[Congressional Record Volume 147, Number 156 (Tuesday, November 13, 2001)]
[Senate]
[Pages S11720-S11726]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. BROWNBACK:
  S. 1675. A bill to authorize the President to reduce or suspend 
duties on textiles and textile products made in Pakistan until December 
31, 2004; to the Committee on Finance.
  Mr. BROWNBACK. Madam President, today I rise to introduce the 
Pakistan Emergency Economic Development and Trade Support Act. This 
legislation will provide the President with the authority to reduce or 
suspend any existing duty on imports of textiles and textile products 
that are produced or manufactured in Pakistan. This Act is vitally 
important to shore up the economic strength of our strategic ally, 
Pakistan, so central to our Nation's ability to continue to prosecute 
the war against terrorism.
  Currently, Pakistan is providing invaluable basing rights and 
intelligence assistance to the United States as we continue to degrade 
and dismantle the Taliban regime in Afghanistan. Taking this action 
against the Taliban is crucial if we are to successfully locate and 
destroy Osama bin Laden's al Qaeda terrorist network, which the Taliban 
is currently harboring within Afghanistan's borders. Al Qaeda continues 
to represent public enemy number one in the war against terrorism.
  Pakistan's bold stand against terror alongside the United States is 
not made in a vacuum. There are very real economic and social 
consequences in Pakistan for assisting the United States in our war 
effort, and it would be a failure of United States foreign policy not 
to pursue the means of assisting our ally in its time of need.
  Textiles and textile products are Pakistan's main export. As a result 
of the war effort, invaluable orders for textile products made and 
exported by Pakistan have been canceled due to perceived instability in 
the region and a lack of confidence that such orders will ultimately be 
delivered. According to the Pakistan Textile and Apparel Group, 
Pakistan has witnessed a 64 percent reduction in orders for clothes 
that would be made from December through February by the 14 largest 
apparel factories in Lahore, Karachi, and Faisalabad. As a result, 
employment in these factories has dropped 32 percent from a year ago. 
The Pakistani government has estimated the overall decline in orders at 
40 percent. This has very real consequences for the future of Pakistan, 
its stability, and its ability to forge a future of economic prosperity 
for its people.
  As we are all aware, a small yet very vocal fundamentalist Islamic 
minority within Pakistan which has spoken out against the Pakistani 
government's assistance to the U.S., has called for and implemented 
damaging general labor strikes, and has encouraged countless numbers of 
young Pakistanis to cross the border into Afghanistan to fight 
alongside the Taliban. A further weakened economy and increased 
unemployment, the clear results of a weak market for Pakistani textile 
exports, only adds to the influence of fundamentalists in Pakistan, by 
strengthening social and economic unrest on which fundamentalists prey.
  Currently, the Pakistani government is devoting much needed resources 
to innovative and existing human development programs inside the 
country. Pakistan is spending a full 2 percent of its gross domestic 
product, approximately $2 billion per year, on a program that combines 
improved primary education, basic health care, and skills training for 
income generating activities for the Pakistani people. Pakistan's 
efforts to utilize human development programs to lift up the Pakistani 
people are central to stemming the tide of fundamentalist elements in 
our ally. An already weakened economy, hampered by years of sanctions, 
combined with increased unemployment only serve to add to existing 
social dissatisfaction and civil unrest within Pakistan. This undercuts 
the valuable impact of human development on Pakistan, makes increasing 
these human development efforts far more difficult, and jeopardizes the 
long-term stability of our ally.
  As a weakened market for Pakistani textile exports ultimately renders 
human development programs within Pakistan less effective, especially 
the primary education element, young Pakistani's are faced with the 
prospect of no education and therefore no quality employment. An all-
to-frequent alternative to this prospect is for young Pakistani's to 
attend Madrasas, Islamic religious schools run by mullahs, where too 
often basic skills and primary education are supplanted by religious 
teachings used to indoctrinate young Pakistani's into following the 
perverted version of Islam followed by Osama bin Laden, al Qaeda, and 
the Taliban.
  I urge all of my colleagues to work with me to provide the President 
with authority to assist Pakistan in the textile market immediately. 
Such action is vitally important to the stability of our important 
ally, and victory in our Nation's war against terrorism. Failing to 
take quick action only strengthens our enemy.
                                 ______
                                 
      By Mr. KERRY:
  S. 1676. A bill to amend the Internal Revenue Code of 1986 to provide 
tax relief for small business, and for other purposes; to the Committee 
on Finance.
  Mr. KERRY. Madam President, today I am introducing a package of 
targeted, affordable tax relief provisions designed to help the 
Nation's small businesses during this time of economic distress. While 
the Finance Committee has recently reported a more general stimulus 
bill to the full Senate, that measure only contains a few items that 
will help small businesses, which are the lifeblood of our Nation's 
economy, creating the majority of new jobs. As the Chairman of the 
Senate Committee on Small Business and Entrepreneurship, I believe that 
I have an obligation

