[Congressional Record Volume 148, Number 3 (Friday, January 25, 2002)]
[Senate]
[Pages S128-S131]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    HOPE FOR CHILDREN ACT--Continued


                           Amendment No. 2717

  Mr. NICKLES. I ask unanimous consent to set aside the pending 
amendment and send an amendment to the desk on behalf of Senator Bond, 
Senators Collins, Enzi, Allen, and Senator Nickles.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Oklahoma [Mr. Nickles], for Mr. Bond, for 
     himself, Ms. Collins, Mr. Enzi, Mr. Allen, and Mr. Nickles, 
     proposes an amendment to the language proposed to be stricken 
     by amendment No. 2698.

  Mr. NICKLES. Mr. President, I ask unanimous consent reading of the 
amendment be dispensed.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

 (Purpose: To amend the Internal Revenue Code of 1986 to provide for a 
    temporary increase in expensing under section 179 of such code)

       At the end, add the following:

     SEC. ____. TEMPORARY INCREASE IN EXPENSING UNDER SECTION 179.

       (a) In General.--The table contained in section 179(b)(1) 
     of the Internal Revenue Code of 1986 (relating to dollar 
     limitation) is amended to read as follows:

``If the taxable year begins in:              The applicable amount is:
      2001.....................................................$24,000 
      2002 or 2003.............................................$40,000 
      2004 or thereafter.....................................$25,000.''
       (b) Temporary Increase in Amount of Property Triggering 
     Phaseout of Maximum Benefit.--Paragraph (2) of section 179(b) 
     of the Internal Revenue Code of 1986 is amended by inserting 
     before the period ``($325,000 in the case of taxable years 
     beginning during 2002 or 2003)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

  Mr. NICKLES. Is there an amendment pending by Senator Allen?
  The PRESIDING OFFICER. There is no amendment at the desk; there is a 
submitted amendment from Senator Allen.
  Mr. NICKLES. Parliamentary inquiry: What is the number of that 
amendment?
  The PRESIDING OFFICER. It is 2702.
  Mr. NICKLES. Mr. President, I ask unanimous consent to set aside the 
pending amendment and ask consent to call up amendment No. 2702 on 
behalf of Senator Allen.
  The PRESIDING OFFICER. In my capacity as a Senator from Michigan, I 
object to that. I understand there is an objection.
  Mr. NICKLES. I ask unanimous consent this be the next Republican 
amendment filed in the normal course of business.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. NICKLES. I thank my friends and colleagues.
  The PRESIDING OFFICER. The Senator from Wyoming.
  Mr. ENZI. I rise to speak on the Bond-Collins amendment and give a 
little explanation of what has been submitted. I am sure most of the 
Members of this body will want to back an amendment that supports small 
business in the way that this particular amendment does. Senator Bond, 
of course, has worked extensively on it and is the ranking member on 
the Small Business Committee. Senator Collins has been involved in 
small business most of her life. I appreciate all the thought and 
effort that went into this amendment. It will provide an immediate 
economic stimulus and will provide a stimulus for small businesses in 
this country. The details of this are very limited to small business. 
However, it is an area that will help out immediately a wide range of 
businesses, and I will explain how that will happen.
  I appreciate this opportunity to talk about what our Nation and my 
State of Wyoming need in the way of an economic stimulus package. I 
will talk on a broader issue first and then get into the details of 
this particular amendment. While I have a degree in accounting, you 
don't need to be an accountant to know that something needs to be done 
to kick-start our economy. We ended Congress last year with a well-
crafted economic stimulus bill that had bipartisan support, which the 
House passed, and the President said he would sign. In short, it was a 
bill worked out over several months of tough negotiations involving the 
administration and congressional Democrats and Republicans. It included 
unemployment compensation and health insurance for unemployed workers. 
It included tax relief for hard-working individuals and families, and 
it included much needed help for America's small businesses.
  I was disappointed about the majority leader's refusal to schedule 
the bipartisan bill for a vote before the recess. Today, rather than 
having an opportunity to vote on that bill, we are suddenly faced with 
a vote on a totally new bill.

  The bill we are currently debating did not go through the normal 
congressional process. Instead, it was filed quickly. It was filed with 
little input from our Senate colleagues on either side of the aisle, 
and it was brought to the floor for purposes of a vote.

