issue designated as a qualified NYC recovery bond by the 
     Mayor of the City of New York, New York, or an individual 
     specifically appointed to make such designation.
       (d) Issuance and Volume Requirements.--
       (1) In general.--Except as provided in paragraph (3), a 
     bond issued as part of an issue meets the requirements of 
     this subsection if such bond is issued during 2002 (or during 
     the period elected under paragraph (2)) and the aggregate 
     face amount of the bonds issued pursuant to such issue, when 
     added to the aggregate face amount of qualified NYC recovery 
     bonds previously issued, does not exceed $15,000,000,000.
       (2) Elective carryforward of unused limitation.--If the 
     volume cap under paragraph (1)

[[Page S11681]]

     exceeds the aggregate amount of qualified NYC recovery bonds 
     issued during 2002, the issuing authority under subsection 
     (b) may elect to carry forward such excess volume cap for an 
     additional 3-year period under rules similar to the rules of 
     section 146(f) of the Internal Revenue Code of 1986 (other 
     than paragraph (2) thereof).
       (3) Certain Current Refundings Not Counted.--For purposes 
     of paragraph (1), there shall not be taken into account any 
     current refunding bond the proceeds of which are used to 
     refund any bond described in paragraph (1) to the extent the 
     face amount of such current refunding bond does not exceed 
     the outstanding face amount of the refunded bond.
       (e) Qualified Project Requirements.--
       (1) In general.--A bond meets the requirements of this 
     subsection if it is issued as part of an issue at least 95 
     percent of the net proceeds of which are to be used for 
     qualified project costs.
       (2) Qualified project costs.--For purposes of this 
     subsection--
       (A) In general.--The term ``qualified project costs'' 
     means--
       (i) with respect to a qualified project described in 
     paragraph (3)(A)(i), the costs of acquisition, construction, 
     reconstruction, and renovation of commercial real property 
     and residential rental real property, including--

       (I) buildings and their structural components,
       (II) fixed tenant improvements, and
       (III) public utility property, and

       (ii) with respect to a qualified project described in 
     paragraph (3)(A)(ii), the costs of acquisition, construction, 
     reconstruction, and renovation of commercial real property, 
     including--

       (I) buildings and their structural components, and
       (II) fixed tenant improvements.

       (B) Limitations.--
       (i) Residential rental real property.--Such term shall not 
     include costs with respect to residential rental real 
     property to the extent such costs for all such property 
     exceed 20 percent of the aggregate face amount of the bonds 
     issued under this section.
       (ii) Retail sales property.--Such term shall not include 
     costs with respect to property used for retail sales of 
     tangible property and functionally related and subordinate 
     property to the extent such costs for all such property 
     exceeds 10 percent of the aggregate face amount of the bonds 
     issued under this section.
       (iii) Movable fixtures and equipment.--Such term shall not 
     include costs with respect to movable fixtures and equipment.
       (3) Qualified projects.--For purposes of this subsection--
       (A) In general.--The term ``qualified project'' means any 
     project--
       (i) located within the New York Recovery Zone, or
       (ii) located within the City of New York, New York, but 
     outside of the New York Recovery Zone, but only if--

       (I) such project consists of at least 100,000 square feet 
     of usable office or other commercial space located in a 
     single building or multiple adjacent buildings, and
       (II) the aggregate face amount of the bonds issued to 
     finance such project, when added to the aggregate face amount 
     of all bonds issued to finance all other projects described 
     in this clause, does not exceed $7,000,000,000.

       (B) New york recovery zone.--The term ``New York Recovery 
     Zone'' means the area located on or south of Canal Street, 
     East Broadway (east of its intersection with Canal Street), 
     or Grand Street (east of its intersection with East Broadway) 
     in the Borough of Manhattan in the City of New York, New 
     York.
       (f) General Requirements.--A bond meets the requirements of 
     this subsection if it is issued as part of an issue which 
     meets the requirements of part IV of subchapter B of chapter 
     1 of the Internal Revenue Code of 1986 applicable to an 
     exempt facility bond, except as follows:
       (1) Sections 142(d) and 150(b)(2) (relating to qualified 
     residential rental project), and section 146 (relating to 
     volume cap) of such Code shall not apply to bonds issued 
     under this section.
       (2) The application of section 147(c) of such Code 
     (relating to limitation on use for land acquisition) shall be 
     determined by reference to the aggregate authorized face 
     amount of all bonds issued under this section rather than the 
     net proceeds of each issue.
       (3) Section 147(d) of such Code (relating to acquisition of 
     existing property not permitted) shall be applied by 
     substituting ``50 percent'' for ``15 percent'' each place it 
     appears.
       (4) Section 148(f)(4)(C) of such Code (relating to 
     exception from rebate for certain proceeds to be used to 
     finance construction expenditures) shall apply to 
     construction proceeds of bonds issued under this section.
       (5) Rules similar to the rules of section 143(a)(2)(A)(iv) 
     of such Code (relating to use of loan repayments) shall apply 
     to bonds issued under this section.
       (g) Bond Interest not an AMT Preference Item.--For purposes 
     of section 57(a)(5) of the Internal Revenue Code of 1986, a 
     qualified NYC recovery bond shall not be treated as a 
     specified private activity bond.
       (h) Separate Issue Treatment of Portions of an Issue.--This 
     section shall not apply to the portion of the proceeds of an 
     issue which (if issued as a separate issue) would be treated 
     as a qualified bond or as a bond that is not a private 
     activity bond (determined without regard to subsection (a)), 
     if the issuer elects to so treat such portion.
       (i) Net Proceeds.--For purposes of this section, the term 
     ``net proceeds'' has the meaning given such term by section 
     150(a)(3) of the Internal Revenue Code of 1986.
       (j) Interest on Debt Used To Purchase or Carry Qualified 
     NYC Recovery Bonds.--
       (1) In general.--Section 265(b)(3) (relating to exception 
     for certain tax-exempt obligations) is amended--
       (A) by inserting ``a tax-exempt obligation issued pursuant 
     to section 302 of the Economic Recovery and Assistance for 
     American Workers Act of 2001 or'' after ``means'' in 
     subparagraph (B)(i),
       (B) by inserting ``other than an obligation issued pursuant 
     to section 302 of the Economic Recovery and Assistance for 
     American Workers Act of 2001'' after ``of a qualified tax-
     exempt obligation'' in subparagraph (D)(ii), and
       (C) by adding at the end of subparagraph (D) the following 
     new clause:
       ``(iv) Refundings of certain obligations.--In the case of a 
     refunding (or a series of refundings) of a qualified tax-
     exempt obligation that is an obligation issued pursuant to 
     section 302 of the Economic Recovery and Assistance for 
     American Workers Act of 2001, the refunding obligation shall 
     be treated as a qualified tax-exempt obligation if the 
     refunding obligation meets the requirements of such 
     section.''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to taxable years ending on or after the date of 
     the enactment of this Act.
       (k) Coordination With Emergency Appropriations.--
     Notwithstanding any other provision of law, any amount 
     otherwise available for disaster recovery activities and 
     assistance related to the September 11, 2001, terrorist 
     attack in the City of New York, New York, under the 2001 
     Emergency Supplemental Appropriations Act for Recovery from 
     and Response to Terrorist Attacks on the United States 
     (Public Law 107-38) shall be reduced by the aggregate 10-year 
     cost to the United States Treasury of the qualified NYC 
     recovery bonds issued under this section, as estimated for 
     purposes of determining whether this Act complies with the 
     Congressional Budget Act of 1974.

     SEC. 303. GAIN OR LOSS FROM PROPERTY DAMAGED OR DESTROYED IN 
                   NEW YORK RECOVERY ZONE.

       (a) General Rule.--For purposes of the Internal Revenue 
     Code of 1986, if a taxpayer elects the application of this 
     section with respect to any eligible property, then any gain 
     or loss on the disposition of the property shall be 
     determined without regard to any compensation (by insurance 
     or otherwise) received by the taxpayer for damages sustained 
     to the property as a result of the terrorist attacks 
     occurring on September 11, 2001. Such election shall be made 
     at such time and in such manner as the Secretary of the 
     Treasury may prescribe, and, once made, is irrevocable.
       (b) Limitation Based on Purchase of Replacement Property.--
       (1) In general.--Subsection (a) shall apply to compensation 
     received with respect to eligible property only to the extent 
     of the cost of any qualified replacement property purchased 
     by the taxpayer.
       (2) Allocation.--If the aggregate compensation received by 
     a taxpayer with respect to all eligible property exceeds the 
     aggregate cost of all qualified replacement property 
     purchased by the taxpayer, such cost shall be allocated to 
     such eligible property in accordance with rules prescribed by 
     the Secretary.
       (3) Special rule for consolidated groups.--For purposes of 
     paragraph (1), an affiliated group filing a consolidated 
     return may elect to treat any qualified replacement property 
     purchased by a member of the group as purchased by another 
     member of the group.
       (c) Eligible Property.--For purposes of this section, the 
     term ``eligible property'' means any tangible property--
       (1) which is section 1245 property (as defined in section 
     1245(a)(3) of the Internal Revenue Code of 1986) or qualified 
     leasehold improvement property (as defined in section 
     168(k)(3) of such Code),
       (2) substantially all of the use of which as of September 
     11, 2001, was in a business establishment of the taxpayer 
     located in the New York Recovery Zone, and
       (3) which was damaged or destroyed in the terrorist attacks 
     of September 11, 2001.
       (d) Qualified Replacement Property.--For purposes of this 
     section--
       (1) In general.--The term ``qualified replacement 
     property'' means tangible property--
       (A) which is described in subsection (c)(1),
       (B) which is purchased by the taxpayer on or after 
     September 11, 2001, and placed in service in the City of New 
     York, New York, before January 1, 2007,
       (C) the original use of which in such city begins with the 
     taxpayer, and
       (D) substantially all of the use of which is reasonably 
     expected to be in connection with a business establishment of 
     the taxpayer located in such city.
       (2) Recapture.--The Secretary shall, by regulations, 
     provide for the recapture of any Federal tax benefit provided 
     by this section in cases where a taxpayer ceases to use 
     property as qualified replacement property and such recapture 
     is necessary to prevent the avoidance of the purposes of this 
     section.
       (e) Coordination With Other Provisions of Code.--For 
     purposes of the Internal Revenue Code of 1986--
       (1) Special rule for treatment of unrecognized gain in 
     eligible property.--Sections 1245 and 1250 of such Code shall 
     not apply to any gain on the disposition of eligible property 
     not recognized by reason of this section.
       (2) Loss election not to apply to eligible property.--If a 
     taxpayer elects the application of this section with respect 
     to any eligible property, the taxpayer may not make an 
     election under section 165(i) of such Code with respect to 
     any loss attributable to the property.
       (3) Basis adjustments of qualified replacement property.--

[[Page S11682]]

       (A) In general.--The basis of any qualified replacement 
     property shall be reduced by the amount of any compensation 
     disregarded by reason of subsection (a).
       (B) Special rules for recapture.--For purposes of sections 
     1245 and 1250 of such Code, any reduction under subparagraph 
     (A) shall be treated as a deduction allowed for depreciation, 
     except that for purposes of section 1250(b) of such Code, the 
     determination of what would have been the depreciation 
     adjustments under the straight line method shall be made as 
     if there had been no reduction under subparagraph (A).
       (4) Special rules for applying section 1033.--For purposes 
     of applying section 1033 of such Code to converted property 
     which is eligible property with respect to which an election 
     under subsection (a) has been made--
       (A) the amount realized from the eligible property shall 
     not include any compensation received by the taxpayer which 
     is disregarded by reason of subsection (a), and
       (B) any qualified replacement property shall be disregarded 
     in determining whether property was acquired for the purposes 
     of replacing the converted property.
       (f) Other Definitions and Rules.--For purposes of this 
     section--
       (1) New york recovery zone.--The term ``New York Recovery 
     Zone'' means the area located on or south of Canal Street, 
     East Broadway (east of its intersection with Canal Street), 
     or Grand Street (east of its intersection with East Broadway) 
     in the Borough of Manhattan in the City of New York, New 
     York.
       (2) Time for assessment.--Rules similar to the rules of 
     subparagraphs (C) and (D) of section 1033(a)(2) of such Code 
     shall apply for purposes of this section.
       (3) Related party limitation.--Section 1033(i) of such Code 
     shall apply for purposes of this section.
       (g) Coordination With Emergency Appropriations.--
     Notwithstanding any other provision of law, any amount 
     otherwise available for disaster recovery activities and 
     assistance related to the September 11, 2001, terrorist 
     attack in the City of New York, New York, under the 2001 
     Emergency Supplemental Appropriations Act for Recovery from 
     and Response to Terrorist Attacks on the United States 
     (Public Law 107-38) shall be reduced by the aggregate 10-year 
     cost to the United States Treasury resulting from the 
     enactment of this section, as estimated for purposes of 
     determining whether this Act complies with the Congressional 
     Budget Act of 1974.

     SEC. 304. REENACTMENT OF EXCEPTIONS FOR QUALIFIED-MORTGAGE-
                   BOND-FINANCED LOANS TO VICTIMS OF 
                   PRESIDENTIALLY DECLARED DISASTERS.

       Section 143(k)(11) (relating to special rules for 
     residences located in disaster areas) is amended--
       (1) by inserting ``damaged or destroyed by a disaster and'' 
     after ``In the case of a residence'',
       (2) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) Paragraph (4) of this subsection shall be applied by 
     substituting `$25,000' for `$15,000'.'', and
       (3) by inserting ``, and after December 31, 2001, and 
     before January 1, 2003'' after ``1999'' in the last sentence.

     SEC. 305. ONE-YEAR EXPANSION OF AUTHORITY FOR INDIAN TRIBES 
                   TO ISSUE TAX-EXEMPT PRIVATE ACTIVITY BONDS.

       (a) In General.--Section 7871(c) (relating to additional 
     requirements for tax-exempt bonds) is amended by adding at 
     the end the following new paragraph:
       ``(4) Exception for qualified indian private activity 
     bonds.--
       ``(A) In general.--In the case of any qualified Indian 
     private activity bond--
       ``(i) paragraph (2) shall not apply,
       ``(ii) such bond shall be treated as a qualified bond under 
     section 141(e), and
       ``(iii) section 146 shall not apply.
       ``(B) Qualified indian private activity bond.--For purposes 
     of this paragraph, the term `qualified Indian private 
     activity bond' means any bond which--
       ``(i) is issued by a qualified Indian tribal government--

       ``(I) as part of an issue 95 percent or more of the net 
     proceeds of which are to be used to provide qualified 
     residential rental projects (as determined under section 
     142(d), by substituting `statewide median gross income' for 
     `area median gross income'),
       ``(II) as part of a qualified mortgage issue (as defined in 
     section 143(a)(2)),
       ``(III) as part of an issue 95 percent or more of the net 
     proceeds of which are to be used to provide any facility 
     described in section 1394(b)(1) for any business (whether 
     tribally owned or not) that would qualify as an enterprise 
     zone business if the Indian reservation (as defined in 
     section 168(j)(6)) over which the qualified Indian tribal 
     government exercises general governmental authority were 
     treated as an empowerment zone, or
       ``(IV) as part of an issue to be used for more than 1 of 
     the purposes described in the preceding subclauses, and

       ``(ii) meets the requirements of subparagraphs (D) and (E).
       ``(C) Qualified indian tribal government.--For purposes of 
     this paragraph, the term `qualified Indian tribal government' 
     means an Indian tribal government which exercises general 
     governmental authority over an Indian reservation (as so 
     defined) with an unemployment rate among members of the tribe 
     of at least 25 percent. For purposes of the preceding 
     sentence, determinations of unemployment shall be made with 
     respect to any issuance of a bond under this section on the 
     basis of the most recent report published by the Bureau of 
     Indian Affairs under section 17(a) of the Indian Employment, 
     Training and Related Services Demonstration Act of 1992 (25 
     U.S.C. 3416(a)) before such issuance.
       ``(D) Designation requirements.--A bond meets the 
     requirements of this subparagraph if it is issued as part of 
     an issue designated as a qualified Indian private activity 
     bond for a purpose described in subclause (I), (II), or (III) 
     of subparagraph (B)(i) by the qualified Indian tribal 
     government.
       ``(E) Volume requirements.--
       ``(i) In general.--A bond issued as part of an issue meets 
     the requirements of this subparagraph if such bond is issued 
     during 2002 (or during the period elected under clause (ii)) 
     and the aggregate face amount of the bonds issued pursuant to 
     such issue, when added to the aggregate face amount of 
     qualified Indian private activity bonds previously issued by 
     such qualified Indian tribal government, does not exceed 
     $10,000,000.
       ``(ii) Elective carryforward of unused limitation.--If the 
     volume cap under clause (i) exceeds the aggregate amount of 
     qualified Indian private activity bonds issued during 2002, 
     the qualified Indian tribal government may elect to carry 
     forward such excess volume cap for an additional 3-year 
     period under rules similar to the rules of section 146(f) 
     (other than paragraph (2) thereof).
       ``(F) Application of section 42 to residential rental 
     projects financed by bonds under this paragraph.--In the case 
     of bonds described in subparagraph (B)(i)(I), issuance under 
     the requirements of subparagraph (E) shall be treated as 
     issuance under the requirements of section 146 for purposes 
     of determining the application of section 42 to projects 
     financed by the net proceeds of such bonds.
       ``(G) Special rule for determining enterprise zone 
     business.--For purposes of subparagraph (B)(i)(III), an 
     enterprise zone business shall not include any facility a 
     principal business of which is the sale of tobacco products 
     or highway motor fuels, unless the qualified Indian tribal 
     government has entered into an agreement with the State in 
     which such facility is located to collect applicable State 
     taxes on such products or fuels.
       ``(H) Bond interest not an amt preference item.--For 
     purposes of section 57(a)(5), a bond designated under 
     subparagraph (D) as a qualified Indian private activity bond 
     shall not be treated as a specified private activity bond.
       ``(I) Report.--The Secretary shall compile necessary data 
     from reports required under section 149(e) relating to the 
     issuance of bonds under this paragraph and shall report to 
     the Committee on Ways and Means of the House of 
     Representatives and the Committee on Finance of the Senate 
     not later than September 30 of any year following the 
     calendar year in which Indian tribal governments issued bonds 
     under this paragraph and the activities for which such bonds 
     were issued.''.
       (b) Conforming Amendments.--
       (1) Section 7871(c)(2) is amended by striking ``paragraph 
     (3)'' and inserting ``paragraphs (3) and (4)''.
       (2) Section 7871 is amended--
       (A) by striking clause (iii) of subsection (c)(3)(E), and
       (B) by adding at the end the following new subsection:
       ``(f) Net Proceeds.--For purposes of this section, the term 
     `net proceeds' has the meaning given such term by section 
     150(a)(3).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after December 31, 2001.

              Subtitle B--Victims of Terrorism Tax Relief

     SEC. 310. SHORT TITLE.

       This subtitle may be cited as the ``Victims of Terrorism 
     Tax Relief Act of 2001''.

PART I--RELIEF PROVISIONS FOR VICTIMS OF APRIL 19, 1995, AND SEPTEMBER 
                      11, 2001, TERRORIST ATTACKS

     SEC. 311. INCOME AND EMPLOYMENT TAXES OF VICTIMS OF TERRORIST 
                   ATTACKS.

       (a) In General.--Section 692 (relating to income taxes of 
     members of Armed Forces on death) is amended by adding at the 
     end the following new subsection:
       ``(d) Certain Individuals Dying as a Result of April 19, 
     1995, and September 11, 2001, Terrorist Attacks.--
       ``(1) In general.--In the case of any individual who dies 
     as a result of wounds or injury incurred as a result of the 
     terrorist attacks against the United States on April 19, 
     1995, or September 11, 2001, any tax imposed by this subtitle 
     shall not apply--
       ``(A) with respect to the taxable year in which falls the 
     date of such individual's death, and
       ``(B) with respect to any prior taxable year in the period 
     beginning with the last taxable year ending before the 
     taxable year in which the wounds or injury were incurred.
       ``(2) Exceptions.--
       ``(A) Taxation of certain benefits.--Subject to such rules 
     as the Secretary may prescribe, paragraph (1) shall not apply 
     to the amount of any tax imposed by this subtitle which would 
     be computed by only taking into account the items of income, 
     gain, or other amounts attributable to--
       ``(i) amounts payable in the taxable year by reason of the 
     death of an individual described in paragraph (1) which would 
     have been payable in such taxable year if the death had 
     occurred by reason of an event other than the terrorist 
     attacks against the United States on April 19, 1995, or 
     September 11, 2001, or
       ``(ii) amounts payable in the taxable year which would not 
     have been payable in such taxable year but for an action 
     taken after April 19, 1995, or after September 11, 2001 (as 
     the case may be).
       ``(B) No relief for perpetrators.--Paragraph (1) shall not 
     apply with respect to any individual identified by the 
     Attorney General to

[[Page S11683]]

     have been a participant or conspirator in any such terrorist 
     attack, or a representative of such individual.''.
       (b) Refund of Other Taxes Paid.--Section 692, as amended by 
     subsection (a), is amended by adding at the end the following 
     new subsection:
       ``(e) Refund of Other Taxes Paid.--In determining the 
     amount of tax under this section to be credited or refunded 
     as an overpayment with respect to any individual for any 
     period, such amount shall be increased by an amount equal to 
     the amount of taxes imposed and collected under chapter 21 
     and sections 3201(a), 3211(a)(1), and 3221(a) with respect to 
     such individual for such period.''.
       (c) Conforming Amendments.--
       (1) Section 5(b)(1) is amended by inserting ``and victims 
     of certain terrorist attacks'' before ``on death''.
       (2) Section 6013(f)(2)(B) is amended by inserting ``and 
     victims of certain terrorist attacks'' before ``on death''.
       (d) Clerical Amendments.--
       (1) The heading of section 692 is amended to read as 
     follows:

     ``SEC. 692. INCOME AND EMPLOYMENT TAXES OF MEMBERS OF ARMED 
                   FORCES AND VICTIMS OF CERTAIN TERRORIST ATTACKS 
                   ON DEATH.''.

       (2) The item relating to section 692 in the table of 
     sections for part II of subchapter J of chapter 1 is amended 
     to read as follows:

``Sec. 692. Income and employment taxes of members of Armed Forces and 
              victims of certain terrorist attacks on death.''.
       (d) Effective Date; Waiver of Limitations.--
       (1) Effective date.--The amendments made by this section 
     shall apply to taxable years ending before, on, or after 
     September 11, 2001.
       (2) Waiver of limitations.--If refund or credit of any 
     overpayment of tax resulting from the amendments made by this 
     section is prevented at any time before the close of the 1-
     year period beginning on the date of the enactment of this 
     Act by the operation of any law or rule of law (including res 
     judicata), such refund or credit may nevertheless be made or 
     allowed if claim therefor is filed before the close of such 
     period.

     SEC. 312. ESTATE TAX REDUCTION.

       (a) In General.--Section 2201 is amended to read as 
     follows:

     ``SEC. 2201. COMBAT ZONE-RELATED DEATHS OF MEMBERS OF THE 
                   ARMED FORCES AND DEATHS OF VICTIMS OF CERTAIN 
                   TERRORIST ATTACKS.

       ``(a) In General.--Unless the executor elects not to have 
     this section apply, in applying section 2001 to the estate of 
     a qualified decedent, the rate schedule set forth in 
     subsection (c) shall be deemed to be the rate schedule set 
     forth in section 2001(c).
       ``(b) Qualified Decedent.--For purposes of this section, 
     the term `qualified decedent' means--
       ``(1) any citizen or resident of the United States dying 
     while in active service of the Armed Forces of the United 
     States, if such decedent--
       ``(A) was killed in action while serving in a combat zone, 
     as determined under section 112(c), or
       ``(B) died as a result of wounds, disease, or injury 
     suffered while serving in a combat zone (as determined under 
     section 112(c)), and while in the line of duty, by reason of 
     a hazard to which such decedent was subjected as an incident 
     of such service, or
       ``(2) any individual who died as a result of wounds or 
     injury incurred as a result of the terrorist attacks against 
     the United States on April 19, 1995, or September 11, 2001.
     Paragraph (2) shall not apply with respect to any individual 
     identified by the Attorney General to have been a participant 
     or conspirator in any such terrorist attack, or a 
     representative of such individual.
       ``(c) Rate Schedule.--

``If the amount with respect to which the tentative tax to be computed 
The tentative tax is:
1 percent of the amount by which such amount exceeds $100,000..........
$500 plus 2 percent of the excess over $150,000........................
$1,500 plus 3 percent of the excess over $200,000......................
$4,500 plus 4 percent of the excess over $300,000......................
$12,500 plus 5 percent of the excess over $500,000.....................
$22,500 plus 6 percent of the excess over $700,000.....................
$34,500 plus 7 percent of the excess over $900,000.....................
$48,500 plus 8 percent of the excess over $1,100,000...................
$88,500 plus 9 percent of the excess over $1,600,000...................
$133,500 plus 10 percent of the excess over $2,100,000.................
$183,500 plus 11 percent of the excess over $2,600,000.................
$238,500 plus 12 percent of the excess over $3,100,000.................
$298,500 plus 13 percent of the excess over $3,600,000.................
$363,500 plus 14 percent of the excess over $4,100,000.................
$503,500 plus 15 percent of the excess over $5,100,000.................
$653,500 plus 16 percent of the excess over $6,100,000.................
$813,500 plus 17 percent of the excess over $7,100,000.................
$983,500 plus 18 percent of the excess over $8,100,000.................
$1,163,500 plus 19 percent of the excess over $9,100,000...............
$1,353,500 plus 20 percent of the excess over $10,100,000..............
       ``(d) Determination of Unified Credit.--In the case of an 
     estate to which this section applies, subsection (a) shall 
     not apply in determining the credit under section 2010.''.
       (b) Conforming Amendments.--
       (1) Section 2011 is amended by striking subsection (d) and 
     by redesignating subsections (e), (f), and (g) as subsections 
     (d), (e), and (f), respectively.
       (2) Section 2053(d)(3)(B) is amended by striking ``section 
     2011(e)'' and inserting ``section 2011(d)''.
       (3) Paragraph (9) of section 532(c) of the Economic Growth 
     and Tax Relief Reconciliation Act of 2001 is repealed.
       (c) Clerical Amendment.--The item relating to section 2201 
     in the table of sections for subchapter C of chapter 11 is 
     amended to read as follows:

``Sec. 2201. Combat zone-related deaths of members of the Armed Forces 
              and deaths of victims of certain terrorist attacks.''.
       (d) Effective Date; Waiver of Limitations.--
       (1) Effective date.--The amendments made by this section 
     shall apply to estates of decedents--
       (A) dying on or after September 11, 2001, and
       (B) in the case of individuals dying as a result of the 
     April 19, 1995, terrorist attack, dying on or after April 19, 
     1995.
       (2) Waiver of limitations.--If refund or credit of any 
     overpayment of tax resulting from the amendments made by this 
     section is prevented at any time before the close of the 1-
     year period beginning on the date of the enactment of this 
     Act by the operation of any law or rule of law (including res 
     judicata), such refund or credit may nevertheless be made or 
     allowed if claim therefor is filed before the close of such 
     period.

     SEC. 313. PAYMENTS BY CHARITABLE ORGANIZATIONS TREATED AS 
                   EXEMPT PAYMENTS.

       (a) In General.--For purposes of the Internal Revenue Code 
     of 1986--
       (1) payments made by an organization described in section 
     501(c)(3) of such Code by reason of the death, injury, or 
     wounding of an individual incurred as the result of the 
     terrorist attacks against the United States on September 11, 
     2001, shall be treated as related to the purpose or function 
     constituting the basis for such organization's exemption 
     under section 501 of such Code if such payments are made 
     using an objective formula which is consistently applied, and
       (2) in the case of a private foundation (as defined in 
     section 509 of such Code), any payment described in paragraph 
     (1) shall not be treated as made to a disqualified person for 
     purposes of section 4941 of such Code.
       (b) Effective Date.--This section shall apply to payments 
     made on or after September 11, 2001.

     SEC. 314. EXCLUSION OF CERTAIN CANCELLATIONS OF INDEBTEDNESS.

       (a) In General.--For purposes of the Internal Revenue Code 
     of 1986--
       (1) gross income shall not include any amount which (but 
     for this section) would be includible in gross income by 
     reason of the discharge (in whole or in part) of indebtedness 
     of any taxpayer if the discharge is by reason of the death of 
     an individual incurred as the result of the terrorist attacks 
     against the United States on September 11, 2001, and
       (2) return requirements under section 6050P of such Code 
     shall not apply to any discharge described in paragraph (1).
       (b) Effective Date.--This section shall apply to discharges 
     made on or after September 11, 2001, and before January 1, 
     2002.

  PART II--GENERAL RELIEF FOR VICTIMS OF DISASTERS AND TERRORISTIC OR 
                            MILITARY ACTIONS

     SEC. 321. EXCLUSION FOR DISASTER RELIEF PAYMENTS.

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

     ``SEC. 139. DISASTER RELIEF PAYMENTS.