[[Page S11721]]

to do more for small businesses, and I hope that several of the 
provisions in my bill may be accepted by the Finance Committee's 
Chairman and Ranking Member as the stimulus bill nears Senate passage.
  As many of my colleagues are aware, I have also introduced an 
emergency small business relief bill, S. 1499, which would provide 
assistance to small business concerns adversely impacted by the 
terrorist attacks of September 11. That bill currently has 51 
cosponsors, including 15 Republicans. S. 1499 provides loan and 
investment assistance, as well as other programmatic relief, to small 
businesses impacted by the attacks, but it does not contain tax 
provisions. I am introducing this new bill today to complement what I 
have tried to accomplish with S. 1499. Given that my emergency bill has 
such widespread support, I plan on offering it as an amendment to the 
economic stimulus package when it reaches the Senate floor, and I hope 
that it will be added to the package before it reaches the President's 
desk. This important legislation has been held hostage to someone 
else's political agenda for too long one way or another, it's important 
that we pass it and achieve the agenda of small businesses hurting 
across this country.
  I have titled the bill that I am introducing today ``The Affordable 
Small Business Stimulus Act of 2001.'' Before outlining the contents of 
the bill, I want my colleagues to know why I have selected this 
``affordable'' approach.
  During this session of Congress, some in Congress have supported what 
I might call the ``kitchen sink'' approach. It includes everything on 
small business's tax wish list, often also including a number of items 
that do not directly relate to small business, such as a complete 
repeal of the individual Alternative Minimum Tax. As a result, that 
approach is very expensive, and not something that could be enacted 
today given the changed budgetary situation and the fact that we are at 
war.
  I call my bill an ``affordable'' stimulus package for small business 
because it is very targeted in the policies that it includes, and, as a 
result, it will spend our limited resources wisely. It does not include 
everything that I would like to do for small business on the tax side, 
but it includes enough to help stimulate this essential component of 
our economy. Moreover, the bill will help address the tax complexity 
that many small businesses face because it includes the Single Point 
Tax Filing Act that has passed the Senate on two previous occasions.
  Let me briefly explain the contents of my bill.
  First, as in other Senate proposals, my bill increases the expensing 
limitation for small businesses. My bill raises it to $35,000, and it 
increases the phase-out level, above which expensing is not allowed, to 
$350,000. The stimulus package that I recently voted for in the Finance 
Committee temporarily increased these amounts to $35,000 and $325,000, 
respectively. The increases in my bill, however, would be permanent, 
and both the $35,000 and $350,000 limits would be increased annually 
for inflation beginning in calendar year 2003.
  Second, my bill modifies and expands a provision that was signed into 
law in 1993 regarding new equity investments in small businesses' 
stock. Under my bill, new investments in companies with capitalization 
of up to $100 million at the time of investment will have a 75 percent 
capital gains exclusion if the investments are held at least three 
years. The exclusion for such investments will be 100 percent if they 
are made in a business involved in ``critical technologies,'' as 
defined by the Commerce Department, or in technologies related to 
transportation security, personal identification, anti-terrorism, 
pollution minimization, remediation, or waste management. The 100 
percent exclusion would also be allowed for investments in specialized 
small business investment companies, or SSBICs, which are private 
venture capital companies licensed by the SBA whose investments are 
made solely in disadvantaged small businesses. Both the 75 and 100 
percent exclusion levels would be available for investments made by 
both individuals and corporations. In addition, the rollover period for 
such investments would be increased from 60 days to 180 days. The 
provision passed in 1993 was too narrow, and I hope that this new, 
expanded capital gains treatment will help prompt new investments in 
small and entrepreneurial businesses.
  Third, my bill recognizes that the current depreciation schedules for 
high-tech equipment and software are out of date, given how quickly 
such items become obsolete in our fast-changing economy. My bill would 
reduce the recovery period for computers or peripheral equipment from 
five years to three, and for software from three years to two. This 
change would be permanent.
  Fourth, my bill would make the health insurance expenses of the self-
employed fully tax deductible. Under current law, 60 percent is 
deductible in 2001, 70 percent in 2002, and 100 percent in 2003. My 
bill would speed up the 100-percent deductibility to this year.
  Fifth, to simplify tax filing, my bill would include the Single Point 
Tax Filing Act. This section would simplify the tax filing process for 
employers by allowing the Internal Revenue Service and State agencies 
to combine, on one form, both State and Federal employment tax returns. 
This provision has been passed by the Senate twice before, but it has 
not yet become law. There is currently a demonstration project along 
these lines in Montana, which is working very well. I believe such 
authority should extend to all States.
  Sixth, my bill would extend the existing income averaging provisions 
to cover fishing as well as farming. In other words, the choice to 
average income from a farming trade or business under present law would 
be extended to cover income from the trade or business of fishing as 
well. Under my bill, a farmer or fisherman electing to average his or 
her income would owe the alternative minimum tax, AMT, only to the 
extent he or she would have owed AMT had averaging not been elected. 
This is an important change that will benefit not only people in my 
State, but also throughout New England and in other regions of the 
country where fishing is an important industry.
  Finally, my bill would modify the tax treatment of investments in 
debenture small business investment companies, or SBICs, so they are 
less likely to create unrelated business taxable income, UBTI, 
liability. The current tax treatment of money borrowed from the 
government by a debenture SBIC creates taxable income for an otherwise 
tax-exempt investor, which makes it almost impossible to raise capital 
from these investors. Free to choose, tax-exempt investors opt to 
invest in venture capital funds that do not create any UBTI liability. 
Therefore, my bill would assure that money borrowed from the government 
by an SBIC does not subject tax-exempt investors to UBTI. In so doing, 
the bill would encourage greater investment in SBICs, which provide 
critically needed venture capital to emerging small businesses. These 
venture capital funds are sorely needed in today's stalled economy.
  I believe that ``The Affordable Small Business Stimulus Act of 2001'' 
will provide a much-needed stimulus to small business in a way that we 
can afford. I look forward to working with the Chairman and Ranking 
Member of the Finance Committee to have some or all of its provisions 
enacted into law.
                                 ______
                                 
