[Congressional Record Volume 148, Number 4 (Monday, January 28, 2002)]
[Senate]
[Pages S168-S173]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    HOPE FOR CHILDREN ACT--Continued

  Mr. ALLARD. Mr. President, my understanding is that we are under 
regular business.
  The PRESIDING OFFICER. The Senator is correct.


                           Amendment No. 2722

  Mr. ALLARD. Mr. President, I ask unanimous consent to lay aside the 
pending amendment and call up amendment No. 2722, which is the Allard-
Hatch-Allen amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will report the amendment.
  The legislative clerk read as follows:

       The Senator from Colorado [Mr. Allard] for himself, Mr. 
     Hatch, and Mr. Allen, proposes an amendment numbered 2722 to 
     the language proposed to be stricken by amendment No. 2698.

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

  (Purpose: To amend the Internal Revenue Code of 1986 to permanently 
extend the research credit and to increase the rates of the alternative 
                          incremental credit)

       At the appropriate place, insert the following:

     SEC. __. PERMANENT EXTENSION OF RESEARCH 
                   CREDIT; INCREASE IN RATES OF ALTERNATIVE 
                   INCREMENTAL CREDIT.

       (a) Permanent Extension of Research Credit.--
       (1) In general.--Section 41 of the Internal Revenue Code of 
     1986 (relating to credit for increasing research activities) 
     is amended by striking subsection (h).
       (2) Conforming amendment.--Paragraph (1) of section 45C(b) 
     of such Code is amended by striking subparagraph (D).
       (3) Effective date.--The amendments made by this subsection 
     shall apply to amounts paid or incurred after the date of the 
     enactment of this Act.
       (b) Increase in Rates of Alternative Incremental Credit.--
       (1) In general.--Subparagraph (A) of section 41(c)(4) of 
     the Internal Revenue Code of 1986 (relating to election of 
     alternative incremental credit) is amended--
       (A) by striking ``2.65 percent'' and inserting ``3 
     percent'',
       (B) by striking ``3.2 percent'' and inserting ``4 
     percent'', and
       (C) by striking ``3.75 percent'' and inserting ``5 
     percent''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

  Mr. ALLARD. Mr. President, I ask unanimous consent Senator Warner be 
added as a cosponsor to the amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ALLARD. Mr. President, I am pleased to rise today to offer an 
amendment making the research and development tax credit permanent. I 
express my gratitude to Senator Hatch, the distinguished ranking member 
of the Judiciary Committee. Senator Hatch has been working on this 
issue for years, and I am grateful for the opportunity to join him in 
this continuing effort on this essential piece of legislation. I also 
express my thanks to Senator George Allen who has distinguished himself 
as the chairman of the High Tech Task Force.
  I am pleased to serve with Senator Allen on the task force, and I 
look forward to continuing to work with him as we address the many 
numerous technology issues that confront this Nation. Both of our 
States take a very active role in high tech. We have many businesses in 
both of our States--Virginia and Colorado--that rely on high tech in 
order to grow.
  As a member of the Senate High Tech Task Force, I have been fortunate 
to work with a number of my colleagues on an agenda that is both 
probusiness and proconsumer. We have focused on expanding the reach of 
Internet and broadband technologies, putting more computers in 
classrooms, more schools online dealing with cyber security issues in 
general relating to e-commerce, the spectrum, and intellectual property 
issues. None of these issues has the power to make as immediate an 
impact in the technology industry as a permanent extension of the 
research and development tax credit. It is altogether appropriate that 
we include this language in any stimulus bill to pass out of the 
Senate.
  A study by Coopers & Lybrand in 1998 showed that a permanent 
extension of the R&D tax credit would create nearly $58 billion in 
domestic economic growth through 2010.
  This is an astounding and immediate impact that affects virtually 
every American. Available solely for incremental research activities in 
the United States and Puerto Rico, approximately 75 percent of the R&D 
tax credit dollars pay for salaries of employees associated with 
research and development. These are high-skilled, high-paying American 
jobs.
  In an ever expanding global marketplace, it is important that 
American companies be able to compete abroad. It is also important that 
multinational firms see the United States as a welcome laboratory for 
research and development.
  Australia, Canada, Germany, Great Britain, and Japan all offer 
financial incentives to companies to perform research and development 
within their borders which lowers the cost of R&D and gives companies 
both a competitive advantage and an incentive to bring their resources 
and jobs to the marketplace where they can get the most bang for the 
buck. It is my hope that international research and development 
investors will recognize that the United States is just such a place.
  The R&D tax credit provides an effective incentive for companies to 
create valuable, skilled jobs. This is not just theory. The research 
and development tax credit was originally enacted in 1981 and has been 
extended 11 times.
  From 1995 through 1998, the innovation and economic growth in 
information technology alone was responsible for one-third of the real 
economic growth. Studies by the General Accounting Office, the Bureau 
of Labor Statistics, and others have documented the impact the research 
and development tax credit has on private research and development 
spending. One such study found that every dollar of tax benefit spurs 
an additional dollar in private research and development investment. 
This is to say nothing of the major economic benefits associated with 
increased productivity and efficiency that new technologies and 
products bring.
  And the benefits don't stop there. Investment in research and 
development has generated countless products and technological advances 
affecting every facet of American life.
  In 1866, American farmers could expect to yield 11.6 bushels of wheat 
per acre. Then, about 34 years later, in 1900, the expected yield was 
12.2 bushels, climbing to 16.5 bushels per acre in 1950. Today, thanks 
to advances in pesticides and crop genetics, that yield can reach well 
over 43 bushels per acre.
  Medical patients today benefit from a variety of wonder drugs and 
medical devices previously unimaginable. The hardware, software, and 
fiber that makes the Internet run, even the Internet itself, provide 
examples of what aggressive research and development can