       ``(a) General Rule.--Gross income shall not include--
       ``(1) any amount received as payment under section 406 of 
     the Air Transportation Safety and System Stabilization Act, 
     or
       ``(2) any amount received by an individual as a qualified 
     disaster relief payment.
       ``(b) Qualified Disaster Relief Payment Defined.--For 
     purposes of this section, the term `qualified disaster relief 
     payment' means any amount paid to or for the benefit of an 
     individual--
       ``(1) to reimburse or pay reasonable and necessary 
     personal, family, living, or funeral expenses incurred as a 
     result of a qualified disaster,
       ``(2) to reimburse or pay reasonable and necessary expenses 
     incurred for the repair or rehabilitation of a personal 
     residence or repair or replacement of its contents to the 
     extent that the need for such repair, rehabilitation, or 
     replacement is attributable to a qualified disaster,
       ``(3) by a person engaged in the furnishing or sale of 
     transportation as a common carrier by reason of the death or 
     personal physical injuries incurred as a result of a 
     qualified disaster, or

[[Page S11684]]

       ``(4) if such amount is paid by a Federal, State, or local 
     government, or agency or instrumentality thereof, in 
     connection with a qualified disaster in order to promote the 
     general welfare,

     but only to the extent any expense compensated by such 
     payment is not otherwise compensated for by insurance or 
     otherwise.
       ``(c) Qualified Disaster Defined.--For purposes of this 
     section, the term `qualified disaster' means--
       ``(1) a disaster which results from a terroristic or 
     military action (as defined in section 692(c)(2)),
       ``(2) a Presidentially declared disaster (as defined in 
     section 1033(h)(3)),
       ``(3) a disaster which results from an accident involving a 
     common carrier, or from any other event, which is determined 
     by the Secretary to be of a catastrophic nature, or
       ``(4) with respect to amounts described in subsection 
     (b)(4), a disaster which is determined by an applicable 
     Federal, State, or local authority (as determined by the 
     Secretary) to warrant assistance from the Federal, State, or 
     local government or agency or instrumentality thereof.
       ``(d) Coordination With Employment Taxes.--For purposes of 
     chapter 2 and subtitle C, a qualified disaster relief payment 
     shall not be treated as net earnings from self-employment, 
     wages, or compensation subject to tax.
       ``(e) No Relief for Certain Individuals.--Subsection (a) 
     shall not apply with respect to any individual identified by 
     the Attorney General to have been a participant or 
     conspirator in a terroristic action (as so defined), or a 
     representative of such individual.''.
       (b) Conforming Amendments.--The table of sections for part 
     III of subchapter B of chapter 1 is amended by striking the 
     item relating to section 139 and inserting the following new 
     items:

``Sec. 139. Disaster relief payments.
``Sec. 140. Cross references to other Acts.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending on or after September 11, 
     2001.

     SEC. 322. AUTHORITY TO POSTPONE CERTAIN DEADLINES AND 
                   REQUIRED ACTIONS.

       (a) Expansion of Authority Relating to Disasters and 
     Terroristic or Military Actions.--Section 7508A is amended to 
     read as follows:

     ``SEC. 7508A. AUTHORITY TO POSTPONE CERTAIN DEADLINES BY 
                   REASON OF PRESIDENTIALLY DECLARED DISASTER OR 
                   TERRORISTIC OR MILITARY ACTIONS.

       ``(a) In General.--In the case of a taxpayer determined by 
     the Secretary to be affected by a Presidentially declared 
     disaster (as defined in section 1033(h)(3)) or a terroristic 
     or military action (as defined in section 692(c)(2)), the 
     Secretary may specify a period of up to one year that may be 
     disregarded in determining, under the internal revenue laws, 
     in respect of any tax liability of such taxpayer--
       ``(1) whether any of the acts described in paragraph (1) of 
     section 7508(a) were performed within the time prescribed 
     therefor (determined without regard to extension under any 
     other provision of this subtitle for periods after the date 
     (determined by the Secretary) of such disaster or action),
       ``(2) the amount of any interest, penalty, additional 
     amount, or addition to the tax for periods after such date, 
     and
       ``(3) the amount of any credit or refund.
       ``(b) Special Rules Regarding Pensions, Etc.--In the case 
     of a pension or other employee benefit plan, or any sponsor, 
     administrator, participant, beneficiary, or other person with 
     respect to such plan, affected by a disaster or action 
     described in subsection (a), the Secretary may specify a 
     period of up to one year which may be disregarded in 
     determining the date by which any action is required or 
     permitted to be completed under this title. No plan shall be 
     treated as failing to be operated in accordance with the 
     terms of the plan solely as the result of disregarding any 
     period by reason of the preceding sentence.
       ``(c) Special Rules for Overpayments.--The rules of section 
     7508(b) shall apply for purposes of this section.''.
       (b) Clarification of Scope of Acts Secretary May 
     Postpone.--Section 7508(a)(1)(K) (relating to time to be 
     disregarded) is amended by striking ``in regulations 
     prescribed under this section''.
       (c) Conforming Amendments to ERISA.--
       (1) Part 5 of subtitle B of title I of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1131 et 
     seq.) is amended by adding at the end the following new 
     section:

     ``SEC. 518. AUTHORITY TO POSTPONE CERTAIN DEADLINES BY REASON 
                   OF PRESIDENTIALLY DECLARED DISASTER OR 
                   TERRORISTIC OR MILITARY ACTIONS.

       ``In the case of a pension or other employee benefit plan, 
     or any sponsor, administrator, participant, beneficiary, or 
     other person with respect to such plan, affected by a 
     Presidentially declared disaster (as defined in section 
     1033(h)(3) of the Internal Revenue Code of 1986) or a 
     terroristic or military action (as defined in section 
     692(c)(2) of such Code), the Secretary may, notwithstanding 
     any other provision of law, prescribe, by notice or 
     otherwise, a period of up to one year which may be 
     disregarded in determining the date by which any action is 
     required or permitted to be completed under this Act. No plan 
     shall be treated as failing to be operated in accordance with 
     the terms of the plan solely as the result of disregarding 
     any period by reason of the preceding sentence.''.
       (2) Section 4002 of Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1302) is amended by adding at the end the 
     following new subsection:
       ``(i) Special Rules Regarding Disasters, Etc.--In the case 
     of a pension or other employee benefit plan, or any sponsor, 
     administrator, participant, beneficiary, or other person with 
     respect to such plan, affected by a Presidentially declared 
     disaster (as defined in section 1033(h)(3) of the Internal 
     Revenue Code of 1986) or a terroristic or military action (as 
     defined in section 692(c)(2) of such Code), the corporation 
     may, notwithstanding any other provision of law, prescribe, 
     by notice or otherwise, a period of up to one year which may 
     be disregarded in determining the date by which any action is 
     required or permitted to be completed under this Act. No plan 
     shall be treated as failing to be operated in accordance with 
     the terms of the plan solely as the result of disregarding 
     any period by reason of the preceding sentence.''.
       (d) Additional Conforming Amendments.--
       (1) Section 6404 is amended--
       (A) by striking subsection (h),
       (B) by redesignating subsection (i) as subsection (h), and
       (C) by adding at the end the following new subsection:
       ``(i) Cross Reference.--

  ``For authority of the Secretary to abate certain amounts by reason 
of Presidentially declared disaster or terroristic or military action, 
see section 7508A.''.

       (2) Section 6081(c) is amended to read as follows:
       ``(c) Cross References.--

  ``For time for performing certain acts postponed by reason of war, 
see section 7508, and by reason of Presidentially declared disaster or 
terroristic or military action, see section 7508A.''.

       (3) Section 6161(d) is amended by adding at the end the 
     following new paragraph:
       ``(3) Postponement of certain acts.--

  ``For time for performing certain acts postponed by reason of war, 
see section 7508, and by reason of Presidentially declared disaster or 
terroristic or military action, see section 7508A.''.

       (d) Clerical Amendments.--
       (1) The item relating to section 7508A in the table of 
     sections for chapter 77 is amended to read as follows:

``Sec. 7508A. Authority to postpone certain deadlines by reason of 
              Presidentially declared disaster or terroristic or 
              military actions.''.

       (2) The table of contents for the Employee Retirement 
     Income Security Act of 1974 is amended by inserting after the 
     item relating to section 517 the following new item:

``Sec. 518. Authority to postpone certain deadlines by reason of 
              Presidentially declared disaster or terroristic or 
              military actions.''.

       (e) Effective Date.--The amendments made by this section 
     shall apply to disasters and terroristic or military actions 
     occurring on or after September 11, 2001, with respect to any 
     action of the Secretary of the Treasury, the Secretary of 
     Labor, or the Pension Benefit Guaranty Corporation occurring 
     on or after the date of the enactment of this Act.

     SEC. 323. INTERNAL REVENUE SERVICE DISASTER RESPONSE TEAM.

       (a) In General.--Section 7508A, as amended by section 
     322(a), is amended by adding at the end the following new 
     subsection:
       ``(d) Duties of Disaster Response Team.--The Secretary 
     shall establish as a permanent office in the national office 
     of the Internal Revenue Service a disaster response team 
     which, in coordination with the Federal Emergency Management 
     Agency, shall assist taxpayers in clarifying and resolving 
     Federal tax matters associated with or resulting from any 
     Presidentially declared disaster (as defined in section 
     1033(h)(3)) or a terroristic or military action (as defined 
     in section 692(c)(2)).''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 324. APPLICATION OF CERTAIN PROVISIONS TO TERRORISTIC OR 
                   MILITARY ACTIONS.

       (a) Exclusion for Death Benefits.--Section 101 (relating to 
     certain death benefits) is amended by adding at the end the 
     following new subsection:
       ``(i) Certain Employee Death Benefits Payable by Reason of 
     Death From Terroristic or Military Actions.--
       ``(1) In general.--Gross income does not include amounts 
     which are received (whether in a single sum or otherwise) if 
     such amounts are paid by an employer by reason of the death 
     of an employee incurred as a result of a terroristic or 
     military action (as defined in section 692(c)(2)).
       ``(2) No relief for certain individuals.--Paragraph (1) 
     shall not apply with respect to any individual identified by 
     the Attorney General to have been a participant or 
     conspirator in a terroristic action (as so defined), or a 
     representative of such individual.
       ``(3) Treatment of self-employed individuals.--For purposes 
     of this subsection, the term `employee' includes a self-
     employed person (as described in section 401(c)(1)).''.
       (b) Disability Income.--Section 104(a)(5) (relating to 
     compensation for injuries or sickness) is amended by striking 
     ``a violent attack'' and all that follows through the period 
     and inserting ``a terroristic or military action (as defined 
     in section 692(c)(2)).''.
       (c) Exemption From Income Tax for Certain Military or 
     Civilian Employees.--Section 692(c) is amended--
       (1) by striking ``outside the United States'' in paragraph 
     (1), and

[[Page S11685]]

       (2) by striking ``Sustained Overseas'' in the heading.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending on or after September 11, 
     2001.

     SEC. 325. CLARIFICATION OF DUE DATE FOR AIRLINE EXCISE TAX 
                   DEPOSITS.

       (a) In General.--Paragraph (3) of section 301(a) of the Air 
     Transportation Safety and System Stabilization Act (Public 
     Law 107-42) is amended to read as follows:
       ``(3) Airline-related deposit.--For purposes of this 
     subsection, the term `airline-related deposit' means any 
     deposit of taxes imposed by subchapter C of chapter 33 of 
     such Code (relating to transportation by air).''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in section 301 of the Air 
     Transportation Safety and System Stabilization Act (Public 
     Law 107-42).

     SEC. 326. COORDINATION WITH AIR TRANSPORTATION SAFETY AND 
                   SYSTEM STABILIZATION ACT.

       No reduction in Federal tax liability by reason of any 
     provision of, or amendment made by, this title shall be 
     considered as being received from a collateral source for 
     purposes of section 402(4) of the Air Transportation Safety 
     and System Stabilization Act (Public Law 107-42).

   PART III--DISCLOSURE OF TAX INFORMATION IN TERRORISM AND NATIONAL 
                        SECURITY INVESTIGATIONS

     SEC. 331. DISCLOSURE OF TAX INFORMATION IN TERRORISM AND 
                   NATIONAL SECURITY INVESTIGATIONS.

       (a) Disclosure Without a Request of Information Relating to 
     Terrorist Activities, Etc.--Paragraph (3) of section 6103(i) 
     (relating to disclosure of return information to apprise 
     appropriate officials of criminal activities or emergency 
     circumstances) is amended by adding at the end the following 
     new subparagraph:
       ``(C) Terrorist activities, etc.--
       ``(i) In general.--Except as provided in paragraph (6), the 
     Secretary may disclose in writing return information (other 
     than taxpayer return information) that may be related to a 
     terrorist incident, threat, or activity to the extent 
     necessary to apprise the head of the appropriate Federal law 
     enforcement agency responsible for investigating or 
     responding to such terrorist incident, threat, or activity. 
     The head of the agency may disclose such return information 
     to officers and employees of such agency to the extent 
     necessary to investigate or respond to such terrorist 
     incident, threat, or activity.
       ``(ii) Disclosure to the department of justice.--Returns 
     and taxpayer return information may also be disclosed to the 
     Attorney General under clause (i) to the extent necessary 
     for, and solely for use in preparing, an application under 
     paragraph (7)(D).
       ``(iii) Taxpayer identity.--For purposes of this 
     subparagraph, a taxpayer's identity shall not be treated as 
     taxpayer return information.
       ``(iv) Termination.--No disclosure may be made under this 
     subparagraph after December 31, 2003.''.
       (b) Disclosure Upon Request of Information Relating to 
     Terrorist Activities, Etc.--Subsection (i) of section 6103 
     (relating to disclosure to Federal officers or employees for 
     administration of Federal laws not relating to tax 
     administration) is amended by redesignating paragraph (7) as 
     paragraph (8) and by inserting after paragraph (6) the 
     following new paragraph:
       ``(7) Disclosure upon request of information relating to 
     terrorist activities, etc.--
       ``(A) Disclosure to law enforcement agencies.--
       ``(i) In general.--Except as provided in paragraph (6), 
     upon receipt by the Secretary of a written request which 
     meets the requirements of clause (iii), the Secretary may 
     disclose return information (other than taxpayer return 
     information) to officers and employees of any Federal law 
     enforcement agency who are personally and directly engaged in 
     the response to or investigation of terrorist incidents, 
     threats, or activities.
       ``(ii) Disclosure to state and local law enforcement 
     agencies.--The head of any Federal law enforcement agency may 
     disclose return information obtained under clause (i) to 
     officers and employees of any State or local law enforcement 
     agency but only if such agency is part of a team with the 
     Federal law enforcement agency in such response or 
     investigation and such information is disclosed only to 
     officers and employees who are personally and directly 
     engaged in such response or investigation.
       ``(iii) Requirements.--A request meets the requirements of 
     this clause if--

       ``(I) the request is made by the head of any Federal law 
     enforcement agency (or his delegate) involved in the response 
     to or investigation of terrorist incidents, threats, or 
     activities, and
       ``(II) the request sets forth the specific reason or 
     reasons why such disclosure may be relevant to a terrorist 
     incident, threat, or activity.

       ``(iv) Limitation on use of information.--Information 
     disclosed under this subparagraph shall be solely for the use 
     of the officers and employees to whom such information is 
     disclosed in such response or investigation.
       ``(B) Disclosure to intelligence agencies.--
       ``(i) In general.--Except as provided in paragraph (6), 
     upon receipt by the Secretary of a written request which 
     meets the requirements of clause (ii), the Secretary may 
     disclose return information (other than taxpayer return 
     information) to those officers and employees of the 
     Department of Justice, the Department of the Treasury, and 
     other Federal intelligence agencies who are personally and 
     directly engaged in the collection or analysis of 
     intelligence and counterintelligence information or 
     investigation concerning terrorists and terrorist 
     organizations and activities. For purposes of the preceding 
     sentence, the information disclosed under the preceding 
     sentence shall be solely for the use of such officers and 
     employees in such investigation, collection, or analysis.
       ``(ii) Requirements.--A request meets the requirements of 
     this subparagraph if the request--

       ``(I) is made by an individual described in clause (iii), 
     and
       ``(II) sets forth the specific reason or reasons why such 
     disclosure may be relevant to a terrorist incident, threat, 
     or activity.

       ``(iii) Requesting individuals.--An individual described in 
     this subparagraph is an individual--

       ``(I) who is an officer or employee of the Department of 
     Justice or the Department of the Treasury who is appointed by 
     the President with the advice and consent of the Senate or 
     who is the Director of the United States Secret Service, and
       ``(II) who is responsible for the collection and analysis 
     of intelligence and counterintelligence information 
     concerning terrorists and terrorist organizations and 
     activities.

       ``(iv) Taxpayer identity.--For purposes of this 
     subparagraph, a taxpayer's identity shall not be treated as 
     taxpayer return information.
       ``(C) Disclosure under ex parte orders.--
       ``(i) In general.--Except as provided in paragraph (6), any 
     return or return information with respect to any specified 
     taxable period or periods shall, pursuant to and upon the 
     grant of an ex parte order by a Federal district court judge 
     or magistrate under clause (ii), be open (but only to the 
     extent necessary as provided in such order) to inspection by, 
     or disclosure to, officers and employees of any Federal law 
     enforcement agency or Federal intelligence agency who are 
     personally and directly engaged in any investigation, 
     response to, or analysis of intelligence and 
     counterintelligence information concerning any terrorist 
     activity or threats. Return or return information opened 
     pursuant to the preceding sentence shall be solely for the 
     use of such officers and employees in the investigation, 
     response, or analysis, and in any judicial, administrative, 
     or grand jury proceedings, pertaining to any such terrorist 
     activity or threat.
       ``(ii) Application for order.--The Attorney General, the 
     Deputy Attorney General, the Associate Attorney General, any 
     Assistant Attorney General, or any United States attorney may 
     authorize an application to a Federal district court judge or 
     magistrate for the order referred to in clause (i). Upon such 
     application, such judge or magistrate may grant such order if 
     he determines on the basis of the facts submitted by the 
     applicant that--

       ``(I) there is reasonable cause to believe, based upon 
     information believed to be reliable, that the return or 
     return information may be relevant to a matter relating to 
     such terrorist activity or threat, and
       ``(II) the return or return information is sought 
     exclusively for use in a Federal investigation, analysis, or 
     proceeding concerning terrorist activity, terrorist threats, 
     or terrorist organizations.

       ``(D) Special rule for ex parte disclosure by the irs.--
       ``(i) In general.--Except as provided in paragraph (6), the 
     Secretary may authorize an application to a Federal district 
     court judge or magistrate for the order referred to in 
     subparagraph (C)(i). Upon such application, such judge or 
     magistrate may grant such order if he determines on the basis 
     of the facts submitted by the applicant that the requirements 
     of subparagraph (C)(ii)(I) are met.
       ``(ii) Limitation on use of information.--Information 
     disclosed under clause (i)--

       ``(I) may be disclosed only to the extent necessary to 
     apprise the head of the appropriate Federal law enforcement 
     agency responsible for investigating or responding to a 
     terrorist incident, threat, or activity, and
       ``(II) shall be solely for use in a Federal investigation, 
     analysis, or proceeding concerning terrorist activity, 
     terrorist threats, or terrorist organizations.

     The head of such Federal agency may disclose such information 
     to officers and employees of such agency to the extent 
     necessary to investigate or respond to such terrorist 
     incident, threat, or activity.
       ``(E) Termination.--No disclosure may be made under this 
     paragraph after December 31, 2003.''.
       (c) Conforming Amendments.--
       (1) Section 6103(a)(2) is amended by inserting ``any local 
     law enforcement agency receiving information under subsection 
     (i)(7)(A),'' after ``State,''.
       (2) The heading of section 6103(i)(3) is amended by 
     inserting ``or terrorist'' after ``criminal''.
       (3) Paragraph (4) of section 6103(i) is amended--
       (A) in subparagraph (A) by inserting ``or (7)(C)'' after 
     ``paragraph (1)'', and
       (B) in subparagraph (B) by striking ``or (3)(A)'' and 
     inserting ``(3)(A) or (C), or (7)''.
       (4) Paragraph (6) of section 6103(i) is amended--
       (A) by striking ``(3)(A)'' and inserting ``(3)(A) or (C)'', 
     and
       (B) by striking ``or (7)'' and inserting ``(7), or (8)''.
       (5) Section 6103(p)(3) is amended--
       (A) in subparagraph (A) by striking ``(7)(A)(ii)'' and 
     inserting ``(8)(A)(ii)'', and
       (B) in subparagraph (C) by striking ``(i)(3)(B)(i)'' and 
     inserting ``(i)(3)(B)(i) or (7)(A)(ii)''.
       (6) Section 6103(p)(4) is amended--
       (A) in the matter preceding subparagraph (A)--
       (i) by striking ``or (5),'' the first place it appears and 
     inserting ``(5), or (7),'', and
       (ii) by striking ``(i)(3)(B)(i),'' and inserting 
     ``(i)(3)(B)(i) or (7)(A)(ii),'', and

[[Page S11686]]

       (B) in subparagraph (F)(ii) by striking ``or (5),'' the 
     first place it appears and inserting ``(5) or (7),''.
       (7) Section 6103(p)(6)(B)(i) is amended by striking 
     ``(i)(7)(A)(ii)'' and inserting ``(i)(8)(A)(ii)''.
       (8) Section 6105(b) is amended--
       (A) by striking ``or'' at the end of paragraph (2),
       (B) by striking ``paragraphs (1) or (2)'' in paragraph (3) 
     and inserting ``paragraph (1), (2), or (3)'',
       (C) by redesignating paragraph (3) as paragraph (4), and
       (D) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) to the disclosure of tax convention information on 
     the same terms as return information may be disclosed under 
     paragraph (3)(C) or (7) of section 6103(i), except that in 
     the case of tax convention information provided by a foreign 
     government, no disclosure may be made under this paragraph 
     without the written consent of the foreign government, or''.
       (9) Section 7213(a)(2) is amended by striking 
     ``(i)(3)(B)(i),'' and inserting ``(i)(3)(B)(i) or 
     (7)(A)(ii),''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to disclosures made on or after the date of the 
     enactment of this Act.

          TITLE IV--EXTENSIONS OF CERTAIN EXPIRING PROVISIONS

     SEC. 401. ALLOWANCE OF NONREFUNDABLE PERSONAL CREDITS AGAINST 
                   REGULAR AND MINIMUM TAX LIABILITY.

       (a) In General.--Paragraph (2) of section 26(a) is 
     amended--
       (1) by striking ``rule for 2000 and 2001.--'' and inserting 
     ``rule for 2000, 2001, and 2002.--'', and
       (2) by striking ``during 2000 or 2001,'' and inserting 
     ``during 2000, 2001, or 2002,''.
       (b) Conforming Amendments.--
       (1) Section 904(h) is amended by striking ``during 2000 or 
     2001'' and inserting ``during 2000, 2001, or 2002''.
       (2) The amendments made by sections 201(b), 202(f), and 
     618(b) of the Economic Growth and Tax Relief Reconciliation 
     Act of 2001 shall not apply to taxable years beginning during 
     2002.
       (c) Technical Correction.--Section 24(d)(1)(B) is amended 
     by striking ``amount of credit allowed by this section'' and 
     inserting ``aggregate amount of credits allowed by this 
     subpart''.
       (d) Effective Dates.--
       (1) The amendments made by subsections (a) and (b) shall 
     apply to taxable years beginning after December 31, 2001.
       (2) The amendment made by subsection (c) shall apply to 
     taxable years beginning after December 31, 2000.

     SEC. 402. WORK OPPORTUNITY CREDIT.

       (a) In General.--Subparagraph (B) of section 51(c)(4) is 
     amended by striking ``2001'' and inserting ``2002''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to individuals who begin work for the employer 
     after December 31, 2001.

     SEC. 403. WELFARE-TO-WORK CREDIT.

       (a) In General.--Subsection (f) of section 51A is amended 
     by striking ``2001'' and inserting ``2002''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to individuals who begin work for the employer 
     after December 31, 2001.

     SEC. 404. CREDIT FOR ELECTRICITY PRODUCED FROM RENEWABLE 
                   RESOURCES.

       (a) In General.--Subparagraphs (A), (B), and (C) of section 
     45(c)(3) are each amended by striking ``2002'' and inserting 
     ``2003''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect on the date of the enactment of this Act.

     SEC. 405. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLETION FOR 
                   OIL AND NATURAL GAS PRODUCED FROM MARGINAL 
                   PROPERTIES.

       (a) In General.--Subparagraph (H) of section 613A(c)(6) is 
     amended by striking ``2002'' and inserting ``2003''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 406. QUALIFIED ZONE ACADEMY BONDS.

       (a) In General.--Paragraph (1) of section 1397E(e) is 
     amended by striking ``2000, and 2001'' and inserting ``2000, 
     2001, and 2002''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of the enactment of this Act.

     SEC. 407. SUBPART F EXEMPTION FOR ACTIVE FINANCING.

       (a) In General.--
       (1) Section 953(e)(10) is amended--
       (A) by striking ``2002'' and inserting ``2003'', and
       (B) by striking ``2001'' and inserting ``2002''.
       (2) Section 954(h)(9) is amended by striking ``2002'' and 
     inserting ``2003''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 408. COVER OVER OF TAX ON DISTILLED SPIRITS.

       (a) In General.--Paragraph (1) of section 7652(f) is 
     amended by striking ``2002'' and inserting ``2003''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of the enactment of this Act.

     SEC. 409. DELAY IN EFFECTIVE DATE OF REQUIREMENT FOR APPROVED 
                   DIESEL OR KEROSENE TERMINALS.

       Paragraph (2) of section 1032(f) of the Taxpayer Relief Act 
     of 1997 (Public Law 105-34) is amended by striking ``2002'' 
     and inserting ``2003''.

     SEC. 410. DEDUCTION FOR CLEAN-FUEL VEHICLES AND CERTAIN 
                   REFUELING PROPERTY.

       (a) In General.--Section 179A is amended--
       (1) in subsection (b)(1)(B)--
       (A) by striking ``December 31, 2001,'' and inserting 
     ``December 31, 2002,'', and
       (B) in clauses (i), (ii), and (iii), by striking ``2002'', 
     ``2003'', and ``2004'', respectively, and inserting ``2003'', 
     ``2004'', and ``2005'', respectively, and
       (2) in subsection (f), by striking ``2004'' and inserting 
     ``2005''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect on the date of the enactment of this Act.

     SEC. 411. CREDIT FOR QUALIFIED ELECTRIC VEHICLES.

       (a) In General.--Section 30 is amended--
       (1) in subsection (b)(2)--
       (A) by striking ``December 31, 2001,'' and inserting 
     ``December 31, 2002,'', and
       (B) in subparagraphs (A), (B), and (C), by striking 
     ``2002'', ``2003'', and ``2004'', respectively, and inserting 
     ``2003'', ``2004'', and ``2005'', respectively, and
       (2) in subsection (e), by striking ``2004'' and inserting 
     ``2005''.
       (b) Conforming Amendments.--
       (1) Subparagraph (C) of section 280F(a)(1) is amended by 
     adding at the end the following new clause
       ``(iii) Application of subparagraph.--This subparagraph 
     shall apply to property placed in service after August 5, 
     1997, and before January 1, 2005.''.
       (2) Subsection (b) of section 971 of the Taxpayer Relief 
     Act of 1997 is amended by striking ``and before January 1, 
     2005''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 412. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO 
                   MENTAL HEALTH BENEFITS.

       (a) In General.--Subsection (f) of section 9812 is amended 
     by striking ``2001'' and inserting ``2002''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to plan years beginning after December 31, 2001.

     SEC. 413. COMBINED EMPLOYMENT TAX REPORTING.

       (a) Demonstration Project.--Section 976 of the Taxpayer 
     Relief Act of 1997 is amended by striking ``with the date 
     which is 5 years after the date of the enactment of this 
     Act'' and inserting ``on December 31, 2002''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

      TITLE V--EXTENSION OF ADDITIONAL PROVISIONS EXPIRING IN 2001

     SEC. 501. GENERALIZED SYSTEM OF PREFERENCES.

       (a) Extension of Duty-Free Treatment Under System.--Section 
     505 of the Trade Act of 1974 (19 U.S.C. 2465) is amended by 
     striking ``September 30, 2001'' and inserting ``December 31, 
     2002''.
       (b) Retroactive Application for Certain Liquidations and 
     Reliquidations.--
       (1) In general.--
       (A) Entry of certain articles.--Notwithstanding section 514 
     of the Tariff Act of 1930 or any other provision of law, and 
     subject to paragraph (2), the entry--
       (i) of any article to which duty-free treatment under title 
     V of the Trade Act of 1974 would have applied if the entry 
     had been made on September 30, 2001;
       (ii) that was made after September 30, 2001, and before the 
     date of enactment of this Act; and
       (iii) to which duty-free treatment under title V of that 
     Act did not apply,

     shall be liquidated or reliquidated as free of duty, and the 
     Secretary of the Treasury shall refund any duty paid with 
     respect to such entry.
       (B) Entry.--In this subsection, the term ``entry'' includes 
     a withdrawal from warehouse for consumption.
       (2) Requests.--Liquidation or reliquidation may be made 
     under paragraph (1) with respect to an entry only if a 
     request therefor is filed with the Customs Service, within 
     180 days after the date of enactment of this Act, that 
     contains sufficient information to enable the Customs 
     Service--
       (A) to locate the entry; or
       (B) to reconstruct the entry if it cannot be located.
       (c) Effective Date.--The amendment made by subsection (a) 
     shall take effect on October 1, 2001.

     SEC. 502. ANDEAN TRADE PREFERENCE ACT.

       (a) In General.--Section 208(b) of the Andean Trade 
     Preference Act (19 U.S.C. 3206(b))is amended by striking ``10 
     years after December 4, 1991'' and inserting ``after June 4, 
     2002''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on December 5, 2001.

     SEC. 503. REAUTHORIZATION OF TRADE ADJUSTMENT ASSISTANCE.

