[Congressional Record Volume 149, Number 56 (Tuesday, April 8, 2003)]
[Senate]
[Pages S4930-S4949]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
LEGISLATIVE SESSION
______
CARE ACT OF 2003
Mr. GRASSLEY. Mr. President, I ask unanimous consent that the Senate
now return to legislative session and proceed to the consideration of
S. 476, the CARE Act, as provided under the previous order.
The PRESIDING OFFICER. Without objection, it is so ordered. The clerk
will report the bill by title.
The bill clerk read as follows:
A bill (S. 476) to provide incentives for charitable
contributions by individuals and businesses, to improve the
public disclosure of activities of exempt organizations, and
to enhance the ability of low-income Americans to gain
financial security by building assets, and for other
purposes.
The Senate proceeded to consider the bill.
Mr. GRASSLEY. Mr. President, I have a few remarks on the legislation.
I am sure my good colleague, Senator Baucus, has remarks as the manager
for the Democratic Members. We would also like to take quick action on
a managers' amendment that is in order under a unanimous consent
agreement. There are a few issues that have to be cleared on the
amendment.
I rise to speak on the CARE Act of 2003. I will first talk generally
about the charitable provisions in the bill and then talk about those
provisions designed to combat corporate tax shelters.
The CARE Act seeks to support that great American tradition--helping
a neighbor in need. Our Nation's tradition of caring and charitable
support goes back to the founding. When faced with tragedy or hardship
in our communities, we have always been a people who have rolled up our
sleeves to pitch in, rather than leaning on a shovel waiting for the
government to show up.
The charitable tradition in America has certainly been for the common
good. Unfortunately, there are not many K Street lobbyists for
charities and for the common good.
That is why this legislation is a direct testimony to the leadership
of President Bush. There is no question that but for his efforts, this
legislation for the common good would not have seen the light of the
Senate floor.
Let me note that commentators have rushed to state that the
President's efforts to strengthen America's charitable tradition has
been watered down. Nothing could be further from the truth. This
legislation goes far in meeting the President's ambitious goals for a
greater role for charities in assisting those most in need.
And legislation is only part of the story. The President's speeches
and visits have done even more to energize the charitable sector of
this country. Hardly a week goes by when I am not stopped by someone
who runs a charity, or is active in a charity, and they ask me how they
can get involved in the President's proposal, how they can help.
Clearly, President Bush's words have been heard by America's charities
and they are eager to turn his words into deeds of compassion and aid.
In addition to this legislation being a tribute to President Bush's
leadership, let me also note the tremendous efforts of Senators
Santorum and Lieberman to bring this bill to the Senate floor. I
commend them for their energy in making the CARE Act a reality.
Finally, I'm pleased to have worked with Senator Baucus, the ranking
member of the Finance Committee. This legislation continues our
bipartisan efforts as to tax legislation.
Mr. President, for the benefit of my colleagues let me now highlight
some of the major tax provisions of the CARE Act that encourage
charitable giving.
First, is the creation of a charitable deduction for nonitemizers.
Given that over half of Americans do not itemize their tax return, this
provision will encourage taxpayers to give to charities, regardless of
income. The legislation allows for charitable deduction of up to $500
for a married couple giving over $500 per year. For an individual
filing single, it is a deduction of up to $250 for a person who gives
over $250 per year. For example, an individual who doesn't itemize and
gives $400 to charity, could deduct $150 from their taxes. This
provision was designed to encourage new giving and also limit possible
abuses.
Next is a major provision that will provide for tax-free distribution
from Individual Retirement Arrangements, IRAs, to charities. This is a
provision that is important to many major charities, particularly
universities. The Finance Committee heard testimony from the President
of the University of Iowa about the importance of this provision in
encouraging new giving. The legislation provides that direct
distributions are excluded from income at the age of 70\1/2\ and
distributions to a charitable trust can be excluded after the age of
59\1/2\.
We then have language that encourages donations of food inventory,
book inventory and computer technology. I would note that my
colleagues, Senator Lugar, and Senator Lincoln, a member of the Finance
Committee, were strong advocates for the legislation involving food
donation. I'm particularly pleased that this legislation will give
farmers and ranchers a fairer deal when it comes to donation of food.
Conservation is also a part of this bill. Efforts to conserve our
land and limit development benefit our Nation as well as farmers and
ranchers who work on the land. The CARE Act contains language I have
long supported that will encourage conservation of land through a 25-
percent reduction in the capital gains tax of the sale of undeveloped
land, or conservation easements. The sale must be to a charitable
organization and the land must be dedicated for conservation purposes.
I am pleased that President Bush also included this proposal in his
budget.
The bill also encourages gifts of land for conservation purposes.
This is an issue long advocated by Senator Baucus, which I am pleased
to support.
These are the major tax provisions that encourage charitable giving
contained in this bill. I would note that I am pleased that the
legislation does contain provisions requiring greater sunshine and
transparency in the work of charities. It is my belief that just as we
are encouraging people to write more checks, we need to ensure that
those checks are being cashed for a charitable purpose. In addition,
the bill authorizes a serious increase in funding for the Exempt
Organizations Office at the IRS to better police the few bad apples
among the nonprofits.
My colleagues should also be aware that this legislation addresses
the abuse of charities by terrorist organizations, making it easier to
shutdown or suspend such organizations.
Let me note also that this bill contains $1.4 billion in new funding
for Social Services block grants, SSBG. This is a very important
provision that will greatly benefit the States and, more
[[Page S4931]]
importantly, those in need. I would note that this was a matter of
great priority for me, and I am glad to see we have been able to
include this funding. The provision also gives States greater
flexibility in how to use the SSBG funds.
My colleagues will be pleased to know that this bill is fully paid
for. I turn now to discuss those provisions regarding abusive corporate
tax shelters that are of great importance.
We have known for many years that abusive tax shelters, which are
structured to exploit unintended consequences of our complicated
Federal income tax system, erode the Federal tax base and the public's
confidence in the tax system. Such transactions are patently unfair to
the vast majority of taxpayers who do their best to comply with the
letter and spirit of the tax law.
As a result, the Finance Committee has worked exceedingly hard over
the past several years to develop several legislative discussion drafts
for public review and comment. Thoughtful and well-considered comments
on these drafts have been greatly appreciated by the staff and members
of the Finance Committee. The collaborative efforts of those involved
in the discussion drafts combined with the recent request for
legislative assistance from the Treasury Department and IRS formed the
basis for our most recent approach to dealing with abusive tax
avoidance transactions.
The antitax shelter provisions contained in the CARE Act encourages
taxpayer disclosure of potentially abusive tax avoidance transactions.
It is surprising and unfortunate that taxpayers, though required to
disclose tax shelter transactions under present law, have refused to
comply. The Treasury Department and IRS report that the 2001 tax filing
season produced a mere 272 tax shelter return disclosures from only 99
corporate taxpayers, a fraction of transactions requiring such
disclosure.
Today's bill will curb non-compliance by providing clearer and more
objective rules for the reporting of potential tax shelters and by
providing strong penalties for anyone who refuses to comply with the
revised disclosure requirements.
The legislation has been carefully structured to reward those who are
forthcoming with disclosure. I wholeheartedly agree with the remarks
offered by a recent Treasury Assistant Secretary for Tax Policy, that
``if a taxpayer is comfortable entering into a transaction, a promoter
is comfortable selling it, and an advisor is comfortable blessing it,
they all should be comfortable disclosing it to the IRS.''
Transparency is essential to an evaluation by the IRS and ultimately
by the Congress of the United States as to whether the tax benefits
generated by complex business transactions are appropriate
interpretations of existing tax law.
To the extent such interpretations were unintended, the bill allows
Congress to amend or clarify existing tax law. To the extent such
interpretations are appropriate, all taxpayers--from the largest U.S.
multinational conglomerate to the smallest local feedstore owner in
Iowa--will benefit when transactions are publicly sanctioned in the
form of an ``angel list'' of good transactions. This legislation
accomplishes both of these objectives.
This year's legislation contains a new provision that would clarify
the economic substance doctrine. The economic substance doctrine was
created by the courts as a flexible text to determine whether a
transaction is a tax scam or valid business deal.
Last year, there were several court rulings that, in my view,
misapplied this doctrine. These rulings now stand as legal precedent
that can be used to justify abusive schemes in the future. Today's
clarification is intended to overturn those rulings. If a court finds
that a shelter violates our clarification, the shelter participant
would be subject to a strict 40 percent penalty on any tax due. This is
a very tough anti-shelter provision.
Mr. President, I appreciate my colleagues' patience as I have
reviewed the key provisions of the CARE Act. I think it is legislation
that provides needed encouragement for charities and charitable giving
in this country. In addition, it takes real steps toward addressing
corporate tax shelters. I strongly encourage my colleagues to support
this legislation.
I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. BAUCUS. Mr. President, I ask unanimous consent the order for the
quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BAUCUS. Mr. President, I thank the chairman of the Finance
Committee, Senator Grassley, for the great job he has done in putting
this bill together. It is not easy. There are lots of different
components and many Senators have legitimately different points of
view. I commend him for his yeoman work. He is not here at the moment,
but I want him to know, in the arena of the Senate, and publicly, he
has done a great job. The folks in Iowa must be very proud of him.
The chairman and I together are considering a bill designed to help
charitable organizations--that is the main goal here--and, therefore,
to help our communities.
The bill is called the Charity Aid Recovery and Empowerment Act,
otherwise known as CARE. Our President said it well:
In order to fight evil we must do good. [And] it is the
gathering momentum of millions of acts of kindness and
compassion which define the true face of America.
I think that is very true. More than peoples in any other country,
Americans are noted for their openness, their generosity, and their
kindness. At a time when Americans are at war and our economy is
sagging, this bill is more important than ever.
The economy is in worse shape than it has been in over a decade. Too
many Americans go to bed hungry at night. Two million Americans have
lost their jobs since 2001. Men, women, and children are increasingly
relying on charities to meet their needs. The problem is made worse
because our States are strapped with huge budget deficits. States are
actually the No. 1 provider of social services, but presently they are
experiencing the largest deficits they have had in 40 years.
This is where charities come in. Charities deliver food, water,
clothing, and counseling to those in need. They are the first
responders to these quiet tragedies. Let me give a few examples from my
own home State of Montana.
Each year, the Montana Food Bank Network serves 1.5 million meals,
including 200,000 meals to our State's children. Clearly our children
can't learn if they go hungry.
There are roughly 30 adult literacy programs in Montana serving over
5,000 people.
Programs such as the Adult Literacy Center in Billings, MT, and the
Literacy Volunteers of America in Butte provide free adult literacy
classes to anyone who walks in the door, free to anyone who walks in.
Groups like the Blackfoot Challenge provide local voluntary solutions
to environmental problems like restoring stream habitat.
I copied the model of Senator Bob Graham of Florida. He has what is
called workday projects once a month and I do, too. One day I worked at
Blackfoot Challenge and all of us together in the Blackfoot Valley--not
all but a bunch of us, 15 people--volunteered our time and work to
restore a stream habitat. Ranchers in the old days just plowed a
straight channel through their places and eliminated the meandering
nature of streams, which made it difficult for bull trout to come up
and spawn. We decided to do this project together, in part because the
higher-ups couldn't agree on anything. The Fish and Wildlife Service,
State Fish and Wildlife, and Parks and all the government agencies
couldn't get together, so locally we just said we are going to do it
ourselves--and we did. It is such volunteer, charitable efforts that
make a huge difference.
Our State's economy also benefits from tourism, and keeping our
streams clean and teeming with fish is good for our economy. In fact, I
might say, I was delayed coming to the floor because I was talking to a
fellow who could hardly wait to get back to Montana because the right
hatch is going on now. He is going to go fishing in the next couple of
days. He couldn't wait to get back home.
[[Page S4932]]
The list goes on: Montanans, working in homeless shelters, churches,
libraries, schools, boys and girls clubs, substance abuse centers, and
jails.
Our State is not alone. This is true all across our country. In
communities, millions of Americans depend upon the generosity of their
neighbors and upon charitable organizations. The CARE Act is designed
to help these organizations, helping them by creating incentives to
encourage more contributions to charity--help them receive more
contributions.
Let me describe some of the main provisions of the bill. The
provision that has received the most attention is the above-the-line
deduction for charitable contributions for people who do not itemize
their deductions. Most Americans actually use the standard deduction--
about 70 percent. This says: OK, all you folks who use the standard
deduction--that is, you do not itemize your deductions--we will provide
for an above-the-line charitable contribution for you as well, even
though you do not itemize.
I must say, I have some concerns about this provision. Why? Because
we tried this before. It didn't work very well. That is why we
eliminated the deduction in 1986. More specifically, I am concerned
that the deduction will not provide much of an incentive for charitable
giving while making the Tax Code even more complicated. Nonetheless,
the President has made this particular proposal a top priority and, in
light of that, I am willing to give the proposal a chance. So we
limited the proposal to 2 years to give us time to study it and see how
it is working and gain from the experience.
While the nonitemizer deduction has received most of the attention,
there are several other provisions of the bill that have strong
bipartisan support. They could provide a significant boost to
charitable giving. First, we provide enhanced deductions for
contributions of food, of books, and computers. In response to growing
economic hardship and hunger that has gone along with it, we have
increased the deduction for contributions of surplus food. In most
cases, the Tax Code provides the same tax deduction for food hauled to
a landfill as it does for food donated to charities. That does not make
a lot of sense.
Businesses that choose to contribute food instead of throwing it away
are faced with the added costs of storing, packaging, and trucking the
food to the charity.
So our new enhanced deduction will encourage business, farmers, and
ranchers to contribute the food by offsetting these costs associated
with the donations.
This makes it easier for the farmer in Montana to receive a fair
deduction for giving food to a local food bank, for example.
We also make it easier for a publisher to donate extra books to a
local library. Sometimes lots of books get stacked up and cannot be
sold. I think it is a good idea to be able to donate them. And kids
will be able to get much better access to computers and cutting edge
technology.
Second, we expand the IRA rollover exception to allow individuals to
donate their IRAs directly to charity without taking a tax hit.
Under current law, taxpayers, say, who are prospective donors would
include their IRA income as taxable income and then take a
corresponding charitable deduction, subject to limits, when they want
to donate that IRA to a charity. The provision in the bill makes that
easier, allowing direct giving; that is, streamlining the process and
eliminating the limits that impede giving.
Third, in this bill we provide several important new incentives for
voluntary conservation; for example, incentives to encourage
contributions of conservation easements, which are so important,
especially for my State of Montana and throughout the Nation. This
means that cash poor/land rich farmers--which I must say, regrettably,
is the rule, not the exception--can donate the conservation rights of
their property and get a tax benefit and still keep the family farm in
the family.
While the majority of the provisions in this bill encourage giving to
charities, there are also provisions that help ensure that charities
are responsible public citizens. As many have noticed, national
newspapers have recently detailed the secretive use of charities by
terrorist organizations. This is, obviously, a serious problem. The
large majority of American charities are law abiding and serve an
invaluable function. But there are a few exceptions.
So this legislation gives authority to the IRS to immediately revoke
the tax-exempt status of charities that are suspected of giving aid to
terrorist groups. When there is a crisis in confidence with respect to
charities, it hurts honest groups. The charities that have worked hard
to further their noble missions should not be jeopardized because of
bad ``charities'' doing bad things.