[[Page S169]]

do. The benefits of investment in research and development in short 
makes our lives better.
  Every American has benefited from the giant leap forward in 
technology. Our standard of living is higher. Our quality of life is 
greater.
  I realize that many of my colleagues may ask why we must make this 
tax credit permanent rather than continuing to extend it annually 
semiannually. As a former small businessman, I know many of my 
colleagues can relate to this. A business must budget, look forward, 
and plan in order to get the highest use of their hard-earned dollars. 
This principle applies to all businesses, regardless of size, location, 
or the number of borders they cross in doing business.
  The process of ongoing renewal year to year means the research and 
development tax credit offers less value to the businesses and research 
initiatives we are seeking to support. Business and technology leaders 
look at multiyear projects often over 10 years down the road. When we 
look around today and take stock of the many goods and services today 
that did not exist 10 years ago, I believe we can agree that this kind 
of planning must be encouraged.

  I mentioned my experience as a small businessman. As my colleagues 
know, I ran my own veterinary hospital. Trained as a scientist, I 
continue to keep up on the latest developments in pharmaceuticals, 
treatment techniques, and chemistry. I would like to make one thing 
very clear today: That is, scientific development does not fit in 
calendar or fiscal years. It is not cyclical or situational. Science is 
an evolving, growing, expanding study. This vital process through which 
virtually all human endeavor can be traced is one that should not be 
inhibited by regular policy debates when the result is so clear.
  Research and development is the cornerstone of healthy industry and 
provides solutions to problems we may not even realize exist. 
Uncertainty can equate to less investment and undermines the entire 
purpose of the research and development tax credit.
  President Bush included permanent extension of the R&D tax credit in 
his initial tax relief plan. I was pleased to see that a majority of my 
colleagues supported this credit by voting 62 to 38 on the final tax 
package, which at that time included the permanent extension. It is my 
hope that we will be able to continue the momentum of last year's vote 
and seize this opportunity to state, in no uncertain terms, that the 
Senate recognizes the importance of this tax credit, the innovations it 
inspires, and the tangible impact it makes on the quality of life in 
America.
  A number of prominent trade organizations have organized the R&D 
credit coalition in an effort to support the Congress in passing this 
legislation. I ask unanimous consent to print a list of these 
organizations in the Record.
  There being no objection, the list was ordered to be printed in the 
Record, as follows:

              Association Members of R&D Credit Coalition

       (Listing from NAM/R&D Workbook)

     AeA (formerly American Electronics Association)
     Aerospace Industries Association (AIA)
     American Association of Engineering Societies
     American Council on Education
     American Institute of Aeronautics and Astronautics
     American Institute of Chemical Engineers
     American Society of Civil Engineers
     American Society of Engineering Education Engineering Deans 
         Council
     Automotive Parts Rebuilders Association
     Biotechnology Industry Organization
     Business Software Alliance
     Computing Technology Industry Association
     Electronic Industries Alliance
     Federation of Materials Societies
     Information Technology Association of America
     Information Technology Industry Council
     IPC, Association Connecting Electronics Industries
     Medical Device Manufacturers Association
     National Association of Manufacturers
     National Electric Manufacturers Association
     National Society of Professional Engineers
     North American Die Casting Association
     Pharmaceutical Research and Manufacturers of America
     Semiconductor Equipment and Materials International (SEMI)
     Semiconductor Industry Association
     Software & Information Industry Association (SIIA)
     Software Finance and Tax Executives Council
     Steel Manufacturers Association
     Technology Network
     Telecommunications Industry Association
     The Advanced Medical Technology Association (AdvaMed)
     The Tax Council
     U.S. Chamber of Commerce

  Mr. ALLARD. I also ask unanimous consent to print a number of 
letters, from the American Electronics Association, the Information 
Technology Industry Council, and the R&D Credit Coalition, regarding 
the importance of including this permanent R&D tax credit extension in 
the current stimulus bill.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                             American Electronics Association,