       (a) Assistance for Workers.--Section 245 of the Trade Act 
     of 1974 (19 U.S.C. 2317) is amended by striking ``October 1, 
     1998, and ending September 30, 2001,'' each place it appears 
     and inserting ``October 1, 2001, and ending December 31, 
     2002,''.
       (b) Assistance for Firms.--Section 256(b) of the Trade Act 
     of 1974 (19 U.S.C. 2346(b)) is amended by striking ``October 
     1, 1998, and ending September 30, 2001'' and inserting 
     ``October 1, 2001, and ending December 31, 2002,''.
       (c) Termination.--Section 285(c) of the Trade Act of 1974 
     (19 U.S.C. 2771 note) is amended in

[[Page S11687]]

     paragraphs (1) and (2)(A), by striking ``September 30, 2001'' 
     and inserting ``December 31, 2002''.
       (d) Training Limitation Under NAFTA Program.--Section 
     250(d)(2) of the Trade Act of 1974 (19 U.S.C. 2331(d)(2)) is 
     amended by striking ``October 1, 1998, and ending September 
     30, 2001'' and inserting ``October 1, 2001, and ending 
     December 31, 2002''.
       (e) Effective Date.--The amendments made by this section 
     shall take effect on the date of enactment of this Act.

  TITLE VI--HEALTH INSURANCE COVERAGE OPTIONS FOR RECENTLY UNEMPLOYED 
                     INDIVIDUALS AND THEIR FAMILIES

     SEC. 601. PREMIUM ASSISTANCE FOR COBRA CONTINUATION COVERAGE 
                   FOR INDIVIDUALS AND THEIR FAMILIES.

       (a) Establishment.--
       (1) In general.--Not later than 30 days after the date of 
     enactment of this Act, the Secretary of the Treasury, in 
     consultation with the Secretary of Labor, shall establish a 
     program under which 75 percent of the premium for COBRA 
     continuation coverage shall be provided for an individual 
     who--
       (A) at any time during the period that begins on September 
     11, 2001, and ends on December 31, 2002, is separated from 
     employment; and
       (B) is eligible for, and has elected coverage under, COBRA 
     continuation coverage.
       (2) Inclusion of certain individuals.--For purposes of 
     paragraph (1), the spouse, child, or other individual who was 
     an insured under health insurance coverage of an individual 
     who was killed as a result of the terrorist-related aircraft 
     crashes on September 11, 2001, or as a result of any other 
     terrorist-related event occurring during the period described 
     in that paragraph, and who is eligible for, and has elected 
     coverage under, COBRA continuation coverage shall be eligible 
     for premium assistance under the program established under 
     this section.
       (3) State option to elect administration of program.--
       (A) In general.--A State may elect to administer the 
     premium assistance program established under this section if 
     the State submits to the Secretary of the Treasury, not later 
     than January 1, 2002, a plan that describes how the State 
     will administer such program on behalf of the individuals 
     described in paragraph (1) or (2) who reside in the State 
     beginning on that date.
       (B) State entitlement.--In the case of a State that submits 
     a plan under subparagraph (A), the Secretary of the Treasury 
     shall pay to each such State an amount for each quarter equal 
     to the total amount of premium subsidies provided in that 
     quarter on behalf of such individuals.
       (4) Immediate implementation.--The program established 
     under this section shall be implemented without regard to 
     whether or not final regulations to carry out such program 
     have been promulgated by the date described in paragraph (1).
       (b) Limitation of Period of Premium Assistance.--
       (1) In general.--Premium assistance provided in accordance 
     with this section shall end with respect to an individual on 
     the earlier of--
       (A) the date the individual is no longer covered under 
     COBRA continuation coverage; or
       (B) 12 months after the date the individual is first 
     enrolled in the premium assistance program established under 
     this section.
       (2) No assistance after december 31, 2002.--No premium 
     assistance (including payment for such assistance) may be 
     provided under this section after December 31, 2002.
       (c) Payment Arrangements; Crediting of Assistance.--
       (1) Provision of assistance.--
       (A) In general.--Premium assistance shall be provided under 
     the program established under this section through direct 
     payment arrangements with a group health plan (including a 
     multiemployer plan), an issuer of health insurance coverage, 
     an administrator, or an employer as appropriate with respect 
     to the individual provided such assistance.
       (B) Additional option for state-run program.--In the case 
     of a State that elects to administer the program established 
     under this section, such assistance may be provided through 
     the State public employment office or other agency 
     responsible for administering the State unemployment 
     compensation program.
       (2) Premiums payable by individual reduced by amount of 
     assistance.--Premium assistance provided under this section 
     shall be credited by the group health plan, issuer of health 
     insurance coverage, or an administrator against the premium 
     otherwise owed by the individual involved for COBRA 
     continuation coverage.
       (d) Program Requirements.--Premium assistance shall be 
     provided under the program established under this section 
     consistent with the following:
       (1) All qualifying individuals may apply.--All individuals 
     described in paragraph (1) or (2) of subsection (a) may apply 
     for such assistance at any time during the period described 
     in subsection (a)(1)(A).
       (2) Selection on first-come, first-served basis.--Such 
     assistance shall be provided to such individuals who apply 
     for the assistance in the order in which they apply.
       (e) Limitation on Entitlement.--Nothing in this section 
     shall be construed as establishing any entitlement of 
     individuals described in paragraph (1) or (2) of subsection 
     (a) to premium assistance under this section.
       (f) Disregard of Subsidies for Purposes of Federal and 
     State Programs.--Notwithstanding any other provision of law, 
     any premium assistance provided to, or on behalf of, an 
     individual under this section, shall not be considered income 
     or resources in determining eligibility for, or the amount of 
     assistance or benefits provided under, any other Federal 
     public benefit or State or local public benefit.
       (g) Change in COBRA Notice.--
       (1) General notice.--
       (A) In general.--In the case of notices provided under 
     section 4980B(f)(6) of the Internal Revenue Code of 1986, 
     section 2206 of the Public Health Service Act (42 U.S.C. 
     300bb-6), section 606 of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1166), or section 
     8905a(f)(2)(A) of title 5, United States Code, with respect 
     to individuals who, during the period described in subsection 
     (a)(1)(A), become entitled to elect COBRA continuation 
     coverage, such notices shall include an additional 
     notification to the recipient of the availability of premium 
     assistance for such coverage under this section and for 
     temporary medicaid assistance under section 603 for the 
     remaining portion of COBRA continuation premiums.
       (B) Alternative notice.--In the case of COBRA continuation 
     coverage to which the notice provision under such sections 
     does not apply, the Secretary of the Treasury, in 
     consultation with the Secretary of Labor, shall, in 
     coordination with administrators of the group health plans 
     (or other entities) that provide or administer the COBRA 
     continuation coverage involved, assure the provision of such 
     notice.
       (C) Form.--The requirement of the additional notification 
     under this paragraph may be met by amendment of existing 
     notice forms or by inclusion of a separate document with the 
     notice otherwise required.
       (2) Specific requirements.--Each additional notification 
     under paragraph (1) shall include--
       (A) the forms necessary for establishing eligibility and 
     enrollment in the premium assistance program established 
     under this section in connection with the coverage with 
     respect to each covered employee or other qualified 
     beneficiary;
       (B) the name, address, and telephone number necessary to 
     contact the administrator and any other person maintaining 
     relevant information in connection with the premium 
     assistance; and
       (C) the following statement displayed in a prominent 
     manner:
       ``You may be eligible to receive assistance with payment of 
     75 percent of your COBRA continuation coverage premiums and 
     with temporary medicaid coverage for the remaining premium 
     portion for a duration of not to exceed 12 months.''.
       (3) Notice relating to retroactive coverage.--In the case 
     of such notices previously transmitted before the date of 
     enactment of this Act in the case of an individual described 
     in paragraph (1) who has elected (or is still eligible to 
     elect) COBRA continuation coverage as of the date of 
     enactment of this Act, the administrator of the group health 
     plan (or other entity) involved or the Secretary of the 
     Treasury, in consultation with the Secretary of Labor, (in 
     the case described in the paragraph (1)(B)) shall provide 
     (within 60 days after the date of enactment of this Act) for 
     the additional notification required to be provided under 
     paragraph (1).
       (4) Model notices.--Not later than 30 days after the date 
     of enactment of this Act, the Secretary of the Treasury shall 
     prescribe models for the additional notification required 
     under this subsection.
       (h) Reports.--Beginning on January 1, 2002, and every 3 
     months thereafter until January 1, 2003, the Secretary of the 
     Treasury shall submit a report to Congress regarding the 
     premium assistance program established under this section 
     that includes the following:
       (1) The status of the implementation of the program.
       (2) The number of individuals provided assistance under the 
     program as of the date of the report.
       (3) The average dollar amount (monthly and annually) of the 
     premium assistance provided under the program.
       (4) The number and identification of the States that have 
     elected to administer the program.
       (5) The total amount of expenditures incurred (with 
     administrative expenditures noted separately) under the 
     program as of the date of the report.
       (i) Appropriation.--
       (1) In general.--Out of any funds in the Treasury not 
     otherwise appropriated, there is appropriated to carry out 
     this section, such sums as are necessary for each of fiscal 
     years 2002 and 2003.
       (2) Obligation of funds.--This section constitutes budget 
     authority in advance of appropriations Acts and represents 
     the obligation of the Federal Government to provide for the 
     payment of premium assistance under this section.
       (j) Sunset.--No premium assistance (including payment for 
     such assistance) may be provided under this section after 
     December 31, 2002.

     SEC. 602. STATE OPTION TO PROVIDE TEMPORARY MEDICAID COVERAGE 
                   FOR CERTAIN UNINSURED INDIVIDUALS.

       (a) State Option.--Notwithstanding any other provision of 
     law, a State may elect to provide under its medicaid program 
     under title XIX of the Social Security Act medical assistance 
     in the case of an individual--
       (1) who at any time during the period that begins on 
     September 11, 2001, and ends on December 31, 2002, is 
     separated from employment;
       (2) who is not eligible for COBRA continuation coverage;
       (3) who is uninsured; and
       (4) whose assets, resources, and earned or unearned income 
     (or both) do not exceed such limitations (if any) as the 
     State may establish.
       (b) Limitation of Period of Coverage.--Medical assistance 
     provided in accordance with this section shall end with 
     respect to an individual on the earlier of--
       (1) the date the individual is no longer uninsured; or
       (2) subject to subsection (c)(4), 12 months after the date 
     the individual first receives such assistance.

[[Page S11688]]

       (c) Special Rules.--In the case of medical assistance 
     provided under this section--
       (1) the Federal medical assistance percentage under section 
     1905(b) of the Social Security Act (42 U.S.C. 1396d(b)) shall 
     be the enhanced FMAP (as defined in section 2105(b) of such 
     Act (42 U.S.C. 1397ee(b)));
       (2) a State may elect to apply any income, asset, or 
     resource limitation permitted under the State medicaid plan 
     or under title XIX of such Act;
       (3) the provisions of section 1916(g) of the Social 
     Security Act (42 U.S.C. 1396o) shall apply to the provision 
     of such assistance in the same manner as the provisions of 
     such section apply with respect to individuals provided 
     medical assistance only under subclause (XV) or (XVI) of 
     section 1902(a)(10)(A)(ii) of such Act (42 U.S.C. 
     1396a(a)(10)(A)(ii));
       (4) a State may elect to provide such assistance in 
     accordance with section 1902(a)(34) of the Social Security 
     Act (42 U.S.C. 1396a(a)(34)) and any assistance provided with 
     respect to a month described in that section shall not be 
     included in the determination of the 12-month period under 
     subsection (b)(2);
       (5) a State may elect to make eligible for such medical 
     assistance a dependent spouse or children of an individual 
     eligible for medical assistance under subsection (a), if such 
     spouse or children are uninsured;
       (6) individuals eligible for medical assistance under this 
     section shall be deemed to be described in the list of 
     individuals described in the matter preceding paragraph (1) 
     of section 1905(a) of such Act (42 U.S.C. 1396d(a));
       (7) a State may elect to provide such medical assistance 
     without regard to any limitation under sections 401(a), 
     402(b), 403, and 421 of the Personal Responsibility and Work 
     Opportunity Reconciliation Act of 1996 (8 U.S.C. 1611(a), 
     1612(b), 1613, and 1631) and no debt shall accrue under an 
     affidavit of support against any sponsor of an individual who 
     is an alien who is provided such assistance, and the cost of 
     such assistance shall not be considered as an unreimbursed 
     cost; and
       (8) the Secretary of Health and Human Services shall not 
     count, for purposes of section 1108(f) of the Social Security 
     Act (42 U.S.C. 1308(f)), such amount of payments under this 
     section as bears a reasonable relationship to the average 
     national proportion of payments made under this section for 
     the 50 States and the District of Columbia to the payments 
     otherwise made under title XIX for such States and District.
       (d) Sunset.--No medical assistance may be provided under 
     this section after December 31, 2002.

     SEC. 603. STATE OPTION TO PROVIDE TEMPORARY COVERAGE UNDER 
                   MEDICAID FOR THE UNSUBSIDIZED PORTION OF COBRA 
                   CONTINUATION PREMIUMS.

       (a) State Option.--
       (1) In General.--Notwithstanding any other provision of 
     law, a State may elect to provide under its medicaid program 
     under title XIX of the Social Security Act medical assistance 
     in the form of payment for the portion of the premium for 
     COBRA continuation coverage for which an individual does not 
     receive a subsidy under the premium assistance program 
     established under section 601 in the case of an individual--
       (A) who at any time during the period that begins on 
     September 11, 2001, and ends on December 31, 2002, is 
     separated from employment;
       (B) who is eligible for, and has elected coverage under, 
     COBRA continuation coverage;
       (C) who is receiving premium assistance under the program 
     established under section 601; and
       (D) whose family income does not exceed 200 percent of the 
     poverty line.
       (2) Inclusion of certain individuals.--For purposes of 
     paragraph (1), the spouse, child, or other individual who was 
     an insured under health insurance coverage of an individual 
     who was killed as a result of the terrorist-related aircraft 
     crashes on September 11, 2001, or as a result of any other 
     terrorist-related event occurring during the period described 
     in that paragraph, and who satisfies the requirements of 
     subparagraphs (B), (C), and (D) of paragraph (1) shall be 
     eligible for medical assistance under this section.
       (b) Limitation of Period of Coverage.--Medical assistance 
     provided in accordance with this section shall end with 
     respect to an individual on the earlier of--
       (1) the date the individual is no longer covered under 
     COBRA continuation coverage; or
       (2) 12 months after the date the individual first receives 
     such assistance under this section.
       (c) Special Rules.--In the case of medical assistance 
     provided under this section--
       (1) such assistance may be provided without regard to--
       (A) whether the State otherwise has elected to make medical 
     assistance available for COBRA premiums under section 
     1902(a)(10)(F) of the Social Security Act (42 U.S.C. 
     1396a(a)(10)(F)); or
       (B) the conditions otherwise imposed for the provision of 
     medical assistance for such COBRA premiums under clause (XII) 
     of the matter following section 1902(a)(10)(G) of the Social 
     Security Act (42 U.S.C. 1396a(a)(10)(G)), or paragraphs 
     (1)(B), (1)(C), (1)(D), and (4) of section 1902(u) of such 
     Act (42 U.S.C. 1396a(u)); and
       (2) paragraphs (1), (2), (4), (5), (7), and (8) of 
     subsection (c) of section 602 apply to such assistance in the 
     same manner as such paragraphs apply to the provision of 
     medical assistance under that section.
       (d) Sunset.--No medical assistance may be provided under 
     this section after December 31, 2002.

     SEC. 604. TEMPORARY INCREASES OF MEDICAID FMAP FOR FISCAL 
                   YEAR 2002.

       (a) Permitting Maintenance of Fiscal Year 2001 FMAP.--
     Notwithstanding any other provision of law, but subject to 
     subsection (d), if the FMAP determined without regard to this 
     section for a State for fiscal year 2002 is less than the 
     FMAP as so determined for fiscal year 2001, the FMAP for the 
     State for fiscal year 2001 shall be substituted for the 
     State's FMAP for fiscal year 2002, before the application of 
     this section.
       (b) General 1.50 Percentage Points Increase.--
     Notwithstanding any other provision of law, but subject to 
     subsections (d) and (e), for each State for each calendar 
     quarter in fiscal year 2002, the FMAP (taking into account 
     the application of subsection (a)) shall be increased by 1.50 
     percentage points.
       (c) Further Increase for States With High Unemployment 
     Rates.--
       (1) In general.--Notwithstanding any other provision of 
     law, but subject to subsections (d) and (e), the FMAP for a 
     high unemployment State for a calendar quarter in fiscal year 
     2002 (and any subsequent calendar quarter in such fiscal year 
     regardless of whether the State continues to be a high 
     unemployment State for a calendar quarter in such fiscal 
     year) shall be increased (after the application of 
     subsections (a) and (b)) by 1.50 percentage points.
       (2) High unemployment state.--For purposes of this 
     subsection, a State is a high unemployment State for a 
     calendar quarter if, for any 3 consecutive months beginning 
     on or after June 2001 and ending with the second month before 
     the beginning of the calendar quarter, the State has an 
     unemployment rate that exceeds the national average 
     unemployment rate. Such unemployment rates for such months 
     shall be determined based on publications of the Bureau of 
     Labor Statistics of the Department of Labor.
       (d) 1-Year Increase in Cap on Medicaid Payments to 
     Territories.--Notwithstanding any other provision of law, 
     with respect to fiscal year 2002, the amounts otherwise 
     determined for Puerto Rico, the Virgin Islands, Guam, the 
     Northern Mariana Islands, and American Samoa under section 
     1108 of the Social Security Act (42 U.S.C. 1308) shall each 
     be increased by an amount equal to 3.093 percentage points of 
     such amounts.
       (e) Scope of Application.--The increases in the FMAP for a 
     State under this section shall apply only for purposes of 
     title XIX of the Social Security Act and shall not apply with 
     respect to--
       (1) disproportionate share hospital payments described in 
     section 1923 of such Act (42 U.S.C. 1396r-4); and
       (2) payments under titles IV and XXI of such Act (42 U.S.C. 
     601 et seq. and 1397aa et seq.).
       (f) State Eligibility.--A State is eligible for an increase 
     in its FMAP under subsection (b) or (c) only if the 
     eligibility under its State plan under title XIX of the 
     Social Security Act (including any waiver under such title or 
     under section 1115 of such Act (42 U.S.C. 1315)) is no more 
     restrictive than the eligibility under such plan (or waiver) 
     as in effect on October 1, 2001.

     SEC. 605. DEFINITIONS.

       In this title:
       (1) Administrator.--The term ``administrator'' has the 
     meaning given that term in section 3(16)(A) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 
     1002(16)(A)).
       (2) COBRA continuation coverage.--
       (A) In general.--The term ``COBRA continuation coverage'' 
     means coverage under a group health plan provided by an 
     employer pursuant to title XXII of the Public Health Service 
     Act, section 4980B of the Internal Revenue Code of 1986, part 
     6 of subtitle B of title I of the Employee Retirement Income 
     Security Act of 1974, or section 8905a of title 5, United 
     States Code.
       (B) Application to employers in states requiring such 
     coverage.--Such term includes such coverage provided by an 
     employer in a State that has enacted a law that requires the 
     employer to provide such coverage even though the employer 
     would not otherwise be required to provide such coverage 
     under the provisions of law referred to in subparagraph (A).
       (3) Covered employee.--The term ``covered employee'' has 
     the meaning given that term in section 607(2) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1167(2)).
       (4) Federal public benefit.--The term ``Federal public 
     benefit'' has the meaning given that term in section 401(c) 
     of the Personal Responsibility and Work Opportunity 
     Reconciliation Act of 1996 (8 U.S.C. 1611(c)).
       (5) FMAP.--The term ``FMAP'' means the Federal medical 
     assistance percentage, as defined in section 1905(b) of the 
     Social Security Act (42 U.S.C. 1396d(b)).
       (6) Group health plan.--The term ``group health plan'' has 
     the meaning given that term in section 2791(a) of the Public 
     Health Service Act (42 U.S.C. 300gg-91(a)) and in section 
     607(1) of the Employee Retirement Income Security Act of 1974 
     (29 U.S.C. 1167(1)).
       (7) Health insurance coverage.--The term ``health insurance 
     coverage'' has the meaning given that term in section 
     2791(b)(1) of the Public Health Service Act (42 U.S.C. 300gg-
     91(b)(1)).
       (8) Multiemployer plan.--The term ``multiemployer plan'' 
     has the meaning given that term in section 3(37) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1002(37)).
       (9) Poverty line.--The term ``poverty line'' has the 
     meaning given that term in section 2110(c)(5) of the Social 
     Security Act (42 U.S.C. 1397jj(c)(5)).
       (10) Qualified beneficiary.--The term ``qualified 
     beneficiary'' has the meaning given that term in section 
     607(3) of the Employee Retirement Income Security Act of 1974 
     (29 U.S.C. 1167(3)).
       (11) State.--The term ``State'' has the meaning given such 
     term for purposes of title XIX of the Social Security Act (42 
     U.S.C. 1396 et seq.).
       (12) State or local public benefit.--The term ``State or 
     local public benefit'' has the meaning given that term in 
     section 411(c) of the Personal Responsibility and Work 
     Opportunity Reconciliation Act of 1996 (8 U.S.C. 1621(c)).

[[Page S11689]]

       (13) Uninsured.--
       (A) In general.--The term ``uninsured'' means, with respect 
     to an individual, that the individual is not covered under--
       (i) a group health plan;
       (ii) health insurance coverage; or
       (iii) a program under title XVIII, XIX, or XXI of the 
     Social Security Act (other than under such title XIX pursuant 
     to section 602).
       (B) Exclusion.--Such coverage under clause (i) or (ii) 
     shall not include coverage consisting solely of coverage of 
     excepted benefits (as defined in section 2791(c) of the 
     Public Health Service Act (42 U.S.C. 300gg-91(c)).

          TITLE VII--TEMPORARY ENHANCED UNEMPLOYMENT BENEFITS

     SEC. 701. SHORT TITLE.

       This title may be cited as the ``Temporary Unemployment 
     Compensation Act of 2001''.

     SEC. 702. FEDERAL-STATE AGREEMENTS.

       (a) In General.--Any State which desires to do so may enter 
     into and participate in an agreement under this title with 
     the Secretary of Labor (in this title referred to as the 
     ``Secretary''). Any State which is a party to an agreement 
     under this title may, upon providing 30 days' written notice 
     to the Secretary, terminate such agreement.
       (b) Provisions of Agreement.--
       (1) In general.--Any agreement under subsection (a) shall 
     provide that the State agency of the State will make--
       (A) payments of regular compensation to individuals in 
     amounts and to the extent that such payments would be 
     determined if the State law were applied with the 
     modifications described in paragraph (2); and
       (B) payments of temporary supplemental unemployment 
     compensation to individuals who--
       (i) have exhausted all rights to regular compensation under 
     the State law;
       (ii) do not, with respect to a week, have any rights to 
     compensation (excluding extended compensation) under the 
     State law of any other State (whether one that has entered 
     into an agreement under this title or otherwise) nor 
     compensation under any other Federal law (other than under 
     the Federal-State Extended Unemployment Compensation Act of 
     1970 (26 U.S.C. 3304 note)), and are not paid or entitled to 
     be paid any additional compensation under any Federal or 
     State law; and
       (iii) are not receiving compensation with respect to such 
     week under the unemployment compensation law of Canada.
       (2) Modifications described.--The modifications described 
     in this paragraph are as follows:
       (A) Alternative base period.--An individual shall be 
     eligible for regular compensation if the individual would be 
     so eligible, determined by applying--
       (i) the base period that would otherwise apply under the 
     State law if this title had not been enacted; or
       (ii) a base period ending at the close of the calendar 
     quarter most recently completed before the date of the 
     individual's application for benefits, provided that wage 
     data for that quarter has been reported to the State;

     whichever results in the greater amount.
       (B) Part-time employment.--An individual shall not be 
     denied regular compensation under the State law's provisions 
     relating to availability for work, active search for work, or 
     refusal to accept work, solely by virtue of the fact that 
     such individual is seeking, or is available for, only part-
     time (and not full-time) work, if--
       (i) the individual's employment on which eligibility for 
     the regular compensation is based was part-time employment; 
     or
       (ii) the individual can show good cause for seeking, or 
     being available for, only part-time (and not full-time) work.
       (C) Increased benefits.--
       (i) In general.--The amount of regular compensation 
     (including dependents' allowances) payable for any week shall 
     be equal to the amount determined under the State law (before 
     the application of this subparagraph), plus an amount equal 
     to the greater of--

       (I) 15 percent of the amount so determined; or
       (II) $25.

       (ii) Rounding.--For purposes of determining the amount 
     under clause (i)(I), such amount shall be rounded to the 
     dollar amount specified under State law.
       (c) Nonreduction Rule.--Under the agreement, subsection 
     (b)(2)(C) shall not apply (or shall cease to apply) with 
     respect to a State upon a determination by the Secretary that 
     the method governing the computation of regular compensation 
     under the State law of that State has been modified in a way 
     such that--
       (1) the average weekly amount of regular compensation which 
     will be payable during the period of the agreement 
     (determined disregarding the modifications described in 
     subsection (b)(2)) will be less than
       (2) the average weekly amount of regular compensation which 
     would otherwise have been payable during such period under 
     the State law, as in effect on September 11, 2001.
       (d) Coordination Rules.--
       (1) Regular compensation payable under a federal law.--The 
     modifications described in subsection (b)(2) shall also apply 
     in determining the amount of benefits payable under any 
     Federal law to the extent that those benefits are determined 
     by reference to regular compensation payable under the State 
     law of the State involved.
       (2) TSUC to serve as second-tier benefits.--Notwithstanding 
     any other provision of law, extended benefits shall not be 
     payable to any individual for any week for which temporary 
     supplemental unemployment compensation is payable to such 
     individual.
       (e) Exhaustion of Benefits.--For purposes of subsection 
     (b)(1)(B)(i), an individual shall be considered to have 
     exhausted such individual's rights to regular compensation 
     under a State law when--
       (1) no payments of regular compensation can be made under 
     such law because such individual has received all regular 
     compensation available to such individual based on employment 
     or wages during such individual's base period; or
       (2) such individual's rights to such compensation have been 
     terminated by reason of the expiration of the benefit year 
     with respect to which such rights existed.
       (f) Weekly Benefit Amount, Terms and Conditions, Etc. 
     Relating to TSUC.--For purposes of any agreement under this 
     title--
       (1) the amount of temporary supplemental unemployment 
     compensation which shall be payable to an individual for any 
     week of total unemployment shall be equal to the amount of 
     regular compensation (including dependents' allowances) 
     payable to such individual under the State law for a week for 
     total unemployment during such individual's benefit year;
       (2) the terms and conditions of the State law which apply 
     to claims for regular compensation and to the payment thereof 
     shall apply to claims for temporary supplemental unemployment 
     compensation and the payment thereof, except where 
     inconsistent with the provisions of this title or with the 
     regulations or operating instructions of the Secretary 
     promulgated to carry out this title; and
       (3) the maximum amount of temporary supplemental 
     unemployment compensation payable to any individual for whom 
     a temporary supplemental unemployment compensation account is 
     established under section 703 shall not exceed the amount 
     established in such account for such individual.

     SEC. 703. TEMPORARY SUPPLEMENTAL UNEMPLOYMENT COMPENSATION 
                   ACCOUNT.

       (a) In General.--Any agreement under this title shall 
     provide that the State will establish, for each eligible 
     individual who files an application for temporary 
     supplemental unemployment compensation, a temporary 
     supplemental unemployment compensation account.
       (b) Amount in Account.--
       (1) In general.--The amount established in an account under 
     subsection (a) shall be equal to the lesser of--
       (A) 50 percent of the total amount of regular compensation 
     (including dependents' allowances) payable to the individual 
     during the individual's benefit year under such law; or
       (B) 13 times the individual's weekly benefit amount.
       (2) Weekly benefit amount.--For purposes of this 
     subsection, an individual's weekly benefit amount for any 
     week is the amount of regular compensation (including 
     dependents' allowances) under the State law payable to such 
     individual for such week for total unemployment.
       (3) Rule of construction.--For purposes of any computation 
     under paragraph (1) (and any determination of amount under 
     section 702(f)(1)), the modification described in section 
     702(b)(2)(C) (relating to increased benefits) shall be deemed 
     to have been in effect with respect to the entirety of the 
     benefit year involved.

     SEC. 704. PAYMENTS TO STATES HAVING AGREEMENTS UNDER THIS 
                   TITLE.

       (a) General Rule.--There shall be paid to each State which 
     has entered into an agreement under this title an amount 
     equal to--
       (1) 100 percent of any regular compensation made payable to 
     individuals by such State by virtue of the modifications 
     which are described in section 702(b)(2) and deemed to be in 
     effect with respect to such State pursuant to section 
     702(b)(1)(A);
       (2) 100 percent of any regular compensation--
       (A) which is paid to individuals by such State by reason of 
     the fact that its State law contains provisions comparable to 
     the modifications described in subparagraphs (A) and (B) of 
     section 702(b)(2); but only
       (B) to the extent that those amounts would, if such amounts 
     were instead payable by virtue of the State law's being 
     deemed to be so modified pursuant to section 702(b)(1)(A), 
     have been reimbursable under paragraph (1); and
       (3) 100 percent of the temporary supplemental unemployment 
     compensation paid to individuals by the State pursuant to 
     such agreement.
       (b) Determination of Amount.--Sums under subsection (a) 
     payable to any State by reason of such State having an 
     agreement under this title shall be payable, either in 
     advance or by way of reimbursement (as may be determined by 
     the Secretary), in such amounts as the Secretary estimates 
     the State will be entitled to receive under this title for 
     each calendar month, reduced or increased, as the case may 
     be, by any amount by which the Secretary finds that the 
     Secretary's estimates for any prior calendar month were 
     greater or less than the amounts which should have been paid 
     to the State. Such estimates may be made on the basis of such 
     statistical, sampling, or other method as may be agreed upon 
     by the Secretary and the State agency of the State involved.
       (c) Administrative Expenses, Etc.--There is hereby 
     appropriated out of the employment security administration 
     account of the Unemployment Trust Fund (as established by 
     section 901(a) of the Social Security Act (42 U.S.C. 
     1101(a))) $500,000,000 to reimburse States for the costs of 
     the administration of agreements under this title (including 
     any improvements in technology in connection therewith) and 
     to provide reemployment services to unemployment compensation 
     claimants in States having agreements under this title. Each 
     State's share of the amount appropriated by the preceding 
     sentence shall be determined by the Secretary according to 
     the factors described in section 302(a) of the Social 
     Security Act (42 U.S.C. 501(a)) and certified by the 
     Secretary to the Secretary of the Treasury.

