Congressional Record, Volume 147 Issue 156 (Tuesday, November 13, 2001)

[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

[[Page S11706]]

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.

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