The Finance Committee bill attempts to cure this by giving watchdogs
and donors better tools to monitor the activities of charities. The
CARE Act gives State attorneys general more authority to review the IRS
filings of tax-exempt organizations.
In addition, the bill lets donors see more information about
communications between charities and the IRS. These important steps
will go a long way to help restore America's confidence in charities.
I have just provided some highlights of the bill, but there are a
number of other important provisions. All told, this package includes
many proposals that enjoy widespread support. It has bipartisan
support. In fact, many provisions have been approved by the Senate.
With war costs on the horizon, and current budget deficits, it is
essential we pay for this bill. I applaud Chairman Grassley for
insisting that these tax cuts be paid for. So let me turn to the
provisions which cover the costs.
First, we have included a proposal that takes aim at the
proliferation of abusive tax shelters. I, along with Senator Grassley,
introduced the Tax Shelter Transparency Act to encourage more timely
and accurate disclosure of these abusive transactions. Under the
proposal, we provide a disincentive to promoters, advisors, and
taxpayers by subjecting them to stiff penalties for failing to
acknowledge these transactions to the IRS.
The proposal also clarifies a definition of what is known as economic
substance. That means it forces companies to engage in real business
planning instead of tax-driven hoaxes. The Joint Committee on Taxation
recently released its Enron report. The transactions it reviewed
demonstrate the need for strong anti-avoidance rules to combat tax-
motivated transactions. These deals might satisfy the technical
requirements of the Tax Code, as well as administrative rules, but they
serve little or no other purpose than to generate income tax or
financial statement benefits; that is, there is no economic substance
to the transactions. And the American taxpayers are cheated, frankly--
those who do not have the ability to hire high-paid counsel and
accountants to find these very complicated measures which, frankly,
even the IRS cannot figure out in a lot of cases.
It is just not right when the majority of taxpayers--such as the
hardware store owner, say, in Butte, MT--have to pay their fair share
of taxes while these big corporations twist their way out of paying
their own fair share. That is, I think, simply wrong. But it is the
right thing to do to use this proposal to pay for tax incentives to
benefit the charitable community. It is the right thing to do and the
right time to do it.
I urge my colleagues to support this legislation.
I yield the floor.
Mr. DURBIN. Mr. President, I rise today to discuss the CARE Act and
my concerns regarding the implementation of President Bush's faith-
based initiative.
Like many of my colleagues, I am a person of faith. I support the
good work that religious organizations undertake every day. I agree
with President Bush and the sponsors of this legislation that there is
an important role for the Federal Government to play in encouraging
religious organizations to do more for the good of society.
In fact, I support many of the provisions of the CARE Act before us
today. For example, I have been an original cosponsor of the Charitable
IRA Rollover Act and a cosponsor of the Good Samaritan Hunger Relief
Tax Incentive Act in the last two Congresses. I also
[[Page S4933]]
support the increased funding for the Social Services block grant.
However, when I read the specific details of how the President is
implementing his faith-based initiative, I am concerned that the good
intentions behind this proposal may be lead to troubling, unintended
consequences.
It appears that what the President wants to achieve with this
initiative is to fundamentally change the historic balance in the
relationship between government and religion that our founding fathers
struck over 200 years ago.
I believe and many of my colleagues agree: this Senate debate is
historic. With our deliberations, we will test Constitutional
principles regarding the place of religion in America in a way they
have never been tested.
That is why many Senators joined me in insisting that the Senate take
all deliberate time and attention to carefully review this bill and to
add language to clarify and improve the bill.
Since the Senator from Pennsylvania has agreed not to add language
that would raise concerns with respect to church and state, I have
joined with Senator Jack Reed of Rhode Island in agreeing not to offer
our amendments at this time. However, I would like to take this
opportunity to express my concerns regarding the President's
implementation of his faith-based initiative which, if offered at a
later time, I hope will be subject to a vigorous, important, and
historic debate in the Senate.
We should begin this debate at the beginning. The opening words of
our Bill of Rights state that:
Congress shall make no law respecting an establishment of
religion, or prohibiting the free exercise thereof.
For over two centuries, those 16 words have served us well and have
protected religious freedom in America.
We must continue to respect the diversity of belief in America and
remember that freedom from government interference was one of the few
principles that early Americans, with a variety of religious
backgrounds, could agree on.
In fact, many of the settlers who colonized America fled from
religious persecution by government officials in their native countries
and they still do.
James Madison recognized that this history of religious persecution
was based upon Government involvement in establishing official
churches. He believed that Government support of certain religions
could threaten the liberty of every citizen to hold his or her own
religious convictions.
Madison suggested that the Government support of religion differs
only in a matter of degree, and he vehemently opposed the payment of
taxes in support of any religion.
Before the American Revolution, the State of Virginia rescinded a tax
in support of the Anglican Church, which was their so-called
established church, and instead granted its citizens religious liberty.
However, in 1784, Patrick Henry became concerned with the moral decline
of Virginians and he proposed a bill to restore the tax to support
``teachers of the Christian religion.''
Madison responded to this proposal with his ``Memorial and
Remonstrance against Religious Assessments.'' This document--written 16
years before the Bill of Rights was adopted--reveals the earliest
origins of the concepts behind the first amendment: Madison expressed
his opposition to Government involvement in religion because he
believed such involvement would interfere with citizens' right of free
exercise. Madison also believed that the right of religious freedom was
as important as freedom of the press, trial by jury, and the right to
vote.
According to Madison, his Memorial was so widely accepted that
Henry's proposal failed and Virginia instead enacted Thomas Jefferson's
``Bill for Establishing Religious Freedom in Virginia.''
In this bill, Jefferson expressed his belief that religious liberty
is necessary to ensure that individuals are not forced to support
religious opinions with which they disagree, to practice faiths they
find abhorrent, or to voice allegiance to one faith over another, and:
To compel a man to furnish contributions of money for the
propagation of opinions which he disbelieves and abhors is
sinful.
During their Presidencies, Jefferson and Madison had the opportunity
to illustrate their understanding of the first amendment to the
Constitution.
In 1801, the Danbury Baptist Association wrote a letter to President
Jefferson because it feared that the State of Connecticut would
establish the Congregationalist Church as the official religion.
Jefferson responded to the Danbury Baptist Association with a letter
on January 1, 1802, in which he reaffirmed his belief that each
individual has the right to hold whatever opinion he or she may choose
and that the Government should not interfere in religion. This reply
contained his now-famous view that the purpose of the first amendment
was to build a--in Jefferson's words--``wall of separation between
church and state.''
President Madison, in his 8 years in office, vetoed only seven
bills--two of which he believed violated the Establishment Clause of
the first amendment.
In 1811, Congress passed a bill entitled ``An act incorporating the
Protestant Episcopal Church in the town of Alexandria in the District
of Columbia.'' This bill would have enacted the rules of the church as
a matter of law, thereby giving legal force to the provisions of the
church's constitution.
Madison believed that even supporting churches in their charitable
functions would give religious organizations too much power in public
and civic affairs. He wrote that the bill would be ``precedent for
giving to religious societies as such a legal agency in carrying into
effect a public and civic duty.'' Think of those words in the context
of the proposal before us.
Madison also vetoed a bill ``An act for the relief of Richard Tervin,
William Coleman, Edwin Lewis, Samuel Mims, Joseph Wilson, and the
Baptist Church at Salem Meeting House, in the Mississippi Territory.''
This bill would have given a Baptist Church specific Federal Government
property for the church's use.
Madison believed that:
reserving a certain parcel of land of the United States for
the use of said Baptist Church comprises a principle and
precedent for the appropriation of funds of the United States
for the use and support of religious societies, contrary to
the article of the Constitution which declares that
``Congress shall make no law respecting a religious
establishment.''
Thanks to Jefferson and Madison, first amendment protections have
made America the most tolerant society in the world--a tolerance many
of our critics around the world neither understand nor accept. They
live in nations where government and religious belief are so closely
entwined that diversity of creed is officially discouraged, if not
prohibited.
Each of us, when we return home, can drive through our cities and see
a Protestant church down the street from a Catholic church, next to a
Jewish synagogue which is not too far from a Muslim mosque, and perhaps
across the street from a Sikh Gur-dwala. Some churches even share their
facilities with congregations from other religious and ethnic groups.
To me, this is proof positive that the wisdom of the first amendment is
alive and well in America today.
Although some may argue that the faith-based initiative does not
``establish a religion,'' the Supreme Court has ``long held that the
First Amendment reaches more than classic, 18th century
establishments.''
Indeed, the Supreme Court has examined the history of the first
amendment and has come to the same conclusion that I have reached:
For the men who wrote the Religion Clauses of the First
Amendment the `establishment' of a religion connoted
sponsorship, financial support, and active involvement of the
sovereign in religious activity.
That comes from the case of Walz v. Tax Commission in 1970.
This is one principle that President Bush seems to be willing to
accept. I am heartened that the White House publication Guidance to
Faith-Based and Community Organizations on Partnering with the Federal
Government is clear that faith-based organizations cannot use any part
of a direct Federal grant to fund religious worship, instruction, or
proselytization. Such activities must be separate in time or location.
[[Page S4934]]
The President also agrees that faith-based organizations cannot
discriminate against beneficiaries or potential beneficiaries of a
social service on the basis of religion.
However, one area where we clearly diverge is the issue of employment
discrimination on the basis of religion.
The Civil Rights Act of 1964 prohibits most public and private
employers with 15 or more employees from discriminating in their
employment practices on the basis of race, color, national origin, sex,
and religion.
However, religious employers have an exemption with respect to
religious discrimination, which was expanded in 1972.
I will read the current exemption:
This subchapter shall not apply . . . to a religious
corporation, association, educational institution, or society
with respect to the employment of individuals of a particular
religion to perform work connected with the carrying on by
such corporation, association, educational institution, or
society of its activities.
In 1987, the Supreme Court upheld this title VII religious exemption
in the case of Corporation of Presiding Bishop of the Church of Jesus
Christ of Latter-Day Saints v. Amos.
I support this right of religious organizations to use religious
criteria in hiring people to carry out their religious work. I have no
quarrel with the title VII religious exemption. It makes sense for
people of common faith to work together to further their religion's
mission.
At the same time, I recognize that discrimination ``on the basis of
religion'' can often include discrimination based on other factors that
are prohibited by civil rights laws, such as race, ethnicity, and sex.
Dr. Martin Luther King, Jr., observed that the hour of worship is one
of the most segregated hours in American society. Sadly this is still
true today, but many people of similar racial or ethnic backgrounds do
prefer to worship together, and there are churches throughout this
Nation that target only certain races or ethnic groups.
So, unfortunately, allowing religious organizations to hire only
members of their own religion, in many cases, can also mean hiring only
members of a certain race or ethnic background.
For example, if employment is limited to the co-religionists of the
recipients, how many African Americans will be hired by Orthodox Jewish
groups? How many white people will the Nation of Islam employ as
security guards in public housing? And what of the many Protestant
groups that are overwhelmingly White or overwhelmingly Black or
overwhelmingly Hispanic?
The courts also have read the title VII exemption very broadly to
allow discrimination on the basis of religion to include the religion's
``tenets and teachings.'' This broad reading has resulted in situations
where people of faith who do not necessarily follow the accepted
lifestyle or private behavior of that religion have lost their jobs.
Here are some examples of how this law discriminates against people's
everyday behavior in addition to their religious beliefs:
In the case of EEOC v. Presbyterian Ministries, Inc., a Christian
retirement home fired a Muslim receptionist after she insisted on
wearing a head covering as required by her faith.
The Church of Jesus Christ of Latter-Day Saints fired several
employees because they failed to qualify for a ``temple recommend,''
that is, a certificate that they were Mormons who abided by the
church's standards in such matters as regular church attendance,
tithing, and abstinence from coffee, tea, alcohol, and tobacco.
This exemption, unfortunately, has had a particularly harsh impact on
women and people of different sexual orientation. Here are some
examples of how courts have interpreted this exemption to allow
employment discrimination against women and gays under the current
title VII exemption:
Numerous Christian schools fired female teachers for having
extramarital sex or committing adultery; upheld by the court. A
Catholic school fired a teacher who remarried without seeking an
annulment of her first marriage in accord with Catholic doctrine;
upheld by the court. A Catholic school fired a teacher for marrying a
divorced man; upheld by the court. A Catholic university refused to
hire a female professor because her views on abortion were not in
accord with Catholic teaching; upheld by the court. A Baptist nursing
home fired a student services specialist after she was ordained a
minister in a gay and lesbian church that advocated views on
homosexuality ``which were inconsistent with the [school's] perception
of its purpose and mission''; upheld by the court. A church terminated
the employment of an organist on the grounds that his homosexuality
conflicted with the church's belief; upheld by the court.
I regret that these may be unintended discriminatory consequences
today under the title VII exemption where religious organizations hire
people using money raised by the church from its own congregation. But
what of the case we are discussing? We are not talking about a
situation where churches are spending their own money for their own
religious purposes and following their own employment codes and
practices under the title VII exemption. We are talking about opening
up a new world where tax dollars are taken from the treasury and given
to these same churches. What if the money is not raised by the
congregation or coreligionists, but the money is being raised from the
taxpaying public? What standard should we use?
Most scholars agree it is an open legal question as to whether a
religious organization can take taxpayer money and use it to
discriminate in hiring employees on the basis of religion. It would
seem to me that the obvious answer to this question is no. Any other
response would result in taxpayer-funded discrimination. I will return
to this question and the reasons for my answer after examining asking
how this issue fits into the broader picture of the President's faith-
based initiative.
The faith-based initiative has been marketed as a proposal to ``level
the playing field'' for religious organizations that seek government
funds to pay for social service programs. However, it appears that the
supporters of the initiative do not want to level the playing field;
they want to create a special set of rules for religious organizations
which would result in special treatment that other nongovernmental
organizations do not currently enjoy.
President Bush has demonstrated, through his Executive orders and
agency regulations, that his faith-based initiative goes far beyond
religious icons, religious names, religious language in chartering
documents or religious criteria for membership on governing boards. I
do not object to any of those stated goals which I have heard from the
Senator from Pennsylvania and the Senator from Connecticut as well as
the President. I have seen the enforcement of rules and standards which
I think have gone way too far.
I can think of my own hometown of Springfield where there is a long-
simmering controversy still brought up regularly about whether a
teacher could come in and teach a driver training course at the
Catholic high school if that teacher were paid for out of public school
funds and that Catholic high school and its classroom had a crucifix on
the wall. It rubbed a lot of people of my Catholic religion the wrong
way, that people would argue that the mere presence of that crucifix
was somehow offensive or violated the law. That argument goes to the
extreme. I do not hold those views. I support the position stated time
and again by the Senators from Pennsylvania and Connecticut that we
ought to draw a more reasonable line. The House of Representatives,
with mottos on the walls ``In God We Trust,'' with our currency
reflecting that, with chaplains in the House and Senate, we can state a
reasonable standard that does not violate the basic freedom of religion
or establishment clause of our Constitution. But I do object to the
administration bypassing Congress to write one set of rules for secular
organizations and another for religious organizations.
For example, all recipients of government grants currently are
required to abide by a host of regulatory requirements, including
filing IRS documentation and complying with all State and local laws.