                                 Washington, DC, January 28, 2002.
       Dear Senator: On behalf of the high-tech industry, I write 
     to express AeA's strong support for the Allard/Hatch/Allen 
     amendment which calls for a permanent extension of the 
     research and development tax credit (R&D tax credit) along 
     with a modest increase in the Alternative Incremental 
     Research Credit (AIRC) rates. We believe that this amendment 
     would provide businesses the certainty to invest in 
     additional R&D and would stimulate the economy. Our industry 
     is unified in its support of such a measure.
       Please vote in support of the Allard/Hatch/Allen amendment 
     (SA 2772.) This amendment is identical to bipartisan 
     legislation, S. 41, sponsored by Senators Max Baucus and 
     Orrin Hatch and which currently has 53 Senate cosponsors.
       The many economic benefits of the R&D tax credit are well 
     documented. A permanent R&D credit would: Create additional 
     high-paying, high-skilled jobs in the United States; increase 
     productivity in the U.S. almost immediately; stimulate 
     additional R&D spending in the United States, ranging from 1 
     to 2 additional dollars for every dollar of foregone tax 
     revenue; and lower U.S. production costs and consumer prices.
       In times of uncertainty, companies are reluctant to invest 
     in long term projects, and therefore anything that provides 
     certainty will make it that much easier to commit resources 
     now to hire people to pursue long term research projects. The 
     current economic slowdown requires this kind of dramatic, 
     effective action by the Congress.
       AeA (American Electronics Association) is the nation's 
     largest high-tech trade association and is comprised of more 
     than 3,500 small, medium and large high-tech companies. 
     Passage of an economic stimulus package is very important to 
     the high-tech industry right now, and we hope the U.S. Senate 
     will act quickly to approve a stimulus package that includes 
     a permanent R&D tax credit extension.
           Sincerely,
                                                William T. Archey,
     President and CEO.
                                  ____

                                            Information Technology


                                             Industry Council,

                                 Washington, DC, January 28, 2002.
     Hon. Orrin G. Hatch,
     Hon. Wayne Allard,
     U.S. Senate, Washington, DC.
       Dear Gentlemen: The Information Technology Industry Council 
     (ITI) wishes to express our strong support for your amendment 
     to permanently extend the Research and Development (R&D) 
     credit and to increase the rates of the alternative 
     incremental credit. We commend you for your leadership on 
     such a critical issue to the U.S. economy.
       As the representative of the leading U.S. providers of 
     information technology (IT) products and services. ITI is 
     extremely proud of the critical role our member companies 
     have played in fueling the extraordinary growth in 
     productivity and job creation over the last decade. Much of 
     that growth was fueled by industry-funded investments in R&D.
       As you know, R&D is the lifeblood of the IT industry. It 
     has proven instrumental in helping America remain at the 
     forefront of technological development and innovation. While 
     we appreciate the fact that the credit has been extended many 
     times over the years, a permanent R&D tax credit will provide 
     a more predictable environment for sustaining our lead in 
     cutting-edge technology.
       The R&D credit has long enjoyed bipartisan support in both 
     houses of Congress. We hope the Senate will once again 
     demonstrate its commitment to U.S. technology by voting in 
     favor of your amendment.
           Sincerely,
                                                     Rhett Dawson,
     President.
                                  ____



                                         R&D Credit Coalition,

                                 Washington, DC, January 28, 2002.
     Hon. Wayne Allard,
     U.S. Senate,
       Dear Senator Allard: On behalf of the members of the R&D 
     Credit Coalition, we thank you for offering as an amendment 
     to the pending economic stimulus bill (S. 622) a permanent 
     extension of the research and experimentation tax credit (the 
     ``R&D credit'') with a modest increase in the Alternative 
     Incremental Research Credit (AIRC) rates.
       Private-sector research is vital to our national security 
     as well as to our economic resilience. In order to maximize 
     the potential for new and continued U.S.-based research, it 
     is important that companies be able to rely on the long-term 
     availability of the R&D

[[Page S170]]

     credit. This is especially true in periods of economic 
     uncertainty, when it is particularly difficult for companies 
     to commit to high cost, high-risk projects.
       The R&D tax credit encourages companies to create more 
     high-skilled, high-paying jobs, as well as increased economic 
     security and higher standards of living for American workers. 
     In addition, this credit enables companies to provide 
     increased jobs and salaries for engineers, researchers and 
     technicians. Just as important, however, are the additional 
     jobs created in manufacturing, administration and sales when 
     research yields new products taken to market.
       By making the commitment to U.S. based research permanent, 
     Congress is in the unique position to help stimulate 
     investments now in more long-term research projects in the 
     U.S.-providing both an immediate boost to the economy and a 
     stronger foundation for future economic growth through 
     productivity gains. We look forward to working with you to 
     see a permanent extension of the R&D credit with a modest 
     increase in the AIRC rates enacted into law this year.
           Sincerely,
         Bill Sample, Microsoft Corporation, Chairman, R&D Credit 
           Coalition; Donna Siss Gleason, The Boeing Company, Vice 
           Chair, R&D Credit Coalition; Kristin Paulson, United 
           Technologies Corporation, Cochair, R&D Credit 
           Coalition, Government Affairs Committee; Karen Myers, 
           EDS, Cochair, R&D Credit Coalition, Government Affairs 
           Committee; Caroline Graves Hurley, American Electronics 
           Association, Executive Secretary, R&D Credit Coalition.