[[Page S129]]

  While we finally have an opportunity to vote on an economic stimulus 
bill, it is much like a patient needing emergency treatment. Our only 
choice is to patch it up. That is what we have been doing through an 
amendment process. When we work bills that do not come out of the 
congressional committee review, it takes longer. The reason it takes 
longer is because there has to be more consideration of amendments here 
that would normally be considered in a much easier process in 
committee. This is one of them.
  Today, we are arduously going through that process. I rise in favor 
of the Bond-Collins amendment which increases section 179 small 
business expensing. I support that because it is one of the many 
bandages that is needed to patch up the current proposal. If we are 
going to stimulate our economy, and I think we all want to do that, one 
of the main ways to do it is to help small businesses who are suffering 
from recession. If we can help them, we can create more jobs.
  Small business has been one of the successes of this country over the 
last decade. We have had a great economy. Throughout that time, though, 
there have been what I call the megamergers. The megamergers are when a 
big company merges with another big company to become a huge company. 
We find with the megamergers that shortly after that is done, there has 
been a downsizing, often referred to as a ``right sizing.'' If you are 
an employee who is affected by that, it means you get laid off.
  Fortunately, during this time of the megamergers, we have had small 
business. Notice the unemployment for almost a decade did not rise. It 
went down in spite of megamergers. What does that mean? It means small 
business was hiring up the people that were laid off from the 
megamergers. They picked up the slack in the economy. Through their 
innovation, drive, flexibility, their ability to react to the 
situations, they created the success we have had.
  Now, they are the part of the economy that can jump-start the 
economy, and this amendment is designed to jump-start that small 
business area. The Bond-Collins amendment contains a tax relief 
provision that is similar to the bipartisan House bill, which calls for 
an increase in Section 179 business expensing for small businesses. In 
short, it gives small businesses relief by increasing the amount of 
property a business can treat as an ordinary and necessary deductible 
business expense.
  Right now a business can deduct, or write off, up to $24,000 of the 
cost of business equipment or assets as an expense of doing business. 
This type of expensing allows businesses to take an immediate 
deduction, rather than treating their purchases as a capital 
expenditure.
  Let's see if I can put that a little bit more clearly. If you 
purchase something and it is in this capital expenditure category, that 
means that you are only able to count that as an expense in each of 
several years. You have to divide it over the period of years that the 
capital expenditure would be useful. If you buy a computer, and deduct 
is as a capital expenditure, you must write that off over 7 years. Now, 
computers get outdated much quicker than that, so you might be able to 
make an argument that it ought to be written off in a shorter period of 
time. But under this provision you could write it off as an expense in 
the initial year. You do not have to do all the division and all the 
complicated calculations that our depreciation system leads to.
  I have to tell you, the toughest thing in calculating taxes is if you 
have to figure depreciation. I know there are a lot of individuals as 
well as companies out there who understand that. We have changed the 
depreciation schedule so many times, we have changed the methods for 
doing depreciation so many times, that some people have to calculate 
depreciation on each item they have in several different ways. It is a 
big part of the Tax Code itself. It is very confusing. Probably one of 
the reasons a lot of people have to hire accountants to do their taxes 
is just to figure the depreciation section.
  For a small business, what Section 179 allows them to do is to count 
their purchased business asset as a normal business expense rather than 
trying to figure out which depreciation table applies and then making 
them apply that formula and keep track of what part has been written 
off and what part has not been written off for a period of years. I 
think you are getting the idea of how complicated this depreciation 
thing is. I want to tell you when you actually get to calculating it, 
it is a lot more complicated than what I have been talking about here.
  But if you can call it a business expense, that means you get to 
write it off in that initial year. You have the revenue that comes in 
and you get to subtract the expenses. That winds up with a net figure 
that you pay taxes on. So, if you get to write off more as an expense, 
rather than dragging it out over a period of years and trying to 
remember to calculate and recalculate all of this, then in this first 
year, you will have more revenue because you will have less taxes. That 
is why this becomes a very important jump-start to our economy.
  Right now, if you have $24,000 worth of those purchases, you can 
write them off. But if you go over that, you have to keep track of it 
and do all the calculations. So this amendment, the Bond-Collins 
amendment, would give immediate relief and is preferable to treating 
such purchases as capital expenditures where the business purchases 
must be deducted over a long period of time to reflect an asset's 
useful life.
  Even calculating useful life can be difficult. There are a whole set 
of principles set out in the Tax Code that help you to determine 
``useful life,'' but the easy part is writing it off in the year you 
purchase it. Direct expensing allows small business to avoid the 
complexities of depreciation rules and the depreciation, so to speak, 
is immediate rather than over the life of the asset.