Supporters of the faith-based initiative would like to exempt religious
organizations from complying with these important regulations, such as
those dealing with health and safety. Explain that for a moment.
If in the State of Illinois or my city of Springfield someone wants
to run a daycare center and we have decided, for the safety of the
children in the
[[Page S4935]]
daycare center, there should be perhaps a sprinkler system, a fire
alarm, or a fire escape, certain doors so that kids can get out in case
of emergency, why, if this becomes a faith-based childcare center,
should we reduce or limit that same application of health and safety
standards? It doesn't make sense. One of the amendments which needs to
be offered as part of this conversation on faith-based initiatives will
address that.
Take a look at the Teen Challenge substance abuse program which
President Bush has mentioned many times. In 1995, the Texas Commission
on Alcohol and Drug Abuse threatened to close Teen Challenge after
issuing a 49-page list of violations of State health and safety codes.
The list included unlicensed counselors, food preparation that created
a health hazard, a broken smoke detector system, and exposed wires and
electrical outlets. Then-Governor Bush responded by exempting faith-
based drug treatment programs from all of the State health and safety
regulations that were followed by their secular counterparts.
I don't know how you could reach that conclusion. It is one thing to
be imbued with a religion; it is another thing to ignore the obvious.
If there is a terrible accident or fire or some disaster, children in
faith-based institutions deserve the same level of legal protection as
those in institutions run as businesses.
This special treatment was not limited to drug treatment programs.
Faith-based childcare centers and residential children's homes could
use an alternative accreditation program that would exempt them from
State licensing. The special treatment for these alternatively
accredited facilities was that there were no unannounced inspections of
the facilities as required by State law. As a result, the rate of
confirmed abuse and neglect at alternatively accredited facilities was
25 times higher than that of State-licensed facilities. Whom are we
doing a favor for by exempting the faith-based charity from standards
of unannounced inspections to make certain that they are living up to
the letter of the law?
The complaint rate at alternatively accredited facilities was 75
percent compared to 5.4 percent at State-licensed facilities. Due to
these staggering outcomes, this accreditation program sunset in 2001
and has never been renewed.
The White House has also given indications it may provide special
treatment to religious organizations by exempting them from State and
local laws addressing employment discrimination. I have a great deal of
respect for the Salvation Army. They do wonderful work, not only in the
United States but around the world. But they had a rather embarrassing
incident in July of 2001 when an internal report was discovered that
stated their group had received a ``firm commitment'' from the Bush
White House to protect religious charities from State and local laws
regarding sexual orientation discrimination and domestic partner
benefits. I hope that is not the goal of the Bush White House in
pushing this faith-based initiative.
Over the past 2 years, President Bush and his faith-based initiative
have repeatedly eroded 200 years of carefully protected separation
between church and state. In what the Washington Post called ``faith-
based by fiat,'' President Bush signed Executive Order 13279, in
December of 2002, to overturn principles of nondiscrimination in
Federal contracts that have stood for over 60 years.
The House of Representatives is currently considering the
reauthorization of the Workforce Investment Act. The legislation has
been marked up in the House, and it would repeal 20 years of civil
rights protections against religious discrimination. The House also has
held hearings regarding the reauthorization of the Corporation for
National and Community Service, known as AmeriCorps. In its proposed
legislation, the House would repeal a decade of civil rights
protections against religious discrimination in employment that were
signed into law by President Bush's father.
Finally, the Department of Housing and Urban Development has proposed
rules to allow religious organizations to use Federal funds to build
centers where religious worship is held as long as parts of the
building are also used for social services.
Supporters of the faith-based initiative want to know why we are
raising these issues now, when Congress included charitable choice
provisions in legislation we passed as far back as 1996. The difference
is this: Then-President Clinton made it clear, as part of the technical
corrections package to the welfare reform bill, that nothing included
therein would change the fundamental protections against religious
discrimination which were currently in the law. President Clinton did
that as well in the reauthorization of Community Services Block Grant
Programs in 1998 and the reauthorization of the Substance Abuse Mental
Health Services Act in 2000. Unfortunately, in this debate, that same
assurance has not been given.
I want to go to a point which really gets to the heart of the issue.
It is a difficult one. It is one for which I don't have an answer. When
you talk about faith-based initiatives, you are talking about religion
in America. The obvious and important question is: What is a religion?
There are many that we readily will recognize as being established
religions of all different denominations. But when it comes to the
definition of religion, many people self-define their beliefs and
activities as religion.
Jim Jones led people to a mass suicide in Guyana, and David Koresh
and his Branch Davidians in Waco, TX, have become scarred in the
American memory as tragic reminders of what happens when people are
blindly led by fanatics who use the guise of religion for their own
personal, violent agenda. I represent a State which is the home of the
so-called World Church of the Creator, which has to be one of the most
perverted extremist groups in America that I know of, which claims
itself to be a religion. On its Web site, the so-called ``Reverend''
Matt Hale--who graduated from law school but was not allowed to be
licensed under the rules and practices of the bar in Illinois--proudly
welcomes visitors, saying:
We are a religious, nonprofit organization, with our world
headquarters in the State of Illinois. At the time of this
writing, we have 24 regional and local branches of the church
and members all over the world.
What are the tenets of his church and religion, of this World Church
of the Creator? Here is what he says in his own words:
After 6,000 years of recorded history, our people finally
have a religion of, for, and by them. Creativity is that
religion. It is established for the survival, expansion, and
advancement of our white race exclusively. Indeed, we believe
that what is good for the white race is the highest virtue,
and what is bad for the white race is the ultimate sin.
I cannot think of any more hateful rhetoric spewed in the name of
religion. That is exactly what is happening today. Recently someone
challenged their dismissal of employment because they were members of
this church. The court came back and said it is a religion and has to
be treated as such for the purpose of the Civil Rights Act of 1964.
So here we come to a point where we are talking about giving Federal
dollars to those who call themselves religions for the purpose of
performing social services. What is the threshold question we should
ask? Is this truly a religion or is this something else in the guise of
a religion? What are we doing with taxpayer dollars? Would we want to
spend $1 supporting the racist views of the World Church of the Creator
because they tell the Federal Government they have a program to deal
with drug abuse or to provide childcare services in central Illinois? I
hope not. But once you have opened this door and start talking about
Federal dollars given to religion for social services, you open up a
can of worms, a set of questions and great challenges that we have not
faced for many years, if ever.
I am worried as I look across the various religions of the world, not
just those purporting to be Christian but some who are members of
different religions that have taken what in fact are extreme views.
It was only a little more that a year ago that the people of
Afghanistan were still suffering under the violent and oppressive
regime of the Taliban, which suppressed and punished its people in the
name of Islamic fundamentalist religious beliefs.
Thanks to the leadership of the United States and our military, we
[[Page S4936]]
have now liberated the Afghan people from the Taliban, which, like Al
Qaeda, had distorted the peaceful religion of Islam for their own
destructive purposes.
The leaders of the Taliban were trained in ``madrassas,'' which are
characterized as religious schools. But those familiar with these
institutions often call many of them ``jihad factories'' because of the
extreme nature of their ``religious'' indoctrination and the militancy
they train.
At madrassas, the Taliban preached that freedom afforded to women is
the main reason for social degradation, and that the best place for
women was inside the four walls of their homes--cut off from education
and cut off from opportunity.
They also preached that television is the ``spark of hell''
responsible for moral degradation, and watching it or listening to
music was un-Islamic and sinful. And when they came to power, the
Taliban put all of these distorted lessons to practice against their
own people.
The Taliban is perhaps the most recent example of extremism in the
name of religion that we have witnessed.
But since the 1979 Islamic revolution in Iran, we have seen numerous
radical Islamic fundamentalists utilize their religious ideology as the
driving force behind the most active Middle Eastern terrorist groups
and state sponsors.
For example, Hizballah of Lebanon calls itself the ``Party of God''
although there is nothing godly about its terrorist activities.
Hizballah was founded in 1982 as a faith-based organization by
Lebanese Shiite clerics who were inspired by the Islamic ideology of
Iran's Ayatollah Khomeini. Its original goal was to establish an
Islamic republic in Lebanon. But many of the Shiite Muslims who rule
Hizballah studied in Iran's theological seminaries while receiving
terrorist training there as well.
The trainings paid off as this terrorist group became responsible for
the detention of most, if not all, American and other Western hostages
held in Lebanon during the 1980s and early 1990s. Eighteen Americans
were held hostage during that period, three of whom were killed.
Hizballah is also suspected in the April 1983 suicide truck bombings
of the U.S. Embassy in Beirut and the U.S. Marine barracks in October
1983 that killed 220 Marine, 18 Navy and 3 Army personnel.
And Hizballah is also suspected to have been behind the hijacking of
TWA Flight 847 in 1985, and the killing of a Navy diver, Robert
Stethem, who was on board.
Hamas, Al-Jihad, Abu Sayyaf, and Islamic Movement are some of the
other better-known extremists that argue their organizations are based
on Islamic religious beliefs.
There are radical Jewish groups as well, such as Kach and Kahane
Chai. These two Jewish movements seek to expel all Arabs from Israel
and expand Israel's boundaries to include the occupied territories and
parts of Jordan. Founded by extremist Rabbi Meir Kahane, these groups
also argue for strict implementation of Jewish law in Israel.
I do not mean to suggest here that the President's faith-based
initiative will necessarily lead to such religious extremism.
At the same time, I want to make it clear that this is not an easy
question. To dismiss it simply as a question about whether or not we
are tolerant of religion is one thing, but the question of whether we
are going to subsidize religious belief that reaches the extreme is
really something else.
The important message we must send is that religious organizations
that take taxpayers' money should not be able to use those funds to
discriminate in hiring employees on the basis of religion. The American
people have been asked their opinion on this issue. The response is
interesting.
According to the Washington Post, in a 2001 survey conducted by the
Pew Research Center:
When people were asked whether ``religious groups that use
Government funds [should] be allowed to hire only those who
share their religious beliefs,'' 78 percent said ``no'' and
18 percent said ``yes''--a degree of objection that so
surprised researchers that they repeated the question three
different ways. . . .
They received the same answer time and time again. On the other hand,
the Bush administration believes that Government-funded discrimination
in hiring on the basis of religion is acceptable.
According to a U.S. Department of Justice Office of Legal Counsel
memorandum on June 25, 2001:
We conclude, for the reasons set forth more fully below,
that a faith-based organization receiving direct Federal aid
may make employment decisions on the basis of religion
without running afoul of the Establishment Clause.
In the only case that directly addressed whether the Title VII
exemption applies to a position funded by government funds, the
Southern District Court of Mississippi ruled that it did not.
In the 1989 case Dodge v. Salvation Army, Jamie Dodge was employed by
the Salvation Army in its Domestic Violence Shelter as the Victims
Assistance Coordinator.
After the Director of the shelter saw Ms. Dodge using the Salvation
Army's copy machine, Ms. Dodge admitted that she had made copies of
manuals and information on Wiccan rituals.
Soon after making these admissions, Ms. Dodge was terminated.
She filed a complaint that because the shelter where she worked
received substantial federal and state funds, the Title VII exemption
could not be applied to her.
The District Court ruled that ``even though the religious exemption
does permit the Salvation Army to terminate an employee based on
religious grounds, the fact that the plaintiff's position as Victims'
Assistance Coordinator was funded substantially, if not entirely, by
federal, state, and local government, gives rise to constitutional
considerations which effectively prohibit the application of the
exemption to the facts in this case.''
Furthermore, the Court held that ``Based on the facts in the present
case, the effect of the government substantially, if not exclusively,
funding a position such as the Victims' Assistance Coordinator and then
allowing the Salvation Army to choose the person to fill or maintain
the position based on religious preference clearly has the effect of
advancing religion and is unconstitutional.
Despite this ruling, the issue is considered an open legal question
because the case was not considered beyond the District Court and there
are several other cases which at least partially address this question.
However, this is not just a legal question or a hypothetical line we
are drawing in the sand.
One of the cases I would like to point out is a case that really
talks about discrimination firsthand. It is the case of Alan Yorker and
his experience with United Methodist Children's Home in Decatur, GA.
The children's home, which receives almost half of its money from
Government sources, provides residential group foster care for 70 young
people, many of whom are in State custody.
Mr. Yorker responded to an advertisement in the Atlanta Journal-
Constitution for a position at the home. As a psychotherapist with over
20 years experience counseling young people and their families and over
a decade of experience teaching in Emory University professional
schools, the home determined that his credentials placed him among the
top candidates for the position. He was rushed in for an interview,
where he was required to disclose in an application form his religious
affiliation, his church and minister. Mr. Yorker, a Jew, supplied the
names of his synagogue and rabbi. During the interview, an
administrator noted that Mr. Yorker was Jewish and told him that this
children's home doesn't hire people who are Jewish. He was shown the
door.
Let me tell you that this didn't happen decades ago; this is of
recent vintage. The same administrator told another employee that it is
the home's practice to throw the resumes of applicants with Jewish-
sounding names in the trash. The Yorker name got past her.
Ironically, Yorker has not always been the family name. Alan Yorker's
Jewish paternal grandfather, Harry Monjesky, spent many years as a
conductor on the New York Central Railroad. When the railroad began to
face tough times, Jewish and African-American workers were singled out
for layoffs first, regardless of their seniority.
[[Page S4937]]
Mr. Monjesky was fired and left without a livelihood. Several years
later, when Alan's father reached adulthood, he changed his name to
Yorker. He wanted to make sure that his children would be judged by
their merit and not by their surname or private religious beliefs.
That is how Alan Yorker's resume landed at the top of the pile
instead of the home's trash bin. And nearly a century after his
grandfather was turned away by the Railroad because of his religion,
Alan Yorker faced the same discrimination when applying for a
government-funded position.
I will conclude by saying that these are examples of what is being
done in the name of religion. For it to be done by a religious
organization to achieve a religious goal, with funds raised by co-
religionists, is certainly allowed in title VII of the Civil Rights
Act. To say, however, that we are going to open the Federal Treasury
and provide millions of dollars to religions for social services, and
then approve of their discriminatory activity in the name of religion,
is branching out in a direction that our Founding Fathers could never
have considered, let alone condoned.
In light of this complex constitutional issue, I think it is fair to
ask why we even need a faith-based initiative. President Bush believes
it is necessary because ``people should be allowed to access money
without having to lose their mission or change their mission.''
However, current law already permits groups that are affiliated with
religious entities to provide social services with Government funding.
Catholic Charities, Lutheran Social Services, Jewish Federations, and
many other religious organizations have received--and continue to
receive--taxpayer funds from the Government to provide much-needed
services that our Government is often unable and unavailable to
provide.
These organizations access Federal funds without changing their
missions. For example, Catholic Charities has a publication entitled
``10 Ways Catholic Charities are Catholic.'' At the same time, Catholic
Charities in Chicago, which I am proud to represent, also issues the
following statement on its Web site:
Catholic Charities employs more than 3,000 dedicated,
compassionate and professional men and women, regardless of
race, religion, or ethnic background.
Many Catholic Charities across the Nation have similar equal
opportunity statements.