  Mr. ALLARD. Mr. President, at one time or another, we have had 
various Members from the Senate state how important it is to encourage 
research and development in our country. In fact, the majority leader 
himself, Tom Daschle, on January 4, 2001, said:

       We should act to make the research and development tax 
     credit permanent; the sooner the better.

  And then majority leader Tom Daschle, on January 4, 2001, stated:

       . . . the R&D tax credit is one of the most effective 
     mechanisms to encourage innovation, increase business 
     investment, and keep the economy growing.
  Now, as I mentioned in my remarks, being a scientist and having been 
in business for myself, I fully understand the importance of research 
and bringing those technologies to the marketplace. Not only do the 
consumers benefit, but society in general and the whole world benefit. 
If we are going to continue to be a leading competitive nation in the 
world, we need to continue research and development.
  As members of the chamber of commerce in the town in which I 
practiced veterinary medicine, we tried to attract businesses that did 
a sizable amount of research and development because we understood 
that, with research and development, that company was likely to be with 
us for a long time because they were continually keeping up with 
advancements in science and bringing that to the marketplace.
  So as we talk about what it is with which we can stimulate the 
economy in America, I think one of the most significant things we can 
do as a Congress is to send to the President a research and development 
tax credit that is permanent, not one that will change every year.
  I can understand the frustrations of business people who come to me 
and have talked in town meetings and said: Look, if we only had some 
idea of how long this research and development tax credit would last 
instead of periodically renewing it, we could lay out long-term plans 
for R&D. I agree. I think it is important to have a very successful 
program of research and development in your company. You have to have a 
long-range plan in place, and the only way to do that is to have some 
assurance from the Congress, the President, and the Federal Government 
that the tax credits are going to be there to use in putting together 
any research needs you may have in order to meet product development 
within your company. So this is an extremely important piece of 
legislation. I think it is an important issue.
  The Senate should address it, and the sooner the better, during these 
times when our economy is not doing so well. Even if our economy was 
doing well, this is what we need to have in place in order to sustain 
economic growth. It would be less likely we would get into economic 
downturns with this kind of encouraging tax credit on a permanent 
basis. I encourage my colleagues to join me in voting for the permanent 
extension of the research and development tax credit.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Utah is recognized.
  Mr. HATCH. Mr. President, I thank my colleague. I commend him for 
being willing to file this amendment today. I rise to speak in support 
of the amendment of the distinguished Senator from Colorado to extend 
permanently the research credit.
  This amendment we offer today is simple and straightforward. It would 
extend permanently the credit for increasing research activities, 
commonly known as the research credit or the R&D credit. This provision 
was an important contributor to our robust economic growth of the last 
half of the 1990s.
  Let me explain why this amendment is necessary.
  In July 1999, the Senate voted to make the research credit permanent. 
Unfortunately, the House version of the 1999 tax bill included only a 
5-year extension of the credit. The 5-year extension did prevail in the 
conference. Unfortunately, that bill was vetoed by President Clinton 
for reasons unrelated to the research credit itself.
  However, in November of 1999, Congress passed and President Clinton 
signed the Ticket to Work and Work Incentives Improvement Act, which 
included a 5-year extension of the research credit. Therefore, the 
credit was extended to June 30, 2004.
  In mid-2000, the Senate again had the opportunity to vote on a 
permanent extension of the research credit. While we were debating that 
year's version of the death tax repeal bill, Senator Baucus and I 
offered an amendment to make the research credit permanent. The Senate 
passed the amendment with a vote of 98 to 1. Once again, President 
Clinton vetoed the underlying bill.
  Again last May, as we debated the 2001 tax cut bill, I offered an 
amendment to extend permanently the research credit. That amendment was 
withdrawn, but the provision was included in a managers' amendment that 
was approved by the Senate. Unfortunately again, however, the permanent 
research credit was dropped in conference and the credit was not 
extended.
  Thus, as it stands under present law, the research credit is 
scheduled to expire on June 30, 2004. This is most unfortunate, Mr. 
President, because in 2004 the Congress and, more importantly, 
America's business community will once again have to go through the 
complete rigmarole of on-again, off-again uncertainty of an important 
tax provision. Temporary extensions are poor tax policy. The ultimate 
loser in this game is not the Congress or even the companies that 
engage in research, but each American. That is because every one of us 
is the direct beneficiary of the research investments made by the 
businesses of America. We benefit from the higher economic growth and 
increased productivity and the higher degree of global competitiveness 
that increased research brings.
  The research credit has been in the Internal Revenue Code for more 
than 20 years in one form or another. It has expired and been extended 
10 times, Mr. President. Those extensions have been as short as 6 
months and as long as 5 years. There have even been periods when the 
credit was allowed to expire and then retroactively reestablish. On one 
occasion, the credit expired and was reenacted prospectively, leaving a 
gap period where the credit was not available. The one thing the credit 
has never been is permanent. That is a shame.
  This is significant because, as effective as the credit has been in 
providing a strong incentive to companies to increase research 
activities, it has been inherently limited in its effectiveness because 
business leaders have never been able to count on the credit being 
there on a long-term basis, and therefore their long-term planning 
can't be entered into.