[[Page S11690]]

     SEC. 705. FINANCING PROVISIONS.

       (a) In General.--Funds in the extended unemployment 
     compensation account (as established by section 905(a) of the 
     Social Security Act (42 U.S.C. 1105(a))), and the Federal 
     unemployment account (as established by section 904(g) of 
     such Act (42 U.S.C. 1104(g))), of the Unemployment Trust Fund 
     (as established by section 904(a) of such Act (42 U.S.C. 
     1104(a))) shall be used, in accordance with subsection (b), 
     for the making of payments (described in section 704(a)) to 
     States having agreements entered into under this title.
       (b) Certification.--The Secretary shall from time to time 
     certify to the Secretary of the Treasury for payment to each 
     State the sums described in section 704(a) which are payable 
     to such State under this title. The Secretary of the 
     Treasury, prior to audit or settlement by the General 
     Accounting Office, shall make payments to the State in 
     accordance with such certification by transfers from the 
     extended unemployment compensation account, as so established 
     (or, to the extent that there are insufficient funds in that 
     account, from the Federal unemployment account, as so 
     established) to the account of such State in the Unemployment 
     Trust Fund (as so established).

     SEC. 706. FRAUD AND OVERPAYMENTS.

       (a) In General.--If an individual knowingly has made, or 
     caused to be made by another, a false statement or 
     representation of a material fact, or knowingly has failed, 
     or caused another to fail, to disclose a material fact, and 
     as a result of such false statement or representation or of 
     such nondisclosure such individual has received any regular 
     compensation or temporary supplemental unemployment 
     compensation under this title to which he was not entitled, 
     such individual--
       (1) shall be ineligible for any further benefits under this 
     title in accordance with the provisions of the applicable 
     State unemployment compensation law relating to fraud in 
     connection with a claim for unemployment compensation; and
       (2) shall be subject to prosecution under section 1001 of 
     title 18, United States Code.
       (b) Repayment.--In the case of individuals who have 
     received any regular compensation or temporary supplemental 
     unemployment compensation under this title to which such 
     individuals were not entitled, the State shall require such 
     individuals to repay those benefits to the State agency, 
     except that the State agency may waive such repayment if it 
     determines that--
       (1) the payment of such benefits was without fault on the 
     part of any such individual; and
       (2) such repayment would be contrary to equity and good 
     conscience.
       (c) Recovery by State Agency.--
       (1) In general.--The State agency may recover the amount to 
     be repaid, or any part thereof, by deductions from any 
     regular compensation or temporary supplemental unemployment 
     compensation payable to such individual under this title or 
     from any unemployment compensation payable to such individual 
     under any Federal unemployment compensation law administered 
     by the State agency or under any other Federal law 
     administered by the State agency which provides for the 
     payment of any assistance or allowance with respect to any 
     week of unemployment, during the 3-year period after the date 
     such individuals received the payment of the regular 
     compensation or temporary supplemental unemployment 
     compensation to which such individuals were not entitled, 
     except that no single deduction may exceed 50 percent of the 
     weekly benefit amount from which such deduction is made.
       (2) Opportunity for hearing.--No repayment shall be 
     required, and no deduction shall be made, until a 
     determination has been made, notice thereof and an 
     opportunity for a fair hearing has been given to the 
     individual, and the determination has become final.
       (d) Review.--Any determination by a State agency under this 
     section shall be subject to review in the same manner and to 
     the same extent as determinations under the State 
     unemployment compensation law, and only in that manner and to 
     that extent.

     SEC. 707. DEFINITIONS.

       For purposes of this title:
       (1) In general.--The terms ``compensation'', ``regular 
     compensation'', ``extended compensation'', ``additional 
     compensation'', ``benefit year'', ``base period'', ``State'', 
     ``State agency'', ``State law'', and ``week'' have the 
     respective meanings given such terms under section 205 of the 
     Federal-State Extended Unemployment Compensation Act of 1970, 
     subject to paragraph (2).
       (2) State law and regular compensation.--In the case of a 
     State entering into an agreement under this title--
       (A) ``State law'' shall be considered to refer to the State 
     law of such State, applied in conformance with the 
     modifications described in section 702(b)(2), subject to 
     section 702(c); and
       (B) ``regular compensation'' shall be considered to refer 
     to such compensation, determined under its State law (applied 
     in the manner described in subparagraph (A));
     except as otherwise provided or where the context clearly 
     indicates otherwise.

     SEC. 708. APPLICABILITY.

       (a) In General.--An agreement entered into under this title 
     shall apply to weeks of unemployment--
       (1) beginning after the date on which such agreement is 
     entered into; and
       (2) ending before January 1, 2003.
       (b) Specific Rules.--
       (1) In general.--Under such an agreement, the following 
     rules shall apply:
       (A) Alternative base periods.--The modification described 
     in section 702(b)(2)(A) (relating to alternative base 
     periods) shall not apply except in the case of initial claims 
     filed on or after the first day of the week that includes 
     September 11, 2001.
       (B) Part-time employment and increased benefits.--The 
     modifications described in subparagraphs (B) and (C) of 
     section 702(b)(2) (relating to part-time employment and 
     increased benefits, respectively) shall apply to weeks of 
     unemployment described in subsection (a), regardless of the 
     date on which an individual's initial claim for benefits is 
     filed.
       (C) Eligibility for tsuc.--The payments described in 
     section 702(b)(1)(B) (relating to temporary supplemental 
     unemployment compensation) shall not apply except in the case 
     of individuals exhausting their rights to regular 
     compensation (as described in clause (i) of such section) on 
     or after the first day of the week that includes September 
     11, 2001.
       (2) Reapplication process.--
       (A) Alternative base periods.--In the case of an individual 
     who filed an initial claim for regular compensation on or 
     after the first day of the week that includes September 11, 
     2001, and before the date that the State entered into an 
     agreement under subsection (a)(1) that was denied as a result 
     of the application of the base period that applied under the 
     State law prior to the date on which the State entered into 
     the such agreement, such individual--
       (i) may refile a claim for regular compensation based on 
     the modification described in section 702(b)(2)(A) (relating 
     to alternative base periods) on or after the date on which 
     the State enters into such agreement and before the date on 
     which such agreement terminates; and
       (ii) if eligible, shall be entitled to such compensation 
     only for weeks of unemployment described in subsection (a) 
     beginning on or after the date on which the individual files 
     such claim.
       (B) Part-time employment.--In the case of an individual who 
     before the date that the State entered into an agreement 
     under subsection (a)(1) was denied regular compensation under 
     the State law's provisions relating to availability for work, 
     active search for work, or refusal to accept work, solely by 
     virtue of the fact that such individual is seeking, or 
     available for, only part-time (and not full-time) work, such 
     individual--
       (i) may refile a claim for regular compensation based on 
     the modification described in section 702(b)(2)(B) (relating 
     to part-time employment) on or after the date on which the 
     State enters into the agreement under subsection (a)(1) and 
     before the date on which such agreement terminates; and
       (ii) if eligible, shall be entitled to such compensation 
     only for weeks of unemployment described in subsection (a) 
     beginning on or after the date on which the individual files 
     such claim.
       (3) No retroactive payments for weeks prior to agreement.--
     No amounts shall be payable to an individual under an 
     agreement entered into under this title for any week of 
     unemployment prior to the week beginning after the date on 
     which such agreement is entered into.

              TITLE VIII--EMERGENCY AGRICULTURE ASSISTANCE

                    Subtitle A--Crop Loss Assistance

     SEC. 801. CROP LOSS ASSISTANCE.

       (a) In General.--The Secretary of Agriculture (referred to 
     in this title as the ``Secretary'') shall use $1,800,000,000 
     of funds of the Commodity Credit Corporation to make 
     emergency financial assistance available to producers on a 
     farm that have incurred qualifying losses for the 2001 crop.
       (b) Administration.--The Secretary shall make assistance 
     available under this section in the same manner as provided 
     under section 815 of the Agriculture, Rural Development, Food 
     and Drug Administration, and Related Agencies Appropriations 
     Act, 2001 (Public Law 105-277; 114 Stat. 1549A-55), including 
     using the same loss thresholds for the quantity and economic 
     losses as were used in administering that section.
       (c) Use of Funds for Cash Payments.--The Secretary may use 
     funds made available under this section to make, in a manner 
     consistent with this section, cash payments not for crop 
     disasters, but for income loss to carry out the purposes of 
     this section.

     SEC. 802. LIVESTOCK ASSISTANCE PROGRAM.

       (a) In General.--The Secretary shall use $500,000,000 of 
     the funds of the Commodity Credit Corporation to make and 
     administer payments for livestock losses to producers for 
     2001 losses in a county that has received an emergency 
     designation by the President or the Secretary after January 
     1, 2001.
       (b) Administration.--The Secretary shall make assistance 
     available under this section in the same manner as provided 
     under section 806 of the Agriculture, Rural Development, Food 
     and Drug Administration, and Related Agencies Appropriations 
     Act, 2001 (Public Law 105-277; 114 Stat. 1549A-51).

     SEC. 803. COMMODITY PURCHASES.

       (a) In General.--The Secretary shall use $220,000,000 of 
     funds of the Commodity Credit Corporation to purchase 
     agricultural commodities, especially agricultural commodities 
     that have experienced low prices during the 2001 crop year, 
     as determined by the Secretary.
       (b) Geographic Diversity.--The Secretary is encouraged to 
     purchase agricultural commodities under this section in a 
     manner that reflects the geographic diversity of agricultural 
     production in the United States, particularly agricultural 
     production in the Northeast and Mid-Atlantic States.
       (c) Other Purchases.--The Secretary shall ensure that 
     purchases of agricultural commodities under this section are 
     in addition to purchases by the Secretary under any other 
     law.
       (d) Transportation and Distribution Costs.--The Secretary 
     may use not more than

[[Page S11691]]

     $20,000,000 of the funds made available under subsection (a) 
     to provide assistance to States to cover costs incurred by 
     the States in transporting and distributing agricultural 
     commodities purchased under this section.
       (e) Purchases for School Nutrition Programs.--The Secretary 
     shall use not less than $55,000,000 of the funds made 
     available under subsection (a) to purchase agricultural 
     commodities of the type distributed under section 6(a) of the 
     Richard B. Russell National School Lunch Act (42 U.S.C. 
     1755(a)) for distribution to schools and service institutions 
     in accordance with section 6(a) of that Act.

                     Subtitle B--Rural Development

     SEC. 811. RURAL COMMUNITY FACILITIES AND UTILITIES.

       (a) Funding.--
       (1) In general.--Not later than 30 days after the date of 
     enactment of this Act, out of any funds in the Treasury not 
     otherwise appropriated, the Secretary of the Treasury shall 
     transfer to the Secretary of Agriculture--
       (A) $130,100,000 for the cost of water or waste disposal 
     direct loans under section 306(a)(1) of the Consolidated Farm 
     and Rural Development Act (7 U.S.C. 1926(a)(1));
       (B) $1,074,798,000 for water or waste disposal grants under 
     section 306(a)(2) of that Act;
       (C) $8,362,000 for the cost of community facility direct 
     loans under section 306(a)(1) of that Act; and
       (D) $60,000,000 for community facility grants under 
     paragraph (19), (20), or (21) of section 306(a)(1) of that 
     Act.
       (2) Receipt and acceptance.--The Secretary shall be 
     entitled to receive, shall accept, and shall use in 
     accordance with paragraph (1) the funds transferred under 
     paragraph (1), without further appropriation.
       (3) Availability of funds.--Funds transferred under 
     paragraph (1) shall remain available until expended.
       (4) Applicability of other laws.--For the purposes of the 
     Federal Credit Reform Act of 1990 (2 U.S.C. 661a et seq.), 
     this section shall be treated as if enacted in an Act of 
     appropriation.
       (5) Appropriated amounts.--Funds made available under this 
     subsection shall be available to the Secretary--
       (A) to provide funds for pending applications for loans, 
     loan guarantees, and grants described in paragraph (1); and
       (B) only to the extent that funds for the loans, loan 
     guarantees, and grants appropriated in the annual 
     appropriations Act for fiscal year 2002 have been exhausted.
       (b) Community Facility Guaranteed Loans.--The Secretary may 
     guarantee an additional $128,000,000 for community facility 
     guaranteed loans under section 306(a)(1) of the Consolidated 
     Farm and Rural Development Act (7 U.S.C. 1926(a)(1)).

     SEC. 812. RURAL TELECOMMUNICATIONS LOANS.

       (a) In General.--Not later than 30 days after the date of 
     enactment of this Act, out of any funds in the Treasury not 
     otherwise appropriated, the Secretary of the Treasury shall 
     transfer to the Secretary of Agriculture to make insured cost 
     of money rural telecommunications loans under sections 305 
     and 306 of the Rural Electrification Act of 1936 (7 U.S.C. 
     935, 936) $40,000,000, to remain available until expended.
       (b) Receipt and Acceptance.--The Secretary shall be 
     entitled to receive, shall accept, and shall use to carry out 
     this section the funds transferred under subsection (a), 
     without further appropriation.
       (c) Applicability of Other Laws.--For the purposes of the 
     Federal Credit Reform Act of 1990 (2 U.S.C. 661a et seq.), 
     this section shall be treated as if enacted in an Act of 
     appropriation.

     SEC. 813. TELEMEDICINE AND DISTANCE LEARNING SERVICES.

       (a) In General.--The Secretary may make additional loans 
     and grants for the broadband pilot program and for 
     telemedicine and distance learning services under chapter 1 
     of subtitle D of title XXIII of the Food, Agriculture, 
     Conservation, and Trade Act of 1990 (7 U.S.C. 950aaa et 
     seq.).
       (b) Amount of Loans.--The Secretary shall make loans under 
     this section in an amount not to exceed $400,000,000.
       (c) Funding.--
       (1) In general.--Not later than 30 days after the date of 
     enactment of this Act, out of any funds in the Treasury not 
     otherwise appropriated, the Secretary of the Treasury shall 
     transfer to the Secretary of Agriculture for the cost of 
     loans and grants under this section $5,000,000, to remain 
     available until expended.
       (2) Receipt and acceptance.--The Secretary shall be 
     entitled to receive, shall accept, and shall use to carry out 
     this section the funds transferred under paragraph (1), 
     without further appropriation.
       (3) Applicability of other laws.--For the purposes of the 
     Federal Credit Reform Act of 1990 (2 U.S.C. 661a et seq.), 
     this subsection shall be treated as if enacted in an Act of 
     appropriation.

     SEC. 814. ENVIRONMENTAL QUALITY INCENTIVES PROGRAM.

       In addition to funds otherwise available, the Secretary 
     shall use $1,400,000,000 of funds of the Commodity Credit 
     Corporation to carry out the environmental quality incentives 
     program established under chapter 4 of subtitle D of title 
     XII of the Food Security Act of 1985 (16 U.S.C. 3839aa et 
     seq.), including technical assistance under the program.

     SEC. 815. FARMLAND PROTECTION PROGRAM.

       In addition to funds otherwise available, the Secretary 
     shall use $150,000,000 of funds of the Commodity Credit 
     Corporation to carry out the farmland protection program 
     established under section 388 of the Federal Agriculture 
     Improvement and Reform Act of 1996 (16 U.S.C. 3830 note; 
     Public Law 104-127).

                       Subtitle C--Administration

     SEC. 821. COMMODITY CREDIT CORPORATION.

       The Secretary shall use the funds, facilities, and 
     authorities of the Commodity Credit Corporation to carry out 
     subtitle A.

     SEC. 822. ADMINISTRATIVE EXPENSES.

       (a) In General.--In addition to funds otherwise available, 
     not later than 30 days after the date of enactment of this 
     Act, out of any funds in the Treasury not otherwise 
     appropriated, the Secretary of the Treasury shall transfer to 
     the Secretary of Agriculture to pay the salaries and expenses 
     of the Department of Agriculture in carrying out this title 
     $104,500,000, to remain available until expended.
       (b) Receipt and Acceptance.--The Secretary shall be 
     entitled to receive, shall accept, and shall use to carry out 
     this section the funds transferred under subsection (a), 
     without further appropriation.

     SEC. 823. REGULATIONS.

       (a) In General.--The Secretary may promulgate such 
     regulations as are necessary to implement this title.
       (b) Procedure.--The promulgation of the regulations and 
     administration of this subtitle shall be made without regard 
     to--
       (1) the notice and comment provisions of section 553 of 
     title 5, United States Code;
       (2) the Statement of Policy of the Secretary of Agriculture 
     effective July 24, 1971 (36 Fed. Reg. 13804), relating to 
     notices of proposed rulemaking and public participation in 
     rulemaking; and
       (3) chapter 35 of title 44, United States Code (commonly 
     known as the ``Paperwork Reduction Act'').
       (c) Congressional Review of Agency Rulemaking.--In carrying 
     out this section, the Secretary shall use the authority 
     provided under section 808 of title 5, United States Code.

                    TITLE IX--ADDITIONAL PROVISIONS

     SEC. 901. CREDIT TO HOLDERS OF QUALIFIED AMTRAK BONDS.

       (a) In General.--Part IV of subchapter A of chapter 1 
     (relating to credits against tax) is amended by adding at the 
     end the following new subpart:

``Subpart H--Nonrefundable Credit for Holders of Qualified Amtrak Bonds

``Sec. 54. Credit to holders of qualified Amtrak bonds.

     ``SEC. 54. CREDIT TO HOLDERS OF QUALIFIED AMTRAK BONDS.

       ``(a) Allowance of Credit.--In the case of a taxpayer who 
     holds a qualified Amtrak bond on a credit allowance date of 
     such bond which occurs during the taxable year, there shall 
     be allowed as a credit against the tax imposed by this 
     chapter for such taxable year an amount equal to the sum of 
     the credits determined under subsection (b) with respect to 
     credit allowance dates during such year on which the taxpayer 
     holds such bond.
       ``(b) Amount of Credit.--
       ``(1) In general.--The amount of the credit determined 
     under this subsection with respect to any credit allowance 
     date for a qualified Amtrak bond is 25 percent of the annual 
     credit determined with respect to such bond.
       ``(2) Annual credit.--The annual credit determined with 
     respect to any qualified Amtrak bond is the product of--
       ``(A) the applicable credit rate, multiplied by
       ``(B) the outstanding face amount of the bond.
       ``(3) Applicable credit rate.--For purposes of paragraph 
     (2), the applicable credit rate with respect to an issue is 
     the rate equal to an average market yield (as of the day 
     before the date of sale of the issue) on outstanding long-
     term corporate debt obligations (determined in such manner as 
     the Secretary prescribes).
       ``(4) Credit allowance date.--For purposes of this section, 
     the term `credit allowance date' means--
       ``(A) March 15,
       ``(B) June 15,
       ``(C) September 15, and
       ``(D) December 15.

     Such term includes the last day on which the bond is 
     outstanding.
       ``(5) Special rule for issuance and redemption.--In the 
     case of a bond which is issued during the 3-month period 
     ending on a credit allowance date, the amount of the credit 
     determined under this subsection with respect to such credit 
     allowance date shall be a ratable portion of the credit 
     otherwise determined based on the portion of the 3-month 
     period during which the bond is outstanding. A similar rule 
     shall apply when the bond is redeemed.
       ``(c) Limitation Based on Amount of Tax.--
       ``(1) In general.--The credit allowed under subsection (a) 
     for any taxable year shall not exceed the excess of--
       ``(A) the sum of the regular tax liability (as defined in 
     section 26(b)) plus the tax imposed by section 55, over
       ``(B) the sum of the credits allowable under this part 
     (other than this subpart and subpart C).
       ``(2) Carryover of unused credit.--If the credit allowable 
     under subsection (a) exceeds the limitation imposed by 
     paragraph (1) for such taxable year, such excess shall be 
     carried to the succeeding taxable year and added to the 
     credit allowable under subsection (a) for such taxable year.
       ``(d) Credit Included in Gross Income.--Gross income 
     includes the amount of the credit allowed to the taxpayer 
     under this section (determined without regard to subsection 
     (c)) and the amount so included shall be treated as interest 
     income.
       ``(e) Qualified Amtrak Bond.--For purposes of this part, 
     the term `qualified Amtrak bond' means any bond issued as 
     part of an issue if--

[[Page S11692]]

       ``(1) 95 percent or more of the proceeds from the sale of 
     such issue are to be used for expenditures incurred after the 
     date of the enactment of this section for any qualified 
     project,
       ``(2) the bond is issued by the National Railroad Passenger 
     Corporation, is in registered form, and meets the bond 
     limitation requirements under subsection (f),
       ``(3) the issuer designates such bond for purposes of this 
     section,
       ``(4) the issuer certifies that it meets the State 
     contribution requirement of subsection (k) with respect to 
     such project, as in effect on the date of issuance,
       ``(5) the issuer certifies that it has obtained the written 
     approval of the Secretary of Transportation for such project 
     in accordance with subsection (l),
       ``(6) the term of each bond which is part of such issue 
     does not exceed 20 years,
       ``(7) the payment of principal with respect to such bond is 
     the obligation of the National Railroad Passenger 
     Corporation, and
       ``(8) the issue meets the requirements of subsection (g) 
     (relating to arbitrage).
       ``(f) Limitation on Amount of Bonds Designated.--
       ``(1) National limitation.--There is a qualified Amtrak 
     bond limitation for each calendar year. Such limitation is--
       ``(A) for 2002--
       ``(i) with respect to qualified projects described in 
     subparagraphs (A), (B), and (C) of subsection (j)(1), 
     $7,000,000,000, and
       ``(ii) with respect to the qualified project described in 
     subsection (j)(1)(D), $2,000,000,000, and
       ``(B) except as provided in paragraph (4), zero thereafter.
       ``(2) Limits on bonds for northeast rail corridor and 
     individual states.--
       ``(A) Northeast rail corridor.--Not more than 
     $2,000,000,000 of the limitation under paragraph (1) may be 
     designated for qualified projects on the northeast rail 
     corridor between Washington, D.C., and Boston, Massachusetts.
       ``(B) Individual states.--Not more than $2,000,000,000 of 
     the limitation under paragraph (1) may be designated for any 
     individual State. The dollar limitation under this 
     subparagraph is in addition to the dollar limitation for the 
     qualified projects described in subparagraph (A).
       ``(3) Set aside for bonds for non-federally designated 
     high-speed rail corridor projects.--Not less than 15 percent 
     of the limitation under paragraph (1) shall be designated for 
     qualified projects described in subsection (j)(1)(C).
       ``(4) Carryover of unused limitation.--If for any calendar 
     year--
       ``(A) the qualified Amtrak limitation amount, exceeds
       ``(B) the amount of bonds issued during such year which are 
     designated under subsection (e)(3),

     the qualified Amtrak limitation amount for the following 
     calendar year shall be increased by the amount of such 
     excess.

     Any carryforward of a qualified Amtrak limitation amount may 
     be carried only to calendar year 2003 or 2004.
       ``(g) Special Rules Relating to Arbitrage.--
       ``(1) In general.--Subject to paragraph (2), an issue shall 
     be treated as meeting the requirements of this subsection if 
     as of the date of issuance, the issuer reasonably expects--
       ``(A) to spend at least 95 percent of the proceeds from the 
     sale of the issue for 1 or more qualified projects within the 
     3-year period beginning on such date,
       ``(B) to incur a binding commitment with a third party to 
     spend at least 10 percent of the proceeds from the sale of 
     the issue, or to commence construction, with respect to such 
     projects within the 6-month period beginning on such date, 
     and
       ``(C) to proceed with due diligence to complete such 
     projects and to spend the proceeds from the sale of the 
     issue.
       ``(2) Rules regarding continuing compliance after 3-year 
     determination.--If at least 95 percent of the proceeds from 
     the sale of the issue is not expended for 1 or more qualified 
     projects within the 3-year period beginning on the date of 
     issuance, but the requirements of paragraph (1) are otherwise 
     met, an issue shall be treated as continuing to meet the 
     requirements of this subsection if either--
       ``(A) the issuer uses all unspent proceeds from the sale of 
     the issue to redeem bonds of the issue within 90 days after 
     the end of such 3-year period, or
       ``(B) the following requirements are met:
       ``(i) The issuer spends at least 75 percent of the proceeds 
     from the sale of the issue for 1 or more qualified projects 
     within the 3-year period beginning on the date of issuance.
       ``(ii) Either--

       ``(I) the issuer spends at least 95 percent of the proceeds 
     from the sale of the issue for 1 or more qualified projects 
     within the 4-year period beginning on the date of issuance, 
     or
       ``(II) the issuer pays to the Federal Government any 
     earnings on the proceeds from the sale of the issue that 
     accrue after the end of the 3-year period beginning on the 
     date of issuance and uses all unspent proceeds from the sale 
     of the issue to redeem bonds of the issue within 90 days 
     after the end of the 4-year period beginning on the date of 
     issuance.

       ``(h) Recapture of Portion of Credit Where Cessation of 
     Compliance.--
       ``(1) In general.--If any bond which when issued purported 
     to be a qualified Amtrak bond ceases to be such a qualified 
     bond, the issuer shall pay to the United States (at the time 
     required by the Secretary) an amount equal to the sum of--
       ``(A) the aggregate of the credits allowable under this 
     section with respect to such bond (determined without regard 
     to subsection (c)) for taxable years ending during the 
     calendar year in which such cessation occurs and the 2 
     preceding calendar years, and
       ``(B) interest at the underpayment rate under section 6621 
     on the amount determined under subparagraph (A) for each 
     calendar year for the period beginning on the first day of 
     such calendar year.
       ``(2) Failure to pay.--If the issuer fails to timely pay 
     the amount required by paragraph (1) with respect to such 
     bond, the tax imposed by this chapter on each holder of any 
     such bond which is part of such issue shall be increased (for 
     the taxable year of the holder in which such cessation 
     occurs) by the aggregate decrease in the credits allowed 
     under this section to such holder for taxable years beginning 
     in such 3 calendar years which would have resulted solely 
     from denying any credit under this section with respect to 
     such issue for such taxable years.
       ``(3) Special rules.--
       ``(A) Tax benefit rule.--The tax for the taxable year shall 
     be increased under paragraph (2) only with respect to credits 
     allowed by reason of this section which were used to reduce 
     tax liability. In the case of credits not so used to reduce 
     tax liability, the carryforwards and carrybacks under section 
     39 shall be appropriately adjusted.
       ``(B) No credits against tax.--Any increase in tax under 
     paragraph (2) shall not be treated as a tax imposed by this 
     chapter for purposes of determining--
       ``(i) the amount of any credit allowable under this part, 
     or
       ``(ii) the amount of the tax imposed by section 55.
       ``(i) Trust Account.--
       ``(1) In general.--The following amounts shall be held in a 
     trust account by a trustee independent of the National 
     Railroad Passenger Corporation:
       ``(A) The proceeds from the sale of all bonds designated 
     for purposes of this section.
       ``(B) The amount of any matching contributions with respect 
     to such bonds.
       ``(C) The investment earnings on proceeds from the sale of 
     such bonds.
       ``(D) Any earnings on any amounts described in subparagraph 
     (A), (B), or (C).
       ``(2) Use of funds.--Amounts in the trust account may be 
     used only to pay costs of qualified projects and redeem 
     qualified Amtrak bonds, except that amounts withdrawn from 
     the trust account to pay costs of qualified projects may not 
     exceed the aggregate proceeds from the sale of all qualified 
     Amtrak bonds issued under this section.
       ``(3) Use of remaining funds in trust account.--Upon the 
     redemption of all qualified Amtrak bonds issued under this 
     section, any remaining amounts in the trust account described 
     in paragraph (1) shall be available to the issuer for any 
     qualified project.
       ``(j) Qualified Project.--For purposes of this section--
       ``(1) In general.--The term `qualified project' means--
       ``(A) the acquisition, financing, or refinancing of 
     equipment, rolling stock, and other capital improvements 
     (including the introduction of new high-speed technologies 
     such as magnetic levitation systems), including track or 
     signal improvements or the elimination of grade crossings, 
     for the northeast rail corridor between Washington, D.C., and 
     Boston, Massachusetts,
       ``(B) the acquisition, financing, or refinancing of 
     equipment, rolling stock, and other capital improvements 
     (including the introduction of new high-speed technologies 
     such as magnetic levitation systems), including development 
     of intermodal facilities, track or signal improvements, or 
     the elimination of grade crossings, for the improvement of 
     train speeds or safety (or both) on the high-speed rail 
     corridors designated under section 104(d)(2) of title 23, 
     United States Code, as in effect on the date of the enactment 
     of this section,
       ``(C) the acquisition, financing, or refinancing of 
     equipment, rolling stock, and other capital improvements, 
     including station rehabilitation or construction, development 
     of intermodal facilities, track or signal improvements, or 
     the elimination of grade crossings, for the improvement of 
     train speeds or safety (or both) for other intercity 
     passenger rail corridors and for the Alaska Railroad, and
       ``(D) construction, installation of facilities, performance 
     of railroad force account work, and environmental impact 
     studies that facilitate and maximize intercity and regional 
     rail system capacity and connectivity intended to benefit all 
     users, including the National Passenger Rail Corporation, 
     related to the construction of the Trans Hudson Tunnel, an 
     additional railroad passenger tunnel connecting Newark, New 
     Jersey to the City of New York, New York.
       ``(2) Refinancing rules.--For purposes of paragraph (1), a 
     refinancing shall constitute a qualified project only if the 
     indebtedness being refinanced (including any obligation 
     directly or indirectly refinanced by such indebtedness) was 
     originally incurred by the issuer--
       ``(A) after the date of the enactment of this section,
       ``(B) for a term of not more than 3 years,
       ``(C) to finance or acquire capital improvements described 
     in paragraph (1), and
       ``(D) in anticipation of being refinanced with proceeds of 
     a qualified Amtrak bond.
       ``(k) State Contribution Requirements.--
       ``(1) In general.--For purposes of subsection (e)(4), the 
     State contribution requirement of this subsection is met with 
     respect to any qualified project if the National Railroad 
     Passenger Corporation has received from 1 or more States, not 
     later than the date of issuance of the bond, matching 
     contributions of not less than 20 percent of the cost of the 
     qualified project.
       ``(2) No state contribution requirement for certain 
     qualified projects.--The State contribution requirement of 
     this subsection is

[[Page S11693]]

     zero with respect to any project described in subsection 
     (j)(1)(C) for the Alaska Railroad.
       ``(3) State matching contributions may not include federal 
     funds.--For purposes of this subsection, State matching 
     contributions shall not be derived, directly or indirectly, 
     from Federal funds, including any transfers from the Highway 
     Trust Fund under section 9503.
       ``(l) Department of Transportation Approval for Qualified 
     Projects.--
       ``(1) In general.--The written approval of a qualified 
     project by the Secretary of Transportation required for 
     purposes of subsection (e)(5) shall include--
       ``(A) the finding by the Inspector General of the 
     Department of Transportation described in paragraph (2),
       ``(B) the certification by the Secretary of Transportation 
     described in paragraph (3), and
       ``(C) the agreement by the National Railroad Passenger 
     Corporation described in paragraph (4).
       ``(2) Finding by inspector general.--For purposes of 
     paragraph (1), the finding described in this paragraph is a 
     finding by the Inspector General of the Department of 
     Transportation that there is a reasonable likelihood that the 
     proposed project will result in a positive financial 
     contribution to the National Railroad Passenger Corporation 
     and that the investment evaluation process includes 
     consideration of a return on investment, leveraging of funds 
     (including State capital and operating contributions), cost 
     effectiveness, safety improvement, mobility improvement, and 
     feasibility.
       ``(3) Certification.--For purposes of paragraph (1), the 
     certification described in this paragraph is a certification 
     by the Secretary of Transportation that the issuer of the 
     qualified Amtrak bond--
       ``(A) except with respect to projects described in 
     subsection (j)(1)(C), has entered into a written agreement 
     with the owners of rail properties which are to be improved 
     by the project to be funded by the qualified Amtrak bond, as 
     to the scope and estimated cost of such project and the 
     impact on rail freight capacity, and
       ``(B) has met the State contribution requirements described 
     in subsection (k).