As thousands of Americans visit our Nation's Capital, many will stop
at the Jefferson Memorial and read the following inscription, in the
words of Thomas Jefferson:
No man shall be compelled to frequent or support any
religious worship ministry or shall otherwise suffer on
account of his opinions in matters of religion.
These words, from Jefferson's ``Bill for Establishing Religious
Freedom in Virginia,'' are as relevant now as they were in 1785.
Although we don't debate the faith-based initiative proposal in its
entirety today, I look forward to the opportunity to continue to
protect our historic balance in the relationship between church and
state.
I yield the floor.
Mr. KENNEDY. Mr. President, the CARE Act is a significant bipartisan
effort to create improved opportunities for charitable giving. That is
a goal I wholeheartedly support. Charitable giving is a continuing
reaffirmation of the deeply held community spirit of the American
people. It recognizes our responsibility to help the less fortunate,
and the work of charitable organizations is essential in protecting the
well-being of millions of our fellow citizens.
The key provision of the bill will at long last allow those who do
not itemize their deductions to receive a tax deduction for their
charitable contributions. This deduction will benefit millions of low
and middle-income families who are already making significant
charitable contributions each year, and it will encourage even more
charitable contributions in future years.
The agreement to remove the controversial title 8 makes sense, so the
bill can move quickly through Congress. All of us share the goal of
enhancing community-based services for low-income people through
public, private, and faith-based organizations. Our concern with title
8 was that it failed to see that faith-based organizations do not use
these public funds to discriminate on the basis of religion.
Many of us continue to be concerned about a separate development on
the discrimination issue. The President has issued an Executive order
repealing more than 60 years of Federal protections against religious
discrimination in publicly funded programs. Under the President's
order, organizations can receive public funds and then refuse to hire
persons because of their religion, their marital status, or their
sexual orientation. As the Senate considers future legislation to
support and fund community-based organizations that provide social
services, including faith-based organizations, I look forward to
working with my colleagues to see that civil rights protections are
safeguarded.
I am pleased that the CARE Act restores funding for the social
services block grant. Congress made a promise in 1996 to do so, and it
is essential to keep that promise, so that vulnerable Americans can
continue to rely on the funding in the years ahead.
For too long, Congress has ignored its responsibility to those most
in need. Since 1995, annual funding for SSBG has been cut by more than
$1 billion, from a high of $2.8 billion to the current level of $1.7
billion. This bill will restore the amount to $2.8 billion in the next
fiscal year.
The social services block grant pays for critical services for 11
million children, families, seniors, and persons with disabilities each
year. In 2000, $683 million in these funds was used to support child
protective services, foster care, and adoption services alone. Twelve
percent of the funds was used for disability services, and $181 million
was used to provide services to the elderly. This program is the only
Federal source of funding for Adult Protective Services, which provides
assistance and protection for elderly and disabled adults who are
victims of abuse.
Restoring these funds is especially important now, when most States
are cutting and even eliminating the very services and programs that
the social services block grant was enacted to support. The economic
downturn, escalating State deficits, and reduced funding for social
services, has left State program officials with the impossible task of
deciding who to help and who to turn away.
We must do all we can in Congress to ensure that States have the
resources they need to support their most vulnerable citizens. I
commend my colleagues on the Finance Committee on the provision to
restore SSBG in the CARE Act for the coming year. Our goal now is to
see that we keep doing that in future years as well.
Today's action should not be just a temporary, 1-year fix. We owe a
lasting commitment to the children, families, and seniors who need our
help the most, and I look forward to working with my colleagues to
achieve this goal.
Mr. JEFFORDS. I would like to briefly discuss one of the provisions
in the CARE Act, an incentive that will encourage the conservation of
environmentally sensitive land. This conservation incentive will allow
landowners who own environmentally sensitive land to exclude part of
the gain they realize if they sell their land to conservation
organizations for the purpose of conservation.
We are losing our farms, ranches, and open spaces at an alarming
rate. Many landowners would like to transfer their land to a
conservation organization that would conserve it or preserve its
original use. For many of them, however, donating land to a
conservation organization is not an option. Their land is an important
asset, the sale of which will yield an important source of income.
The CARE Act creates a new tax incentive for these ``land rich/cash
poor'' taxpayers who cannot take advantage of the current law's
charitable deduction. This new incentive is an exclusion from income
for one-fourth of the gain that taxpayers realize upon a sale of land,
when the land is sold for conservation purposes, to a conservation
organization. The exclusion will also be available for a transfer of a
partial interest, such as a conservation easement. With this provision,
landowners would pay less tax when they transfer land for conservation
purposes.
[[Page S4938]]
I first introduced a bill similar to the CARE Act provision in the
106th Congress. In 2000, both Presidential candidates endorsed this
approach. This year, and in the previous 2 years, a provision like the
conservation exclusion in the CARE Act has been included in the
President's budget proposals. It has also been endorsed by a diverse
range of interest groups, including the Farm Bureau, Ducks Unlimited,
the Land Trust Alliance, the American Farmland Trust, and the Nature
Conservancy.
My bill--and President Bush's budget proposals--called for a 50-
percent exclusion. If, as I believe, this tax incentive proves to be an
effective way to encourage conservation, I hope that we will someday be
able to increase the exclusion. This new tax incentive will mean more
conservation with no new appropriations, and no new restrictions on
land use. It adopts a new, market-based approach to conservation, using
funds that have either been privately raised or set aside by State and
local governments.
Mr. LUGAR. Mr. President, I rise today in support of the Charity,
Aid, Recovery, and Empowerment Act. I am proud to be an original
cosponsor of this important legislation, which would encourage more
citizens to contribute to non-profit programs and institutions. I want
to commend my colleagues, Senators Santorum and Lieberman, for
introducing this important bipartisan legislation. The CARE Act is
designed to promote charitable giving at a time when charities report
increasing demands on their services along with a decline in
contributions.
After the tragedy of September 11, charitable contributions were
greatly deminished. Donations to charitable organizations dropped last
year by 2.3 percent and they are lagging even further behind this year.
At the same time, more people are turning to charities for help because
of job lay-offs, health concerns, and the needs of our children. The
tax incentives contained in the CARE Act to encourage charitable giving
are needed now more than ever.
Included in this bill is language to encourage charitable giving by
allowing a tax deduction for charitable giving for non-itemizers.
Eighty-six million Americans do not presently itemize their deductions
on their tax returns. This provision would allow for a tax deduction up
to $250 for individuals and $500 for couples. Organizations such as the
American Red Cross, the March of Dimes, and other charitable
organizations that rely on low dollar donations believe that they will
be able to generate more donations if everyone could take a deduction
regardless of which form they file with the Internal Revenue Service.
The ability to roll over excess funds from Individual Retirement
Accounts to a charitable organization or university is also a part of
this legislation. Many organizations and universities benefit from
planned gift revenues. The IRA rollover provision will allow charities
to increase the number of planned gifts, while being able to diversify
their planned gift portfolios.
I have been a supporter of Individual Development Accounts and was
pleased that this initiative to expand these accounts is included in
the bill before us. These accounts are made up of dollar-for-dollar
matching contributions up to $500 from banks and community
organizations to be used by lower-income working families to buy a
home, start or expand a small business, or pay for college.
I believe that one of the most important provisions that has been
included in this bill is the Hunger Relief Tax Incentive Act. This
important provision allows for expanded charitable tax deductions for
contributions of food inventory to our nation's food banks. Demand on
food banks has been rising, and these tax deductions would be an
important step in increasing private donations to the non-profit hunger
relief charities playing a critical role in meeting America's nutrition
needs.
As I have traveled around Indiana, I have visited many food banks in
our state. They have confirmed the results of a study by the U.S.
Conference of Mayors that showed demand for food at food banks has
risen significantly. The success of welfare reform legislation has
moved many recipients off welfare and into jobs. In many states,
welfare roles have been reduced by more than half. But we need to
recognize that these individuals and their families are living on
modest wages. As the states' unemployment rates have risen, so has the
demand placed on the food banks and soup kitchens.
According to the Conference of Mayors survey, during the last year,
requests for emergency food assistance has increased one hundred
percent. Forty-eight percent of the people requesting emergency food
assistance are either children or their parents. The number of elderly
persons requesting food assistance has increased by ninety-two percent.
Private food banks provide a key safety net against hunger. According
to an August 2000 report by USDA, 31 million Americans are living on
the edge of hunger.
USDA statistics show that up to 96 billion pounds of food go to waste
each year in the United States. If a small percentage of this wasted
food could be redirected to food banks, we could make important strides
in our fight against hunger.
The food bank provisions under the CARE Act would allow farmers and
small business owners to take a deduction when they donate food to
their community food bank. Currently this deduction is available to
large corporations but not to small businesses. This approach would
stimulate private charitable giving to food banks at the community
level.
Each citizen can make an important contribution to the fight against
hunger at a local level. I have been especially impressed by the
remarkable work of food banks in Indiana. In many cases, they are
partnered with churches and faith-based organizations and are making a
tremendous difference in our communities. We should support this
private sector activity, which not only feeds people, but also
strengthens community bonds and demonstrates the power of faith,
charity, and civic involvement.
I would like to thank Senators Santorum, Lieberman, Grassley, and
Baucus for their efforts in helping America's charities meet their
funding goals, and to those individuals who take advantage of the
services provided by these groups.
Mr. GRAHAM of Florida. Mr. President, I am pleased that the Senate is
considering the CARE Act today. By enacting this legislation, Congress
acknowledges the inherent good in millions of Americans.
The bill includes a number of changes to the tax rules that will make
it easier for individuals to donate to the tens of thousands of
worthwhile charities that operate across this nation. By making the
charitable deduction available to those taxpayers who don't itemize
their deductions, married couples can deduct as much as $500 of the
contributions they make to charity.
Provisions in the legislation also make it easier for individuals to
donate funds they have saved in an IRA. Rather than having to report
this amount in income and then take a commensurate deduction for the
contribution, the new rule allows the funds to be transferred directly
to the charity.
The bill also eases the burden of gaining tax benefits for those
individuals who wish to make donations of food, books, and scholarly
compositions to charity.
While these charitable giving incentives are useful to many citizens
and the charities they desire to help, this legislation may be even
more important because it contains strong provisions that will help the
Internal Revenue Service and the Nation's courts crack down on abusive
tax shelters.
In his last report to the IRS Oversight Board, the IRS Commissioner
Charles Rossotti identified abusive corporate tax shelters and
promoters of tax schemes of all varieties as among the most serious
compliance problem areas. In addition to the revenue lost by the
Federal Government--funds that could be used for defending the
homeland, education, and protecting the environment--the proliferation
of these schemes represents in Commissioner Rossotti's words ``a
failure of fairness to the millions of honest taxpayers whose
commitment to paying their taxes is based on the principle that the IRS
will act if they or their neighbors do not pay their fair share.''
This administration has been slow to embrace measures that crack down
on those who manipulate the Tax Code to
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avoid paying their taxes. Despite the previous administration having
identified the proliferation of tax shelters as a large and growing
problem as far back as 2000, President Bush's initial budget contained
no legislative recommendations to stem the proliferation of tax
shelters.
Only after it became clear that Congress was going to address this
issue, did the Bush Administration take notice. Even then, their
approach to combating this problem was, at best, timid. The Bush
administration's solution was to continue to rely solely on the
Service's ability to detect an abusive tax shelter from within the
minutiae of a taxpayer's tax return. If the Service was fortunate to
uncover a tax shelter, it could then initiate steps to shut it down.
This is a difficult and time-consuming process for the IRS to
undertake.
While disclosure of these schemes by taxpayers and promoters can be
useful in combating the proliferation of tax shelters, the IRS also
needs some additional tools. This is why the bill includes a statutory
requirement that transactions utilized by taxpayers have an economic
rationale beyond the creation of tax benefits, commonly referred to as
the ``economic substance doctrine''. The bill backs up this new
requirement with stiff penalties for taxpayers who engage in such
transactions.
It is a simple requirement. You don't even need to be a tax attorney
to understand it. Simply put, it would require that transactions
conducted by taxpayers have a business purpose. What does that mean?
The proposal requires that a taxpayer have a reason other than the
creation of tax benefits for engaging in a transaction.
A cursory review of the recent Joint Committee on Taxation report on
the tax returns of Enron Corporation highlights the dire need for this
legislative change. The Joint Committee on Taxation found that Enron
paid total federal income taxes for the period 1996 through 2001 of $63
million. During this same period Enron reported to investors that it
had profits of nearly $6 billion. How was Enron able to paint such
obviously contrasting pictures?
According to the Joint Committee on Taxation's report, Enron
transformed its tax department from an administrative function to a
profit center. Enron spent millions of dollars on tax attorneys and
shelter promoters who helped it cook up transactions that had no
purpose other than to artificially reduce its tax liability.
According to the JCT Report, these transactions:
demonstrate the need for strong anti-avoidance rules to
combat tax-motivated transactions that might satisfy the
technical requirements of the tax statutes and administrative
rules, but that serve little or no purpose other than to
generate income tax or financial statement benefits.
This bill provides those strong anti-avoidance rules, and I hope they
will become law sooner rather than later.
The PRESIDING OFFICER. The Senator from Iowa.
Mr. GRASSLEY. Mr. President, first of all, I thank Senator Baucus for
the compliments he gave me. More importantly, it emphasizes, as I have
tried to indicate, the great cooperation I have had from him.
Legislation such as this has some controversial provisions in it, and
you don't get a piece of legislation such as this to the floor without
the bipartisan cooperation that has been exhibited. I thank him for
that.
Amendment No. 526
(Purpose: To provide a Managers' amendment)
Mr. President, I send an amendment to the desk and ask for its
immediate consideration. This is what is referred to as the managers'
amendment.
The PRESIDING OFFICER. The clerk will report the amendment.
The bill clerk read as follows:
The Senator from Iowa [Mr. Grassley], for himself and Mr.
Baucus, proposes an amendment numbered 526.
Mr. GRASSLEY. Mr. President, I ask unanimous consent that further
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 ``Text of
Amendments.'')
Mr. GRASSLEY. Mr. President, I ask unanimous consent that all time be
yielded back on the amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. GRASSLEY. Mr. President, I further ask unanimous consent that the
amendment be agreed to and the motion to reconsider be laid upon the
table.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment (No. 526) was agreed to.
Mr. GRASSLEY. Mr. President, I have already complimented Senator
Santorum and Senator Lieberman for their joint work on most of the
provisions of this legislation. I am happy to have Senator Santorum,
who is also a member of the Senate Finance Committee, manage a bill
that he has been central to getting those provisions into law.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. SANTORUM. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. SANTORUM. Mr. President, I thank the Senator from Iowa, the
chairman of the Finance Committee, for his kind words and his
cooperation. I thank the ranking member of the committee for his
cooperation.
There are some things in this legislation that he is not particularly
enamored with, but he was most cooperative and helpful in moving the
legislation forward. We are now at a point where we are within 24 hours
of passing the legislation. Most of all, I thank my colleague from
Connecticut, Senator Lieberman, who has been a faithful partner--to use
a play on words--a faithful partner in putting this initiative
together.
We have worked together closely with the President, who has been
truly the motivating force to try to provide some ammunition to the
armies of compassion out there on the front lines every day, fighting
for hope and opportunity for the millions of Americans who have yet to
realize their dreams in dealing with the problems that confront them.