  Anyone who has been in business more than 10 minutes knows that 
planning and budgeting--unlike what we do in Congress--is a multiyear 
process. Anyone who has been involved in research knows that scientific 
enterprise does not fit neatly into calendar or fiscal years.
  Our history of dealing with the research credit--that is, allowing it 
to run to the brink of expiration and bringing it back after it is dead 
with

[[Page S171]]

retroactive extensions--results in not only very poor tax policy but is 
also very detrimental--and I would say highly so--to our research-
intensive business entities and indeed the whole country.
  It is time to get serious about our commitment to a tax credit that 
is widely viewed by economists and business leaders as a very effective 
provision in creating economic growth and keeping this country on the 
leading edge of high technology in the world. A 1998 study by Coopers 
and Lybrand dramatically illustrated the significant economic benefits 
provided by the research credit. According to the study, making the 
credit permanent would stimulate substantial amounts of additional R&D 
in the United States, increase national productivity and economic 
growth almost immediately, and provide U.S. workers with higher wages.
  The vast majority of the Members of this body are on record in 
support of the permanent research credit. As I mentioned, only 18 
months ago, 98 Senators voted in favor of permanence.
  But, while practically everyone says they support a permanent 
research credit, it has become too easy for Congress to fall into its 
two-decade-long practice of merely extending the credit for a year or 
two, or even five years, and then not worrying about it until it is 
time to extend it again.
  These short-term extensions have occurred ten times since 1981. Ten 
short-term extensions for a tax credit that most Members of this body 
strongly support. I am not sure we realize how the lack of permanence 
of the credit damages its effectiveness.
  Research and development projects cannot be turned on and off like a 
light switch. They typically take a number of years and may even last 
longer than a decade. As our business leaders plan these projects, they 
need to look years ahead in making the projections and estimating the 
potential return on their investment. Because the research credit is 
not permanent, and its extension is not assured, the availability of 
the credit over the life of these projects is uncertain and is thus 
often not included in the numbers. As a result, the projected return on 
the investment is lower and some promising research projects are simply 
not funded.
  With a permanent credit, these business planners would take the 
benefits of the credit into account, knowing they would be there for 
all years in which the reason is to be performed. The result would be a 
lower projected cost, leading to more research projects being funded, 
which in turn would lead to more benefits to the economy, to our 
productivity, and to each consumer. In fact, making the credit 
permanent would start these benefits now and actually give an immediate 
boost to the amount of research performed, even before the current 
credit expires in 2004.
  There is little doubt that a significant amount of the incentive 
effect of the research credit has been lost over the past 20 years 
because of the constant uncertainty about its continuing availability. 
This uncertainty has undermined the very purpose of the credit. For the 
government and the American people to maximize the return on their 
investment in U.S.-based research and development, this credit must be 
made permanent. And now is the time to do so.
  I believe a permanent research credit is one of the most important 
elements of our tax code because it is so tied in with the issues of 
economic growth and our future prosperity.
  According to Chairman Greenspan, the Nation's high productivity 
growth, which played an instrumental role in our economic growth during 
the second half of the 1990s, would likely not have been possible 
without the innovations of recent decades, especially those in 
information technologies. The research credit is a key factor in 
keeping these innovations coming. But a temporary credit is inherently 
limited in its ability to do this.
  As I mentioned earlier, I am afraid to many of us are stuck in a 
mindset that says that since the research credit can just be taken care 
of later this year in a tax extenders package, or when it gets closer 
to its 2004 expiration date, why bother about it now?
  I want to emphasize that another temporary extension is not the issue 
here. We can and probably will always extend the credit when the time 
for its expiration comes. It will likely be on the less effective basis 
we have always done it, perhaps only for a few months, or it may be on 
a retroactive basis, and there may be a gap created, but we will 
probably keep extending it. The issue is whether or not we should 
magnify the power of this credit by making it permanent.
  This amendment is about long-term growth; it is about fostering 
innovation and keeping the innovation pipeline filled; and it is about 
sustaining the productivity gains that have brought us where we are 
today and that can help us stay prosperous in the future as we deal 
with the entitlement challenges ahead.
  In conclusion, if we decide not to make the research credit 
permanent, are we not limiting the potential growth of our economy? How 
can we expect the American economy to hold the lead in the global 
economic race if we allow other countries, some of which provide huge 
government direct subsidies, to offer stronger incentives than we do?
  Making the credit permanent will keep American business ahead of the 
pack. It will speed economic growth. Innovations resulting from 
American research and development will continue to improve the standard 
of living for every person in the U.S. and worldwide.
  I have been making this case year after year, and I am so pleased to 
have the leadership of our distinguished Senator from Colorado in 
helping us to pass it on the economic stimulus bill. I do believe that 
almost everybody in the Senate should vote for this amendment. This 
makes sense. It creates jobs and gives businesses an opportunity to 
plan ahead. It literally keeps us at the cutting edge of technology and 
helps us to really be what we should be, in a time such as this when we 
want to stimulate the economy. I don't know of many amendments that 
would do as much as this particular amendment of the Senator from 
Colorado and myself. I praise him and thank him for his dedication in 
bringing this issue forward.
  I urge my colleagues to support this amendment.
  Mr. President, I yield the floor and suggest the absence of a quorum. 
I withhold.
  The PRESIDING OFFICER. The Senator from Colorado.
  Mr. ALLARD. I thank the Senator from Utah for all his compliments. 
This is a subject I know he has worked on for years. I appreciate what 
he is trying to do.
  I could not agree more with his statement that one of the most 
important things we can do to get the economy to grow is to make on a 
permanent basis the research and development tax credit.
  I am also involved in the Senate Republican High Tech Task Force. I 
would like to make a part of the Record their policy agenda for the 
107th Congress where they talk about a Tax Code for the 21st century 
and list a number of actions they believe we can take to encourage the 
high-tech industry to grow in America. They mention, among those, 
making the research and development tax credit permanent, in addition 
to a number of other provisions. I ask unanimous consent that be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