      By Mr. BINGAMAN (for himself and Ms. Collins):
  S. 1677. A bill to amend title I of the Employee Retirement Income 
Security Act of 1974 to create a safe harbor for retirement plan 
sponsors in the designation and monitoring of investment advisers for 
workers managing their retirement income assets; to the Committee on 
Health, Education, Labor, and Pensions.
  Mr. BINGAMAN. Madam President, I rise today to introduce legislation 
with my colleague from Maine, Senator Collins, that will significantly 
help employees get better advice on how to invest their 401(k) plans. 
The Independent Investment Advice Act of 2001 removes an existing 
impediment that prevents employers from offering this needed 
information to their employees. This legislation was carefully prepared 
with input and consultation with affected groups and interested 
stakeholders and is supported by the American Association of Retired 
Persons, AARP, the American Society of Pension Actuaries, ASPA, 
Committee on

[[Page S11722]]

Investment of Employee Benefit Assets, CIEBA, the Financial Planning 
Association, FPA, and the Small Business Council of America, SBCA.
  Over the past several years, the demand by 401(k) plan participants 
for individualized investment advice has been growing, yet less than a 
third of employers offer this service. Primarily, employers do not 
offer this invaluable resource due to concerns about being responsible 
and ultimately liable for the selection and monitoring of an investment 
adviser. In general, current law relieves employers of their liability 
for the actual investment decisions made by their employees in a 401(k) 
plan. It is therefore illogical to make employers liable for providing 
their employees with sound, independent investment advice when we have 
intentionally shifted the burden to employees to invest their 
retirement funds wisely. The creation of a safe harbor for offering 
qualified independent investment advisers will remove this 
inconsistency and facilitate the flow of reliable, informed advice to 
employees.
  The Independent Investment Advice Act of 2001 creates a safe harbor 
for plan sponsors by giving them clear guidance as to what is necessary 
to ensure that they will not have liability for the selection and 
monitoring of qualified investment advisers. Employers will be deemed 
to have satisfied their fiduciary responsibilities under ERISA with 
respect to the selection and monitoring of qualified investment 
advisers, provided they meet the following strict criteria.
  First, the employer must contract with qualified investment advisers. 
Entities such as Federal and most State registered investment advisers, 
banks and insurance companies will be deemed to be qualified providers 
of investment advice provided the individual actually offering the 
advice is a registered investment adviser, registered representative or 
a registered broker or dealer. The Secretary of Labor has the authority 
to expand this category for other comparably qualified entities and 
individuals.
  Next, the investment adviser must verify in writing that it has met 
several standards. The investment adviser must state that it is 
currently qualified as defined above and acknowledge that it is a 
fiduciary and as such, solely responsible for the information provided 
to the participants. The investment adviser must also review the plan 
documents, including investment options, and guarantee that the 
relationship with the investment adviser will not be in violation of 
any existing prohibited transaction rules under ERISA. It must also 
provide documentation that it has the necessary insurance coverage, as 
determined by the Secretary of Labor, for potential claims by plan 
participants.
  Finally, before hiring the investment adviser, the plan sponsor must 
review the verification as previously described from the investment 
advisor. It must also review the investment adviser's fee structure and 
contract. Finally, it must review the Uniform Application for 
Investment Registration as filed with SEC or comparable filing with the 
Department of Labor. After reviewing all of these documents, the 
adviser must determine that there is no material reason to not enter 
into a contract with the investment advisor. The plan sponsor has a 
continuous duty to investigate the investment adviser if information is 
brought to its attention questioning whether the adviser remains 
qualified or if a significant number of employees register complaints. 
Based on this review the plan sponsor must determine whether or not to 
continue using the investment adviser's services.
  I look forward to working with my colleagues on both sides of the 
aisle in advancing this legislation.
                                 ______
                                 