The President has, through his faith-based initiative, been very
clear in the role of charitable organizations, particularly people of
faith within those organizations, to heal many of the ills that
confront society. We are a society that, while very prosperous by any
measure, even at a time of economic downturn that we are experiencing
right now, we are still the wealthiest country in the history of the
world. With that great wealth comes responsibility. So many people have
taken up that responsibility, trying to meet and serve those who in a
society of great wealth have experienced a multitude of problems in
trying to achieve, both from the economic perspective but again, as I
said before, pursuing their dreams.
This piece of legislation, while it is not everything the President
requested--it is not all of his faith-based initiative--certainly gets
at one of the most important components which is the one funding
organizations which do charitable purposes or have charitable purposes.
No. 2, there is a provision called the Compassionate Capital Fund
which is grants to small organizations with less than six employees or
less than $\1/2\ million in funding, to go out and be able to, for the
first time, compete for Federal funds.
A lot of these small organizations, most of which are faith based in
nature, have not been successful in applying for government grants
principally because they don't have the resources or the expertise to
do so. When you are running a food pantry with one or two people, most
of whom are part-time employees and many volunteers, you don't have the
expertise to apply for Federal grant dollars or any other kind of grant
dollars. You try to do what you can to make ends meet. This provides
the kind of technical assistance necessary for a lot of smaller, mostly
inner-city organizations that right now do not take advantage of the
money available through the Federal Government, again, whether they are
faith based or not.
Most of these organizations are faith based in nature so there is a
faith component to this. As I will show later, many of the provisions
in the act will have a disproportionate benefit to
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charitable organizations which are faith based.
It doesn't accomplish a couple of the things the President set out to
do. The issue Senator Durbin spoke of earlier having to do with equal
treatment, even though it is not in this legislation, let me address it
very briefly and then maybe in more detail later on.
The whole concept of equal treatment is to allow those who have some
element of faith within their organization--and there is a whole range
across the charitable organization horizon. There is a whole range of
faith, how much faith is integrated into those organizations--some are,
to use the term, ``saturated'' or completely faith based in nature and
expressively faith based in their programs, to the whole range of the
other side which are those that are exclusively secular and even to
some degree hostile to faith. In between there are gradations.
What the President has tried to do is instead of, as we do right now,
as we did prior to the 1996 welfare reform, which allowed for
charitable choice, in other words, for some government programs to go,
these dollars to go to faith organizations, we sort of eliminated all
these people of faith and all these organizations that have faith as a
component of their mission or their vision or their program and left it
to a very rather narrow category.
We, in 1996, on the Senate floor, with President Clinton signing it,
said we would stop that discrimination against people of faith who
wanted to act based on their faith to help their fellow man, as long as
they didn't do certain things such as use it for faith worship or
proselytizing, things that are not delivery of service.
We expanded greatly the range of faith organizations and nonfaith
organizations. We expanded greatly those who can participate in
government funds. When you do that, you run into some problems, some
questions.
We have seen tremendous success and very few cases where problems
have arisen, but in the areas where they have, there have been
questions as to what government statutes apply, what provisions or
regulations apply to faith organizations as opposed to nonfaith
organizations.
One of the principal questions has to do with people's religious
liberties and their ability to practice their faith bumping up against
other rights. The one that the House of Representatives dealt with and
the Senator from Illinois referred to had to do with the issue of
employment and whether religious organizations which are provided with
government funds can say that someone cannot work for that organization
or they can refuse to hire someone who works for that organization who
doesn't share that organization's values with respect to tenets and
teaching of the faith which is expressed through their program.
One of the things I believe is essential to a lot of faith
organizations, one of the reasons that faith organizations should be
and need to be included in providing social services, is that a lot of
these faith-based organizations don't just treat the symptom. They
don't just treat the hunger, if it is someone who comes in for food
assistance, or they don't just treat the dependency on drugs or
alcohol, if someone comes in for addiction treatment. It doesn't just
treat the problem of a lack of a GED or education, if someone comes in
for education and training. What they do, because of their mission,
they treat the mind. They treat the spirit and they treat the emotional
well-being of this person. They treat the whole person. That is one of
the keys to success in trying to truly turn people's lives around in a
way that brings them back into productive life in America.
The key to these faith organizations is having people who have this
mission they share out there teaching and bringing people in based on a
certain core value structure. My argument is, we should not
discriminate against people who have programs that are value laden--
those values may be based on Scripture, the Old or New Testament or
some other book--as opposed to saying we are going to discriminate
against you because the values you have are based upon a religious
belief, as opposed to an organization that is secular and its values
are not based on a religious belief. I don't understand the reason for
the discrimination. I don't believe it should exist.
I have had this discussion in brief, and we can talk more about it. I
am sure we will. But having said all that, none of that is in this
bill. We decided not to have this issue before us today because the
need of getting resources out to the charitable organizations meeting
human service and educational and other needs is, frankly, too urgent.
While we will debate this--and I am sure others will want to debate
this issue--the true debate will wait for another day. That will be
when the welfare reauthorization comes up. That is where this whole
conversation of charitable choice and allowing faith-based providers to
participate in government grants came about, back in 1996. And it is
where we should continue that debate. I pledge to you that whether we
get that bill or have that amendment in committee, or whether we bring
it to the floor, this will be a topic of discussion and one I encourage
all Members to think about and participate in.
But the charitable crisis is real, and that is why I agreed--and my
colleagues in the House have been more than cooperative in putting
together, hopefully, a compromise we can quickly get to the President's
desk. We understand the crisis is real. Adjusted for inflation,
charitable giving 2 years ago, in 2001, was 2.3 percent lower than in
2000. You have to remember at the end of 2001, unfortunately, we had to
deal with the aftermath of 9/11, where there was a tremendous
outpouring of giving. Even with that outpouring of giving, because of
the sluggish economy, charitable giving fell again last year. Corporate
giving fell again between 2000 and 2001 by 14.5 percent.
Again, we don't have the final numbers for 2002, but it was supposed
to be off again last year. We saw the American Red Cross--I'll give a
couple of examples. Their contributions declined anywhere from 20 to 60
percent; Salvation Army, off 5 to 10 percent; United Way, off 4 to 5
percent. We can go on and on. Colleges and universities saw a decline
in the amount of charitable giving to their organizations, too.
So what we are doing is trying to respond in a comprehensive way.
When I say that, I mean if you look at this bill, it is carefully
crafted to provide incentives for all different types of givers--
corporate, foundations, and individuals who don't itemize on their tax
forms. By the way, if those with IRA rollovers want to give money to
charitable organizations, they can do so without having to pay taxes
under this legislation. So whether it is the small giver to, hopefully,
the retiree, or someone who has a large IRA, or corporations who may
want to give more money--all the way down the line to food donations,
which is another area where the Senator from Indiana, Senator Lugar,
has a provision in this legislation that I think is very important, we
have a provision that will encourage literally billions of dollars of
additional food donations over the next several years by providing a
tax incentive for corporations; but for the first time, partnerships,
individual proprietors, and S corporations will be able to take the
fair market value of their donation as a deduction--it is up to twice
the cost of the basis of that food item--as a deduction for giving to
charitable purposes.
We have about a billion pounds of food donated right now to people in
America to help feed the hungry in America. It feeds about 26 million
people. There are 96 billion pounds of food wasted in America. That is
just an enormous amount. It is almost incomprehensible that we are
talking about that amount. When you consider the fact that roughly 1
billion pounds of food donated helps feed 26 million, can you imagine,
if we just increase it by a very small percentage, the amount of
donated food there could be and how many people we could feed in
America?
Senator Lugar's legislation is included. We believe it will make a
dramatic impact on hunger in America. There are a lot of other
provisions.
I see my colleague from Indiana, Mr. Bayh. I will be on the floor for
a while. I want to give him the opportunity to share with us some of
the things he has been active with. He has a provision in the
legislation he has shepherded through the process. I will have him talk
about that. He has also been a champion and strong supporter of this
legislation and the entire package from day one. I thank him for his
support,
[[Page S4941]]
and I appreciate him coming to the floor to talk about this issue.
I yield the floor.
Mr. SANTORUM. Mr. President, I see the Senator from Indiana. I yield
to him as much time as he may consume.
Mr. BAYH. Mr. President, I thank my colleague from Montana for his
leadership, his friendship, and his devotion to this issue. I have
listened with interest to his comments about the importance of ensuring
that the incentives in the bill actually increase the charitable
giving, as intended, and that we not inadvertently run a risk of lack
of compliance. I concur with those sentiments and the need for a study
to make sure we accomplish what it is we intend to accomplish.
I also want to begin by thanking our colleague from the State of
Pennsylvania. It is fair to say we would not be here today without
Senator Santorum's leadership. He has been persistent and willing to
strike principled compromises. It has not always been easy, but it is
to his credit in choosing to make progress rather than just having an
issue. I thank him. Thanks to him, we are on the cusp of a significant
breakthrough with regard to doing some things that will, in fact, lead
to better care for the American people.
To our other colleagues involved in the effort, including Senators
Lieberman, Nelson, Grassley, and my colleague from Indiana, Senator
Lugar, I salute them. I observe that at a time and in our body that is
too often driven by politics and partisanship, this has truly been a
bipartisan undertaking.
As I have observed before, just as faith can move mountains, perhaps
it can also bring together Members of the Senate and span the political
divide that too often separates those of us on one side of the aisle
from the other. That is a good thing that the debate has brought to the
Chamber--a greater sense of comity and devotion to progress and
bipartisanship.
I reflect today, as our military men and women are in harm's way in
Iraq, on the fact that our country's greatest military strength lies
not in our weapons systems, not in the planes, the tanks, and the
missiles, as important as they are but, rather, in the character, the
bravery, and the courage those men and women honor us by demonstrating
in the defense of our national security interests--just so our greatest
strength domestically is not the financial markets we enjoy, not the
technology or the factories, as important as they are to our
prosperity. Instead, it is the innate goodness and spirit of the
American people. That is what we celebrate today, Mr. President. That
is what we advance with this legislation, and that is why I am such a
strong supporter of the CARE Act. Through its provisions, we will
enlist literally tens of millions of our fellow citizens in the urgent
cause of making this country an even better place.
As my colleague mentioned, about 70 percent of American taxpayers
currently do not itemize. The provisions of this legislation that will
allow their charitable contributions to be tax deductible will enlist
literally tens of millions of our fellow citizens in philanthropy,
charity, good civic works, community level to address the urgent needs
of our time: Homelessness, hunger, medical needs, fighting drug and
alcohol abuse and addiction, teen and juvenile violence--these sorts of
things--helping to mend the social fabric that is in too great a risk
these days.
Very often, as my colleagues know, we get consumed in this Chamber in
debates not about whether these urgent tasks are being performed, but
instead about who is performing them. Mr. President, my strong sense of
where the American people stand today, and my strong sense of where the
Senate needs to stand today, is on the side of those who are getting
these works done, effectively addressing the needs of the American
people.
When it comes to housing the homeless, feeding the hungry, caring for
the sick and afflicted, it is more important these tasks are being
accomplished in the most effective way rather than getting bogged down
into who is accomplishing it and exactly how.
We will enlist thousands of additional organizations, empower them,
and increase their efforts--church groups, civic groups, other groups
dedicated to doing good deeds, who enlist our citizens in the cause of
not only doing well but also accomplishing good, and that is vitally
important for the future well-being of our great society.
There are two additional points I think should be remarked upon.
Senator Santorum alluded to the first. It is the individual development
account provisions of this legislation. It involves a bringing together
of the best thinking on both the left and the right. This provision
would empower those who are less fortunate in our society to get a
stake in the American dream, a stake toward owning a first home,
starting a small business, going to college--the kinds of activities
that will lead to greater prosperity and progress for individuals who
currently do not have much in the way of hope for either. It gives them
a property interest and a stake in the marketplace in which
traditionally those on the ideological right would have a greater
interest, but it focuses the property interest and the competitiveness
in the marketplace on those who are less fortunate, giving them all an
opportunity to make the most of their God-given talents, something that
those on the ideological left speak to with great fervor.
This is a provision that brings the best of thinking across the
ideological spectrum, regardless of ideology, to do what is right for
the American people. That is why it is a sensible and important step
that is included in this legislation.
There is something else in this legislation that is near and dear to
my heart. We have an outstanding example in my home State of Indiana. I
know my colleague from Pennsylvania has spent a great deal of time
thinking about how to break the cycle of poverty. He has worked
extensively in the area of welfare reform. As a matter of fact, to set
an example for his colleagues of actually reaching out to individuals
who have been in the welfare system and not only moving them from
welfare to work, but moving them into jobs in his own office. I salute
him for that success. Again, it is an example we would all do well to
emulate.
As the Senator from Pennsylvania knows well, we spend hundreds of
billions of dollars in this country dealing with the manifestations of
what really are deeper underlying causes. If one looks at the causes of
welfare dependency, at the causes of juvenile violence, teen pregnancy,
alcohol and drug abuse, educational and economic underperformance, all
too often one will find the root causes of these manifestations and all
the expense we go to in how we treat our children.
There is an important provision in this legislation in this regard.
It deals with maternity homes. We have an outstanding example: Saint
Elizabeth's in Jeffersonville, IN, in Clark County. It is an
outstanding example of how this money can be leveraged not only in
helping the teen mothers but in helping the children and, in so doing,
helping taxpayers and the rest of society.
Their experience indicates that 90 percent of these young women who
are expectant mothers who have the benefits of the services of Saint
Elizabeth's go on to finish their high school education, to get a
diploma, to accomplish that first educational step on the ladder toward
a more successful life.
It is about the same percentage for their children. New babies are
born healthy rather than with serious health problems. And about the
same percentage of those new mothers do not go on to have additional
children out of wedlock. So it is good for the mothers because they
finish their education, it is good for the children because they are
born healthy, and it is good for society because we deal with some of
the root causes of poverty, homelessness, teen violence, drug and
alcohol addiction, and education underperformance, and in so doing,
help society as a whole and the taxpayers in addressing these problems
at the root cause, rather than waiting to address the symptoms, the
manifestations at a later stage.
I am pleased to join with my colleague. This legislation, frankly,
has been too long in coming, but here we are on the cusp of a great
step forward to make our Nation not only more prosperous, not only more
secure, but more decent, more compassionate, more just. That, at the
end of the day,
[[Page S4942]]
is the test of a great society and a great nation, measured not only by
the strength of our arms as being demonstrated abroad as we speak, not
only in the size of our gross domestic product, as important as that
is, but in the opportunity and the decency we demonstrate to our fellow
citizens in the course of their daily lives and in our own.
For all those reasons, Mr. President, I count myself a strong
supporter of this legislation. I again thank the Senator from
Pennsylvania. Without his efforts, we would not be here. I thank those
on our side of the aisle who worked so hard on this legislation. I am
hopeful that in short order we not only can pass this bill and send it
to the President for signature, but, in so doing, help millions of our
fellow citizens. I thank my colleagues for their time.
I yield the floor.
The PRESIDING OFFICER. The Senator from Pennsylvania.
Mr. SANTORUM. Mr. President, I thank the Senator from Indiana for his
overly kind words with respect to my participation in this legislation.