  Senate Republican High Tech Task Force Policy Agenda for the 107th 
                                Congress

       Protecting Internet Privacy and E-Commerce.--The Task Force 
     believes market-based solutions are the best way to balance 
     legitimate privacy concerns with the need for flexible e-
     commerce. While certain types of medical and financial data 
     may warrant special legislative protections, we are skeptical 
     that the Congress should rush to delegate to government 
     bureaucrats the task of developing effective mandates related 
     to personal privacy. If legislation is considered, we believe 
     that it should not discriminate against Internet 
     transactions, should provide a uniform federal standard for 
     enforcement of privacy policies, and should limit the ability 
     to regulatory agencies to impose burdensome and cumbersome 
     mandates.
       Promoting Education and Technology.--Without a workforce 
     fully capable in math, science, and computing skills, our 
     competitiveness is at risk. Without a consumer base able to 
     utilize the latest technological advances, our economic 
     growth may wane. The Task Force believes that a top priority 
     in education should be development of policies both 
     encouraging the use of technology in the classroom and using 
     this technology to

[[Page S172]]

     master basic math, science, and computer skills.
       Safeguarding Copyright in the Digital Age.--With our 
     economy dependent on cutting-edge software and our families 
     enjoying music, movies, and television through new 
     distribution models, protecting copyrighted material is of 
     paramount importance. The Task Force believes that the 
     Congress should bolster efforts to protect copyrighted 
     materials from piracy and to facilitate legal digital 
     distribution of copyrighted works.
       Deploying Broadband Technologies.--The Task Force 
     understands that high speed Internet access has the power to 
     transform how we use the Internet. Encouraging tax and 
     regulatory policies that foster rapid, efficient, and 
     competitive deployment of broadband and other important 
     technologies to urban and rural areas will be crucial to 
     ensure our economic growth and technological competitiveness.
       Enhancing Free Trade.--The Task Force believes that trading 
     freely with other countries has allowed our producers of 
     technology goods and services to lead the world in technology 
     innovation while significantly raising our standard of 
     living. We believe that a vital component of free trade is 
     ensuring enforcement of international trade agreements to 
     guarantee that our businesses are not placed at a competitive 
     disadvantage and that our intellectual property is not 
     pirated or copied illegally.
       Protecting Internet Security and Combating 
     Cyberterrorism.--The Task Force supports legislation and 
     appropriations to protect the privacy of Internet users and 
     to aid law enforcement in making sure the Internet does not 
     become a haven for cybercriminals. Our goals include 
     enhancing deterrents to Internet piracy and counterfeiting of 
     intellectual property and bolstering international 
     cooperation against computer crimes. Also, our communications 
     infrastructures remain vulnerable to cyberattacks, and we 
     must support executive branch efforts to bolster cooperation 
     within and between Federal agencies and the private sector.
       Digital Decency.--The Task Force believes that the growth 
     of the Internet does not have to mean a decline in cultural 
     decency. Advocating ``Digital Decency'' means using the bully 
     pulpit to advocate responsible entertainment products, 
     encouraging parents and children to turn their backs on 
     music, movies, and games advocating violence and 
     discrimination, and encouraging better private sector filters 
     to keep the Internet experience a healthy one.
       Patent and Trademark Office Funding.--The Task Force 
     believes that the explosion of technology patents has made it 
     more necessary than ever to ensure that the PTO has adequate 
     funding through its own fee mechanisms, rather than siphoning 
     off these fees for general government use.
       A Tax Code for the 21st Century.--The Task Force believes 
     our tax code must be reviewed and modernized to reflect 
     current business realities affecting technology industries. 
     Issues which the Task Force believes should be considered 
     include making the research and development tax credit 
     permanent, accelerating the depreciation schedules for 
     technology equipment and encouraging capital formation for 
     small technology businesses.
       Keeping Government Out of Competition With E-Commerce 
     Businesses.--The Task Force believes that federal government 
     agencies should not use taxpayer dollars to compete with 
     private businesses developing new e-commerce products and 
     services.