     The National Railroad Passenger Corporation shall not 
     exercise its rights under section 24308(a)(2) of title 49, 
     United States Code, to resolve disputes with respect to a 
     project to be funded by a qualified Amtrak bond, or with 
     respect to the cost of such a project, unless the project is 
     intended to result in railroad speeds of 79 miles per hour or 
     less.
       ``(4) Agreement by amtrak to issue additional bonds for 
     projects of other carriers.--
       ``(A) In general.--For purposes of paragraph (1), the 
     agreement described in this paragraph is an agreement by the 
     National Railroad Passenger Corporation with the Secretary of 
     Transportation to issue bonds which meet the requirements of 
     this section for use in financing projects described in 
     subparagraph (B).
       ``(B) Projects covered.--For purposes of subparagraph (A), 
     the projects described in this subparagraph are any project 
     described in subsection (j)(1)(B) or (j)(1)(C) for an 
     intercity rail passenger carrier other than the National 
     Railroad Passenger Corporation or for the Alaska Railroad.
       ``(C) Responsibility of intercity rail passenger carrier.--
     Any project financed by bonds referred to in subparagraph (A) 
     shall be carried out by the intercity rail passenger carrier 
     other than the National Railroad Passenger Corporation, 
     through a contract entered into by the National Railroad 
     Passenger Corporation with such carrier.
       ``(D) Intercity rail passenger carrier defined.--For 
     purposes of this paragraph, the term `intercity rail 
     passenger carrier' means any rail carrier (as defined in 
     section 24102(7) of such title 49, as in effect on the date 
     of the enactment of this section) which is part of the 
     interstate system of rail transportation and which provides 
     intercity rail passenger transportation (as defined in 
     section 24102(5) of such title 49 (as so in effect)).
       ``(5) Additional selection criteria.--In determining 
     projects to be approved under this subsection (other than 
     projects for the Alaska Railroad), or to be included in an 
     agreement under paragraph (4), the Secretary of 
     Transportation--
       ``(A) shall base such approval on--
       ``(i) the results of alternatives analysis and preliminary 
     engineering, and
       ``(ii) a comprehensive review of mobility improvements, 
     environmental benefits, cost effectiveness, and operating 
     efficiencies, and
       ``(B) shall give preference to--
       ``(i) projects supported by evidence of stable and 
     dependable financing sources to construct, maintain, and 
     operate the system or extension,
       ``(ii) projects expected to have a significant impact on 
     air traffic congestion,
       ``(iii) projects expected to also improve commuter rail 
     operations,
       ``(iv) projects that anticipate fares designed to recover 
     costs and generate a return on investment, and
       ``(v) projects that promote regional balance in 
     infrastructure investment and the national interest in 
     ensuring the development of a nationwide high-speed rail 
     transportation network.
       ``(m) Other Definitions and Special Rules.--For purposes of 
     this section--
       ``(1) Bond.--The term `bond' includes any obligation.
       ``(2) Treatment of changes in use.--For purposes of 
     subsection (e)(1), the proceeds from the sale of an issue 
     shall not be treated as used for a qualified project to the 
     extent that the issuer takes any action within its control 
     which causes such proceeds not to be used for a qualified 
     project. The Secretary shall specify remedial actions that 
     may be taken (including conditions to taking such remedial 
     actions) to prevent an action described in the preceding 
     sentence from causing a bond to fail to be a qualified Amtrak 
     bond.
       ``(3) Partnership; s corporation; and other pass-thru 
     entities.--In the case of a partnership, trust, S 
     corporation, or other pass-thru entity, rules similar to the 
     rules of section 41(g) shall apply with respect to the credit 
     allowable under subsection (a).
       ``(4) Bonds held by regulated investment companies.--If any 
     qualified Amtrak bond is held by a regulated investment 
     company, the credit determined under subsection (a) shall be 
     allowed to shareholders of such company under procedures 
     prescribed by the Secretary.
       ``(5) Reporting.--Issuers of qualified Amtrak bonds shall 
     submit reports similar to the reports required under section 
     149(e).''.
       (b) Amendments to Other Code Sections.--
       (1) Reporting.--Subsection (d) of section 6049 (relating to 
     returns regarding payments of interest) is amended by adding 
     at the end the following new paragraph:
       ``(8) Reporting of credit on qualified amtrak bonds.--
       ``(A) In general.--For purposes of subsection (a), the term 
     `interest' includes amounts includible in gross income under 
     section 54(d) and such amounts shall be treated as paid on 
     the credit allowance date (as defined in section 54(b)(4)).
       ``(B) Reporting to corporations, etc.--Except as otherwise 
     provided in regulations, in the case of any interest 
     described in subparagraph (A), subsection (b)(4) shall be 
     applied without regard to subparagraphs (A), (H), (I), (J), 
     (K), and (L)(i) of such subsection.
       ``(C) Regulatory authority.--The Secretary may prescribe 
     such regulations as are necessary or appropriate to carry out 
     the purposes of this paragraph, including regulations which 
     require more frequent or more detailed reporting.''.
       (2) Treatment for estimated tax purposes.--
       (A) Individual.--Section 6654 (relating to failure by 
     individual to pay estimated income tax) is amended by 
     redesignating subsection (m) as subsection (n) and by 
     inserting after subsection (l) the following new subsection:
       ``(m) Special Rule for Holders of Qualified Amtrak Bonds.--
     For purposes of this section, the credit allowed by section 
     54 to a taxpayer by reason of holding a qualified Amtrak bond 
     on a credit allowance date shall be treated as if it were a 
     payment of estimated tax made by the taxpayer on such 
     date.''.
       (B) Corporate.--Section 6655 (relating to failure by 
     corporation to pay estimated income tax) is amended by adding 
     at the end of subsection (g) the following new paragraph:
       ``(5) Special rule for holders of qualified amtrak bonds.--
     For purposes of this section, the credit allowed by section 
     54 to a taxpayer by reason of holding a qualified Amtrak bond 
     on a credit allowance date shall be treated as if it were a 
     payment of estimated tax made by the taxpayer on such 
     date.''.
       (3) Exclusion from gross income of contributions by Amtrak 
     to other rail carriers.--
       (A) In general.--Section 118 (relating to contributions to 
     the capital of a corporation) is amended by redesignating 
     subsection (d) as subsection (e) and by inserting after 
     subsection (c) the following new subsection:
       ``(d) Special Rule for Contributions by Amtrak to Other 
     Rail Carriers.--For purposes of this section, the term 
     `contribution to the capital of the taxpayer' includes any 
     contribution by the National Railroad Passenger Corporation 
     of personal or real property funded by the proceeds of 
     qualified Amtrak bonds under section 54.''.
       (B) Conforming amendment.--Subsection (b) of such section 
     118 is amended by striking ``subsection (c)'' and inserting 
     ``subsections (c) and (d)''.
       (4) Protection of highway trust fund.--Section 9503 
     (relating to Highway Trust Fund) is amended by adding at the 
     end the following new subsection:
       ``(g) Special Rules Relating to National Railroad Passenger 
     Corporation.--
       ``(1) In general.--Except as provided in subsection (c), as 
     in effect on the date of the enactment of this subsection, 
     amounts in the Highway Trust Fund may not be used, either 
     directly or indirectly through a State or local transit 
     authority, to provide funds to the National Railroad 
     Passenger Corporation for any purpose, including issuance of 
     any qualified Amtrak bond pursuant to section 54. The 
     preceding sentence may not be waived by any provision of law 
     which is not contained or referenced in this title, whether 
     such provision of law is a subsequently enacted provision or 
     directly or indirectly seeks to waive the application of such 
     sentence.
       ``(2) Certification by the secretary.--The issuance of any 
     qualified Amtrak bonds by the National Railroad Passenger 
     Corporation pursuant to section 54 is conditioned on 
     certification by the Secretary, after consultation with the 
     Secretary of Transportation, within 30 days of a request by 
     the issuer, that with respect to funds of the Highway Trust 
     Fund described under paragraph (1), the issuer either--
       ``(A) has not received such funds during calendar years 
     commencing with 2002 and ending before the calendar year the 
     bonds are issued, or
       ``(B) has repaid to the Highway Trust Fund any such funds 
     which were received during such calendar years.
       ``(3) No retroactive effect.--Nothing in this subsection 
     shall adversely affect the entitlement of the holders of 
     qualified Amtrak bonds to the tax credit allowed pursuant to 
     section 54 or to repayment of principal upon maturity.''.
       (c) Clerical Amendments.--
       (1) The table of subparts for part IV of subchapter A of 
     chapter 1 is amended by adding at the end the following new 
     item:


[[Page S11694]]


``Subpart H. Nonrefundable Credit for Holders of Qualified Amtrak 
              Bonds.''.

       (2) Section 6401(b)(1) is amended by striking ``and G'' and 
     inserting ``G, and H''.
       (d) Annual Report by Treasury on Amtrak Trust Account.--The 
     Secretary of the Treasury shall annually report to Congress 
     as to whether the amount deposited in the trust account 
     established by the National Railroad Passenger Corporation 
     under section 54(i) of the Internal Revenue Code of 1986, as 
     added by this section, is sufficient to fully repay at 
     maturity the principal of any outstanding qualified Amtrak 
     bonds issued pursuant to section 54 of such Code (as so 
     added), together with amounts expected to be deposited into 
     such account, as certified by the National Railroad Passenger 
     Corporation in accordance with procedures prescribed by the 
     Secretary of the Treasury.
       (e) Effective Date.--The amendments made by this section 
     shall apply to obligations issued after the date of the 
     enactment of this Act.
       (f) Multi-Year Capital Spending Plan and Oversight.--
       (1) Amtrak capital spending plan.--
       (A) In general.--The National Railroad Passenger 
     Corporation shall annually submit to the President and 
     Congress a multi-year capital spending plan, as approved by 
     the Board of Directors of the Corporation.
       (B) Contents of plan.--Such plan shall identify the capital 
     investment needs of the Corporation over a period of not less 
     than 5 years and the funding sources available to finance 
     such needs and shall prioritize such needs according to 
     corporate goals and strategies.
       (C) Initial submission date.--The first plan shall be 
     submitted before the issuance of any qualified Amtrak bonds 
     by the National Railroad Passenger Corporation pursuant to 
     section 54 of the Internal Revenue Code of 1986 (as added by 
     this section).
       (2) Oversight of amtrak trust account and qualified 
     projects.--
       (A) Trust account oversight.--The Secretary of the Treasury 
     shall annually report to Congress as to whether the amount 
     deposited in the trust account established by the National 
     Railroad Passenger Corporation under section 54(i) of such 
     Code (as so added) is sufficient to fully repay at maturity 
     the principal of any outstanding qualified Amtrak bonds 
     issued pursuant to section 54 of such Code (as so added), 
     together with amounts expected to be deposited into such 
     account, as certified by the National Railroad Passenger 
     Corporation in accordance with procedures prescribed by the 
     Secretary of the Treasury.
       (B) Project oversight.--The National Railroad Passenger 
     Corporation shall contract for an annual independent 
     assessment of the costs and benefits of the qualified 
     projects financed by such qualified Amtrak bonds, including 
     an assessment of the investment evaluation process of the 
     Corporation. The annual assessment shall be included in the 
     plan submitted under paragraph (1).

     SEC. 902. BROADBAND INTERNET ACCESS TAX CREDIT.

       (a) In General.--Subpart E of part IV of chapter 1 
     (relating to rules for computing investment credit) is 
     amended by inserting after section 48 the following:

     ``SEC. 48A. BROADBAND CREDIT.

       ``(a) General Rule.--For purposes of section 46, the 
     broadband credit for any taxable year is the sum of--
       ``(1) the current generation broadband credit, plus
       ``(2) the next generation broadband credit.
       ``(b) Current Generation Broadband Credit; Next Generation 
     Broadband Credit.--For purposes of this section--
       ``(1) Current generation broadband credit.--The current 
     generation broadband credit for any taxable year is equal to 
     10 percent of the qualified expenditures incurred with 
     respect to qualified equipment providing current generation 
     broadband services to qualified subscribers and taken into 
     account with respect to such taxable year.
       ``(2) Next generation broadband credit.--The next 
     generation broadband credit for any taxable year is equal to 
     20 percent of the qualified expenditures incurred with 
     respect to qualified equipment providing next generation 
     broadband services to qualified subscribers and taken into 
     account with respect to such taxable year.
       ``(c) When Expenditures Taken Into Account.--For purposes 
     of this section--
       ``(1) In general.--Qualified expenditures with respect to 
     qualified equipment shall be taken into account with respect 
     to the first taxable year in which--
       ``(A) current generation broadband services are provided 
     through such equipment to qualified subscribers, or
       ``(B) next generation broadband services are provided 
     through such equipment to qualified subscribers.
       ``(2) Limitation.--
       ``(A) In general.--Qualified expenditures shall be taken 
     into account under paragraph (1) only with respect to 
     qualified equipment--
       ``(i) the original use of which commences with the 
     taxpayer, and
       ``(ii) which is placed in service,
     after December 31, 2001.
       ``(B) Leased equipment.--Except as provided in regulations, 
     rules similar to the rules of section 203(b)(3) of the Tax 
     Reform Act of 1986 shall apply.
       ``(d) Special Allocation Rules.--
       ``(1) Current generation broadband services.--For purposes 
     of determining the current generation broadband credit under 
     subsection (a)(1) with respect to qualified equipment through 
     which current generation broadband services are provided, if 
     the qualified equipment is capable of serving both qualified 
     subscribers and other subscribers, the qualified expenditures 
     shall be multiplied by a fraction--
       ``(A) the numerator of which is the sum of the number of 
     potential qualified subscribers within the rural areas and 
     the underserved areas which the equipment is capable of 
     serving with current generation broadband services, and
       ``(B) the denominator of which is the total potential 
     subscriber population of the area which the equipment is 
     capable of serving with current generation broadband 
     services.
       ``(2) Next generation broadband services.--For purposes of 
     determining the next generation broadband credit under 
     subsection (a)(2) with respect to qualified equipment through 
     which next generation broadband services are provided, if the 
     qualified equipment is capable of serving both qualified 
     subscribers and other subscribers, the qualified expenditures 
     shall be multiplied by a fraction--
       ``(A) the numerator of which is the sum of--
       ``(i) the number of potential qualified subscribers within 
     the rural areas and underserved areas, plus
       ``(ii) the number of potential qualified subscribers within 
     the area consisting only of residential subscribers not 
     described in clause (i),

     which the equipment is capable of serving with next 
     generation broadband services, and
       ``(B) the denominator of which is the total potential 
     subscriber population of the area which the equipment is 
     capable of serving with next generation broadband services.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Antenna.--The term `antenna' means any device used to 
     transmit or receive signals through the electromagnetic 
     spectrum, including satellite equipment.
       ``(2) Cable operator.--The term `cable operator' has the 
     meaning given such term by section 602(5) of the 
     Communications Act of 1934 (47 U.S.C. 522(5)).
       ``(3) Commercial mobile service carrier.--The term 
     `commercial mobile service carrier' means any person 
     authorized to provide commercial mobile radio service as 
     defined in section 20.3 of title 47, Code of Federal 
     Regulations.
       ``(4) Current generation broadband service.--The term 
     `current generation broadband service' means the transmission 
     of signals at a rate of at least 1,000,000 bits per second to 
     the subscriber and at least 128,000 bits per second from the 
     subscriber.
       ``(5) Multiplexing or demultiplexing.--The term 
     `multiplexing' means the transmission of 2 or more signals 
     over a single channel, and the term `demultiplexing' means 
     the separation of 2 or more signals previously combined by 
     compatible multiplexing equipment.
       ``(6) Next generation broadband service.--The term `next 
     generation broadband service' means the transmission of 
     signals at a rate of at least 22,000,000 bits per second to 
     the subscriber and at least 5,000,000 bits per second from 
     the subscriber.
       ``(7) Nonresidential subscriber.--The term `nonresidential 
     subscriber' means a person who purchases broadband services 
     which are delivered to the permanent place of business of 
     such person.
       ``(8) Open video system operator.--The term `open video 
     system operator' means any person authorized to provide 
     service under section 653 of the Communications Act of 1934 
     (47 U.S.C. 573).
       ``(9) Other wireless carrier.--The term `other wireless 
     carrier' means any person (other than a telecommunications 
     carrier, commercial mobile service carrier, cable operator, 
     open video system operator, or satellite carrier) providing 
     current generation broadband services or next generation 
     broadband service to subscribers through the radio 
     transmission of energy.
       ``(10) Packet switching.--The term `packet switching' means 
     controlling or routing the path of a digitized transmission 
     signal which is assembled into packets or cells.
       ``(11) Provider.--The term `provider' means, with respect 
     to any qualified equipment--
       ``(A) a cable operator,
       ``(B) a commercial mobile service carrier,
       ``(C) an open video system operator,
       ``(D) a satellite carrier,
       ``(E) a telecommunications carrier, or
       ``(F) any other wireless carrier,

     providing current generation broadband services or next 
     generation broadband services to subscribers through such 
     qualified equipment.
       ``(12) Provision of services.--A provider shall be treated 
     as providing services to a subscriber if--
       ``(A) a subscriber has been passed by the provider's 
     equipment and can be connected to such equipment for a 
     standard connection fee,
       ``(B) the provider is physically able to deliver current 
     generation broadband services or next generation broadband 
     services, as applicable, to such subscribers without making 
     more than an insignificant investment with respect to any 
     such subscriber,
       ``(C) the provider has made reasonable efforts to make such 
     subscribers aware of the availability of such services,
       ``(D) such services have been purchased by one or more such 
     subscribers, and
       ``(E) such services are made available to such subscribers 
     at average prices comparable to those at which the provider 
     makes available similar services in any areas in which the 
     provider makes available such services.
       ``(13) Qualified equipment.--
       ``(A) In general.--The term `qualified equipment' means 
     equipment which provides current generation broadband 
     services or next generation broadband services--
       ``(i) at least a majority of the time during periods of 
     maximum demand to each subscriber who is utilizing such 
     services, and
       ``(ii) in a manner substantially the same as such services 
     are provided by the provider to

[[Page S11695]]

     subscribers through equipment with respect to which no credit 
     is allowed under subsection (a)(1).
       ``(B) Only certain investment taken into account.--Except 
     as provided in subparagraph (C) or (D), equipment shall be 
     taken into account under subparagraph (A) only to the extent 
     it--
       ``(i) extends from the last point of switching to the 
     outside of the unit, building, dwelling, or office owned or 
     leased by a subscriber in the case of a telecommunications 
     carrier,
       ``(ii) extends from the customer side of the mobile 
     telephone switching office to a transmission/receive antenna 
     (including such antenna) owned or leased by a subscriber in 
     the case of a commercial mobile service carrier,
       ``(iii) extends from the customer side of the headend to 
     the outside of the unit, building, dwelling, or office owned 
     or leased by a subscriber in the case of a cable operator or 
     open video system operator, or
       ``(iv) extends from a transmission/receive antenna 
     (including such antenna) which transmits and receives signals 
     to or from multiple subscribers to a transmission/receive 
     antenna (including such antenna) on the outside of the unit, 
     building, dwelling, or office owned or leased by a subscriber 
     in the case of a satellite carrier or other wireless carrier, 
     unless such other wireless carrier is also a 
     telecommunications carrier.
       ``(C) Packet switching equipment.--Packet switching 
     equipment, regardless of location, shall be taken into 
     account under subparagraph (A) only if it is deployed in 
     connection with equipment described in subparagraph (B) and 
     is uniquely designed to perform the function of packet 
     switching for current generation broadband services or next 
     generation broadband services, but only if such packet 
     switching is the last in a series of such functions performed 
     in the transmission of a signal to a subscriber or the first 
     in a series of such functions performed in the transmission 
     of a signal from a subscriber.
       ``(D) Multiplexing and demultiplexing equipment.--
     Multiplexing and demultiplexing equipment shall be taken into 
     account under subparagraph (A) only to the extent it is 
     deployed in connection with equipment described in 
     subparagraph (B) and is uniquely designed to perform the 
     function of multiplexing and demultiplexing packets or cells 
     of data and making associated application adaptions, but only 
     if such multiplexing or demultiplexing equipment is located 
     between packet switching equipment described in subparagraph 
     (C) and the subscriber's premises.
       ``(14) Qualified expenditure.--
       ``(A) In general.--The term `qualified expenditure' means 
     any amount--
       ``(i) chargeable to capital account with respect to the 
     purchase and installation of qualified equipment (including 
     any upgrades thereto) for which depreciation is allowable 
     under section 168, and
       ``(ii) incurred after December 31, 2001, and before January 
     1, 2003.
       ``(B) Certain satellite expenditures excluded.--Such term 
     shall not include any expenditure with respect to the 
     launching of any satellite equipment.
       ``(15) Qualified subscriber.--The term `qualified 
     subscriber' means--
       ``(A) with respect to the provision of current generation 
     broadband services--
       ``(i) a nonresidential subscriber maintaining a permanent 
     place of business in a rural area or underserved area, or
       ``(ii) a residential subscriber residing in a dwelling 
     located in a rural area or underserved area which is not a 
     saturated market, and
       ``(B) with respect to the provision of next generation 
     broadband services--
       ``(i) a nonresidential subscriber maintaining a permanent 
     place of business in a rural area or underserved area, or
       ``(ii) a residential subscriber.
       ``(16) Residential subscriber.--The term `residential 
     subscriber' means an individual who purchases broadband 
     services which are delivered to such individual's dwelling.
       ``(17) Rural area.--The term `rural area' means any census 
     tract which--
       ``(A) is not within 10 miles of any incorporated or census 
     designated place containing more than 25,000 people, and
       ``(B) is not within a county or county equivalent which has 
     an overall population density of more than 500 people per 
     square mile of land.
       ``(18) Rural subscriber.--The term `rural subscriber' means 
     a residential subscriber residing in a dwelling located in a 
     rural area or nonresidential subscriber maintaining a 
     permanent place of business located in a rural area.
       ``(19) Satellite carrier.--The term `satellite carrier' 
     means any person using the facilities of a satellite or 
     satellite service licensed by the Federal Communications 
     Commission and operating in the Fixed-Satellite Service under 
     part 25 of title 47 of the Code of Federal Regulations or the 
     Direct Broadcast Satellite Service under part 100 of title 47 
     of such Code to establish and operate a channel of 
     communications for distribution of signals, and owning or 
     leasing a capacity or service on a satellite in order to 
     provide such distribution.
       ``(20) Saturated market.--The term `saturated market' means 
     any census tract in which, as of the date of the enactment of 
     this section--
       ``(A) current generation broadband services have been 
     provided by one or more providers to 85 percent or more of 
     the total number of potential residential subscribers 
     residing in dwellings located within such census tract, and
       ``(B) such services can be utilized--
       ``(i) at least a majority of the time during periods of 
     maximum demand by each such subscriber who is utilizing such 
     services, and
       ``(ii) in a manner substantially the same as such services 
     are provided by the provider to subscribers through equipment 
     with respect to which no credit is allowed under subsection 
     (a)(1).
       ``(21) Subscriber.--The term `subscriber' means a person 
     who purchases current generation broadband services or next 
     generation broadband services.
       ``(22) Telecommunications carrier.--The term 
     `telecommunications carrier' has the meaning given such term 
     by section 3(44) of the Communications Act of 1934 (47 U.S.C. 
     153(44)), but--
       ``(A) includes all members of an affiliated group of which 
     a telecommunications carrier is a member, and
       ``(B) does not include a commercial mobile service carrier.
       ``(23) Total potential subscriber population.--The term 
     `total potential subscriber population' means, with respect 
     to any area and based on the most recent census data, the 
     total number of potential residential subscribers residing in 
     dwellings located in such area and potential nonresidential 
     subscribers maintaining permanent places of business located 
     in such area.
       ``(24) Underserved area.--The term `underserved area' means 
     any census tract which is located in--
       ``(A) an empowerment zone or enterprise community 
     designated under section 1391,
       ``(B) the District of Columbia Enterprise Zone established 
     under section 1400,
       ``(C) a renewal community designated under section 1400E, 
     or
       ``(D) a low-income community designated under section 45D.
       ``(25) Underserved subscriber.--The term `underserved 
     subscriber' means a residential subscriber residing in a 
     dwelling located in an underserved area or nonresidential 
     subscriber maintaining a permanent place of business located 
     in an underserved area.
       ``(f) Designation of Census Tracts.--The Secretary shall, 
     not later than 90 days after the date of the enactment of 
     this section, designate and publish those census tracts 
     meeting the criteria described in paragraphs (17), (20), and 
     (24) of subsection (e). In making such designations, the 
     Secretary shall consult with such other departments and 
     agencies as the Secretary determines appropriate.''.
       (b) Credit To Be Part of Investment Credit.--Section 46 
     (relating to the amount of investment credit) is amended by 
     striking ``and'' at the end of paragraph (2), by striking the 
     period at the end of paragraph (3) and inserting ``, and'', 
     and by adding at the end the following:

       ``(4) the broadband credit.''
       (c) Special Rule for Mutual or Cooperative Telephone 
     Companies.--Section 501(c)(12)(B) (relating to list of exempt 
     organizations) is amended by striking ``or'' at the end of 
     clause (iii), by striking the period at the end of clause 
     (iv) and inserting ``, or'', and by adding at the end the 
     following:
       ``(v) from the sale of property subject to a lease 
     described in section 48A(c)(2)(B), but only to the extent 
     such income does not in any year exceed an amount equal to 
     the credit for qualified expenditures which would be 
     determined under section 48A for such year if the mutual or 
     cooperative telephone company was not exempt from taxation 
     and was treated as the owner of the property subject to such 
     lease.''.
       (d) Conforming Amendment.--The table of sections for 
     subpart E of part IV of subchapter A of chapter 1 is amended 
     by inserting after the item relating to section 48 the 
     following:

``Sec. 48A. Broadband credit.''.
       (e) Regulatory Matters.--
       (1) Prohibition.--No Federal or State agency or 
     instrumentality shall adopt regulations or ratemaking 
     procedures that would have the effect of confiscating any 
     credit or portion thereof allowed under section 48A of the 
     Internal Revenue Code of 1986 (as added by this section) or 
     otherwise subverting the purpose of this section.
       (2) Treasury regulatory authority.--It is the intent of 
     Congress in providing the broadband credit under section 48A 
     of the Internal Revenue Code of 1986 (as added by this 
     section) to provide incentives for the purchase, 
     installation, and connection of equipment and facilities 
     offering expanded broadband access to the Internet for users 
     in certain low income and rural areas of the United States, 
     as well as to residential users nationwide, in a manner that 
     maintains competitive neutrality among the various classes of 
     providers of broadband services. Accordingly, the Secretary 
     of the Treasury shall prescribe such regulations as may be 
     necessary or appropriate to carry out the purposes of section 
     48A of such Code, including--
       (A) regulations to determine how and when a taxpayer that 
     incurs qualified expenditures satisfies the requirements of 
     section 48A of such Code to provide broadband services, and
       (B) regulations describing the information, records, and 
     data taxpayers are required to provide the Secretary to 
     substantiate compliance with the requirements of section 48A 
     of such Code.