The Senator from Indiana has been truly one of the people out front and
has been very supportive. I cannot count the number of press
conferences I have asked the Senator from Indiana to be at trying to
keep this ball rolling, and at times with a very busy schedule. He has
always found time to associate himself with this cause and to continue
to make sure it was on track in a bipartisan way.
That is how we get things done around here. I am very happy to have
him as one of the prime cosponsors of this legislation. I again
appreciate very much his kind words, but even more so appreciate his
tremendous effort on making this legislation a reality.
I see the Senator from Rhode Island. If he is on a time schedule, I
will be happy to yield the floor to provide him an opportunity to
speak.
The PRESIDING OFFICER. The Senator from Rhode Island.
Mr. REED. Mr. President, I commend Senators Grassley and Baucus for
bringing this important legislation to the floor, but I particularly
commend and thank Senators Santorum and Lieberman for their principled
and tireless efforts to bring this legislation to the floor and for
recognizing that original versions of this legislation contained
elements that were, to say the least, controversial.
Senator Santorum particularly recognized the need to provide
additional resources to faith-based organizations and other charitable
organizations through new incentives in the tax code to encourage
people to contribute to charities. All of these issues compelled him to
make a very difficult choice, a very important choice, and I think a
very statesmanlike choice to send to the floor today a version of the
bill that I assume will get the unanimous approval of this Senate.
It recognizes our shared belief that the more resources we can direct
to organizations that are committed to helping people, the better off
we will be. The increase in the social service block grant is a
tremendous step forward and is something I know I am proud of, but
certainly the Senator from Pennsylvania has to be very proud of because
he is the principal architect of this effort, and the new tax
advantages also are very important.
Indeed, Senator Santorum and Senator Lieberman worked very hard to
improve legislation that in the other body was submitted as the
Community Solutions Act of 2001, known as H.R. 7 in the 107th Congress.
That legislation contained a number of controversial and potentially
unconstitutional provisions, but they worked very diligently, very
carefully, very thoughtfully to eliminate those provisions from their
bill and ultimately today to bring this legislation to the floor, which
I think and believe will get, as I said, unanimous approval by this
body. Certainly I approve of it.
The CARE Act is going to provide increased resources for needed
social services, and it is going to do so without including at this
juncture troubling provisions that were in the original House bill. I
know the Senator from Pennsylvania reserves his right to engage again
on this issue--in fact, I believe he will exercise his right in all
forums, and that is the glory of this body, and we shall engage in more
extended debate, I think, in the future. But this afternoon is an
opportunity to commend him, thank him, and recognize his wise and
statesmanlike conduct. I again thank Senator Santorum.
The debate about church and state in this land precedes, indeed, the
Constitution of the United States. It has been ongoing since the early
days of the American experience. Religion has been an important part of
our national life throughout our history. Indeed, European immigration
in large part was motivated by the search for an environment conducive
to freedom of conscience and religious exercise unhampered by State
involvement.
Today, in the year 2003, religion remains a vital force in our
national life and religiously affiliated institutions play a critical
role in the provision of social services. For example, in 1996,
Federal, State, and local governments granted $1.3 billion to Catholic
Charities USA, comprising 64 percent of its budget. In 1999, 53 percent
of Catholic Charities' budget came from State and local governments,
and an additional 9 percent came from the Federal Government.
In 2001, United Jewish Communities received a Federal grant of $59.8
million. If indirect payments were included--for example, Medicaid,
Medicare, vouchers, or food stamps--the amount flowing through
religious organizations would be significantly higher.
Both of these mission-driven, faith-based groups are independently or
separately incorporated as nonprofits and both are able to distinguish
their religious activities from their secular social services
activities.
So an initial point we must recognize in the debate about faith-based
initiatives is that it is not whether religious groups will or should
play a role in the spiritual and temporal lives of Americans--they do,
and they will continue to do so--nor is the question about whether the
government discriminates against faith-based charitable groups. The
question is how the important roles faith-based organizations play can
continue to meet the constitutional requirement of separation between
church and state, both as a matter of law and as wise public policy.
This constitutional standard has strengthened religion in America
compared to other countries around the world. We can see on the nightly
newscasts the effects of intolerance across the globe, of established
religions battling other beliefs. In America, we have been spared much
of that. I believe it is directly attributable to the wise condition
included in the First Amendment.
My awareness and sensitivity to these issues might spring in large
part from my roots growing up in Rhode Island. As a child, I learned
the history of Roger Williams and the founding of the colony of Rhode
Island and Providence Plantation. Upon leaving the enforced orthodoxy
of the Massachusetts Bay Colony, Roger Williams started a settlement
that ultimately became Rhode Island. This settlement was founded on his
belief, in his words: ``that no man should be molested for his
conscience.''
The spirit of Roger Williams was captured by his contemporary, John
Clarke, in the petition for a new royal charter by the people of Rhode
Island in 1663. In his words, the people of Narragansett Bay:
have it much in their hearts, if they may be permitted, to
hold forth a lively experiment, that a flourishing and civil
state my stand, yea, and best be maintained. . . . with a
full liberty in religious commitments.
As a result of this religious liberty, Rhode Island became a refuge
for people persecuted for their religious beliefs elsewhere. And
Anabaptists, Quakers, and Jews settled in Rhode Island because of its
commitment to religious liberty and tolerance.
This lively experiment became a model for the Founding Fathers and
helped lead to the drafting of the First Amendment: ``Congress shall
make no law respecting an establishment of religion, or prohibiting the
free exercise thereof.''
In explaining what the First Amendment meant to the Danbury Baptist
Association in 1802, Thomas Jefferson wrote that the combined effect of
the establishment and free exercise clauses of the Constitution was a
``wall of separation between church and state.''
Jefferson's comments were not unique to him. Senator Durbin has
already made a reference to President
[[Page S4943]]
James Madison. President Madison what was meant by this separation of
church and state extremely clear in several messages he delivered on
Government funding of religious endeavors. In 1811, he vetoed a
congressional bill granting the use of some Federal land to a church in
the Mississippi territory. President Madison stated:
Because the bill in reserving a certain parcel of land in
the United States for the use of said Baptist Church
comprises a principle and precedent for the appropriation of
funds to the United States for the use and support of
religious societies, contrary to the article of the
Constitution which declares that ``Congress shall make no law
respecting a religious establishment''. . . Resolved. That
the said bill does not pass.
Indeed, I find it interesting that conservatives would so cavalierly
dismiss so much of the history of this country and disregard so many of
the fundamental principles of the Founding Fathers. President Bush and
his conservative followers want to transform the relationship between
church and state by directly funding pervasively sectarian
organizations. He has done this by regulation and by Executive order,
since he has largely been unsuccessful in accomplishing these tasks
through the legislative process.
Just consider some of the changes that he has advanced thus far. In a
June 2001 Department of Justice memorandum, the Department of Justice
took the legal position that faith-based organizations that are given
Federal taxpayer dollars to run governmental programs should be able to
engage in employment discrimination on the basis of religion.
Subsequent to this memorandum, the President by Executive order
overrode a rule first enunciated by President Franklin Roosevelt that
the Federal Government should not give contracts to employers who
engage in discrimination on the basis of religion. Thus, it is now the
position of the White House that government contractors can
discriminate.
The President believes the government should fund faith-based
organizations who use proselytization and prayer to cure drug addiction
and other social programs. In his State of the Union Address, President
Bush cited one such program in Louisiana that expressly combats drug
abuse with faith. The head of another often-cited religious program,
Teen Challenge, boasted to Congress that he was not only able to get
kids to stop using drugs, he converted Jews into Christians in the
process.
In newly proposed HUD regulations, the Administration says that
Federal funds can be used to construct a religious building used for
religious activities if the building also can be used for a public
purpose such as counseling or a food pantry. At least that is the
proposal.
With these and other initiatives, the President is attempting to
breach the wall the Founding Fathers set up between church and state.
These initiatives are clearly designed to fund proselytization and to
promote certain types of religion.
There are legal challenges being raised to many of these proposals.
But the long and short of it is, we have an opportunity to debate and
to decide these issues through the legislative process, and we have an
obligation to do so. And when there is a more robust, more extensive
attempt to legislatively condone or sanction these faith-based
initiatives, I believe there are going to be three major areas we will
need to address.
One area is effective restraints on proselytization with taxpayer
funds. The second is compliance with local regulatory standards in the
delivery of public programs. And the third is prohibiting the use of
public funds in employment discrimination.
First, with respect to proselytization. If the separation of church
and state means anything, then in my mind, it must mean that no
American should be compelled to pass a sectarian test or participate in
sectarian exercises to receive a public benefit. This principle should
be included in legislation and not left to the more shifting sands of
regulatory pronouncements.
Second, many advocates of faith-based initiatives argue that they
simply want a level playing field. Let's take them at their word. If
State licensing arrangements are appropriate and necessary to protect
children in publicly funded programs, why should religious providers be
exempt from such licensing requirements? If we consider this issue, we
will need to look for the even application of local and state laws,
particularly laws with respect to the protection of children and public
health. This is what we will need to do in order to truly create an
even playing field.
Finally, we must address the issue of employment discrimination.
Title VII provides an exemption for religious groups in certain
situations. In the Amos case, the Supreme Court held that a religious
group using its own funds may claim the Title VII exemption. In the
words of the Court, the purpose of the exemption was to alleviate
``significant governmental interference with the ability of religious
organizations to define and carry out their religious missions.''
Today, with respect to the Administration's proposal, we must
recognize that rather than seeking autonomy from governmental
interference, religious groups are seeking taxpayer funds to carry out
governmental responsibilities. Indeed, in the one unreported case that
has ruled on the use of public funds in this way, the court, in this
labor case, concluded that the title VII exception does not apply.
As James Madison said in 1785, in his ``Memorial and Remonstrance
Against Religious Assessments,'' in opposition to a proposal by Patrick
Henry that all Virginians be taxed to support teachers of the Christian
religion:
If ``all men are by nature equally free and independent,''
. . . above all are they to be considered as retaining an
``equal title to the free exercise of Religion according to
the dictates of conscience.'' Whilst we assert for ourselves
a freedom to embrace, to profess and to observe the Religion
which we believe to be of divine origin, we cannot deny an
equal freedom to those whose minds have not yet yielded to
the evidence which has convinced us. If this freedom be
abused, it is an offense against God, not against man: To
God, therefore, not to man, must an account be rendered.
All of this leads me to my final point. In the words of the New
England poet, Robert Frost, ``Good fences make good neighbors.'' What
might be permissible under the law does not always guarantee the wisest
policy.
We need to remember that as we debate the President's faith-based
initiative, religion has thrived in America because few people confuse
religion with government. Religion has been a citadel of conscience and
a check on government because it draws its strength and its support
from its adherents, not from bureaucratic patrons.
The religious communities of America that have been unequivocally
supporting the President's attempts to allow discrimination with
Federal dollars might be mindful of the old saying: Be careful of what
you pray for.
As the House of Representatives has made clear, we are going to be
discussing this issue in the upcoming months on welfare, SAMSHA,
National Service, and other programs. It is my hope the Senate will
undertake a more careful look at how the charitable choice provisions
in these bills inhibit the free exercise of religion, rather than
encourage it.
Again, I thank the sponsors and the chairman and ranking member of
the Finance Committee for bringing this bill to the floor. This is
something we will all support, and we will do so with the notion and
the idea and the commitment to provide resources for people who want to
help other people, and do so consistent with the spirit and the letter
of the Constitution.
I yield the floor.
The PRESIDING OFFICER (Mr. Crapo). The Senator from Pennsylvania.
Mr. SANTORUM. Mr. President, I thank the Senator from Rhode Island
for his kind remarks with respect to the compromise that Senator
Lieberman and I have engaged in to move this legislation forward. I
appreciate his support of this legislation, as I do that of all of my
colleagues.
As he stated, and he is correct, I do take issue with his perspective
on the issue of charitable choice and the funding--allowing of
government funds to be used by organizations that have some element of
faith within their structure, whether it has been the guiding
principles of the organization or with the programs that they
administer.
I do not believe it violates the ``separation of church and state.''
I do believe organizations of faith should not
[[Page S4944]]
be discriminated against. We should not be in the business of just
funding a set of organizations that have no faith component in them at
the expense of those that do--for a lot of reasons, not the least of
which is there is a lot of evidence out there, most of which is
anecdotal I understand, but a growing body of evidence that
organizations of faith are much more effective in dealing with
problems, particularly the more systemic problems that we have.
But I object to the underlying premise of this argument that somehow
or another we are violating the Founding Fathers' understanding of the
separation of church and state.
I talk at a lot of schools. I ask kids: What words are in the
Constitution, ``the free exercise of religion'' or ``separation of
church and state''? Usually about 75 to 80 percent of the kids say,
``separation of church and state'' is in the Constitution, which of
course it is not.
The Senator from Rhode Island talked about the genesis of that in
referring to one of the Founding Fathers, referring to the
establishment clause as erecting a wall of separation between church
and state. But what were they talking about? They were talking about
certainly the country from which they came, which was England, which
had an established church. The Government funded the church, as many
European countries did historically, for long periods of time.
Certainly prior to the Reformation, the Catholic Church was intertwined
very much so with the state. After the Reformation, each reform church
had its own country and was funded in many cases.
People came to this country for religious freedom. They did not want
an established religion. But even at the time in America there were
certain colonies that had affinities for different religions. Maryland,
for example--neighboring Maryland was considered more of a Catholic
colony. Pennsylvania was home to the Quakers--on down the line.
There was a concern that that could come over here to this country,
so they put in this clause that we should not have an established
religion.
The difference is between the constitutional provisions that allow
for the free exercise of religion and the prohibition against the
establishment of religion. But this is really about freedom of
religion; in other words, to practice whatever religious tenets you
want and for the government not to get in your way in doing so.
What some are really arguing is freedom from religion, which I can
tell you is completely antithetical to what our Founding Fathers
believed.
We will have this debate. I am looking forward to it because I think
it is important for the Senate, arguably the greatest deliberative body
in the world, to talk about these important issues.
The role of faith in our society is central. It is central to the
success of America. One of the reasons we are a successful country is
because we are a faith-filled country. One of the reasons we are a
faith-filled country is because we have a tremendous marketplace of
ideas, whether it is the street-corner preacher or the old church down
the street that has been there for centuries.
We have a marketplace of ideas of faith and that is what makes us:
People out preaching the Word, talking about the values that faith
imparts and the messages that faith imparts and its relevance to
people's lives.
Here is a statistic I just marvel over. There are more people who go
to church in America over a weekend, church and synagogue and temple,
than to all the sporting events throughout the entire year in America.
On one weekend, more people go to their places of worship than to all
the sporting events that are held in America over the course of a year.
That is remarkable. It is a great thing about America. It is what makes
us unique. It is because we have not established religion. But it is
not because we are saying people need to be free from religion. I think
that is one of the concerns I have with the tack that the Senator from
Rhode Island was taking.
Let me mention a couple of issues. Again, this is the beginning of a
debate that is not about this bill. I repeat, we have taken everything
having to do with the concept of equal treatment out of this
legislation. We will save that debate for another day. But there are
some things in this legislation I would like to address very briefly.
I see the Senator from New Jersey. I will not keep him long.