  Mr. ALLARD. Mr. President, I ask unanimous consent that a news 
release from the Senate Republican High Tech Task Force dated Friday, 
June 29, 2001, be printed in the Record. It talks about, again, Senator 
Smith's effort in getting it attached to the Patients' Bill of Rights 
and reemphasizes the point we are trying to make today on how important 
it is we provide a permanent extension of the research and development 
tax credit.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

 High Tech Task Force Supports Smith-Hatch-Allen Amendment to Patients 
                 Bill To Make R&D Tax Credit Permanent

       Washington, DC.--Senate Republican High Tech Task Force 
     Chairman Senator George Allen (VA) today pledged the 
     endorsement of the group of an amendment by Senators Gordon 
     Smith (OR), Orrin Hatch (UT) and Senator Allen to make the 
     federal Research and Development (R&D) Tax Credit permanent.
       The Smith-Hatch-Allen amendment to the Patients' Bill of 
     Rights, currently being debated on the Senate floor, makes 
     the R&D tax credit permanent and increases the rates of the 
     alternative incremental research and development tax credit 
     as provided in S. 41, Senator Hatch's bill. Both Senators 
     Smith and Hatch are also High Tech Task Force members.
       Chairman Allen said making the R&D tax credit permanent 
     will help improve the quality of medical care for all 
     Americans.
       ``Providing every possible incentive for technological 
     advancements and innovations will lead to better and less 
     expensive medical treatments and devices,'' Chairman Allen 
     said. ``The R&D tax credit is crucial not only to the field 
     of medicine, but to the technology community at large.
       ``A permanent R&D Tax Credit credibly encourages investment 
     in basic research that over the long term can lead to the 
     development of new, more cost-effective, and more efficient 
     technology products and services. Research and development is 
     also essential for our long-term, competitive economic 
     growth,''
       Chairman Allen also pointed to a study conducted by Coopers 
     & Lybrand, which shows that workers in every State will 
     benefit from higher wages if the R&D credit is made 
     permanent. Payroll increases as a result of gains in 
     productivity stemming from the credit are estimated to exceed 
     $60 billion over the next 12 years.
       The R&D tax credit was original enacted in 1981 and has 
     been temporarily extended ten times. Permanent extension of 
     the Research and Development Tax Credit is a component of the 
     Task Force's policy agenda, which was announced March 1, 
     2001.

  Mr. ALLARD. Mr. President, I also ask unanimous consent that another 
press release from the Senate Republican High Tech Task Force for 
Friday June 29, 2001, be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

  High Tech Task Force Members Urge Finance Committee To Make R&D Tax 
                            Credit Permanent

       Washington, DC.--Members of the Senate Republican High Tech 
     Task Force including Chairman Senator George Allen (VA) are 
     urging the Senate Finance Committee to include permanent 
     extension of the Research and Development (R&D) Tax Credit in 
     the tax relief package that they will soon consider.
       Members of the Task Force, Senators Allen, Wayne Allard 
     (CO), Robert Bennett (UT), Sam Brownback (KS), Conrad Burns 
     (MT), Orrin Hatch (UT), Jeff Sessions (AL), Gordon Smith (OR) 
     and John Warner (VA), as well as Senators Mike Crapo (ID), 
     Bill Frist (TN), Tim Hutchinson (AR), and Republican Policy 
     Committee Chairman Larry Craig (ID) today sent letters to 
     Senate Finance Committee Chairman Charles Grassley (R-IA) and 
     Ranking Member Max Baucus (D-MT) with their request.
       ``We believe the R&D tax credit is essential to the 
     technology community,'' the Senators wrote. ``It encourages 
     investment in basic research that over the long term can lead 
     to the development of new, more cost-effective, and more 
     efficient technology products and services. Research and 
     development is essential for long-term economic growth.''
       The R&D tax credit was originally enacted in 1981 and has 
     been temporarily extended ten times. ``Permanent extension is 
     long overdue,'' the Senators maintained. ``Yet because it has 
     never been made permanent, this vital tax credit offers 
     business less value than it should because of its 
     unpredictability.''
       The Senators also noted that President Bush included the 
     permanent extension in his budget, and they urged Finance 
     Committee members include this measure in the tax relief 
     package as ``making the R&D tax credit permanent is essential 
     to helping maintain America's technology lead in the world.''
       Permanent extension of the Research and Development Tax 
     Credit is a component of the Task Force's policy agenda, 
     which was announced March 1, 2001.