  By Mr. McCain (for himself, Mr. Allard, Mr. Lieberman, Ms. Snowe, Mr. 
Levin, Mr. Murkowski, Mr. Cleland, Mr. Inhofe, Ms. Landrieu, Mr. Burns, 
Mr. Durbin, Mr. Sessions, and Mr. DeWine):
  S. 1678. A bill to amend the Internal Revenue Code of 1986 to provide 
that a member of the uniformed services or the Foreign Service shall be 
treated as using a principal residence while away from home on 
qualified official extended duty in determining the exclusion of gain 
from the sale of such residence; to the Committee on Finance.
  Mr. McCAIN. Madam President, I, along with Senators Allard, 
Lieberman, Snowe, Levin, Murkowski, Cleland, Inhofe, Landrieu, Burns, 
Durbin, Sessions and DeWine are proud to sponsor this bill to allow 
members of the Uniformed and Foreign Services, who are deployed or are 
away on extended active duty, to qualify for the same tax relief on the 
profit generated when they sell their main residence as other 
Americans. I am pleased to announce that the Secretary of State greatly 
appreciates this legislation and the strong support of this measure by 
the senior uniformed military leadership, the 31-member associations of 
The Military Coalition, the American Foreign Service Association, and 
the American Bar Association. Despite such considerable support, I have 
heard that there are some lower ranking officials from the Office of 
Management and Budget that may have some minor concerns with this 
legislation but they have not conveyed their concerns to me or my staff 
directly.
  This bill will not create a new tax benefit. Let me say that again: 
this bill will not create a new tax benefit, it merely modifies current 
law to include the time members of the Uniformed and Foreign Services 
are away from home on active duty when calculating the number of years 
the homeowner has lived in their primary residence. In short, this bill 
is narrowly tailored to remedy a specific dilemma, it treats service 
members and foreign service officers fairly, by treating them like all 
other Americans.
  The Taxpayer Relief Act of 1997 delivered sweeping tax relief to 
millions of Americans through a wide variety of important tax changes 
that affect individuals, families, investors, and businesses. It was 
also one of the most complex tax laws enacted in recent history.
  As with any complex legislation, there are winners and losers. But in 
this instance, there are unintended losers: service members and Foreign 
Service Officers.
  The 1997 act gives taxpayers who sell their principal residence a 
much-needed tax break. Prior to the 1997 act, taxpayers received a one-
time exclusion on the profit they made when they sold their principal 
residence, but the taxpayer had to be at least 55 years old and live in 
the residence for 2 of the 5 years preceding the sale. This provision 
primarily benefitted elderly taxpayers, while not providing any relief 
to younger taxpayers and their families.
  Fortunately, the 1997 act addressed this issue. Under this law, 
taxpayers who sell their principal residence on or after May 7, 1997, 
are not taxed on the first $250,000 of profit from the sale; joint 
filers are not taxed on the first $500,000 of profit they make from 
selling their principal residence. The taxpayer must meet two 
requirements to qualify for this tax relief. The taxpayer must: one, 
own the home for at least 2 of the 5 years preceding the sale; and two, 
live in the home as their main home for at least 2 years of the last 5 
years.
  I applaud the bi-partisan cooperation that resulted in this much-
needed form of tax relief. The home sales provision sounds great and it 
is. Unfortunately, the second part of this eligibility test 
unintentionally and unfairly prohibits many of our men and women in the 
Armed Forces and Foreign services from qualifying for this beneficial 
tax relief.
  Constant travel across the U.S. and abroad is inherent in the 
military and Foreign Services. Nonetheless, some service members and 
Foreign Service Officers choose to purchase a home in a certain locale, 
even though they will not live there much of the time. Under the new 
law, if a service man does not have a spouse who resides in the house 
during his absence or the spouse is also in the military and also must 
travel, that service member will not qualify for the full benefit of 
the new home sales provision, because no one ``lives'' in the home for 
the required period of time. The law is prejudiced against dual-
military couples who are often away on active duty, because they would 
not qualify for the home sales exclusion because neither spouse 
``lives'' in the house for enough time to qualify for the exclusion.
  This bill simply remedies an inequality in the 1997 law. The bill 
amends the Internal Revenue Code so that service members and Foreign 
Service Officers

[[Page S11723]]

will be considered to be using their house as their main residence for 
any period that they are away on extended active duty. In short, active 
and reserve service members will be deemed to be using their house as 
their main home, even if they are stationed in Bosnia, the Persian 
Gulf, in the ``no man's land,'' commonly called the DMZ between North 
and South Korea, or anywhere else on active duty orders.
  In 1998 alone, the United States had approximately 37,000 men and 
women deployed to the Persian Gulf region, preparing to go into combat, 
if so ordered. There were also 8,000 American troops deployed in 
Bosnia, and another 70,000 U.S. military personnel deployed in support 
of other commitments worldwide. That is a total of 108,000 men and 
women deployed outside of the United States, away from their primary 
home, protecting and furthering the freedoms we Americans hold so dear. 
Today since the September 11 attacks on the United States we've asked 
over 100,000 service members to deploy abroad to seek out and destroy 
the terrorists and their supporting organizations responsible for this 
incomprehensible deed.
  The average American participates in our Nation's growth through home 
ownership. Appreciation in the value of a home because of our country's 
overall economic growth allows everyday Americans to participate in our 
country's prosperity. Fortunately, the Taxpayer Relief Act of 1997 
recognized this and provided this break to lessen the amount of tax 
most Americans will pay on the profit they make when they sell their 
homes.
  The 1997 home sale provision unintentionally discourages home 
ownership among members of the Uniformed and Foreign Services, which is 
bad fiscal policy. Home ownership has numerous benefits for communities 
and individual homeowners. Owning a home provides Americans with a 
sense of community and adds stability to our Nation's neighborhoods. 
Home ownership also generates valuable property taxes for our nation's 
communities.
  We also cannot afford to discourage military service by penalizing 
military personnel with higher taxes merely because they are doing 
their job. Military and Foreign service entails sacrifice, such as long 
periods of time away from friends and family and the constant threat of 
mobilization into hostile territory. We must not use the tax code to 
heap additional burdens upon our men and women in uniform.
  In my view, the way to decrease the likelihood of further inequities 
in the tax code, intentional or otherwise, is to adopt a fairer, 
flatter tax system that is far less complicated than our current 
system. But, in the meantime, we must insure that the tax code is as 
fair and equitable as possible.
  The Taxpayer Relief Act of 1997 was designed to provide sweeping tax 
relief to all Americans, including our men and women in uniform. It is 
true that there are winners and losers in any tax code, but this 
inequity was unintended. Enacting this narrowly-tailored remedy to 
grant equal tax relief to the members of our Uniformed Services 
restores fairness and consistency to our increasingly complex tax code.
  I request unanimous consent that my statement and the letters of 
support be printed in the Record and that the full text of the 
legislation that I have introduced be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1678

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Military Homeowners Equity 
     Act''.

     SEC. 2. MEMBER OF UNIFORMED SERVICE AND FOREIGN SERVICE 
                   TREATED AS USING PRINCIPAL RESIDENCE WHILE AWAY 
                   FROM HOME ON QUALIFIED OFFICIAL EXTENDED DUTY 
                   IN DETERMINING EXCLUSION OF GAIN ON SALE OF 
                   SUCH RESIDENCE.