One of the items I am most excited about in this legislation is a
provision called individual development accounts. Senator Lieberman and
I and Senator Feinstein and many others, who have been advocates of
this legislation for quite some time, are very excited about it being
part of this initiative. Individual development accounts are a matched
savings account for low-income and low- to moderate-income individuals
who will have an opportunity to put up to $500 a year into a savings
account and have that matched, dollar for dollar, up to $500. So it
will be $1,000 total.
It is an exciting opportunity for these individuals to be able to put
money aside. For what? So they can put it aside for three reasons: to
buy a home, to get education, higher education, or, in some cases,
technical training, vocational training, as well as start a small
business, start a business. So it is a way for people to save for
events in their lives that can transform their future economically:
better education; a home, a place where they can save, invest, and
build equity.
As everybody knows in this Chamber, the place where most people have
the bulk of their savings is in their home, in the equity they have in
their home. So the opportunity for home ownership, and having that
money for a downpayment, is so important. And IDAs create that
opportunity.
And finally, for starting that small business, being that
entrepreneur--that spirit really drives America and really is the
ladder of success so many people in America have access to--we want to
create a nest egg for people to be able to buy that first piece of
equipment. If you want to start a landscaping service, you can buy that
lawn mower, you can buy the other tools you need to do that job, or a
variety of other interests people get engaged in as their first
business.
So we, Senator Lieberman and I, are very excited about this
opportunity. We think it builds not just the opportunity for access to
the home or to the education or to that small business, but it builds
the virtue of deferred gratification. That is a virtue we sometimes do
not practice very much in America, but it is a virtue of delaying the
expenditure of that dollar, to put it aside, to save it for something
that is more important than what you immediately have before you. And
when I am talking about gratification, I am not talking about luxuries.
I am talking about maybe simple things, maybe very minor things in the
lives of people who are low to moderate income. But deferring that to
something that may be transformational in their lives is really
something we should create incentives to do because, again, it helps
people move up that ladder of success in America.
I see a couple of my colleagues are in the Chamber. I am happy to
yield the floor for their input.
The PRESIDING OFFICER. The Senator from New Jersey.
Mr. LAUTENBERG. I thank my colleague from Pennsylvania.
Mr. DORGAN. Will the Senator from New Jersey yield for a consent
request?
I ask unanimous consent that I be recognized for 10 minutes,
following the Senator from New Jersey, to speak on the bill.
Mr. SANTORUM. Reserving the right to object, I may have a Senator on
the way down to the Chamber who is trying to fit in here. How long is
the Senator from New Jersey going to speak?
Mr. LAUTENBERG. Less than 10 minutes.
Mr. SANTORUM. I have no objection.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator from New Jersey.
Mr. LAUTENBERG. Once again, I thank my colleague from Pennsylvania.
And I assure my friend from North Dakota, although it is not my time to
give, I am happy he is going to be recognized.
Mr. President, I want to take just a few minutes to talk about the
legislation before us, the CARE Act, and note its timeliness, because I
think fundamental to a lot of good ideas is the fact that it is time to
encourage participation in the spirit of harmony and unity within our
country.
[[Page S4945]]
I have been struck by the fact I have not heard a call for either
participation or voluntary--call it sacrifice, if you will, although
compared to what our young men and women are doing in Iraq, nothing we
are going to do here looks like that much of a sacrifice--but it does
show good intent. To me, that is important.
So I am pleased the sponsors of this bill, Senators Lieberman and
Santorum, have agreed to make this more palatable by removing
controversial language that raised some constitutional and civil rights
concerns.
The bill contains several very good provisions, including changes to
the Tax Code we all hope will increase charitable giving and certainly
encourage the spirit of charitable giving, as well as being an
incentive.
In addition, the bill increases funding for the social services block
grant by over $1 billion. That will restore some of the cuts that have
been made in the program over the years. This increase in the social
services block grant funding will benefit thousands of Americans who
are suffering in this economy, who truly need help.
If the President's faith-based initiative means anything, then,
obviously, this dedication of funding for charitable work by religious
and secular charities confirms that is an appropriate thing to do; that
is, to look to our charitable interests to firm up the fact we do feel
some commitment to commemorate the sacrifice that is being made by so
many.
If this funding disappears in conference, I think it would be tragic
because it would say, OK, if it passes the Senate--and I certainly hope
and believe it will--and then suddenly this mystery hole opens up
between here and the House of Representatives--and these things often
fall in it--then it is left to people who have a curiosity about what
happened, as they say, on the way to the other forum, when things just
disappear. But it is a convenient sleight of hand for those who really
don't want to support it but don't want to be identified with
withdrawing their support.
So even though this bill is silent on civil rights issues, the
President's overall faith-based initiative contains some disturbing
civil rights problems. The President has announced several policies
that I think should trouble Americans who care deeply about civil
justice and equality.
The President has issued an Executive order that authorizes
organizations that receive Federal funding to discriminate in
employment--it is based on religion--for Government-funded positions.
That is not fair, it is not appropriate, and I certainly don't think it
is appropriate for faith-based organizations.
A policy that says ``Catholics need not apply'' should never, ever be
funded by the Federal Government. If a religious group wants to
restrict employment with their own money, that is their business, but
they should not be able to discriminate in staffing up Government
programs paid for with public dollars, tax dollars.
The American people agree. A poll by the Pew Forum on Religion and
Public Life found that 78 percent of Americans oppose allowing
religious groups that receive Federal funding to discriminate in
employment.
And it is not merely a hypothetical problem. It is a real-life
problem.
In Georgia, a man named Alan Yorker sent his resume to a Government-
funded faith-based program for troubled youths. The position he sought
was paid for with taxpayer dollars. The faith-based group said they
were impressed with his resume and called him in for an interview. When
Mr. Yorker arrived, he was asked to fill out an application form. The
form asked for the name of his church. He wrote in the name of his
synagogue. It also asked for the name of his pastor, and he filled in
his rabbi's name.
When he sat down for the interview, he was told, straight out, they
don't hire Jews. A former employee of the organization later told Mr.
Yorker they usually throw resumes with ``Jewish-sounding names'' in the
trash, but they did not recognize his last name as Jewish.
This was a taxpayer-funded job to perform social service work
pursuant to a Government program. And President Bush thinks maybe it is
OK to deny someone employment because they are of a different
persuasion.
The administration thinks it is fine for a Government-funded program
to tell a Catholic or a Mormon they can't get a taxpayer-funded job
simply because of their religion. Well, I disagree. I think it is
wrong. And I am going to join my colleagues, Senators Reed and Durbin,
in fighting it during this session of Congress.
Again, I commend the sponsors of this legislation. The Senator from
Pennsylvania did a very good job, I believe, in developing this
legislation, for removing the controversial provisions from the bill
before us.
I hope the bill will further the good work that faith-based and
secular charities do every day. While this bill moves in the right
direction, the administration is on, I believe, the wrong track
regarding civil rights. I hope the President will reverse that course.
Mr. President, our faith should bring us together, not divide us.
I yield the floor.
The PRESIDING OFFICER (Ms. Murkowski). The Senator from North Dakota.
Mr. DORGAN. Madam President, this is a good piece of legislation. I
am pleased to rise in support and pleased particularly that it is
bipartisan legislation that advances very important interests.
A wise old fellow from my small hometown once asked me if I had ever
seen a U-Haul hooked up to a hearse. I said: No. He said: Well, it goes
to show you, you can't take it with you.
He is right. You can't take it with you. The question is, What do you
do with the resources you develop over a lifetime? It seems to me you
find ways to help other people.
There is an old saying that we make a living by what we get but we
make a life by what we give. The issue of charitable giving and
providing nourishment and incentives to the notion of charitable giving
is a very important impulse. This legislation advances that in a
significant way.
Two years ago I introduced S. 1375, and then, in this Congress, S.
283. I am pleased that these provisions were included in this
legislation by the Senate Finance Committee. Let me describe what they
are and why they are so important.
The provisions in the CARE Act that relate to the legislation I have
introduced, with some of my colleagues, allow individuals to make tax-
free outright gifts to charities from their IRAs at age 70\1/2\ and
charitable life-income gifts at age 59\1/2\. The reason that is
important--to be able to make tax-free gifts from IRAs to charities--is
they won't face adverse tax consequences when they rollover that money
from their IRAs. The detrimental tax consequences have persuaded some
that they can't roll these assets over into a charity.
I heard from a good many charities, when I introduced this
legislation 2 years ago, that people frequently ask them about being
able to give to a charity by using their IRAs to make the donation
itself. But many donors decide not to make a gift from their IRA after
they are told about the potential tax consequences. Tax-free charitable
IRA rollovers will eliminate this concern completely.
In his fiscal year 2004 budget, President Bush proposed allowing
individuals to make tax-free outright charitable IRA rollover
distributions after age 65. That proposal has a lot of merit. But the
approach taken in the Public Good IRA Rollover Act, S. 283, and that's
included in CARE Act, is superior because it will not only allow direct
charitable IRA rollovers, but it will allow tax-free life-income gifts
from the IRA at age 59\1/2\. That means the assets can be donated to
the charities, but the donor retains an income stream from those
assets. This approach would stimulate more charitable giving, while
comporting with the federal government's policy of encouraging
individuals to provide for and safeguard adequate resources after
retirement. This is a very important provision that could put billions
of dollars of additional dollars from a new source to work for the
public good.
I'm told that a senior Salvation Army official once said that
``providing for IRA charitable rollovers would be the single most
important piece of legislation in the history of public charitable
support in this country.''
[[Page S4946]]
I don't think he necessarily understates the proposition. Charitable
giving is critically important. The mechanisms by which we incentivize
and nurture charitable giving are in this legislation and will advance
the interests of charitable giving across the country.
Let me make another point. This legislation contains more than just
that provision. I single that provision out simply because I have been
working on it a couple of years.
I ask unanimous consent to print in the Record a list of principally
North Dakota organizations, 18 of them, that have been working with me
on this proposition.
There being no objection, the material was ordered to be printed in
the Record, as follows:
North Dakota & Fargo-Moorhead Charities that Have Endorsed the
Charitable IRA Rollover
1. North Dakota State University Foundation, Fargo, ND; 2.
University of North Dakota Foundation, Grand Forks, ND; 3.
Bethany Homes, Inc., Foundation, Fargo, ND; 4. Red River
Zoological Society, Fargo, ND; 5. Fargo Catholic Schools,
Fargo, ND; 6. Oak Grove Lutheran School, Fargo, ND; 7.
Meritcare Health System, Fargo, ND; 8. Evangelical Lutheran
Church in America, Eastern North Dakota Synod, Fargo, ND; 9.
Red River Human Services Foundation, Fargo, ND; 10. Eventide
Homes, Moorhead, MN; 11. Fargo-Moorhead Community Theatre,
Fargo, ND; 12. Plains Art Museum, Fargo, ND; 13. Fargo-
Moorhead Symphony, Fargo, ND; 14. Village Family Service
Center, Fargo, ND; 15. Fargo-Moorhead Area Foundation, Fargo,
ND; 16. Foundation of Grand Forks, East Grand Forks & Region,
Grand Forks, ND; 17. United Way of Fargo-Moorhead, Fargo, ND;
and18. Prairie Public Broadcasting, Fargo, ND.
As of Monday, May 13, 2002.
Mr. DORGAN. The provision in the CARE that deals with charitable
deductions for non-itemizers is also very important. All of this coming
together is legislation I am proud to support. It is a significant step
for good.
Let me say one additional point. In order to pay for these
proposals--and these proposals are paid for with a revenue portion of
the bill--there are additional curbs on tax shelters. I strongly
support that as a matter of good tax policy. Last year, former IRS
Commissioner Rossetti told Congress:
Nothing undermines confidence in the tax system more than
the impression that the average honest taxpayer has to pay
his or her taxes while more wealthy or unscrupulous taxpayers
are allowed to get away with not paying.
He is correct. What we have seen, with front-page stories in journals
and technical publications, as well as major daily newspapers, is the
growth of abusive tax shelters. Shutting those down makes a lot of
sense. I don't believe that there is a provision in this bill that
deals with the issue of moving corporate headquarters overseas and
renouncing your U.S. citizenship in order to save on taxes. But that is
another piece we ought to do as well.
I simply make the point that the other piece of this bill that is
important is we pay for this, and we pay for it with good tax policy by
curbing tax shelters.
There are a lot of things in this country that are done that make
people feel good. One of those is the charitable giving that Americans
do. Americans do a great deal of charitable giving. They do it because
they know there is a need, and they know people who need help can count
on others who will offer it. With respect to the provision I have been
working on, there is an impediment that has prevented people from
saying, I would like to roll over my IRA assets to a charity and
provide that charity with resources it needs. To do that under present
law significantly penalizes them through the Tax Code. This legislation
responds to that.
Allen Huffman on my staff and others have worked together for a long
while on this particular provision of the bill. There are other
provisions that have merit as well.
I thank the manager of the bill and the ranking member of the
committee who bring it to the floor. When we pass this--and we will--it
will represent a significant positive step toward good public policy. I
am pleased to support it.
I yield the floor.
The PRESIDING OFFICER. The Senator from Michigan.
Mr. LEVIN. Madam President, I congratulate Senators Santorum and
Lieberman and everybody else who has had a voice and hand in shaping
and crafting the CARE legislation before us. It makes a significant
contribution to the strength of volunteer organizations and charitable
organizations. It is a very significant contribution to that wonderful
cause and to this wonderful land of ours. I commend them.
I would like to take a moment here to highlight a provision in the
managers' amendment to strengthen the ability of the Securities and
Exchange Commission to detect, investigate, and punish violations of
Federal securities law. This provision has been added to the CARE Act,
because we have had the support and we have been able to utilize the
efforts of the managers of this bill, Senators Grassley and Baucus, and
of the chairman and ranking member of the Banking Committee, Senators
Shelby and Sarbanes. This is an effort that Senator Bill Nelson and I
and others have been involved in for some time. Now it will come to
fruition, at least in the Senate, tomorrow when we adopt this
legislation, including the managers' amendment.
I also thank the Securities and Exchange Commission for its
assistance in crafting this legislation and for the agency's support of
our efforts to enact it into law. Senator Bill Nelson and I and others
have been working on this addition to the SEC enforcement powers for a
long time. We are very grateful to all those who have worked with us,
including Senators Corzine and Biden who cosponsored the SEC Civil
Enforcement Act, S. 183, which we introduced earlier this year--in
January--which is identical to the language which is in the managers'
amendment.
The SEC Chairman, Bill Donaldson, is very supportive of our SEC
enforcement legislation. I ask unanimous consent that a letter from the
SEC Chairman supporting this provision and describing it as one that
will ``significantly supplement and strengthen the Commission's ongoing
enforcement efforts'' be printed in the Record at this time.
There being no objection, the material was ordered to be printed in
the Record, as follows:
U.S. Securities
and Exchange Commission,
Washington, DC, April 2, 2003.
Hon. Carl Levin,
Ranking Minority Member, Permanent Subcommittee on
Investigations, U.S. Senate, Russell Senate Office
Building, Washington, DC.
Dear Senator Levin: I want to express my thanks for your
recent introduction of S. 183, your proposal to enhance the
Commission's authority to seek civil penalties for violations
of the Federal securities laws, increase the penalties the
Commission may seek, and eliminate a procedural requirement
that may slow the Commission's efforts to trace and recover
misappropriated investor funds.