     Until the Secretary prescribes such regulations, taxpayers 
     may base such determinations on any reasonable method that is 
     consistent with the purposes of section 48A of such Code.
       (f) Effective Date.--The amendments made by this section 
     shall apply to expenditures incurred after December 31, 2001, 
     and before January 1, 2003.

     SEC. 903. CITRUS TREE CANKER RELIEF.

       (a) Expansion of Period Within Which Converted Citrus Tree 
     Property Must Be Replaced.--
       (1) In general.--Section 1033 (relating to period within 
     which property must be replaced) is amended by redesignating 
     subsection (k) as subsection (l) and by inserting after 
     subsection (j) the following new subsection:
       ``(k) Commercial Trees Destroyed Because of Citrus Tree 
     Canker.--In the case of commercial citrus trees which are 
     compulsorily or

[[Page S11696]]

     involuntarily converted under a public order as a result of 
     the citrus tree canker, clause (i) of subsection (a)(2)(B) 
     shall be applied as if such clause reads: `4 years after the 
     close of the taxable year in which a State or Federal plant 
     health authority determines that the land on which such trees 
     grew is free from the bacteria that causes citrus tree 
     canker'.''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall apply to taxable years beginning before, on, or after 
     the date of the enactment of this Act.
       (b) 10-Year Ratable Income Inclusion for Citrus Canker Tree 
     Payments.--
       (1) In general.--Part I of subchapter Q of chapter 1 
     (relating to income averaging) is amended by inserting after 
     section 1301 the following new section:

     ``SEC. 1302. 10-YEAR RATABLE INCOME INCLUSION FOR CITRUS 
                   CANKER TREE PAYMENTS.

       ``(a) In General.--At the election of the taxpayer, any 
     amount taken into account as income or gain by reason of 
     receiving a citrus canker tree payment shall be included in 
     the income of the taxpayer ratably over the 10-year period 
     beginning with the taxable year in which the payment is 
     received or accrued by the taxpayer. Any election under the 
     preceding sentence shall be irrevocable.
       ``(b) Citrus Canker Tree Payment.--For purposes of 
     subsection (a), the term `citrus canker tree payment' means a 
     payment made to an owner of a commercial citrus grove to 
     recover income that was lost as a result of the removal of 
     commercial citrus trees to control canker under the 
     amendments to the citrus canker regulations (7 C.F.R. 301) 
     made by the final rule published in the Federal Register by 
     the Secretary of Agriculture on June 18, 2001 (66 Fed. Reg. 
     32713, Docket No. 00-37-4).''.
       (2) Clerical amendment.--The table of sections for part I 
     of subchapter Q of chapter 1 is amended by inserting after 
     the item relating to section 1301 the following new item:

``Sec. 1302. 10-year ratable income inclusion for citrus canker tree 
              payments.''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to payments made before, on, or after the date of 
     the enactment of this Act.

     SEC. 904. ALLOWANCE OF ELECTRONIC 1099S.

       Except as otherwise provided by the Secretary of the 
     Treasury, any person required to furnish a statement under 
     any section of subpart B of part III of subchapter A of 
     chapter 61 of the Internal Revenue Code of 1986 for any 
     taxable year ending after the date of the enactment of this 
     Act and before January 1, 2003, may electronically furnish 
     such statement to any recipient who has consented to the 
     electronic provision of the statement in a manner similar to 
     the one permitted under regulations issued under section 6051 
     of such Code or in such other manner as provided by the 
     Secretary.

     SEC. 905. CLARIFICATION OF EXCISE TAX EXEMPTIONS FOR 
                   AGRICULTURAL AERIAL APPLICATORS.

       (a) No Waiver by Farm Owner, Tenant, or Operator 
     Necessary.--Subparagraph (B) of section 6420(c)(4) (relating 
     to certain farming use other than by owner, etc.) is amended 
     to read as follows:
       ``(B) if the person so using the gasoline is an aerial or 
     other applicator of fertilizers or other substances and is 
     the ultimate purchaser of the gasoline, then subparagraph (A) 
     of this paragraph shall not apply and the aerial or other 
     applicator shall be treated as having used such gasoline on a 
     farm for farming purposes.''.
       (b) Exemption Includes Fuel Used Between Airfield and 
     Farm.--Section 6420(c)(4), as amended by subsection (a), is 
     amended by adding at the end the following new flush 
     sentence:

     ``For purposes of this paragraph, in the case of an aerial 
     applicator, gasoline shall be treated as used on a farm for 
     farming purposes if the gasoline is used for the direct 
     flight between the airfield and 1 or more farms.''.
       (c) Exemption From Tax on Air Transportation of Persons for 
     Forestry Purposes Extended to Fixed-Wing Aircraft.--
     Subsection (f) of section 4261 (relating to tax on air 
     transportation of persons) is amended to read as follows:
       ``(f) Exemption for Certain Uses.--No tax shall be imposed 
     under subsection (a) or (b) on air transportation--
       ``(1) by helicopter for the purpose of transporting 
     individuals, equipment, or supplies in the exploration for, 
     or the development or removal of, hard minerals, oil, or gas, 
     or
       ``(2) by helicopter or by fixed-wing aircraft for the 
     purpose of the planting, cultivation, cutting, or 
     transportation of, or caring for, trees (including logging 
     operations),

     but only if the helicopter or fixed-wing aircraft does not 
     take off from, or land at, a facility eligible for assistance 
     under the Airport and Airway Development Act of 1970, or 
     otherwise use services provided pursuant to section 44509 or 
     44913(b) or subchapter I of chapter 471 of title 49, United 
     States Code, during such use. In the case of helicopter 
     transportation described in paragraph (1), this subsection 
     shall be applied by treating each flight segment as a 
     distinct flight.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to fuel use or air transportation after December 
     31, 2001, and before January 1, 2003.

     SEC. 906. RECOVERY PERIOD FOR CERTAIN WIRELESS 
                   TELECOMMUNICATIONS EQUIPMENT.

       (a) 5-Year Recovery Period for Certain Wireless 
     Telecommunications Equipment.--
       (1) In general.--Subparagraph (A) of section 168(i)(2) 
     (defining qualified technological equipment) is amended by 
     striking ``and'' at the end of clause (ii), by striking the 
     period at the end of clause (iii) and inserting ``, and'', 
     and by adding at the end the following:
       ``(iv) any wireless telecommunication equipment.''.
       (2) Definition of wireless telecommunication equipment.--
     Paragraph (2) of section 168(i) is amended by adding at the 
     end the following:
       ``(D) Wireless telecommunication equipment.--For purposes 
     of this paragraph--
       ``(i) In general.--The term `wireless telecommunication 
     equipment' means equipment which is--

       ``(I) used in the transmission, reception, coordination, or 
     switching of wireless telecommunications service, and
       ``(II) placed in service before September 11, 2002.

     For purposes of this clause, the term `wireless 
     telecommunications service' includes any commercial mobile 
     radio service as defined in title 47 of the Code of Federal 
     Regulations.
       ``(ii) Exception.--The term `wireless telecommunication 
     equipment' shall not include towers, buildings, T-1 lines, or 
     other cabling which connects cell sites to mobile switching 
     centers.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after September 10, 
     2001.

     SEC. 907. NO IMPACT ON SOCIAL SECURITY TRUST FUND.

       (a) In General.--Nothing in this Act (or an amendment made 
     by this Act) shall be construed to alter or amend title II of 
     the Social Security Act (or any regulation promulgated under 
     that Act).
       (b) Transfers.--
       (1) Estimate of secretary.--The Secretary of the Treasury 
     shall annually estimate the impact that the enactment of this 
     Act has on the income and balances of the trust funds 
     established under section 201 of the Social Security Act (42 
     U.S.C. 401).
       (2) Transfer of funds.--If, under paragraph (1), the 
     Secretary of the Treasury estimates that the enactment of 
     this Act has a negative impact on the income and balances of 
     the trust funds established under section 201 of the Social 
     Security Act (42 U.S.C. 401), the Secretary shall transfer, 
     not less frequently than quarterly, from the general revenues 
     of the Federal Government an amount sufficient so as to 
     ensure that the income and balances of such trust funds are 
     not reduced as a result of the enactment of this Act.

     SEC. 908. EMERGENCY DESIGNATION.

       Congress designates as emergency requirements pursuant to 
     section 252(e) of the Balanced Budget and Emergency Deficit 
     Control Act of 1985 the following amounts:
       (1) An amount equal to the amount by which revenues are 
     reduced by this Act below the recommended levels of Federal 
     revenues for fiscal year 2002, the total of fiscal years 2002 
     through 2006, and the total of fiscal years 2002 through 
     2011, provided in the conference report accompanying H. Con. 
     Res. 83, the concurrent resolution on the budget for fiscal 
     year 2002.
       (2) Amounts equal to the amounts of new budget authority 
     and outlays provided in this Act in excess of the allocations 
     under section 302(a) of the Congressional Budget Act of 1974 
     to the Committee on Finance of the Senate for fiscal year 
     2002, the total of fiscal years 2002 through 2006, and the 
     total of fiscal years 2002 through 2011.
         Amend the title so as to read: ``An Act to provide 
     incentives for an economic recovery and tax relief for 
     victims of terrorism, and for other purposes.''.

  Mr. BAUCUS. Mr. President, I would like to clarify for the record and 
I ask unanimous consent that the previous order with respect to 
Executive Calendar No. 511 remain in effect.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BAUCUS. Therefore, the order with respect to H.R. 3090 should now 
reflect that the debate-only limitation will extend until 4:45 today.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BAUCUS. Mr. President, we are now on the Economic Recovery Act. I 
would like to make a few comments on it, if I might. I know I will be 
followed by my very good friend, a terrific Senator, Mr. Grassley from 
Iowa.
  This is a sober time. Our Nation is at war overseas and at home. Like 
all Americans, we are struggling to respond, to hold together, to 
assume our responsibilities. Among other things, we in this Chamber 
have the responsibility to help get the economy back on track.
  The September 11 attacks took a bad economic situation--our economy 
was deteriorating--and made it significantly worse. I very sadly add, 
the tragic crash of an American Airlines plane yesterday in New York, I 
am sure, adds more angst and concern across our country, which has a 
very direct effect on people's emotions and psychology, but also, to 
some degree, on the economy, people's willingness to believe in the 
future.
  We had virtually no economic growth in the second quarter of this 
year, and we have had negative growth in the third quarter of this 
year, 2001.
  In addition, in October unemployment jumped from 4.9 percent to 5.4

[[Page S11697]]

percent. That is the largest jump since May of 1980. We also have 
reports of 638,000 layoffs of American workers announced since 
September 11.
  Manufacturing has been particularly hard hit. Last month, 
manufacturing lost 142,000 jobs. That was just in the one month of 
October. That was the 15th consecutive month that manufacturing jobs 
dropped.
  Since July of last year--a little over a year ago--manufacturing has 
lost an incredible 1.3 million jobs. That is over about 15, 16 months. 
Manufacturing employment has now fallen to its lowest levels since 
November 1965.
  The problems are not limited to the manufacturing sector. In October, 
non-manufacturing industries experienced the most dramatic slowdown in 
business activity since a report by the National Association of 
Purchasing Managers began in 1997.
  Agricultural producers are hurting, too. Net farm business income was 
at a 10-year low in 1999 and 2000. Still, unless Government assistance 
is continued, net farm income in 2001 is actually projected to be lower 
than farm income in 1999 and 2000. The most acute problems are faced by 
farmers whose farms have been hit by floods, drought, tornadoes, and 
other national disasters.
  Finally, the economies of New York and the surrounding regions have 
taken an unimaginably severe blow from the events of September 11. It 
is not just the economy of the New York region that has taken a hit. It 
is our highly interdependent economy all across our entire country that 
has suffered as a consequence of the Twin Towers and the Pentagon 
tragedies as well as the other events that have occurred.
  So what can we do? How do we help Americans regain confidence in the 
future so people want to, for example, buy refrigerators and cars, take 
family vacations, and have a really good, confident feeling about the 
future? How do we help businesses believe in the future, invest in new 
products, design new products and ways of doing things? It is a 
psychology that really comes down to confidence. How do we help 
engender the confidence we all desire?
  First, there is something--the fancy term is ``monetary policy.'' 
That is essentially the Federal Reserve System essentially raising or 
lowering interest rates to help make borrowing more expensive or less 
expensive. Basically, I think the Federal Reserve has done a pretty 
good job.
  Last week, the Federal Reserve Board cut short-term interest rates 
for the 10th time this year--that is a lot of cuts over 1 year--
clearly, trying to help make borrowing less expensive, people more 
inclined to borrow and to spend more, putting more money into the 
economy. My guess is, more rate cuts will follow.
  But monetary policy alone does not appear to be enough. We also have 
to pass legislation to stimulate the economy through what is called 
fiscal policy. Just as a reminder, fiscal policy is when Congress 
basically either raises taxes or lowers taxes--spends money or does not 
spend as much--with an economic effect on the economy. To stimulate the 
economy through traditional garden variety fiscal policy, Congress 
spends money.
  Now, there are a couple of ways to spend money. One is through 
cutting taxes; that is, in effect, spending money. The other is direct 
expenditures by the Congress. We are trying to figure out how to 
stimulate the economy by spending money.
  Now, there is no magic, clearly--no magic, no recipe that will send 
us going back to double-digit growth. Nevertheless, I think there are 
some simple guidelines that we in Congress can follow to help regain 
that confidence. Most significantly, the bipartisan leaders of the 
House and Senate Budget Committees provided us about a month ago with 
some very important guidelines. This is very important. The leadership 
of the Budget Committee--Republicans and Democrats, both House and 
Senate--all got together. That is remarkable. A lot of times around 
here we are not always on the same page. But all four of them got 
together because they were thinking of the longer term, about our 
national budget. They agreed upon a certain set of guidelines they 
thought were appropriate in an economic stimulus, economic recovery, a 
package that we might pass.
  Let me try to put in my own words what they said. They first said the 
economic recovery stimulus bill should be temporary--that is, something 
that is a direct, essentially a 1-year stimulus, upfront now, to help 
get the economy going. In one respect, I think it is because we have 
some sense of what the economy is going to be like next year. We don't 
have much of a sense of 2, 3, 4, 5 years down the road. We need to do 
what we can to stimulate the economy now and take stock a year from now 
to see where we are. They also said they should not spend too much over 
the long run. That is part and parcel with the upfront.
  We are very nervous in Congress about longer run, about runups in the 
Federal budget which tend to cause moderate and long-term interest 
rates to rise. Why? Because bond traders are thinking, gee, if Congress 
is spending all this money in the longer term, probably there will be 
competition for capital, and inflation is going to go up a bit, 
probably, with all that spending, and the price of bonds goes down as 
long-term rates stay up. They don't come down like we want them to. 
They will come down if we say we are going to be responsible and we are 
not going to spend a lot of money in the out-years. That is very 
important.
  The Budget Committee chairmen--all 4--also said we should get the 
money into the hands of those who will spend it quickly; that is, they 
are talking more about a consumer-led stimulus. Get people spending 
money. Then businesses are going to want to invest, start manufacturing 
products and selling products to the people who are buying. They said--
the budgeteers--consumers who will spend money then help stimulate 
business. They also said we should spend money on businesses who will 
spend it on capital equipment. That should be stimulative as well.
  One more point: In addition to providing an economic stimulus in this 
legislation, we also have to lend a hand to the Americans who are 
really suffering. It is one thing to help put money in the economy; it 
is also as important--if not more important--to help the Americans who 
are really suffering and living paycheck to paycheck and trying to make 
ends meet as a consequence of the terrorist attacks, or because of the 
recession in which the economy is now. At a time like this, I think it 
is critical that they are all a part of this, and that we Americans 
work together to find a good solution. That is what we tried to do in 
this bill. That is what is contained in the bill the Finance Committee 
is now presenting to the Senate. I think we have done a pretty good 
job. The bill has six main elements, every one of which is important.

  First, we provide a further tax rebate. You will recall that there 
are about 130 million taxpayers in our country. When the checks went 
out in the past summer on the tax bill this Senate passed, 79 million 
Americans got a full rebate. Individuals got either $300, or families 
got $600, and another 14 million taxpayers got a partial rebate--less 
than the full $300 or $600. Another 34 million American taxpayers got 
no rebate whatsoever; 34 million got no rebate in the last go-around, 
last summer. Why? The rebate then was limited to the amount that people 
paid in income taxes. You have to remember that a family who paid 
income taxes of less than $600 did not get a full rebate.
  For a family of four, that would be a gross income of about $30,000. 
If they made less than that, they didn't get a full rebate. In many 
cases, they didn't get any rebate. So here is what we do in this bill. 
This bill provides a second round of tax rebates for people who paid 
payroll taxes but got only a partial rebate, or no rebate, the last 
time around. As a result, by the time the second round of checks go 
out, every one of the 130 million people who paid Federal taxes also 
will receive a full rebate.
  To some extent, this is a matter of simple fairness. After all, some 
got it last time and the rest of the Americans should get it this time. 
It is also more than that. The people who didn't get full rebates 
earlier tend to have relatively low incomes. Those who got it last time 
have higher incomes. The people who get it now are likely to spend a 
higher proportion of the new income they get because they are lower 
income Americans. They have to spend

[[Page S11698]]

it, frankly, to make ends meet. That would be a direct stimulus to the 
economy.
  Second, we establish a series of temporary tax incentives. Most 
significantly, we provide special tax depreciation deductions for a 
limited time to encourage businesses to invest in new plants and 
equipment. As it now stands, businesses deduct the cost of new plants 
and equipment over a period of years. There are various rules that 
apply. We add a temporary depreciation ``bonus'' of 10 percent for 
investments made before the end of next year.
  What does that mean? That basically means, whatever your depreciation 
schedule is, take 10 percent and do it all the first year, expense it 
more quickly, move it up, which helps your bottom line. It encourages 
you to invest. Senator Hatch and others have suggested that we make the 
percentage higher than 10 percent. I am open to that. I am open to a 
higher percentage if it fits into the framework of our overall bill.
  The accelerated depreciation deduction will have a couple effects. 
First, it will encourage businesses to invest sooner rather than later. 
That, in turn, will directly stimulate the economy. Further, to the 
extent some of the additional investments could be put to use right 
away, it will increase productivity. That is no small matter.
  We also provide an even larger depreciation deduction for small 
businesses by increasing what is called the ``expensing'' deduction 
under section 179. This deduction is available only for new investments 
made in the next 12 months.
  Finally, we allow companies a longer period to carry back net 
operating losses. This change is needed to make the first two 
investment incentives work efficiently. It also provides a modest break 
for companies struggling to stay on their feet.
  Those are the nationwide investment incentives through tax cuts. It 
is one way to stimulate the economy through fiscal policy; it is tax 
cuts. There are lots of ways to do it and that is one way in this bill. 
That is very important.
  The third section of the bill provides tax relief to the area in 
Lower Manhattan that was devastated by the terrorist attacks of 
September 11. Yesterday's crash has rekindled our memory of what 
happened on September 11--the death, the destruction, the horror, and 
the angst in our national psyche.
  The September attacks also had a huge economic effect on New York 
City. It was amazing to all of us who have been to Ground Zero and have 
seen it. Fifteen thousand businesses were destroyed or disrupted and 
125,000 workers were displaced. That is just the beginning of it. The 
Senators from New York and New Jersey can go on and on in much greater 
detail and describe the magnitude and degree of devastation that New 
York has suffered.
  Every American wants to help, from those who live across the river in 
New Jersey, to those who live across the country in my State of 
Montana. All Americans want to help. We are all together in this.
  Let me explain how we came up with the New York package. After the 
attacks, Senators Schumer and Clinton and Torricelli and Corzine, along 
with Governor Pataki, approached me with a series of tax proposals for 
New York City. We had lots of discussions. They have been wonderful in 
representing their people and, second, working to do what is right. We 
rejected several ideas, but we revised others. After a lot of give and 
take, we were able to agree on a package that is fair, targeted and, I 
think, practical.
  The basic idea is pretty simple. We provide temporary tax incentives 
to encourage business to either stay in lower Manhattan or to relocate 
in New York City.
  There are three main provisions. First, we expand the work 
opportunity tax credit which exists under current law to encourage 
employers to hire certain categories of individuals.
  We create a new category for people who find jobs in lower Manhattan 
or who used to work there and relocate to another part of New York 
City.
  Second, we allow enhanced cost recovery to encourage businesses that 
lost property in the attacks to relocate to New York City.
  Third, we authorize the issuance of $10 billion in tax-exempt private 
activity bonds to rebuild the area damaged by the attacks.
  As a related matter, we include an amendment offered by Senator 
Torricelli based on a bill I wrote with Senator Grassley. It provides 
tax relief to victims of the terrorist attacks, including both attacks 
of September 11 and the Oklahoma City bombing a couple of years ago.
  Clearly, we will be taking stock at the end of this year as to what 
more is needed for our country, including New York City. This is 
basically to stem the hemorrhage, to help people at least tread water 
and not sink. But we are going to be taking a look at this again, and I 
welcome working with all the people from New York and other parts of 
the country as we try to find a national economic plan for next year.
  The final provision in this part of the bill allows Indian tribes to 
issue additional types of tax-exempt bonds to promote economic 
development. This provision obviously is not related to the September 
11 attacks or the recession, but it will help promote economic 
development in a part of America--Indian country--that has been left 
behind for far too long.
  I will now move on to the fourth section of the bill, unemployment 
benefits. We all understand the problem. In October, we had the biggest 
jump in the unemployment rate in 20 years. Work is harder to keep and 
even harder to find. In response, we have taken an approach that 
Congress has adopted many times in the past; that is, we extend 
unemployment benefits by 13 weeks.
  We also take a few additional steps. We temporarily increase 
unemployment benefits by the greater of 15 percent or $25 a week. These 
people, because of inflation and the difficulty with making ends meet, 
deserve that. We make modest and temporary improvements in the 
operation of the unemployment insurance program. Specifically, we 
update the reporting period and provide better coverage for people 
seeking part-time work. One does not have to be a full-time worker to 
qualify. If you are a part-time worker, you should and do qualify.
  Others argue that unemployment insurance is a poor economic stimulus. 
This surprising argument is contrary to the history of the program and 
to the overwhelming economic evidence.
  Alan Krueger of Princeton University put it this way:

       Unemployment insurance is the quintessential economic 
     stimulus: benefits ramp up temporarily in a downturn and 
     reach those most in need.

  A similar point was recently made by Joseph Stiglitz, co-winner of 
the 2001 Nobel Prize for Economics. He said:

       First, we should extend the duration and magnitude of the 
     benefits we provide to our unemployed. . . . This is not only 
     the fairest proposal, but also the most effective.

  Senior economist Jane Gravelle of the nonpartisan Congressional 
Research Service recently said this:

       Extending unemployment compensation is, in fact, likely to 
     be a more successful policy for stimulating aggregate demand 
     than many other tax/transfer changes.

  Remember, one of the main reasons we have an unemployment insurance 
program is to provide economic stimulus during times of economic 
downturn. That is the whole point of it. Explaining the program in 
1934, President Roosevelt said that it will ``act as a stabilizing 
device in our economic structure and as a method of retarding the rapid 
downward spiral curve and the onset of severe economic crisis.''
  To put it bluntly, people who have lost their jobs and are struggling 
to get by are likely to spend any additional money they get, providing 
a direct stimulus to the economy.
  The next section of the bill helps people maintain health insurance 
coverage for themselves and their families. As unemployment rises, the 
number of uninsured Americans also rise. People are laid off, and they 
do not have health insurance.
  In the recession of the early 1990s, more than half the workers who 
became unemployed also became uninsured. That is an important point. 
More than half the workers who lost their jobs in the early 1990s also 
lost their health insurance. My proposal responds to this in a couple 
of ways.
  The first way is through the so-called COBRA program. That program 
was enacted in 1987. It allows people to

[[Page S11699]]

maintain their employer-provided health insurance coverage for 18 
months after they leave a job as long as they pay the full premiums 
themselves. That is current law.
  That is also the problem. Simply put, COBRA premiums--that is, paying 
full freight for health insurance--is very expensive. On average, the 
cost for individual coverage is $2,700 a year. As one is layed off, to 
maintain COBRA health insurance, one has to pay $2,700 for coverage, 
and for family coverage, turn that 2 and 7 around and it comes out to 
$7,200 or almost $600 a month. Not many families on unemployment 
benefits can afford that.
  The average unemployment benefit is $231 a week. As a result, only 
about 18 percent of the workers who qualify to maintain their health 
insurance coverage under COBRA actually do so. It stands to reason. It 
is too expensive, so it is only 18 percent.
  Here is what we do. First, we provide a 75 percent subsidy for COBRA 
coverage. In essence, the Federal Government would pay the portion of 
the premium that previously had been paid by the employer. This is for 
only 18 months. It is temporary.
  Second, we give States funds and flexibility to pay the remaining 25 
percent for people with very low incomes.
  Third, we give States funds and flexibility to provide Medicaid 
coverage for workers who are not eligible for the COBRA program.
  Fourth, we increase the matching rate for State Medicaid coverage to 
make it easier for States to maintain coverage at a time when State 
budgets are being squeezed. We have heard a lot about this. A lot of 
State budgets are in tough shape. Most have a constitutional 
requirement to balance the budget, and they are strapped. It is very 
difficult. I am not going to get into whether they properly cut taxes 
in the last 2 years when times were good, but nevertheless, we have to 
take things as they are, and I think the States do need some help.
  Forty-nine States face balanced budget requirements and are likely to 
cause them to increase taxes and cut spending, even though such steps 
could deepen the recession. The increase in the matching rate provides 
fiscal relief for States at a time when it is badly needed.
  All told, these provisions will maintain health insurance for 
millions of workers who have lost their jobs or stand to lose them in 
the difficult months ahead.
  Like unemployment insurance, this proposal has been criticized pretty 
sharply. Some argue that covering health insurance costs will not 
provide an economic stimulus, apart from these people who are out of 
work and need a little help.
  I grant the case is not as straightforward--strictly on the stimulus 
point--as it is for unemployment insurance, but still the argument for 
stimulus is very strong. In any event, this part of the proposal is not 
just designed to provide economic stimulus, it is designed to help 
people who have lost their jobs to the recession.
  Critics also argue the proposal is an indirect way to establish a new 
entitlement program. We have heard that, too. Some people do not like 
new entitlement programs, as a matter of philosophy and ideology, never 
mind what the practical consequences may or may not be.
  This is not a new entitlement program. We are responding to a 
temporary crisis with a temporary solution. The program ends after 1 
year on December 31, 2002: It is over; it is the end of the line; it is 
done.
  Finally, critics argue the program will be slow and cumbersome. Let's 
be candid. There are several competing proposals to provide temporary 
health insurance coverage. Each raises the same issues: How efficient 
and how quickly will the dollars be in the hands of people who need it? 
Whether we are talking about direct payments, COBRA tax credits--that 
is another idea--block grants to the States--that is the President's 
idea--we still have to come up with a system that works quickly and 
effectively. I am less hung up as to which it is. I want people who 
need health insurance to get health insurance benefits quickly and 
efficiently.
  If someone can come up with a better approach that accomplishes our 
goal, I am more than willing to listen.
  Let me now turn to a section of the bill that is extremely important: 
The provisions for agriculture and rural economic development.
  To set the stage, let me remind colleagues once again about the state 
of the agricultural economy. We have had an unprecedented streak of bad 
weather and bad economic conditions. Farmers in parts of the South and 
northern-tier States have been particularly hard hit. Although some 
sectors and some regions have begun to recover, farmers' overall 
earnings from their farming operations--that is, absent Government 
payments--are down sharply. The current difficulties could not come at 
a worse time.
  A downturn in farm income does not just impact farmers. It wreaks 
havoc in the rural communities that depend on them. Farmers in economic 
distress are not able to make their usual purchases of seed, 
fertilizer, not to mention food and clothing. This puts the 
agricultural sector at considerable risk.
  To ensure the stimulus plan also provides benefits to agriculture-
dependent economies in the South, the Midwest, the northern-tier, the 
bill extends three programs that have been critical to shoring up farm 
income in the last 3 years. Not a new program, it just extends the 
current program.
  Some of my colleagues have attacked the agriculture section of the 
bill. They have poked fun at it, circulating pictures of various fruits 
and vegetables. The farmers and ranchers across this country may not 
find this all so amusing. They may wonder why the economic problems of 
ailing corporations demand immediate action but the economic problems 
of farmers and ranchers deserve only derision.
  They are asking that question, and rightfully so: Why do big 
corporations get assistance in an economic downturn but not farmers and 
ranchers? Good question. We know the answer. Farmers and ranchers are 
part of America, too.
  Let me be blunt. My constituents, including farmers and ranchers 
suffering through another disaster, deserve economic relief every bit 
as much as Americans from urban areas.
  Finally, to complete my summary of the bill, we also extend various 
tax and trade provisions that are scheduled to expire under current law 
and make a handful of additional changes to the Tax Code. I believe 
this bill will help us achieve our objective of providing a fiscal 
stimulus for the economic recovery of our Nation.
  It is temporary. It is carefully targeted. It will increase both 
business investment and consumer demand, heavier on consumer demand 
which is needed more in this country. Perhaps more importantly, it will 
extend a helping hand to the people who have lost their jobs and risk 
losing their health insurance.