       (a) In General.--Section 121(d) of the Internal Revenue 
     Code of 1986 (relating to special rules) is amended by adding 
     at the end the following:
       ``(9) Determination of use during periods of qualified 
     official extended duty with uniformed service or foreign 
     service.--
       ``(A) In general.--A taxpayer shall be treated as using 
     property as a principal residence during any period--
       ``(i) the taxpayer owns such property, and
       ``(ii) the taxpayer (or the taxpayer's spouse) is serving 
     on qualified official extended duty as a member of a 
     uniformed service or of the Foreign Service,

     but only if the taxpayer owned and used the property as a 
     principal residence for any period before the period of 
     qualified official extended duty.
       ``(B) Qualified official extended duty.--For purposes of 
     this paragraph--
       ``(i) In general.--The term `qualified official extended 
     duty' means any period of extended duty during which the 
     member of a uniformed service or the Foreign Service is under 
     a call or order compelling such duty at a duty station which 
     is a least 50 miles from the property described in 
     subparagraph (A) or compelling residence in Government 
     furnished quarters while on such duty.
       ``(ii) Extended duty.--The term `extended duty' means any 
     period of active duty pursuant to a call or order to such 
     duty for a period in excess of 90 days or for an indefinite 
     period.
       ``(C) Definitions.--For purposes of this paragraph--
       ``(i) Uniformed service.--The term `uniformed service' has 
     the meaning given such term by section 101(a)(5) of title 10, 
     United States Code.
       ``(ii) Foreign service of the united states.--The term 
     `member of the Foreign Service' has the meaning given the 
     term `member of the Service' by paragraph (1), (2), (3), (4), 
     or (5) of section 103 of the Foreign Service Act of 1980.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to sales or exchanges on or after the date of the 
     enactment of this Act.
                                  ____



                                       The Military Coalition,

                                 Alexandria, VA, November 6, 2001.
     Hon. John McCain,
     U.S. Senate,
     Washington, DC.
       Dear Senator McCain: The Military Coalition, a consortium 
     of nationally prominent uniformed services and veterans 
     organizations, representing more than 5.5 million members, 
     plus their families and survivors, is grateful to you for 
     introducing The Military Homeowners Equity Act--a bill that 
     would restore capital gains tax equity for military 
     homeowners.
       Your legislation is essential to correct a serious 
     oversight in the Taxpayer Relief Act of 1997, which 
     inadvertently penalizes servicemembers who are assigned away 
     from their principal residence for more than three years on 
     government orders. Very often, servicemembers keep their 
     homes while reassigned to overseas or elsewhere in the hopes 
     of returning to their residence. On occasions when this 
     proves impossible, and the home must be sold to permit 
     purchase of a new principal residence, servicemembers find 
     themselves subjected to substantial tax liabilities--all 
     because military orders kept them from occupying their 
     principal residence for at least two of the five years before 
     the sale.
       In 1999, both the House and Senate passed corrective 
     legislation (H.R. 865) as part of the Taxpayer Refund and 
     Relief Act of 1999, but the President vetoed this bill over 
     an unrelated issue. Your new bill will be important to 
     resurrect this fairness issue and allow servicemembers to 
     comply with government orders and leave home to serve their 
     country without risking a large capital gains tax liability.
       The Military Coalition pledges to work with you to seek 
     inclusion of your bill in the pending economic stimulus 
     package so military members can once again enjoy the same 
     capital gains tax relief already provided to all other 
     Americans.
           Sincerely,
                                           The Military Coalition.
       (Signed by representatives of the following organizations:)
         Air Force Association; Air Force Sergeants Association; 
           Army Aviation Assn. of America; Assn. of Military 
           Surgeons of the United States; Assn. of the US Army; 
           Commissioned Officers Assn. of the US Public Health 
           Service, Inc.; CWO & WO Assn. US Coast Guard; Enlisted 
           Association of the National Guard of the US; Fleet 
           Reserve Assn.; Gold Star Wives of America, Inc.; Jewish 
           War Veterans of the USA; Marine Corps League; Marine 
           Corps Reserve Officers Assn.; Military Order of the 
           Purple Heart; National Guard Assn. of the US; Nat'l 
           Military Family Assn.
         National Order of Battlefield Commissions; Naval Enlisted 
           Reserve Assn.; Naval Reserve Assn.; Navy League of the 
           US; Non Commissioned Officers Assn. of the United 
           States of America; Reserve Officers Assn.; Society of 
           Medical Consultants to the Armed Forces; The Military 
           Chaplains Assn. of the USA; The Retired Enlisted Assn.; 
           The Retired Officers Assn.; United Armed Forces Assn.; 
           USCG Chief Petty Officers Assn.; US Army Warrant 
           Officers Assn.; Veterans of Foreign Wars of the US; 
           Veterans' Widows International Network, Inc.