                                                      May 7, 2001.
     Hon. Charles Grassley,
     Chairman, Committee on Finance, Washington, DC.
       Dear Chairman Grassley: We respectfully request that you 
     include permanent extension of the research and 
     experimentation (R&D) tax credit in the tax relief package 
     you will consider in your Committee shortly.
       As Republican Senators and members of High Tech Task Force 
     (HTTF), we believe the R&D tax credit is essential to the 
     technology community. It encourages investment in basic 
     research that over the long term can lead to the development 
     of new, cheaper, and better technology products and services. 
     Research and development is essential for long-term economic 
     growth. Innovations in science and technology fueled the 
     massive economic expansion we witnessed over the course of 
     the 20th century. These advancements have improved the 
     standard of living for nearly every American. Simply put, the 
     research tax credit is an investment in economic growth, new 
     jobs, and important new products and processes.
       As you know, the credit was originally enacted in 1981, and 
     has been temporarily extended ten times. Permanent extension 
     is long overdue. There is broad support among Republicans for 
     the credit, and President Bush included the credit in the 
     $1.6 trillion tax relief plan. Yet because it has never been 
     made permanent, this vital tax credit offers business less 
     value then it should. Business, unlike Congress, must plan 
     and budget in a multi-year process. Scientific enterprise 
     does not fit neatly into calendar or fiscal years. Research 
     and development projects typically take a number of years, 
     and may even last longer than a decade. As our business 
     leaders plan these projects, they need to know whether or not 
     they can count on this tax credit. The current uncertainty 
     surrounding the credit has induced businesses to allocate 
     significantly less to research than they otherwise would if 
     they knew the

[[Page S173]]

     tax credit would be available in future years. This 
     uncertainty undermines the entire purpose of the credit.
       We believe making the R&D tax credit permanent is essential 
     to helping maintain America's technology lead in the world. 
     We thank you for your consideration.
           Sincerely,
         George Allen, Larry E. Craig, Conrad Burns, Tim 
           Hutchinson, Gordon Smith, Wayne Allard, Jeff Sessions, 
           Orrin Hatch, Michael Crapo, Robert F. Bennett, Sam 
           Brownback, Bill Frist, John Warner.

  Mr. ALLARD. Mr. President, I ask unanimous consent that a news 
release dated Tuesday, May 8, 2001, entitled ``High Tech Task Force 
Members Urge Finance Committee to Make R&D Tax Credit Permanent,'' 
which documents the work of this task force and the importance they 
place in making permanent the research and development tax credit, be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

Republicans Will Keep Fighting To Make R&D Credit Permanent--High Tech 
  Task Force Chairman Allen Praises Senator Gordon Smith's Leadership

       Washington, DC.--Senate Republican High Tech Task Force 
     Chairman Sen. George Allen (VA) today vowed to keep pushing 
     for an amendment to make the Research and Development (R&D) 
     Tax Credit permanent, despite almost universal Democrat 
     opposition to the provision in a Senate vote. He also praised 
     the leadership of Sen. Gordon Smith (OR) in sponsoring the 
     amendment, which was also sponsored by Sen. Orrin Hatch (UT) 
     and Sen. Allen.
       Senate Democrats, led by Finance Committee Chairman Max 
     Baucus (MT), defeated the provision 57-41. Only one Democrat 
     joined 40 Senate Republicans in supporting the Smith-Hatch-
     Allen amendment. Cosponsors of the amendment were Senators 
     Wayne Allard (CO), Robert Bennett (UT), Sam Brownback (KS), 
     Conrad Burns (MT), Larry Craig (ID), Mike Crapo (ID), John 
     Ensign (NV), and Kay Bailey Hutchison (TX).
       ``Senator Gordon Smith deserves commendation for his 
     leadership for the idea of a permanent R&D Tax Credit,'' 
     Chairman Allen said. ``Unfortunately, Democrats voted almost 
     universally to pull the plug on one of the top items on the 
     technology community's agenda.
       ``I pledge the support of the High Tech Task Force in 
     working with Senators Smith and Hatch to find any avenue to 
     make the R&D Tax Credit a permanent part of our tax code.
       ``A permanent R&D Tax Credit brings certainty and will spur 
     more American investment and more American jobs that can lead 
     to the development of new, more cost-effective, and more 
     efficient technology products and medicines Research and 
     development are also essential for America's long-term, 
     competitive economic growth.''
       Studies have shown that a permanent R&D tax credit would 
     lead to higher wages for workers and gains in productivity.
       The R&D tax credit was originally enacted in 1981 and has 
     been temporarily extended ten times. Permanent extension of 
     the Research and Development Tax Credit is a component of the 
     Task Force's policy agenda, which was announced March 1, 
     2001.

  Mr. ALLARD. Mr. President, I do not see anybody seeking recognition, 
so I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant 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.

                          ____________________