  On balance, it is a very solid bill that deserves support in this 
Chamber. Time is critical. I hope we can complete debate quickly. Every 
day counts for Americans who need assistance and are looking at us. Is 
the Congress going to stand up and do what it should do, so we have a 
chance to wrap up our differences with the House before Thanksgiving? 
It is important we pass this quickly.
  I understand others will disagree with my description of the bill. 
They will say it falls short. They will argue we need more tax cuts, 
that we do not need to do so much for the unemployed, that there are 
better ways to cover health insurance. They will question whether we 
should have any agriculture provisions in this bill at all.
  I say let us have that debate, and let us try to resolve our 
differences with due respect to each Senator's point of view. Let us 
get to the bottom, get the facts out, learn the truth, what works, what 
does not work, so we can get the job done.
  After all, the American people are suffering. They have been hit with 
shock after shock after shock. They look to us for leadership. It is 
time to provide it.
  As the President said, quoting the heroes who jumped the hijackers 
over Pennsylvania, let's roll.
  The PRESIDING OFFICER (Mr. Kennedy). The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, I welcome the opportunity to be with my 
friend, Chairman Baucus, to discuss an economic stimulative package and 
to declare that if he and I can work together, we are going to get such 
an economic stimulative package passed as

[[Page S11700]]

we did in the case of the tax bill that was passed and signed by the 
President in June, the largest tax reduction in the last 20 years, a 
needed tax reduction because the American people are being taxed at the 
highest level since World War II.
  About that tax bill, if we had not passed that tax bill with the 
rebates that went out during August and September, with the flatness of 
the economy, we would now be discussing what we are going to do about 
the flatness of the economy because we did not do something last 
spring. It was fortuitous we were able to pass such a tax bill, and 
pass it before there was a demonstrated need for it, to get the 
taxpayers their rebates, to help consumer demand, and to keep the 
economy going. We would have been considering a tax bill if we had not 
passed the earlier tax bill, regardless of what happened on September 
11.
  Obviously, we are now debating because of the terrorist attacks of 
September 11 and the dramatic downturn in the economy that has resulted 
because of that terrorist act.
  I suggest as we consider this legislation and what ought to be done 
for economic stimulus because of the September 11 terrorist attacks and 
the impact that has made on the economy, that everything be directly 
related to that incident, and that Members of the Senate not try to get 
anything on the agenda that would not otherwise be legitimately there 
because of the September 11 happenings.
  So I rise for this debate on an economic stimulative package because 
of the need for it as a result of what happened on September 11 and for 
no other reason.
  Chairman Baucus and I shared a goal at the start of this process. We 
both wanted a bipartisan economic stimulative package that also 
addressed the needs of people who were hurt because of September 11 and 
helped those with unemployment benefits and health care needs for 
dislocated workers. I still have that as my goal.
  My discussions this afternoon I want to divide into three parts: The 
process for this bill; the substance of the bill, looking primarily at 
similarities between what Democrats think need to be done and what I as 
a Republican leader think needs to be done--in other words, these are 
positions taken by our respective caucuses--and finally, how to resolve 
these differences and get a bipartisan bill through the Senate because 
I think we all know right now there are not enough votes to get a 
partisan package of either caucus through this body.
  Chairman Baucus rightly insisted that the Finance Committee act on 
this matter. There was talk by the majority leader of skipping the 
committee and bringing it directly to the floor. As a ranking member of 
the Finance Committee, I support the chairman. He can count on my 
support in respecting the jurisdiction of the committee.
  Unfortunately, however, in asserting our jurisdiction, we did not 
operate in a committee process, in a bipartisan tradition. Despite all 
the speeches to the contrary, the bill we have now on the Senate floor, 
put forth last Thursday night by the Senate Finance Committee, was 
designed to be partisan. Why somebody would make that judgment, I don't 
have the slightest idea. In all the victories I have had on the floor 
in this Senate in the 21 years I have been a Member, I don't think any 
have been a partisan victory. I have been able to work with members of 
the other party in order to get something done.
  There is an old saying: You can get anything done if you don't care 
who gets credit for it.
  In that respect, I think designing a partisan package was a way to 
bring this bill to a stone wall. My job--and I think Chairman Baucus 
shares this with me--is to break down that stone wall, get beyond that, 
get our people together, get the opposing sides together, and get 
something to the President with the idea we are here to help the 
economy and to not help one political party or the other.
  The economic stimulus package passed out of the Senate Finance 
Committee embodied then the Democratic caucus position on the issues we 
felt ought to stimulate the economy. The bill was precooked and passed 
out of committee because Democrats decided to deal only with 
themselves. As unfortunate as that event was, obviously we are out here 
on the floor of the Senate. Last Thursday is history. It is all water 
under the bridge.
  Equally unfortunate, however, the partisan acts of the Democrats in 
the Finance Committee have necessitated a confrontational debate from 
each side. By choosing a partisan strategy, the Democratic leadership 
has placed us in a position where, aside from the substantive issues 
involved, there is necessarily a partisan division. I point this out 
only because it is a needless barrier to my goal of a bipartisan 
stimulative package in the tradition of how Senator Baucus and I got 
the tax bill of last spring to the President for signature on June 7.
  On the Senate floor, the majority leader does not have an unfettered 
right to push this bill through on a partisan basis. He has a right to 
try but he cannot succeed because this bill violates the restrictions 
of the budget resolution. It is subject to a 60-vote point of order 
under the rules of the Senate. So, too, if Republicans wanted to push 
ours, we could not get it passed. It would be subject to a 60-vote 
point of order. We are in a position where neither side can win.
  I am frustrated and disappointed right now because there is so much 
common ground between us and where the Democrat bill is. I am 
frustrated because, regardless of this common ground, there is little 
will on the part of the Democratic caucus to meet our side halfway or 
even part of the way. That unwillingness doesn't make a lot of sense in 
a Senate that is divided: 50 Democrats, 49 Republicans, and one 
Independent.
  Where is the common ground? Starting with the economic stimulus 
itself, basically the President of the United States and Chairman 
Greenspan gave us a green light to the stimulus exercise. Chairman 
Greenspan requested we take a hard look at proposals that were 
temporary, immediate, and efficient. Since his meetings with the 
President and with us on the Senate Finance Committee, there has also 
been indication that what he has done on interest rates, although he 
can still do more and will probably do more, is reaching the end of the 
road of what can be done through monetary policy, and that there needs 
to be a stimulative package that parallels, through Congress, what 
Chairman Greenspan is trying to do through the Federal Reserve System.

  We have been working with Chairman Greenspan because we want these 
programs to complement each other. We also think Chairman Greenspan has 
a pretty good feel for what it takes to turn this economy around. We 
sought his advice in a bipartisan way. The President sought his advice. 
Chairman Greenspan said we needed to pay particular attention to the 
decline in manufacturing investment.
  I have a chart that demonstrates the relationship of consumption 
expenditures and manufacturing expenditures. As the red line shows, we 
have had a steady growth in personal consumption expenditures. We have 
had more ups and downs with domestic investment, mostly manufacturing 
investment. In the last three quarters, we have seen a very dramatic 
turndown in manufacturing investment. It reached a high and dropped. I 
am glad to hear the chairman of the committee say in his opening 
remarks that the 10-percent accelerated depreciation they allow in 
their legislation is negotiable. We think, and Chairman Greenspan 
thinks, about 30 percent is what it will take to stimulate the economy.
  The other side speaks about consumer demand and doing something about 
consumer demand. The chart shows there has not been an erosion of 
personal consumption expenditures as there has been a dramatic erosion 
of manufacturing investment.
  Of course, why manufacturing investment and encouragement of that? It 
is time tested from both Republican and Democrat Presidents, changing 
tax law from time to time in the last 50 years to stimulate the economy 
because it enhances productivity; but more importantly, the equipment 
bought by major corporations is made at another manufacturing place 
that creates jobs. It is a good way to help the economy in two ways: It 
creates jobs where the enhanced machinery is manufactured, and it also 
makes each person working where this is installed more productive, as 
well.

[[Page S11701]]

  We need a balance between demand and manufacturing. If we trust 
Chairman Greenspan, and a lot of people in the United States have 
confidence in him according to the polls, we need to pay particular 
attention to the downturn in manufacturing investment and follow 
Chairman Greenspan's advice.
  Now, Democrats and Republicans have agreed to pursue accelerated 
depreciation as a stimulus. Both caucus plans have this proposal 
included, but there is an ineffective 10-percent accelerated 
appreciation in the Democrat plan, compared to the positive 30 percent 
in the Republican plan. Both caucuses pursued proposals that, while not 
as stimulative as accelerated depreciation, would still provide much 
needed relief to struggling businesses.
  It is another area of common ground that Democrats propose 
liberalizing the net operating loss carryback rules, but Republicans 
propose repealing the corporate alternative minimum tax. Here again, 
there is room for negotiation and compromise that will lead to a 
bipartisan agreement.
  Republicans put on the table an acceleration of the income tax rate 
cuts put in place by the bipartisan tax relief bill I spoke of twice 
this afternoon that was signed by the President on June 7. That 
included the tax rebates, as well. The Democratic leadership objects 
strenuously to the proposal because, although this proposal is 
stimulative--I have not heard otherwise--it reopened a statute that a 
majority of the Democrats did not support last spring.
  I recognize acceleration is not viewed as common ground, but I think 
it begs a question, if we are going to be intellectually honest with 
each other. How could the Democrats reopen the statute that the 
President signed June 7 by putting rebates for payroll and nontaxpayers 
on the table. It appears a bit inconsistent. In one place you can open 
the bill, but in another place you cannot open that tax bill of last 
spring.
  To those of us on this side, then, it appears the Democratic 
leadership has taken the positive gesture by the President on rebates 
because President Bush wants to get money to lower income people to 
stimulate the economy. So they have taken a positive gesture by the 
President but have not been flexible in return.
  Needless to say, by default, both sides have common ground on the 
next round of rebate checks. This proposal stimulates consumer demand. 
Former Secretary Rubin was very keen on some modest level of consumer 
demand stimulus. So on the investment side and the consumers demand 
side, both Republicans and Democrats have proposals with similar 
features, with the Republicans placing more emphasis on investment. But 
the Democratic leadership has made marginal rate cut acceleration some 
sort of a deal breaker.
  We Republicans want to provide dislocated workers with assistance for 
coverage for health insurance. First off, I want to clear up some 
misstatements. Some have incorrectly said that Republican proposals do 
nothing to help cover the cost of health insurance for dislocated 
workers. This is baloney.
  The President supported health care assistance by proposing funding 
for health care benefits to laid-off workers. Both the House bill and 
the Senate Republican caucus position embrace this idea. In 
negotiations, in particular, I want to say to the Presiding Officer, I 
was willing to go beyond the President's proposal. I offered to more 
than triple the amount of money. I also proposed expanding coverage of 
health benefits to dislocated workers who do not qualify for COBRA, 
such as small business workers. I then offered Democrats complete 
flexibility to write the criteria under which the money would be 
granted so they could be confident in the program doing what they want 
it to do. So how much more flexible can you be? But the Democratic 
leadership said no and rejected the offer.
  So we do have a common ground on the goal of helping dislocated 
workers with health care benefits. Are there any differences in how we 
want to provide this assistance? The answer is yes. The whole point of 
this bill, though, is to get people health care benefits right now, not 
down the road. Yet the Democratic leadership proposes to create a new 
bureaucracy that will take many months to get up and running. The 
Democrats' proposal would not be able to get benefits to workers until 
it is too late. This is a stimulative package to help us out of the 
recession, not to give people help way beyond the turn-around in the 
economy.
  The reason the Democrats' proposal would do this is because Federal 
law requires that when a new Federal program is established, 
regulations must be promulgated and the public be given notice and 
opportunity to comment. Clearly, these laws affecting new programs are 
in place for a good reason.
  We can avoid this hurdle by using existing programs, especially ones 
that are tailor made for national emergencies. That is why the 
President took the approach he did through National Emergency Grant 
Programs. If there is not enough money there to satisfy people on the 
other side of the aisle, we can take care of that. But we ought to take 
care of it in a manner that gets the money to the people in a month, 
not in a year. Our goal was to use the existing National Emergency 
Grant Program, one that the Federal Government and States have used for 
years and have experience with, to ensure benefits can get to 
dislocated workers in the fastest way possible. No new infrastructure 
would be required by the Federal Government and States could quickly 
access much needed funds.

  The bottom line is hard-working Americans who have lost their jobs as 
a result of the September 11 tragedy cannot wait 6, 9, or 12 months for 
health care insurance. They need help and need it right now. We propose 
to do just that. But, again, the Democrat leadership was not interested 
in bipartisan compromises, even when they represented common sense.
  I have another problem, though, with the Democratic health package; 
that is, it places undue burdens on States which are already struggling 
to respond to adverse impacts of September 11. Requiring a new Federal 
infrastructure and corresponding new State infrastructures in order to 
access emergency funds seems to be downright unreasonable.
  We should be working our hardest to get money to States immediately 
for them to get it to their workers who do not have health insurance. 
We should not penalize them by demanding that they, too, establish 
extensive new bureaucracies to get money to people in need.
  For example, the Democrats' proposal would require many States to 
enact legislation in order to set up and fund new State infrastructures 
to certify and deliver COBRA benefits. This is obviously a nonfunded 
mandate. But in addition, the Democrats' proposal requires States to 
use their own money. This means only those States which happen to have 
extra money in their Medicaid budget could help workers who are not 
COBRA eligible. I am not aware any State is claiming to have extra 
Medicaid money burning a hole in its pockets for those people. I think 
this is just plain wrong.
  I propose to provide 100 percent Federal funding through National 
Emergency Grant Programs to allow States, then, to cover non-COBRA 
eligibles.
  Once again, I asked the Democrat leadership: Why are you insisting on 
doing this the hard way, especially when there are much more efficient 
alternatives?
  Now I have a few points about extended unemployment benefits to 
dislocated workers. We want to do more than just provide unemployment 
checks. First of all, let me make it very clear. Why do you have a 
stimulus package? It is not to give unemployment checks, even though 
that is what we are doing. But the idea of stimulating the economy is 
getting people a job. People want a job; they don't want unemployment 
checks. We want incentives to get workers back their paychecks.
  But both sides agree that providing 13 weeks of additional benefit to 
workers in need is reasonable. We have done that five times in the last 
30 years, I believe.
  The Democratic leadership, however, wants to take finite resources 
and spread them thinly across every State so the needy will not get 
enough help. I offered to provide unemployment benefits in two ways--
kind of take your choice. The first was to allow 13 weeks of benefits 
to be extended to those States which experienced a significant increase 
in unemployment. So what is

[[Page S11702]]

a significant increase in unemployment? In that regard, I was 
completely flexible.
  In fact, I was more than willing to bring the threshold well below 
what the President proposed.
  In addition, I believe that extended unemployment benefits should be 
made available to particular industries or communities adversely 
impacted by September 11. This should be the case even if a State as a 
whole doesn't experience a major increase in unemployment.
  So I hope I have made it apparent that on our side we care about 
dislocated workers and getting them unemployment and health benefits. 
The differences are grounded in how to do it, and not whether to do it. 
I still believe that we are not that far apart and our differences can 
be bridged. If we are willing to take the partisan blinders off and 
focus on getting help to workers immediately instead of winning 
ideological points, we can come to agreement on a proposal.
  I have been so flexible that I know how Gumby feels.
  So, here we are, and I am left asking why we are stuck in this 
partisan ditch. We have common ground on the investment side, consumer 
spending side, unemployment benefits, and health coverage for 
dislocated workers. Why couldn't we work out an agreement? It seems 
that there are three reasons.
  The first reason is that the Democratic leadership doesn't want two 
negotiations with Republicans. They don't want to negotiate with Senate 
Republicans first and then have to negotiate with the White House and 
House Republicans later in conference. I have to chuckle when I hear 
this type of objection coming from the Senate Democratic leadership. 
When I was negotiating the bipartisan tax cut in the Finance Committee, 
I ran into the same objection from many in the Senate Republican 
caucus. You know who would bring this up. They said, Grassley, don't 
negotiate with Baucus. If you do, you will have to negotiate further to 
the left on the Senate floor. One negotiation is better than two.
  If I had followed that ``one negotiation'' directive, we would have 
had chaos on the Senate floor last spring.
  As it turned out--and for reference for people who are fearful that 
maybe the bipartisan Senate Finance Committee agreement couldn't hold 
in conference right now--the track record of last spring is that the 
bipartisan Finance Committee agreement held on the Senate floor and 
largely stayed intact in conference. But if the House and Senate 
parties agree to a so-called preconference strategy, which has been 
talked about within just the last 4 or 5 hours due to our constrained 
time now that we are getting up against adjournment this fall, I will 
certainly support that effort and hope it happens.
  So you can't proceed because you don't want to negotiate twice. I 
hope I have proved that is not a problem here in the Senate, if you do 
it right.
  There is a second reason given for not negotiating.
  It seems that many in the Senate Democratic caucus want some kind of 
``payback'' against the bipartisan tax relief legislation. In their 
view, the bipartisan deal was wrong, and with their caucus now running 
the Senate, they do not want to see it repeated in any way. In their 
view, a bipartisan Finance Committee deal would have been a bad deal 
unless it contained all four corners of the Senate Democratic caucus 
position. As I said, I showed movement on several issues but could not 
get movement from the other side. Everyone knows that unless both sides 
move, you can't get a deal.
  So here we are with basically the Senate Democratic caucus position 
as the Finance Committee bill. The bill before us is a partisan 
product. There is no gesture to the Republican side. The Finance 
Committee bill says, ``Our way or the highway.'' I only ask, is this 
what the American people want? I didn't think so at the time of the tax 
cut last spring, and I don't think so now.
  There is a third reason we can't get a deal. Senate Democrats say the 
House Republican partisan process necessitate a partisan response. We 
are kind of engaged in a game of legislative ping pong. That 
frustration, while understandable, doesn't justify shutting out Senate 
Republicans. Senate Republicans are not irrelevant. The House passed a 
partisan tax bill in the Spring, but that did not stop the Senate from 
passing a bipartisan package which the President signed on June 7. The 
Senate should not be rendered irrelevant because of partisan politics 
in the House.
  The American people expect us to work together. That is what I have 
been trying to do over the past few months. Senate Republicans are 
flexible and willing to move toward Senate Democrats, but it is a two-
way street and Democrats must also show movement.
  To sum up, we want to get a bipartisan stimulus package. 
Bipartisanship does not mean adopting the Senate Democratic caucus 
position.
  At this time, we are struck with this partisan, special interest 
Democratic bill that came out of committee on an 11-to-10 vote. We see 
that, even the media, like the Washington Post, call this bill a poor 
excuse for economic stimulus. They blame lobbyists for shaping a 
stimulus bill. ``Special Interests Scramble for Tax Break's, Other 
Windfalls''. The headline of one Post article reads ``Lobbyists Shaping 
Economic Stimulus bill.'' And it goes on to talk about companies 
getting tax credits for millionaires and payments going to billionaire 
bison ranchers.
  Let me note, however, that extensions of provisions that expire under 
current law are matters we should address.
  In the Finance Committee, the Democratic leadership lined the votes 
up, and we on this side were left out. That was an unfortunate outcome 
for the Finance Committee, which has a great bipartisan tradition.
  With some optimism, I noted at the Finance Committee markup that the 
centrists, a group of some Republicans and some Democrats who consider 
themselves right in the center of the political spectrum, indicated 
that things on the Senate floor would be different. I am hopeful of 
this sentiment expressed by the centrist group and that, combined, we 
can get enough votes to put together a bill that will get 60 votes to 
get a bipartisan bill through. I hope this will cause the Democratic 
leadership then to engage in a bipartisan debate. It is about time the 
process on this bill changes and reasonable heads prevail.
  Mr. President, I suggest the absence of a quorum.
  I ask unanimous consent that the Senator from Massachusetts be 
recognized after the quorum call.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will call the roll.
  The senior assistant bill clerk proceeded to call the roll.
  Mr. KENNEDY. Mr. President, I ask unanimous consent the order for the 
quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Kerry). Without objection, it is so 
ordered.
  Mr. KENNEDY. Mr. President, today brave young Americans are on the 
front lines of the fight for freedom from terrorism, and here at home 
we must work together to defeat the terrorists who would poison our 
people, panic our society, and paralyze our democracy. An essential 
point of protecting our homefront is protecting our economy because the 
state of our Union cannot be strong if the state of our economy is 
weak.
  Even before September 11, the Nation's economy was already weakening. 
The unemployment rate had been climbing for months. Relatively few new 
jobs were being created. Companies were announcing a successive round 
of layoffs. Business investment was being drastically reduced. Profits 
were rapidly falling.
  Last week, consumer confidence dropped to its lowest level in 7 
years. And 2 weeks ago, the unemployment rate took the largest jump in 
21 years. Nearly 8 million people are now out of work through no fault 
of their own, left with no pay and no golden parachute. For them and 
their families, life is a nightmare of missing paychecks, unpaid bills, 
lost health insurance, and no job on the horizon.
  Surely, it is these Americans who deserve our highest priority in 
Congress. Helping these workers is the quickest way to stimulate our 
economy. But if we act in the wrong way, a stimulus package could 
actually harm the economy.
  The Republicans would rely almost exclusively on permanent tax cuts 
that

[[Page S11703]]

would do little or nothing to promote growth when we need it most, 
which is right now. Their proposals are neither fair nor will they 
work. They do not measure up to the high standard required of us. A 
true stimulus package cannot be a disguise for special interests, nor 
can it run the risk of imposing large, new, long-term deficits on the 
Federal budget.
  Permanent, new tax cuts, on top of the now nearly $2 trillion in tax 
cuts enacted earlier this year, would actually hurt the economy by 
increasing the cost of long-term borrowing. Such cuts would discourage 
the kind of business investments we need to encourage.
  A true economic stimulus program must meet three criteria:
  First, it must have an immediate impact on the economy. The dollars 
in the stimulus package must be spent in the economy as soon as 
possible. The best way to accomplish this goal is to target the funds 
to the low- and moderate-income families who are the most certain to 
spend it rather than to save it.
  Second, the tax cuts and spending provisions in the plan must be 
temporary. They must focus on the immediate need to generate economic 
activity. And they must not impose substantial new long-term costs on 
the Federal budget.
  And third, the package must be fair. It must focus on those who need 
and deserve the help, who are suffering the most in these difficult 
days. It must reflect the renewed national spirit of taking care of 
each other.
  The bill reported out of the Finance Committee--and I commend Senator 
Baucus for this, as well as Senator Byrd for the homeland security 
provisions which are part of the package--rightly gives first priority 
to the millions of Americans who have lost their jobs in the current 
seriously sagging economy. It puts money directly in the hands of those 
who will spend it immediately and will help laid off workers provide 
health insurance for their families.
  Let's look at the proposal of the Finance Committee, which represents 
the best judgment of the Democrats on this measure. Let's look at the 
heart and the soul of this particular program.

  All we have to do is look at the reports over this past weekend by 
the Nobel laureate in economics, Joseph Stiglitz:

       The United States is in the midst of a recession that may 
     well turn out to be the worst in 20 years, and the 
     Republican-backed stimulus package will do little to improve 
     the economy--indeed, it may make matters worse.

  We may be in the midst of the worst recession of the last 20 years, 
``and the Republican-backed stimulus package will do little to improve 
the economy--indeed, it may make matters worse.'' That is not a 
Democratic statement or comment, and it is repeated by economists 
across the country.
  What have been the proposals? The principal proposals of the 
Democratic effort have, first of all, included unemployment 
compensation in order to get resources out to those who are unemployed.
  We can ask ourselves, what has been the record of the Senate over the 
period of recent years? My friend and colleague from Iowa talked about 
how, in recent years, Republicans had supported unemployment 
compensation. That is true.
  The unemployment insurance benefits were extended four times during 
the recession in the early 1990s. At its peak, an additional 33 weeks 
of benefits were provided. On November 15, 1991, the Senate passed an 
unemployment compensation bill to add an additional 20 weeks of 
unemployment benefits for States with high unemployment rates and 13 
additional weeks for other States. That vote was 91 to 2. The 
Republican Senators voting for the extension included Senators Burns, 
Cochran, Craig, Domenici, Gramm, Grassley, Jeffords, McCain, McConnell, 
Murkowski, Nickles, Smith, Specter, Stevens, and Warner, and then-
Democratic Senator Shelby also voted in favor of the extension. The 
vote was 91 to 2. It represented a bipartisan effort. This is virtually 
identical to what was considered back at that particular time in 1991.
  Then, in 1992, we were still facing the challenges of significant 
unemployment, and we passed 94 to 2 to supplement the regular benefits. 
The bill raised the maximum additional weeks to 33 weeks of benefits 
for States with high unemployment, and 26 weeks for all other States. 
It was a much more dramatic bill. This bill is much more modest. That 
vote was 94 to 2. And that included the Republican leader, Senator 
Lott, as well as Senator Grassley, and other Republicans.
  Then in June of 1992, by a voice vote--and it passed--we had an 
increase in the unemployment compensation. Then the conference came 
back, and the vote was 93 to 3. That was in 1992.
  Then in 1993, the vote was 79 to 20.
  What is it about the Republican leadership that they are opposed to 
this program now? That is what these workers are asking. Not only the 
hundreds of thousands of workers who lost their jobs prior to September 
11, but all those who have lost their jobs since that time, they say: 
You have done it before for workers. You have done it when we have 
needed it. Why aren't you willing to do it now? That is part of the 
challenge of the Democratic leadership to our Republican friends.
  We have listened to the ranking minority member of the Finance 
Committee who says: Well, we have supported it in the past. We will try 
to work something out.
  You can work it out right now by supporting this very modest 
proposal. And it is fairly easy to understand why this has been an 
important provision, why this is a responsible provision. The cost of 
this proposal: $14 billion. That is the unemployment proposal. At the 
present time, we have $38 billion in Federal unemployment insurance 
trust funds that have been paid on behalf of the employees. We are 
talking about taking $14 billion out of there. We have done it in the 
past.
  What is their resistance? What is their reluctance? Why aren't they 
willing to look after what is most important in a recession--the real 
people who are suffering, the workers who are suffering, men and women 
who want to go to work today and can't go to work because their jobs 
have been lost to them? Real people, real families. Those are the 
people we are caring about. The funds are sufficient, obviously, to 
take care of that. We have more than enough funds.
  Why is this important? As we have seen before, unemployment insurance 
is an ideal stimulus. It delivers the stimulus where and when it is 
needed. It provides $2.15 of positive impact to the GDP for every $1 
that is spent. That has been the history of it, according to the 
Department of Labor. And it has been relied on by the Congress, and the 
Senate, going back for a long period of time.
  Let's look at what is happening out there in the real world in terms 
of the levels of newly unemployed not seen since 1992. This chart I 
have in the Chamber, going from 250,000 to 550,000, shows what is 
happening in 2001. It shows the greatest increase, as I mentioned, of 
the number of unemployed workers going right up through the roof. It is 
virtually the highest we have seen in over 10 years. It is a real 
problem. The statistics show it. The families show it. We have the 
resources to be able to afford it. We have enacted that at other times 
in our history, and done it in a bipartisan way.
  Now look at the percentage of unemployed workers receiving 
unemployment benefits which has declined over the last 25 years.
  In 1975, 75 percent of those who were unemployed received 
unemployment insurance. And then, during the 1980s, the States squeezed 
back eligibility for workers who were unemployed. We have seen, as a 
result of that, that we are down now, with figures getting further and 
further from what they were in 1975. We are finding out that only 38 
percent of those workers are receiving the benefits now. We not only 
have to do something in order to extend unemployment compensation, but 
we also have to do something about the eligibility and who will be 
eligible for that program. The Democratic program does just that. It is 
one of the key important features.

  (Mr. TORRICELLI assumed the chair.)
  Mr. KENNEDY. This is what is happening out there. Low-wage workers 
are half as likely to receive unemployment benefits as other unemployed 
workers, even though low-wage workers are twice as likely to be 
unemployed. That is because of the change

[[Page S11704]]

of the rules and regulations in the States. Nationwide, they are twice 
as likely to be unemployed and they have half as much chance of getting 
any kind of coverage. In all but 13 States, unemployed workers seeking 
part-time work are not eligible for unemployment benefits. In all but 
12 States, most unemployed low-wage workers are not eligible for 
unemployment benefits.
  The Democratic plan ensures that more than 600,000 low-wage and part-
time workers will receive the benefits. These are men and women whose 
employers are paying into the fund now on their behalf. That is the 
extraordinary thing. These workers are being paid for in the fund at 
the present time, but they are not eligible because they have been 
effectively written out with the redrafting and changes of the 
unemployment laws in their respective States. There are only 13 States 
that even provide unemployment help and assistance for part-time 
workers--those workers who work 30 hours a week or less.
  What we have seen in the workforce is that there has been a very 
important transition to increasing what they call the temps, the part-
time workers. Seventy percent of those are women, because they want to 
go into the workforce, and sometimes to expand their families and then 
go back into the workforce. They may want to work a certain number of 
hours, and even though they are paying in under the unemployment 
compensation, they are being left out; but not under the Democratic 
program. That is very important.
  This chart shows that there are only 13 States that provide 
unemployment insurance for the part-time workers. This chart shows that 
only 12 States provide unemployment insurance for the low-wage workers. 
That is a dramatic difference from other times of recession we have 
seen.
  So this proposal--one very important aspect of it, the unemployment 
insurance--has been accepted by Republicans historically. The reason 
they have accepted it is that, as other distinguished economists and 
the CRS have pointed out, this program is truly a stimulus in terms of 
the economy. It is fair, temporary, and it works. It provides very 
important assistance to needy families.
  I want to take a minute--and I see others on the floor who wish to 
speak--on another major part of our program--that is with regard to 
health insurance, which is important. Many colleagues remember the 
debate we had on the Patients' Bill of Rights not long ago and what 
many of our colleagues on the other side of the aisle said:

       If we want to look at what the real problem is in America, 
     it is the 44 million people who do not have any health 
     insurance.