[[Page S11724]]

           
                                  ____
                                                  American Foreign


                                          Service Association,

                                 Washington, DC, November 5, 2001.
     Hon. John McCain,
     Senate Russell Building,
     Washington, DC.
       Dear Senator McCain: On behalf of the 23,000 active-duty 
     and retired members of the Foreign Service which the American 
     Foreign Service Association (AFSA) represents, thank you for 
     your leadership and support with your soon-to-be-introduced 
     bill extending to the Uniformed Services and the Foreign 
     Service the tax treatment enjoyed by all other Americans when 
     they sell their principal residence.
       As you know this is an important active-duty issue for both 
     the Uniformed Services and the Foreign Service. Your bill, 
     amending section 121(d) of the Internal Revenue Code of 1986, 
     addresses an inequity faced by our members because of the 
     particular nature of our profession. As you are well aware, 
     our careers require us to live for years at a time away from 
     our homes in duty posts around the world in service to our 
     nation. In the case of the Foreign Service, our duty 
     assignments range from 2-4 years. Back-to-back assignments 
     abroad are common. It is not unusual for a member of the 
     Foreign Service to spend six or more years abroad before 
     returning to Washington for an assignment here. With the 
     current two-in-five year occupancy test, many of our members 
     in both the Uniformed Services and the Foreign Service find 
     that we do not have the same flexibility in selling our homes 
     as enjoyed by our fellow Americans. After several years 
     abroad, there are many reasons why we may wish to sell our 
     homes upon returning home. As with other Americans, we would 
     like our homes to reflect and be suited to the changes in our 
     lives--the increase or decrease in the size of our families, 
     divorce, retirement, promotions and the ability to pay more 
     for a house, the schools our children would attend, etc. Yet 
     because of current law, we cannot sell our principal 
     residences without living in them again for two years or else 
     pay a serious tax penalty. Your bill, gratefully, addresses 
     these problems.
       The members of the Uniformed Services and the Foreign 
     Service have been faced with this problem since the change in 
     the tax code in 1997. We hope that your provision can become 
     law soon. If we can be of any assistance, please do not 
     hesitate to contact me or Ken Nakamura, AFSA's Director of 
     Congressional Relations at (202) 944-5517 or by e-mail at 
     [email protected].
           Sincerely,
                                                   John K. Naland,
     President.
                                  ____

                                                 October 31, 2001.
     Hon. John McCain,
     U.S. Senate,
     Washington, DC.
       Dear Senator McCain: Your efforts to improve the quality of 
     service enjoyed by our Navy-Marine Corps team are greatly 
     appreciated. I would like to extend my support for the 
     legislation that you intend to introduce to correct the tax 
     disadvantage created by The Tax Reform Act of 1997.
       The Marine Corps has been tracking several intended to 
     correct this tax disadvantage. As you know, The Tax Reform 
     Act repealed certain portions of the existing law that 
     allowed military members to maintain the status quo with 
     other taxpayers for exclusion of capital gains. The Act 
     provided for an exclusion, obviously not intended to 
     disadvantage military service members or members of the 
     Foreign Service. In order to qualify, a taxpayer must ``own 
     and use'' the property for two of the five years preceding 
     the sale. Since our personnel seldom remain in one location 
     for over three years, it is difficult to qualify for the 
     exclusion.
       Please let me know if there is any way in which I can be of 
     assistance or service.
           Semper Fidelis,

                                                   J.L. Jones,

                                       General, U.S. Marine Corps,
     Commandant of the Marine Corps.
                                  ____

                                         American Bar Association,


                                  Governmental Affairs Office,

                                 Washington, DC, November 7, 2001.
     Hon. John M. McCain,
     Russell Senate Office Building,
     Washington, DC.
       Dear Senator McCain: On behalf of the American Bar 
     Association, I would like to commend you for your leadership 
     in developing a proposal on the issue of the military 
     homeowners capital gains exemption. Such legislation is 
     needed to correct an inequity that occurred as a result of 
     the Taxpayer Relief Act of 1997 (Public Law No: 105-34).
       As you know, Section 121 of the Internal Revenue Code 
     permits a single taxpayer to exclude up to $250,000 of the 
     capital gains on the sale of a principal residence and 
     permits a married couple filing jointly to exclude up to 
     $500,000 on such a sale. Yet in order to qualify for such an 
     exclusion, a taxpayer must have owned and used the home as a 
     principal residence for two out of the five years prior to 
     its sale. Otherwise, a taxpayer must pay taxes on all or a 
     pro rata share of the capital gains on the sale of the home.
       Unfortunately, this provision penalizes service members who 
     are unable to use a principal residence for two out of the 
     five years prior to its sale, because they are deployed 
     overseas or required to live in military housing. The ABA 
     urges Congress to amend Section 121 of the IRC to either: (1) 
     treat time spent away from a principal residence while away 
     from home on official active duty as counting towards the 
     ownership and use requirement, or (2) suspend the ownership 
     and use requirement for time spent away from a principal 
     residence due to official active duty. Earlier this year, the 
     ABA submitted comments to the Internal Revenue Service on 
     proposed regulations regarding Section 121. A copy of our 
     comments is enclosed for your review.
       We want to thank you for your plans to rectify the inequity 
     created for service members by Section 121. We look forward 
     to working with you to establish a military homeowners 
     capital gains exemption.
           Sincerely,
                                                  Robert D. Evans,
                                                         Director.