  The Bond-Collins amendment would increase the amount of small 
business expensing from $24,000 to $40,000 for 2 years. What does this 
mean? It means small business would have an additional $16,000 in 
business asset costs that they can deduct, above and beyond the $24,000 
that they can currently deduct, and they can deduct that expense 
immediately.
  That doesn't all become a tax break. The only part that becomes a tax 
break is the remainder, the revenue less this expense. The remainder 
will be smaller and the remainder gets taxed. So there still is a tax 
implication to the whole thing.
  We are not talking about the $24,000 or the $40,000 increase as being 
a tax write-off. It is a tax deduction, so it is a reduction in 
revenue. It is a very difficult concept, but it will only reduce the 
$16,000 of additional expenditure; that would actually be a tax saving 
of whatever they are taxed on the $16,000.
  But it is an immediate encouragement for the companies to purchase 
things that they need, and they only get to write them off if they buy 
them. They don't get to write them off if it is history. They don't get 
to write them off if it is a thought in the future. They only get to 
write it off if they go out and buy the equipment now. It is not 
everything they buy because vehicles are excluded and computer software 
is excluded. Computers are allowed. I will go into some other examples 
of some things that could be written off.
  I also want to point out, though, that when small businesses go out 
and make this expenditure, this is an expenditure in the private 
sector. One of the things that the economic report shows is that an 
expenditure in the private sector revolves money purchases around about 
seven times. One business buys something, the business that sold it to 
them receives the money, the business that sold it to them turns it 
around and spends it at another company, who takes it and spends it at 
another company who spends it. I think you get the idea. The money 
revolves seven times.
  We can get expenditures, too, by having the government just run out 
and buy things. But here is a very important point: Private sector 
expenditures revolve seven times; government expenditures, twice. So 
that increase of $16,000 is considerably more effective in the private 
sector than it is if we are spending it on government projects. Keep 
that in mind. That is what this particular bill does.
  Farmers can deduct up to $40,000 of the cost of a much-needed piece 
of farm equipment, such as a hay baler. Ranchers have an additional tax 
deduction for the expense of their electric pump used to water their 
cattle. The local

[[Page S130]]

auto repair shop can deduct the cost of a much-needed welding machine 
or painting equipment. The local florist or dry cleaner can buy the 
computerized cash register it needs. The local barber shop maybe can 
deduct the cost of a new chair. It is a stimulus to get them to go make 
the purchases they need now, to make their business operate and be more 
competitive now.
  Some folks will try to argue that this applies to big corporations, 
and we are trying to make the rich even richer. Not so. Remember this 
amendment only applies to small business.
  In the past, section 179 applies only to those small businesses with 
annual asset purchases up to $200,000. The Bond-Collins amendment will 
simply increase that amount for 2 years to asset purchases of $325,000. 
As a result, section 179 will still apply to small businesses, but will 
allow those small businesses to buy even more equipment up front and 
have the small business expensing of that equipment apply immediately.
  If they buy more than $325,000 worth of equipment in a year, they do 
not qualify for this. If they buy $325,000, they are still limited to 
expensing only $40,000 of that amount. It is a small business 
proposition.
  There are a lot of companies that are at the $24,000 mark that will 
jump to the $40,000 mark because of this incentive. That extra $16,000 
for thousands of companies across this country will cause other 
businesses to have a good year. They also will be stimulated to buy 
some extra equipment; and, it grows and grows.
  I support the Bond-Collins amendment because it gives small 
businesses more incentive to make investments in business assets or 
property immediately, causing an immediate, positive effect on our 
economy. With a business deduction of up to $40,000 and resulting 
increased purchases of business products from other businesses, many 
more businesses will have the money necessary to hire additional 
workers. In Wyoming, a $40,000 tax deduction can go a long way in 
providing wages for an additional or part-time worker.
  I should know. I owned a shoe store in Gillette, WY. Simply put, the 
less money I had to pay in taxes, the more money I had to invest in 
inventory, to maintain my building, and more importantly, to hire more 
people to take care of the customers. With additional small business 
expensing of $40,000, I could have bought that extra cash register I 
needed and with the tax money I saved, I could have hired an extra 
sales clerk to run it.
  I just spent a couple of weeks in Wyoming and walked down main street 
in places like Casper, Gillette, and Cheyenne, and smaller towns such 
as Sundance, Saratoga, and some that you have probably never heard of. 
Every business in Wyoming could use some relief. Many of these are 
small Mom and Pop businesses that don't want a ``hand-out,'' but could 
use a ``hand-up.'' The Bond-Collins amendment does just that.
  As a member of the Senate Small Business Committee and a small 
business owner for much of my life, I know we need the Bond-Collins 
amendment. Right now, the current economic stimulus bill we are 
discussing does not provide a small business expensing increase. Small 
businesses on Main Street America deserve more. Small businesses in 
this country have been the mainstay of our economy. In good and bad 
times, they have continued to stimulate our Nation's economy. We need 
to preserve this small business stimulus by providing this tax relief 
mechanism for small businesses.
  I think it is something that is appreciated across the aisle and 
across this building. I know on the other end of the building they have 
already passed this kind of stimulus. A small, short amendment like 
this doesn't appear to be much, but I think it will make a huge 
difference because things start in small business and they grow. We 
don't give them enough credit. But that is how it works.
  For these reasons, I support the Bond-Collins amendment covering 
small business expensing. I hope we can come together and resolve to 
pass an amendment that helps America's mainstay, the small businesses.
  I think this amendment will make a huge difference. It will make it 
immediately. It will grow in size more than is anticipated by anything 
else in the stimulus package. I hope my colleagues will take a careful 
and close look at this amendment, see the value of it, and join me in 
supporting it.
  Thank you, Mr. President. I yield the floor. I suggest the absence of 
a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. REID. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                Amendment No. 2718 to Amendment No. 2698