  That was Senator Santorum on June 20.

       If you have no insurance, the likelihood of getting good 
     health care in the United States is much less.

  That was Senator Frist.

       We will be using the health care coverage for seniors who 
     are taking arthritis medicines, men and women who are being 
     treated with chemotherapy or kidney dialysis, and families 
     waiting for loved ones to have bypass surgery. These are the 
     lives that will be disrupted, even devastated, as a direct 
     result of this bill. They are talking about the Patients' 
     Bill of Rights.

  Then Senator Hutchison said:

       The Kennedy-McCain bill ignores what I believe is the most 
     important patient protection, and that is affordable health 
     insurance.

  Well, Mr. Republican, your problems are solved because under the 
Democratic program we provide an effective extension of health 
insurance for those who had it in their previous employment and lost 
it, and for those who didn't have it but need it in terms of this 
recession. We have a lot of statements and comments about the 
importance of extending this. And, we are doing the job.
  Let me just review a couple of facts. The typical unemployment 
benefit is $925 per month. The health insurance costs are about $588 
per month, which is 63 percent of the unemployment benefit. Only 18 
percent of workers today, if they qualify for COBRA, are able to take 
advantage of it. It doesn't do very much for them. The Senate 
Democratic plan provides 75-percent premium assistance. CBO estimates 
this would cover 7.2 million workers.
  We listened to my friend from Iowa talk about what the Republicans 
were doing. Senate Republicans have an inadequate plan that at least 
would provide a family with 2 weeks of COBRA. Theirs is the $3 billion, 
which they say can be used for unemployment compensation, health 
insurance, and other kinds of activities in the States, leaving it up 
to the States. We heard that outlined, but the numbers weren't 
described. If they use it all for health to offset premiums, it will 
last for 2 weeks for COBRA. So when we recognize the difference, it is 
very real.
  The next chart demonstrates $925 a month as the average unemployment. 
In order to recover your COBRA, it is 65 percent of that. As a result, 
very few are able to do it. If we have the Democratic program, the 
amount that will be required will only be 16 percent. That will result 
in about 80 percent of all of those being covered.
  This chart shows who recovered. Nearly half of all workers are not 
eligible for COBRA, including workers in small businesses of fewer than 
20, workers in businesses that go out of business, individuals who buy 
individual coverage, those whose employers do not offer health 
insurance or cannot afford to take it up. They are excluded. What do we 
do? They need an affordable health option.
  We Democrats are proposing a new Medicaid State option to cover these 
workers. CBO has estimated that 2\1/2\ million workers will benefit 
from our plan. The Republican plan has no relief for these workers; 
zero will be included. The administration proposes to take funds from 
the CHIP program for these workers, to cover the workers they would 
like to cover, which is basically taking money that is guaranteed to 
the States, on which the States rely to provide coverage for uncovered 
children. It is effectively robbing Peter to pay Paul.
  On this chart, if you look at the categories on the Democratic and 
Republican packages:

       Guarantees workers help paying COBRA, who will have COBRA 
     but find difficulty in affording it.

  We would help the 7.2 million unemployed Americans. The Republican 
bill has no guarantee.

       Providing help for displaced workers.

  We provide 2\1/2\ million Americans with coverage. There is no such 
coverage under the Republicans.

       Provide the State fiscal relief by improving Federal 
     Medicaid payments.

  That is what they call an ``enhanced match,'' which has been so 
successful to get children. We provide that, and the best estimate at 
CBO is that 4 million will be covered.
  If one is concerned about health care, this is how it gets done. It 
is not just what we are saying; it is what the CRS and the CBO says. 
This is an effective program to deal with the health aspects of this 
proposal.
  If we are talking about something that is going to be temporary, if 
we are talking about something that is going to be stimulative, if we 
are talking about something that is fair, these aspects of the Finance 
Committee proposal meet all of those criteria. It will assist those who 
are impacted--working families. It will give them some lift. We have 
done that in a bipartisan way historically.
  We ask the question: Where are our Republican friends? Why are they 
not joining us as they did at other times? If you understand the 
importance of health care, this is the best way to do it. If they have 
a better way of doing it, I am sure our leadership and the Finance 
Committee will welcome that opportunity. This will ensure that workers 
who need health care for their families are going to be able to 
maintain their coverage, and the health industry, which is so important 
to our country, is going to prosper. This is limited to 1 year. It is a 
1-year stimulus program.
  The democratic plan helps ensure that States do not have to make 
budget cuts that would undermine any Federal stimulus. States have 
yearly balanced budget requirements and many are already looking at 
major budget cuts to meet those requirements. To help keep State 
economies strong, our plan freezes planned Federal Medicaid cuts and 
enhances the Medicaid matching rate by up to 3 percent for States that 
agree not to cut back on their coverage. This plan will provide 
immediate assistance to States and help assure they do not have to make 
budget cuts that put us deeper in recession.

[[Page S11705]]

  The Democratic plan is also a fair balance between tax incentives and 
spending incentives for the economy. The tax incentives in the plan 
meet the three essential criteria for a stimulus--they will put money 
into the economy now, they do not impose substantial new long-term 
costs on the federal budget, and they treat fairly those who are most 
in need.
  Seventy percent of Americans today pay more in payroll taxes than in 
income taxes. Yet many of them received no tax rebate earlier this 
year. The rebate unfairly ignored these low- and moderate-income 
families. A one-time rebate of payroll taxes to them now will 
immediately inject $15 billion into the economy, placing the dollars in 
the hands of people who are likely to spend them immediately. 
Economists tell us that families with modest incomes are likely to 
spend the extra money they receive right away on needed consumer goods. 
Those with higher incomes are more likely to save it.
  The Democratic bill also includes temporary, targeted tax cuts to 
stimulate immediate business activity. These changes provide more 
favorable treatment for new investments now, and they deserve to be 
supported.
  Because the tax cuts in the Democratic plan are truly designed to be 
an immediate economic stimulus, they do not incur any substantial cost 
beyond 2003. This point is vital to our economic recovery. Enacting new 
permanent tax cuts which can trigger large long-term Federal deficits 
would be counterproductive. Permanent new tax cuts--on top of the 
nearly $2 trillion in tax cuts enacted earlier this year--would 
actually hurt the economy now, by raising the cost of long-term 
borrowing and discouraging the kinds of investment we need most today.
  The House of Representatives passed, by the narrowest of margins, a 
so-called stimulus package that will not stimulate economic growth in 
the short term, and will not be affordable in the long term. It merely 
repackages old, unfair, permanent tax breaks which were rejected by 
Congress last spring under the new label of ``economic stimulus.'' The 
American people deserve better.
  The long-term cost of the House plan is too high, and less than half 
of the dollars would reach the economy next year. The House plan offers 
$46 billion in tax breaks to big businesses by permanently repealing 
the corporate alternative minimum tax and by giving permanent new tax 
cuts for multinational corporations. These provisions are an 
unacceptable giveaway of public resources.
  The alternative suggested by our Republican colleagues in the Senate 
is also flawed. Their proposal to accelerate the reduction of upper 
income tax rates would cost $120 billion over the next decade. Only a 
small percentage of these dollars--less than one dollar in four--would 
go into the economy in 2002. And these dollars would go to those least 
likely to spend them. The result would be little immediate stimulus, 
large long-term costs, and a grossly unfair distribution to the 
wealthiest individuals in our society.

  In fact, the House Republican proposal gives $115 billion in 
permanent new tax breaks to wealthy individuals and corporations, while 
the Senate plan would give them $142 billion in new tax breaks. Yet 
each of the Republican tax plans provide only $14 billion for low- and 
moderate-income families. Under the GOP plan, the tax cuts for 
corporations and wealthy individuals are permanent, while the cuts for 
working families are limited to just 1 year. The result is unfair, and 
it will not provide the economic stimulus that the Nation urgently 
needs now.
  Our Democratic alternative also includes key steps to make our 
country stronger and safer. It includes needed resources to fight 
bioterrorism and improve our ability to respond to an attack. It will 
help detect an attack by strengthening our public health system. It 
will help treat the victims of an attack by making sure that our 
hospitals and other health facilities are better prepared. It will 
expand pharmaceutical stockpiles and develop new treatments. We owe it 
to the American people to take these steps now, and we need this 
legislation to do that.
  Perhaps never before in history has our Nation faced such grave 
challenges. The tragedy of September 11 has touched us all. Together, 
we witnessed a horror we could not have imagined and bravery which 
inspires us all. The tragedy may have shaken our basic assumptions 
about the world in which we live, but Americans have not retreated in 
fear. Instead, they have risen to meet these new challenges. The spirit 
of September 11 has compelled vast numbers of our fellow citizens to 
ask what they can do for their communities and our country.
  It is time for Congress to do its part. We must respond to the 
economic crisis the Nation faces. As we do so, we must show our 
dedication to America's best ideals. As we fight for a safer society, 
we can also create a more just society at the same time. September 11 
has taught all Americans that we need to help each other as never 
before.
  We will not ignore the plight of millions of Americans hurt by this 
tragedy and by economic forces beyond their control. As we work 
together to get our economy moving again, we can also work together to 
see that none are left behind. We have a unique opportunity to give 
help and hope to every American as we enact a stimulus plan that puts 
America back to work.
  The American people are meeting this challenge, and we must 
demonstrate to them that Congress is capable of meeting it, too. The 
test we face now is to pass a stimulus package that truly lifts the 
economy, and lifts it fairly and responsibly. The American people are 
watching this debate closely, and they are waiting for our answer.
  I hope Americans who are paying attention to this debate understand 
the dramatic contrast between what has been suggested by our Republican 
friends and the proposal that has been advanced by our Finance 
Committee. Hopefully, we will gain their support.
  The PRESIDING OFFICER (Mr. Schumer). Who yields time?
  Mr. BAUCUS. Mr. President, I yield 15 minutes to the Senator from New 
Jersey.
  The PRESIDING OFFICER. The Senator from New Jersey is recognized.
  Mr. TORRICELLI. Mr. President, I thank the distinguished chairman of 
the Finance Committee for yielding the time, and I compliment him on 
his extraordinary leadership in bringing the Senate to this moment.
  It may well be that this Nation was headed towards an economic 
downturn before September 11. We may debate that fact, but there is no 
mistaking that every State in the Nation is now facing a dramatic 
change in economic circumstances.
  In October, the unemployment rate rose one-half point, to 5.4 percent 
of working Americans; 400,000 people lost their jobs, including 8,000 
in my State of New Jersey alone.
  As this has affected our families individually, the economic change 
has affected our States collectively. Thirty States are now clearly in 
a position of economic recession.
  The Senate is faced with two very different philosophies in dealing 
with this change of economic circumstances. The Senate Finance 
Committee, under Chairman Baucus leadership, has sought to address both 
the causes of the downturn and those most dramatically affected by the 
economic downturn.
  The bill, as Senator Kennedy has illustrated, provides 13 weeks of 
extended unemployment benefits. It makes many part-time workers 
eligible. These are the people on the front line of our economic 
difficulties, and rightfully and exclusively, this bill, among the 
alternatives before us, provides the most help to families who, through 
no fault of their own, now find themselves wanting for rent payments, 
mortgage payments, or tuitions, and only have the bridge of 
unemployment benefits to get them through the crisis.
  In New Jersey, this means 50,000 people will be able to continue 
their unemployment benefits or face the prospect of no help at all; 
11,000 part-time workers in New Jersey, the most vulnerable of the 
vulnerable, will be able to continue their benefits.
  The bill also addresses the reality that as people lose their jobs, 
their problems are compounded by the emergency situation of also losing 
health benefits. The legislation provides a 75-percent subsidy for 
laid-off workers to purchase COBRA insurance.
  As families are vulnerable, so are the States. The National 
Governors' Association projects State revenues to be $30 billion less 
than previously forecast. As we all know, as the States

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start to reduce their budgets to deal with the budgetary emergencies, 
the first to suffer will be education and health care.
  Twenty-nine States already face $600 million of projected reductions 
in what they will be able to provide in health care. The Baucus bill 
provides $5 billion directly to States through an increase in Medicaid 
matching funds.
  These provisions are all national in scope. They help every State in 
the Nation deal with this economic emergency, but, in fact, as acute as 
the situation is nationally, regionally it is the most severe. While 
all the Nation is in pain, it is most severe in those areas directly 
impacted by the terrorist attacks on September 11.
  It would be no surprise to anyone in the Senate to know the economic 
downturn is affecting the New York-New Jersey-Connecticut areas most 
directly. The attacks not only killed thousands of people, but for 
those left behind, those whom they loved and their neighbors, the 
economic impact is particularly acute. Prior to September 11, 300,000 
people worked in Lower Manhattan in the impact area. Since the attacks, 
125,000 people have been displaced; 19,000 have already left the city; 
35 million square feet of office space is currently unavailable.

  Indeed, in Battery Park City, home to thousands of New Yorkers in 
Lower Manhattan, only 30 percent of the tens of thousands of residents 
have returned to their homes.
  The simple truth is, as a matter of employment and residency, Lower 
Manhattan will never be the same without Federal assistance. This 
legislation dealing with the economic emergency in the Nation, as it 
deals with national unemployment, the national health care situation, 
the national need for stimulus, focuses in particular on the fact there 
is an acute economic emergency in Manhattan.
  The legislation that I offered with Senator Schumer and Senator 
Clinton contains $5 billion in economic assistance to New York. I make 
no apologies for offering this legislation. Almost unbelievably, I have 
read in the national media that somehow this constitutes some form of 
special interest legislation.
  The terrorists may have attacked buildings that were in New York, but 
this was an assault on America, on every American, and it tests our 
concept of national union whether when an individual city, State, or 
group of people are attacked, whether we respond as a city or State or 
we respond as a country.
  I may live in New Jersey, but on September 11 my country was 
attacked, and we should all respond as Americans.
  If there is a special interest contained in this legislation to deal 
with residency and employment, the economic stability and the 
reconstruction of New York, let us identify that special interest.
  The interest is, we are all Americans, we are all in this together, 
and we will respond together. That is the interest being tested.
  Now, indeed, the pain may be particular to New York, but it is shared 
with their neighbors whom I represent in the State of New Jersey. Two 
hundred thousand New Jersey residents are employed in Lower Manhattan, 
or they were employed, because 40 percent of the people who worked in 
the World Trade Center lived with their families in New Jersey. Fifteen 
thousand people lost their place of employment if they did not also 
lose their lives. Sixty-six thousand people from New Jersey commuted 
every day to Lower Manhattan on the PATH railroad system, all of which 
to Lower Manhattan is now in shambles.
  The $5 billion in tax incentives will apply to the 1.6-square-mile 
recovery zone around the World Trade Center. That is where people I 
represent worked every day. They lost their offices. Many lost their 
companies. Most lost their means of employment with which to feed their 
families and raise their children.
  Special interests? Very special. Keeping these people employed, their 
families alive and prosperous, that is our special interest.
  This $5 billion in tax incentives includes a $4,800 employee wage tax 
credit for existing and new hirers to try to keep employment stability 
in Lower Manhattan so a bad situation does not get worse; second, $10 
billion in private activity bonding authority to rebuild the real 
estate in the impacted zone; third, to encourage businesses to stay and 
reinvest in Lower Manhattan. The bill will allow the cost of 
replacement property to be deducted as a loss.
  There is no better symbol to the world of American resolve, our 
determination to survive, than to rebuild in this economic zone and to 
provide stability for employment in the impacted area. That is exactly 
what we intend to do.
  Then there is the question of the Nation's infrastructure. We are not 
responding properly to the recession, this economic emergency, if we 
provide for unemployment benefits, provide for health insurance, 
provide for the areas most acutely impacted, if we do not also do 
something about the national infrastructure.
  I yield to Senator Baucus.
  Mr. BAUCUS. I thank the Senator. Mr. President, I ask unanimous 
consent that the Senator from California be allowed to speak for 5 
minutes at the conclusion of the remarks of the Senator from New 
Jersey.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. TORRICELLI. This package is not complete if we deal with 
unemployment and health benefits and the impacted area of New York, but 
we do not also do something about the national infrastructure.
  The truth is this Nation had a severe infrastructure problem long 
before there was a recession. Thirty-three percent of the Nation's half 
million bridges are structurally deficient. Fourteen million children 
attend schools that are a decade or two beyond the needs of basic 
repairs. The time to do that work is when we have workers to do it.
  In 6 months or a year, as commercial construction activity in the 
Nation slows and people employed in the building trades add to the 
ranks of the unemployed, the one means of keeping them working is to do 
the work for the Nation that already needs to be done. Yet our 
Republican friends and even some in the media call this a special 
interest--pork.

  Can building a school for a child in a deficient structure ever be a 
needless expenditure? It may be safe for someone in some media outlet 
or someone who feels good about their own child to call building a 
school pork. To me, it is meeting a basic obligation.
  I have placed in this bill, and I make no apologies for it, a major 
national investment in national infrastructure to build high-speed rail 
lines. It is right and it is proper. As was demonstrated on September 
11, this Nation's transportation infrastructure is fragile. When it is 
interrupted, business stops, employment declines, and the Nation's 
economy suffers. This economic downturn is an opportunity, once again, 
to increase employment by modernizing our infrastructure, as we have 
done in almost every recession in the last 50 years.
  As the chart to my left illustrates, as we try now to provide duality 
in our national transportation infrastructure so the Nation is not 
entirely dependent on an aircraft system, this chart demonstrates how 
much each of these Federal Governments contributes to the construction 
of rail systems.
  In Germany, the government provides 21 percent; France, 20 percent; 
the United Kingdom, almost 18 percent; and the United States of 
America, .04 percent of our rail system is provided by the Federal 
Government. It is therefore no wonder the Nation is largely without a 
modern high-speed rail system outside of the Northeast corridor.
  The amendment I provide in this economic stimulus package provides $9 
billion in bonding authority which will be repaid by Amtrak. The 
Federal Government only pays the interest on these bonds. It would cost 
$4 billion to provide modern systems throughout the country, in the 
Southeast from Washington to Jacksonville, including Virginia, North 
and South Carolina and Georgia; a modern high-speed rail system from 
Orlando-Miami-Tampa; on the gulf coast, from Houston and New Orleans, 
eventually to Atlanta; and a Midwestern Express covering nine States.
  This is the moment. We need to employ people. Ridership is soaring. 
The demand is clear.
  The PRESIDING OFFICER. The Senator has consumed 15 minutes.

[[Page S11707]]

  Mr. TORRICELLI. I ask unanimous consent for an additional 5 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. TORRICELLI. This is the moment to build this high-speed rail 
system. It is in this legislation. It is identical to the legislation 
cosponsored by 56 Senators, including Senator Lott and Senator Daschle. 
Use this moment to build this system.
  The legislation also includes $2 billion toward the engineering and 
construction of a new Trans-Hudson tunnel between New York and New 
Jersey. This is vital. There has not been a rail tunnel built between 
New York, connecting it with the rest of the Nation, since 1920.
  The existing tunnels do not have escape mechanisms. They do not have 
adequate fire protection. They are old and they are slow. This 
legislation will immediately begin the engineering and then the funding 
of a new rail tunnel. So if in any future emergency or terrorist attack 
we lose the existing tunnels, there will be one safe, modern, fast 
tunnel to connect New York with the remainder of the Nation and allow 
in New Jersey an Amtrak for the rest of the country to expand the rail 
commuter network, which is now at capacity, to get more people out of 
their automobiles and onto trains, throughout suburban New Jersey, into 
Manhattan.

  Nothing would convince employers to remain in Manhattan longer and 
invest better than the knowledge there will be a rail network to get 
employees there in the decades ahead. Our constituents are giving us 
exactly that message. Ridership is up 45 percent from New Jersey to New 
York City since September 11. Amtrak now runs 21 trains per hour 
through the existing tunnel capacity. They need to get that rate to 45. 
This new tunnel can add 20 trains an hour. We can get people out of 
their cars. We can get them into safe trains. This legislation contains 
exactly that capacity.
  This is simply a good economic stimulus package. It is good in what 
it does to the unemployed. It is good in what it does for vulnerable 
families. It provides the proper public works to get people employed 
and keep them employed and make the national investments we need for 
the coming decades.
  I am proud of it. It is the right thing. It is good legislation. I 
thank Senator Baucus. I thank my colleagues for being responsive to New 
York, New Jersey, and the Connecticut region during this time of 
crisis. I urge my colleagues to support this legislation and to do so 
with pride.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from California is recognized for 
5 minutes.
  Mrs. BOXER. Seeing no one else on the floor, I ask unanimous consent 
for an additional 5 minutes for a total of 10 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mrs. BOXER. Mr. President, I have not spoken on the floor of the 
Senate in a long time. The issues have been coming fast and furiously 
toward us. Today I will discuss with my colleagues in the Senate the 
very important economic stimulus bill. Beyond that, before I turn to 
that bill, I will discuss what I consider to be the three most pressing 
matters to deal with, in addition to our normal appropriations work.
  One of those is certainly this economic stimulus package. The last 
economic data we had showed the greatest loss of jobs in 1 month for 21 
years. It has been 21 years since we have lost so many jobs in 1 month. 
We must take up this economic stimulus bill. We have been hit hard by 
the terrorists, and before that we were beginning to see a slowdown in 
our economy. The combination of the two is simply not acceptable.
  Another pressing need is aviation security. I say in no uncertain 
terms I cannot say what the President says to the American people: Get 
in those planes and fly. I want to say those words, and I will say 
those words when we have passed the laws we need to pass to make flying 
as safe as possible.
  We do not now screen and check all the bags that are in the 
underbelly of the planes. We don't check and screen the cargo for 
bombs. No, we do not. We do not have screeners who are a well-trained 
security force. We do not have air marshals on every flight. We do not 
have yet a secure cockpit always locked and not open during the flight.

  These are four basic measures we have learned are the key to aviation 
security. El Al, that runs the Israeli airline, has told us very 
clearly: There are no secrets; these are the things we have to do. When 
we do those things, I will look in the eyes of your constituent and 
mine, and I will say not what I am saying today, which is, yes, it is 
safer than it was on September 11; but I can look at them and say the 
skies are as safe as we can make them.
  To be a Pollyanna, to stand up and say, come fly with me--as the 
Frank Sinatra song goes--I cannot do it. I fly a lot. I am in the air a 
lot to do my work. As I said, I know we are safer than we were before 
September 11, but we are nowhere near where we should be. I call on the 
conferees to get moving. I call on the House Republican leaders to get 
off their ideological problems and understand the same old way of doing 
business with private security handling the bags is a failure.
  That is something we must do right away. We also need a package for 
homeland defense or homeland security. Senator Byrd has a wonderful, 
well-thought-out package which will become, I hope, part of the 
economic stimulus at a later time. It is modest in its approach but 
will allow us to vaccinate every man, woman, and child against smallpox 
and, God forbid if we have to, against anthrax, and develop the kind of 
work we need to prevent bioterrorism, protect our nuclear powerplants. 
Again, airport security, chemical plants, and we will give special 
grants to law enforcement, local and State, and rebuild our public 
health system so when we have a problem the local people, the first 
responders, will have the wherewithall to do what it takes.
  I am very happy that Senator Byrd will be doing this. It ought to 
become part of the stimulus package because not only do we need it for 
the defense of our country, but we also know those dollars will be 
spent and every one of those dollars will help provide jobs.
  That gets me to where we are right now, this economic stimulus 
package dealing with tax cuts. If you want to see the difference 
between Republicans and Democrats, if you are sitting at home and 
scratching your head and saying, aren't these guys and gals all alike, 
I say take a look at this package. What do the Republicans do, to the 
tune of more than $20 billion over 10 years? They give big dollars to 
those who have them--surprise. They give $1.4 billion to IBM. The last 
I checked, they earned $5.7 billion in the year 2000. The last I 
checked they were laying off people, not hiring people. Is that what we 
want to do, reward them for that?
  Ford Motor, a $1 billion refund check; their corporate profits were 
$9.4 billion. General Motors, $833 million? Their corporate profits in 
2000 were $2.9 billion. And, GE, a $671 million refund check. Their 
corporate profits were $9.3 billion.

  I do not know how to say this in a way that doesn't sound harsh, but 
in the nicest way I can say it, it is this. I believe you have said it 
in your way as well, Mr. President.
  For people to use the 9-11 tragedy, which you felt in your State--in 
your heart, with perhaps a few of you in this body more than any of 
us--to use 9-11 as an excuse to do something that these Republicans 
have wanted to do since the minute they took over control of the 
Congress, which is to reward their biggest contributors, is nothing 
less than unpatriotic. It is my feeling. It is how I feel. It is my 
opinion. It is not a fact. It is my opinion.
  Let my say it again. To use 9-11 as an excuse to pay back your 
biggest contributors--who are laying off people, by the way, and who 
are doing just fine, thank you very much--is a disgrace.
  If you want to see the difference in the parties, look at our tax 
cuts. They deal with ways to stimulate investment by businesses by 
giving a bonus depreciation to encourage investments in capital 
equipment, additional depreciation for small business, net operating 
loss carrybacks that will help companies that have done well in the 
last few years but not as well recently to get an immediate tax refund, 
and we propose giving tax rebates to those who were left out earlier 
this year.
  I know Republicans have that provision as well. But the lion's share 
of

[[Page S11708]]

what they do is this--and how about this--escalate the tax breaks so 
the wealthiest people among us get back $16,000 a year.
  That is not $16,000 over 10 years. That is $16,000 in a year. Those 
are the people earning over $1 million a year. Thank you--they are 
doing fine, and they are not going to spend the money.
  We had an interesting meeting with the former Treasury Secretary who 
presided over the greatest economic recovery our country has ever seen, 
Robert Rubin. He told us that those in that top bracket are not going 
to spend that money. They are spending everything they can spend.
  These corporations are not going to put anybody to work when they get 
their refund checks. These are the people who are slimming down, who 
are cutting back. So what kind of economic stimulus is the Republican 
plan? It is a giveaway to the wealthiest people at the expense of 
everybody else.
  And, might I add, it is a budget buster. It is a budget buster. When 
you look at the costs of the Grassley plan and the House plan, what are 
we looking at over the period? We are looking at about $170 billion 
over the period. When we look at our plan, even if you add on the 
homeland security, you are looking at about $60 billion over the 10-
year period.
  So they are bringing us right back into the deficit hole where they 
took us in the first place and it took a Democratic administration to 
get us out of that mess. Now they are putting us right back in the 
mess, deficits as far as the eye can see. To do what? Help the richest 
people in the country, the richest corporations.
  I remember the days when there wasn't an alternative minimum tax 
because I was over on the House side when we decided it was outrageous 
that the biggest corporations in the country were paying zero taxes. I 
remember that.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Mrs. BOXER. I ask for 5 additional minutes.
  The PRESIDING OFFICER. There are 4 minutes remaining before the 
debate on the nomination.
  Mrs. BOXER. I ask for 4 additional minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mrs. BOXER. Mr. President, I think you were in the House at that time 
as well, when we closed that terrible loophole and we made sure these 
companies, these companies that were popping champagne corks on tax day 
because they paid nothing in the defense of their country, paid nothing 
to educate one child, they paid nothing to give health care to one 
child, and we said that was wrong and we walked down the path and we 
put in a fair alternative minimum tax.
  Here they are, boys; they are back. They are back and they are trying 
to go back to those days when the largest corporations in America paid 
zero.
  Again, to use the 9-11 tragedy as an excuse to do this is beyond my 
ability to express. I usually don't have too much trouble, but this is 
horrific.
  Let's not go back to those days in the 1980s. I will give an example. 
Senator Robert Byrd told a story about a woman in Milwaukee, the mother 
of three children, who in 1983 earned $12,000. On that income, she paid 
more taxes than Boeing, GE, DuPont, and Texaco put together. Welcome 
back to those days, if you go with that House plan.
  Senator Grassley just does away with this prospectively. The House 
gives them a rebate for the past. He doesn't do that, but he does away 
with it for the future. So I will be able to stand up here, if he 
prevails, and say the same thing next year: A woman earning $12,000 
paid more in taxes than all these corporations together. I do not want 
to go there.
  Here is the bottom line. We have the best economist in the world 
telling us the House plan and the Senate Republican bill will make 
things worse. That is Joseph Stiglitz, awarded the Nobel Prize in 
economics last month. He says the family earning $50,000 would get 
zero, but the Republican plan would give $50,000 over 4 years to 
families making $4 million a year.
  What are we doing? This is a time we need to get money into this 
economy. We need to jump-start this economy. It started to go down when 
President Bush came in. With 9-11, it has gone straight this way. We 
better do something that gets it going.
  So we have a lot of work to do. I can only hope the American people 
will weigh in, in this debate, and understand the average American with 
the Republican plan gets nothing, gets big deficits again that will 
fall on their children, and the big corporations and the most wealthy 
among us will be ready to pop their champagne corks.
  That is not fair. It is not just. It is not what 9-11 was all about. 
I hope we can stop it, come together, and have a fair plan for all 
Americans.
  I yield the floor.
  The PRESIDING OFFICER. The Chair thanks the Senator from California.

                          ____________________