  Mr. ALLARD. Madam President, I want to thank Senator McCain for 
offering the ``Military Homeowner Equity Act'' and voice my full 
support as original sponsor. The bill provides tax equity to members of 
the uniformed services and the Foreign Service by permitting them to 
benefit from the capital gains tax exemption when they sell a principal 
residence, as other Americans enjoy. The bill does so by providing that 
absences from the principal residence due to serving on a qualified 
official extended duty as a member of a uniformed or Foreign Service of 
the United States be treated as using the residence in determining the 
exclusion of gain from the sale of such residence.
  This bill does not create a new benefit, it simply adjusts an 
oversight and brings fairness and equality to the Code by recognizing 
the unique circumstances of the members of the uniformed and Foreign 
Services. This proposed correction is not new to this Congress. The 
Taxpayer Refund and Relief Act, which passed both the House and Senate 
during the 106th Congress included provisions to correct this problem. 
Unfortunately, that bill was vetoed.
  The citizens of this country earned the many improvements made to the 
tax code in the Taxpayer Relief Act of 1997. Under this law, taxpayers 
who sell their residence are not taxed on the first $250,000 of profit 
from the sale, $500,000 for joint filers. This is a well deserved tax 
break that encourages and rewards home ownership. The taxpayer must 
meet two requirements to qualify for this relief. First, they must own 
the home for at least 2 of the last 5 years, and second they must live 
in the home for at least 2 of the last 5 years. It is the latter 
requirement that is not fair or equitable to our service members.
  The requirement for a taxpayer to have lived in a principal residence 
for 2 of the previous 5 years from the date of sale in order to take 
advantage of the full capital gains exclusion on the sale of a 
principal residence is difficult if not impossible for our career 
service members to meet. Unlike most Americans, career members of our 
military must, as a matter of law, serve throughout the world based on 
the needs of the nation. Our Foreign Service personnel, on average, 
spend more than 55 percent of their career abroad, for periods of 2 to 
4 years. Consecutive tours keep our uniformed and Foreign Service 
members away from a ``principal residence'' far beyond the 5-year test 
period required in the current tax law. The unique circumstances of our 
uniformed and Foreign Service members effectively exclude them from 
taking full advantage of the 1997 changes in the tax law if they wish 
to sell their home.
  Service members move at the direction of the U.S. Government. They 
pick up and move their families on a regular basis whenever the need of 
their service requires them to move. It may be possible for service 
members to purchase a home at some locations, but selling that home and 
purchasing another at the next location is often not possible. This 
happens when their new location is overseas, they are assigned to live 
in government housing, off-post housing is not available for sale, or 
home prices in the new area are simply not within their budget. Thus, 
frequently they are unable to meet the requirement to live in a house 2 
of the last 5 years preceding a sale.
  Additionally, our career service members need and want to sell their 
homes for all of the multitude of reasons that most Americans sell. 
They may have an increase or a decrease in the size of the family or 
want to change neighborhoods or schools. They may have the ability to 
afford more because of promotions or salary increases or it may simply 
be time to retire and leave the service. They should not be

[[Page S11725]]

penalized for their time away when buying and selling their home was 
impossible or impractical.
  The intent of the capital gains exclusion in the IRS code is to 
encourage home ownership by exempting capital gains taxes on the sale 
their home and allow more Americans to enjoy our country's prosperity. 
Again, the situation that career service members are in makes it 
difficult, or impossible, to follow this course of action. This bill 
remedies the situation. I urge my colleagues to join us in co-
sponsoring this legislation.
                                 ______
                                 
      By Mr. CONRAD:
  S. 1679. A bill to amend title XVIII of the Social Security Act to 
accelerate the reduction on the amount of beneficiary copayment 
liability for Medicare outpatient services; to the Committee on 
Finance.
  Mr. CONRAD. Madam President, today I am introducing the Medicare 
Beneficiary Liability Reduction Act. This legislation will help 
America's seniors better afford the costs of receiving needed medical 
services.
  As you may know, most seniors are required to pay a portion of the 
costs associated with medical care they receive under the Medicare 
program. In particular, Medicare Part B, which covers physician, 
laboratory, outpatient and other services, requires most beneficiaries 
to cover 20 percent of the cost of care they receive. However, there is 
an anomaly in the Medicare system that has required many beneficiaries 
to pay much more out-of-pocket for hospital outpatient department, 
HOPD, services. in particular, prior to 1997, many beneficiaries were 
required to pay more than 50 percent of the approved Medicare costs for 
hospital outpatient care. I am concerned that this situation made it 
difficult for lower income seniors to receive needed outpatient medical 
services.
  To address this problem, I am happy to say that the Congress included 
measures in the Balanced Budget Act of 1997 that sought to bring 
beneficiary cost sharing for HOPD care in line with the out-of-pocket 
requirements for other Medicare Part B services. Unfortunately, while 
this legislation was a step in the right direction, it will still take 
nearly 40 years of the cost sharing level to be reduced to the targeted 
level for some outpatient procedures. Clearly, this prolonged time lag 
is unacceptable.
  In subsequent years, I have supported additional measures to expedite 
the reduction in seniors' cost sharing liability by placing a limit on 
how much a senior can be charged in any given year and requiring that 
the coinsurance level be brought down to 40 percent by 2006. These were 
important achievements. The legislation I am introducing today takes 
the final step to bring seniors' copayment rates for HOPD services down 
to the desired 20 percent level.
  In particular, the Medicare Beneficiary Liability Reduction Act would 
continue to reduce HOPD cost-sharing requirements so that by 2010 and 
thereafter seniors would be required to pay no more than 20 percent of 
the allowable Medicare costs for HOPD care. I strongly believe that 
this legislation will help ensure our nation's seniors are not over-
burdened with unfair Medicare cost sharing requirements. I hope my 
colleagues will join me in supporting this important effort.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1679

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Medicare Beneficiary 
     Liability Reduction Act of 2001''.

     SEC. 2. ACCELERATING THE RATE OF REDUCTION OF BENEFICIARY 
                   COPAYMENT LIABILITY UNDER THE MEDICARE HOSPITAL 
                   OUTPATIENT DEPARTMENT PROSPECTIVE PAYMENT 
                   SYSTEM.