 (Purpose: To amend the Internal Revenue Code of 1986 to provide for a 
  special depreciation allowance for certain property acquired after 
             December 31, 2001, and before January 1, 2004)

  Mr. REID. Mr. President, I send an amendment to the desk on behalf of 
Senator Max Baucus.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Nevada [Mr. Reid], for Mr. Baucus, Mr. 
     Torricelli, and Mr. Bayh, proposes an amendment numbered 2718 
     to amendment No. 2698.

  Mr. REID. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The amendment is printed in today's Record under ``Amendments 
Submitted.'')
  Mr. REID. Mr. President, I ask unanimous consent that the amendment 
be set aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                Amendment No. 2719 to Amendment No. 2698

  Mr. REID. Mr. President, we have an agreement with the minority that 
we will alternate amendments. This would be the next Democratic 
amendment if the Republicans decide to offer an amendment.
  I send an amendment to the desk on behalf of Senator Tom Harkin.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Nevada [Mr. Reid], for Mr. Harkin, 
     proposes an amendment numbered 2719 to amendment No. 2698.

  Mr. REID. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

 (Purpose: To provide for a temporary increase in the Federal medical 
  assistance percentage for the medicaid program for fiscal year 2002)

       Strike section 301 and insert the following:

     SEC. 301. 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 3 Percentage Points Increase.--Notwithstanding 
     any other provision of law, but subject to subsections (e) 
     and (f), 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 3 percentage points.
       (c) Further Increase for States With High Unemployment 
     Rates.--
       (1) In general.--Notwithstanding any other provision of 
     law, but subject to subsections (e) and (f), 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.--
       (A) In general.--For purposes of this subsection, a State 
     is a high unemployment State for a calendar quarter if, for 
     any 3 consecutive month period beginning on or after June 
     2001 and ending with the second month before the beginning of 
     the calendar quarter, the State has an average seasonally 
     adjusted unemployment rate that exceeds the average weighted 
     unemployment rate during such period. Such unemployment rates 
     for such months shall be determined based on publications of 
     the Bureau of Labor Statistics of the Department of Labor.
       (B) Average weighted unemployment rate defined.--For 
     purposes of subparagraph (A), the ``average weighted 
     unemployment rate'' for a period is--
       (i) the sum of the seasonally adjusted number of unemployed 
     civilians in each State

[[Page S131]]

     and the District of Columbia for the period; divided by
       (ii) the sum of the civilian labor force in each State and 
     the District of Columbia for the period.
       (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 6 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.
       (g) Definitions.--In this section:
       (1) 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)).
       (2) 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.).
       (h) Implementation for Remainder of Fiscal Year 2002.--The 
     Secretary of Health and Human Services shall increase 
     payments to States under title XIX for the second, third, and 
     fourth calendar quarters of fiscal year 2002 to take into 
     account the increases in the FMAP provided for in this 
     section for fiscal year 2002 (including the first quarter of 
     such fiscal year).

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