I support this proposal, which was previously reflected in
a bill you introduced in the 107th Congress, to significantly
supplement and strengthen the Commission's ongoing
enforcement efforts. I very much appreciate your steadfast
dedication to supporting the work of the Commission in
protecting investors.
Please do not hesitate to contact me or Stephen Cutler,
Director of the Division of Enforcement, at (202) 942-4500 if
we can be of any assistance in this regard.
Sincerely,
William H. Donaldson,
Chairman.
Mr. LEVIN. Madam President, here is a description of what the Levin-
Nelson provision would do.
First, the provision will grant the SEC administrative authority to
impose civil monetary fines on any person who violates Federal
securities laws. Under current law, only broker-dealers, investment
advisers, and certain other persons are now subject to administrative
fines by the SEC. Our legislation will allow the SEC to impose
administrative fines on anyone who violates Federal securities law,
including, for example, corporate officers, directors, auditors,
lawyers, or publicly traded companies, none of whom are now subject to
being fined by the SEC in administrative proceedings. These fines, of
course, would be subject to judicial review, as are all SEC
administrative determinations.
Last year, the Permanent Subcommittee on Investigations, which I then
chaired, conducted an extensive investigation into the collapse of
Enron. As a result of that investigation, the Subcommittee determined
that Enron's board of directors and officers and certain major
financial institutions assisted Enron in carrying out deceptive
accounting transactions and other abuses that misled investors and
analysts about the company's finances.
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The Subcommittee's last Enron hearing in December also highlighted
the fact that the SEC is in need of additional tools to deal with the
individuals and entities that participated in Enron's deceptive
accounting or tax strategies. Our legislation would give to the SEC new
authority to impose an administrative fine on anyone who violates the
Federal security laws--not just broker-dealers or investment advisers,
but also corporate directors or officers, employees, bankers, lawyers,
auditors, law firms, accounting firms, corporations, financial
institutions, partnerships, and trusts.
Second, the provision will significantly increase the maximum civil
administrative fine that the SEC is able to impose on persons who
violate Federal securities laws. The civil administrative fines that
the SEC is currently authorized to impose have statutory maximums that,
depending upon the nature of the securities law violation, range from a
maximum of $6,500 to a maximum of $600,000 per violation. Again, the
particular amount depends upon the nature of the violation. In a day
and age when some CEOs make $100 million in a single year, and a
company like Enron can report gross revenues of $100 billion in a
single year, a civil fine with a maximum of $6,500 is laughable. Here
is what one SEC staff stated about the current maximums in a document
dated June 2002, and this explains why the agency is supporting our
legislation:
The current maximum penalty amounts may not have the
desired deterrent effect on an individual or corporate
violator. For example, an individual who commits a negligent
act is subject to a maximum penalty of $6,500 per violation.
This amount is so trivial it cannot possibly have a deterrent
effect on the violator.
Our provision would increase the civil fine maximums from a range of
a maximum of $6,500 to a maximum of $600,000 per violation, depending
on the nature of the securities law violation, to a range that goes
from a maximum of $100,000 to a maximum of $2 million per violation. At
a time when we are seeing corporate restatements and misconduct
involving billions of dollars, these larger fines are critical if the
fines are to have an effective deterrent or punitive impact on
wrongdoers.
Third, the Levin-Nelson provision would grant the SEC new
administrative authority, when the SEC has opened an official SEC
investigation, to subpoena financial records from a financial
institution without having to notify the subject that such a records
request has been made, thereby bringing the SEC's subpoena authority
into alignment with the subpoena authority of Federal banking agencies
like the Federal Reserve and the Office of the Comptroller of the
Currency. This authority would allow the SEC to trace funds, evaluate
financial transactions, and analyze financial relationships without
having to alert the subject of an investigation to the SEC's inquiry.
Under current law, the SEC either has to give the subject advance
notice of the subpoena or spend precious time seeking to obtain a court
order to delay notification.
Cases we are seeing today involve allegations of persons using
offshore accounts to move millions of dollars or engage in complex
transactions that materially affect the financial statements and tax
returns of publicly traded companies in the United States. The SEC must
be able to look at financial records quickly without giving the subject
of the inquiry an opportunity to move funds, change accounts, or
further muddy the investigative waters.
This authority is particularly important in light of the Patriot Act
of 2001, which for the first time requires securities firms to detect
and report possible money laundering through U.S. securities accounts.
The SEC cannot be expected to effectively monitor these anti-money
laundering efforts or act quickly to trace possible terrorist financing
or other suspicious financial conduct if, as is the case now, the SEC
must provide advance notice to investigative subjects or obtain court
orders granting delayed notification. No Federal banking agency
operates under these types of constraints in its anti-money laundering
efforts, and there is no reason why the SEC should. Our provision would
modernize the SEC's oversight authority and bring it into alignment
with the Federal banking agencies.
Last year, the Sarbanes-Oxley law strengthened law enforcement and
stiffened penalties for Federal securities crimes. By enacting the
Levin-Nelson provision this year, Congress would help put some teeth
into SEC enforcement on the civil side. We originally offered this
legislation as an amendment to the Senate bill that resulted in the
Sarbanes-Oxley Act, but were unable to obtain a vote before time ran
out. That is why we are back.
Investor confidence in U.S. capital markets has not been fully
restored, and Congress needs to provide strong leadership to assure
U.S. investors that their interests are protected. A vigorous SEC that
can act quickly to impose civil fines on those who violate Federal
securities laws can help restore investor confidence in the
effectiveness of U.S. securities laws and capital markets. In addition,
since many securities violations warrant civil rather than criminal
treatment, strengthening the SEC's civil enforcement authority would
help streamline the available civil enforcement options and give the
SEC better tools to fashion appropriate civil penalties.
Again, I thank my colleagues for supporting this provision.
Madam President, I ask unanimous consent that a letter from the
former Chairman of the SEC, Harvey Pitt, dated August 30, 2002, also
endorsing this legislation be printed in the Record at this time.
There being no objection, the material was ordered to be printed in
the Record, as follows:
U.S. Securities and
Exchange Commission,
Washington, DC, August 30, 2002.
Hon. Carl Levin,
Chairman, Permanent Subcommittee on Investigations, U.S.
Senate, Russell Senate Office Building, Washington, DC.
Dear Chairman Levin: This letter responds to your letter of
August 9th, seeking my views on your proposal to enhance the
Commissions' authority to seek civil penalties for violations
of the federal securities laws, increase the penalties the
Commission may seek, and eliminate a procedural requirement
that may slow the Commission's efforts to trace and recover
misappropriated investor funds.
The three additional enforcement tools you contemplate
reflect recommendations we have made previously in an effort
to facilitate our goal of achieving ``real-time
enforcement.'' Especially in light of recent events, I
believe these proposals would enhance our efforts and the
interest of investors. As you know, during this Congressional
session, with the bipartisan support of Congress and the
Administration, the Commission already has been given, and
has begun to implement, greater authority to pursue and
punish corporate wrongdoers and enhance corporate
accountability. The additional authority about which you
inquire would be a welcome addition to our enforcement
arsenal, if the proposals achieve bipartisan support.
Again, thank you for your interest in strengthening
penalties for securities fraud violations. Please do not
hesitate to contact me or Stephen Cutler, Director of the
Division of Enforcement, at (202) 942-4500 if we can be of
further assistance.
Yours truly,
Harvey L. Pitt.
Mr. LEVIN. Madam President, I thank the managers and all the other
persons who worked with us to get this legislation included in the
managers' amendment and, hopefully, passed tomorrow.
Mr. SARBANES. Madam President, I rise in support of the Levin-Nelson
provision included in the managers' amendment to the CARE Act of 2003.
This provision, the SEC Civil Enforcement Act, will strengthen the
Securities and Exchange Commission's authority to prosecute securities
fraud violations and augment investor protection. Senator Levin is to
be commended for his unwavering advocacy on behalf of investors and his
role in ensuring that our capital markets retain their reputation as
being the fairest, most efficient, and most transparent in the world.
The Levin-Nelson provision has the full support of the SEC Chairman,
William Donaldson, and it has been supported by the full Commission and
by former SEC Chairman, Harvey Pitt, who remarked that this provision
would promote the SEC's goal of achieving ``real-time enforcement.''
The legislation has been sought by the SEC's Enforcement Division
because it will eliminate inefficiency, provide the SEC with additional
flexibility, and strengthen the Commission's ability to hold securities
law violators accountable for their actions.
[[Page S4948]]
The SEC Civil Enforcement Act effectively complements the statutory
framework created by the Public Company Accounting Reform and Investor
Protection Act of 2002--the ``Sarbanes-Oxley Act.'' Against the
backdrop of a series of corporate scandals and a severe drop in
investor confidence last year, the Sarbanes-Oxley Act sought to take
steps to ensure investors that corporate executives and financial
reports are trustworthy, accountants and analysts independent, and that
the SEC has adequate resources and enforcement authority to fulfill its
mandate.
In its continuing, ``real-time'' investigation into accounting
irregularities at HealthSouth Corp., the Commission has put these new
powers to work. As The Wall Street Journal of April 4 noted, ``the
HealthSouth inquiry has already netted eight criminal convictions,
accomplishing in just weeks what might have stretched across months or
even years in the past.''
The Levin-Nelson provision will significantly buttress the SEC's
enforcement efforts in this area. I urge enactment of the provision to
further protect securities investors and help assure the U.S. capital
markets remain the envy of the world.
The PRESIDING OFFICER. Who yields time?
Mr. SANTORUM. Madam President, 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. NELSON of Florida Mr. President, I ask unanimous consent that the
order for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Fitzgerald). Without objection, it is so
ordered.
Mr. NELSON of Florida. Mr. President, I wish to talk about the CARE
Act. I rise to speak in favor of the Charity Aid Recovery and
Empowerment Act, or the CARE Act.
As the Senate is considering this legislation, it is important to
remember both Republicans and Democrats have cosponsored the CARE Act.
This reflects the bipartisan spirit of this legislation which out of
this legislative caldron was created by compromise, and we had last
year as the goal of increasing charitable giving and helping the needy.
In light of the uncertain economy, charities across the Nation are
serving the needs of more people with fewer resources. This particular
legislation is an opportunity to encourage Americans to help their
neighbors, community, and their country by giving. By extending the
charitable contribution deduction for 86 million Americans who do not
itemize their tax returns, and allowing people to make charitable
contributions from their individual development accounts, IDAs, this
legislation creates incentives for giving to charity.
This legislation also provides an enhanced charitable deduction for
restaurants and businesses that make donations of food to charitable
organizations. For some two decades, my wife Grace and I have been
working with organizations to distribute food to the hungry. One such
organization is back in our State of Florida. It is actually a part of
our State Department of Agriculture. Its name is Farm Share. What it
operates on is the original concept of gleaning, which was a biblical
concept. In biblical times it was their social security system. When
the farmers would go in and harvest the field, they would leave the
rest of the crop so that then the poor people could come into the field
and harvest the remaining crop, called gleaning; that was their way to
support those least fortunate in the society of the day.
When you take that ancient concept and bring it forward to today,
look at all the crops that are wasted. So this concept of Farm Share, a
part of our State Department of Agriculture, although not going
directly into the field, what we find is enormous amounts of edible
food wasted in the distribution process--in the collection, in the
actual harvesting, then at the packinghouse and the rest of the
distribution process.
So what Farm Share does is go to the packinghouse where tomatoes, for
example, a winter crop in south Florida, might have a blemish on them.
They are completely edible, but they might not be marketable for that
particular company buying those tomatoes. Or a company that uses a lot
of tomatoes, such as McDonald's Corporation, wants a tomato of a
certain size. So the tomatoes that are not that size are discarded. But
it is good food that is going to waste. It is a form of gleaning, to
save that, to have it packaged, and then ready for distribution.
When my wife and I announce a distribution and we reach out to all
the soup kitchens and reach out to the churches that are so effective
throughout the communities in distributing food to the poor, when we
send word out that the next morning there is going to be a distribution
of food, and you arrive the next morning, there is a lump in your
throat to suddenly see the lines of hundreds of hungry people in
America; that they are so grateful, so orderly, so polite, and so
thankful for the food that is going to be distributed.
It is not unusual I would come as a cosponsor of this act and be very
thankful that the Senate is considering it. It looks as if we have our
differences worked out, and we are going to be able to pass it. This
new legislation is more than just tax provisions. Individual
development accounts are also expanded in this legislation. These IDAs
are special savings accounts that offer matching contributions from
participating banks or community organizations. This innovative program
encourages low-income families to build assets and proposes reduced
costs for banks and community organizations that offer the IDAs.
This legislation also increases the funding for the social services
block grant. That supplies States with resources to support a variety
of social services. These funds can be used to assist the elderly and
disabled so they do not need to enter institutions. Those funds can
also be used to prevent child and elder abuse and to prevent things
that go on that we read about in the newspaper that we shudder at in
regard to the care of our elderly. These funds can be used to provide
child care, to promote and support adoption, and many other purposes.
By creating tax incentives for charitable contributions we can help
support and give incentives to the natural instincts of the American
people, which are to be generous, to give. When they do, faith-based
and community organizations can pass on the gains to a community.
We know that faith-based groups are doing good work all over the
country, and their work is already being funded by Federal dollars
because they are running programs that work to better people's lives.
These faith-based groups operate soup kitchens, they run homeless
shelters, and they rehabilitate drug users. Our Nation already funds
many of these programs. I have seen these programs all over Florida. I
have seen them here in Washington, DC. Anyone would be amazed just a
stone's throw from where we are in the U.S. Capitol at the kinds of
programs going on in the inner city to feed the poor and minister to
the least privileged in society.
Lives have been changed. I have seen cities, particularly the inner
cities, being transformed from neglect to respect.
This legislation is all about grassroots change, change from the
ground up, by people who are close to the problems and who care enough
to take up the challenge.
I have cosponsored this legislation before. I am going to continue to
work with our colleagues to try to find ways to help those who help
others.
This is one way. As we have been considering this emergency funding
bill that we just passed and that is now in the conference committee, I
thank the Senate for increasing the food aid. Back earlier when we were
considering legislation, the task fell to me to increase the
appropriation with regard to food aid, particularly destined for
Africa, where they are experiencing another enormous drought which has
caused a great deal of famine and death. The United States is a
generous country. So, too, from our generosity, when we see a problem
such as that, we want to try to take care of it.
We passed a level of increased food aid here at $500 million. It was
watered down in conference to $250 million. A lot of that money was
squirreled away from Africa to meet the food needs there will be in
Iraq. Because of that, a few nights ago on this floor we agreed to an
amendment to the emergency
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supplemental appropriations bill that would have an additional $600
million to go for emergency food assistance. That will then be able to
get to Africa with all of its famine that is ravaging the land.
It is my hope, as the Appropriations Committees are meeting in
conference right now on the emergency supplemental to determine the
final outcome, that they will honor all those images they have seen on
television of starving children and they will not reduce that $600
million very much.
It is with this spirit of thanks, of humility, and thanksgiving that
I come to speak on behalf of this legislation and to thank the Senate
and the many participants here who have worked out all the kinks in
this legislation so we could pass it in a unanimous fashion.
I yield the floor.
The PRESIDING OFFICER. The Senator from Utah.
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