       Section 1833(t)(8)(C)(ii) of the Social Security Act (42 
     U.S.C. 1395l(t)(8)(C)(ii)) is amended--
       (1) in clause (v), by striking ``and thereafter''; and
       (2) by adding at the end the following new subclauses:

       ``(VI) For procedures performed in 2007, 35 percent.
       ``(VII) For procedures performed in 2008, 30 percent.
       ``(VIII) For procedures performed in 2009, 25 percent.
       ``(IX) For procedures performed in 2010 and thereafter, 20 
     percent.''.

                                 ______
                                 
      By Mr. WELLSTONE:
  S. 1680. A bill to amend the Soldiers' and Sailors' Civil Relief Act 
of 1940 to provide that duty of the National Guard mobilized by a State 
in support of Operation Enduring Freedom or otherwise at the request of 
the President shall qualify as military service under that Act; to the 
Committee on Veterans' Affairs.
  Mr. WELLSTONE. Madam President, I rise today to urge your support for 
amending the Soldiers' and Sailors' Civil Relief Act, SSCRA, to expand 
the protections of that Act to National Guard personnel protecting our 
Nation's airports and nuclear facilities. Specifically, this bill will 
provide civil relief to National Guard personnel mobilized by State 
governors in support of Operation Enduring Freedom, or who are 
otherwise called up at the request of the President.
  The SSCRA is an important Act that provides help to people who have 
taken on financial burdens without knowing they would be called up to 
serve in the military. Today those people are the men and women of our 
National Guard called-up to protect our nation's airports. Men and 
women of the National Guard serve the Nation and our States as a unique 
organization among all branches of the United States armed forces, the 
Guard is America's community based defense force, located in more than 
2,700 cities and towns throughout the Nation. Some 60 of these units 
are in my home state of Minnesota. National Guard members are integral 
members of their communities, they and their families live, shop, work, 
worship and go to schools in our cities and towns. It is this link 
between the community and its citizen-soldiers that makes the National 
Guard unique and so vital to our homeland security. It is imperative we 
give them the protections of the SSCRA they rightly deserve.
  I would like to take a moment to explain the protections offered by 
the SSCRA. Most people have debts or financial obligations of one kind 
or another, mortgages on family homes, debts related to buying cars, 
charge account debts from buying things with credit cards, or child-
support payments. The SSCRA does not wipe out any debts or other 
financial obligations of people who have been called up for active 
duty. But it does give them certain protections. A few of these are 
especially important because they affect a large number of people: 
Section 526 states that interest of no more than 6 percent a year can 
be charged by a lender on a debt which a person on active duty in 
military service incurred before he or she went on active duty. This is 
very important. The men and women of our National Guard are people like 
you and me, they've bought things on credit and have jobs that allow 
them to pay off that debt. But now, many have taken pay cuts to protect 
our airports. Capping interest on their debt is important to ensuring 
their financial security.
  Other sections of the SSCRA protect people from being evicted from 
rental property or from mortgaged property, against cancellation of 
life insurance, from having their property sold to pay taxes that are 
due; and from getting stuck in a lease, some Guardsmen may have 
recently rented a new apartment only to find their duty is going to 
send them far from their new property.
  Unfortunately, the SSCRA only applies to National Guard personnel 
mobilized directly by the President of the United States, and does not 
protect those mobilized by state governors at the request of the 
President, as is the case with those National Guard now protecting our 
airports. This distinction is inequitable and actually, makes no sense. 
Service performed by those mobilized by a governor at the request of 
the President face the same problems as those mobilized by the 
President directly. It is only right that they receive the same 
protections.
  Although the President is clearly authorized to mobilize the National 
Guard himself, on September 27 he instead requested State governors to 
mobilize their own National Guard personnel. He did so again last 
Friday. Under this type of mobilization the National Guard remains 
under the full operational control of the State, providing the 
necessary flexibility to deal

[[Page S11726]]

with security issues that are better handled at the State and local 
level. While National Guard mobilized in this manner receive the 
general benefits of active duty military personnel, such as VA Veterans 
status and Tricare family health insurance, they do not receive the 
additional benefit of civil relief under the SSCRA.
  In Minnesota, soldiers have received orders to provide protection at 
airports until as late as March 28, 2002. These soldiers are serving in 
a full-time status, six to seven days per week. While the Minnesota 
National Guard initially began providing security at the Minneapolis/
St. Paul, Duluth and Rochester airports, they were recently informed 
that they will provide security at five additional Minnesota airports. 
This means they will spend less time with their families and employers. 
Some of them face the real possibility of financial ruin due to their 
time away from work. They have mortgages and car payments, things they 
may have easily expected to be able to pay. Some have college debt and 
others child support payments. Many have taken pay cuts to leave their 
professions to come out and protect our airports, to protect us. We 
must act now to provide them the civil relief they rightly deserve. And 
we must be aware that National Guard units may soon be asked to secure 
other facilities such as power plants and water treatment facilities in 
the near future. Addressing these issues now will ease the burden 
placed upon these soldiers now and in the future.
  It is my belief that the SSCRA was never meant to purposely exclude 
National Guard mobilized in the manner they have been today, we simply 
could never have imagined the need for round-the-clock security at our 
airports when this Act was written. September 11 changed so many things 
for us. And it is time we change the SSCRA to ensure we provide 
benefits to protect those who are protecting us.

                          ____________________