[Congressional Record Volume 149, Number 113 (Monday, July 28, 2003)]
[Senate]
[Pages S10057-S10071]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. BINGAMAN (for himself, Mr. Enzi, Mr. Daschle, Mr. Johnson, 
        and Mr. Inouye):
  S. 1469. A bill to amend the Head Start Act to provide grants to 
Tribal Colleges and Universities to increase the number of post-
secondary degrees in early childhood education and related fields 
earned by Indian Head Start agency staff members, parents of children 
served by such an agency, and members of the community involved; to the 
Committee on Indian Affairs.
  Mr. BINGAMAN. Mr. President, I rise today to introduce the Tribal 
Colleges and Universities/Head Start Partnership Act, on behalf of 
myself and Senators Enzi, Daschle, Johnson, and Inouye.
  As I am sure you all know, Head Start is the flagship Federal program 
that insures that disadvantaged children have access to the 
educational, social, health, and behavioral services that they need in 
order to be ready to enter and excel in school. Studies clearly show 
that Head Start is a strong and effective program and that children who 
enroll in it benefit from improved cognitive and social skills. 
Although Head Start is a model program, it can be even better. One 
factor that we know is strongly related to student outcomes is teacher 
quality and education. Simply put, the more advanced the credentials of 
the teacher, the better the outcomes for students.
  In recognition of this fact, the 1998 Head Start reauthorization 
required that 50 percent of all Head Start teachers have at least an 
Associate's Degree, AA, in early childhood or a related field by 2003. 
In the impending reauthorization of Head Start, is it likely that 
teacher credential requirements will be increased even further.
  Although across the Nation as a whole, the 50 percent AA degree 
requirement for Head Start teachers has been met, there are some 
regions and sub-groups in the U.S. for which this is not the case. It 
is particularly difficult for Head Start teachers on Indian 
reservations, in rural areas, and those who teach migrants to access 
the necessary educational opportunities. Often, the distance these 
individuals would have to travel to take classes at the nearest college 
that offers an early childhood education degree is simply prohibitive.
  The purpose of the Tribal College and University/Head Start 
Partnership Act is to facilitate the continuing education of Native 
American Head Start teachers so that they can obtain the credentials 
they need to provide the best outcomes for the children under their 
care. Nationally, only 14 percent of Native American Head Start 
teachers have an AA degree and a scant 7 percent have a BA degree or 
higher.
  The current Act is based on the ``Head Start Partnerships with 
Tribally Controlled Land-Grant Colleges and Universities'' 
discretionary grants program at HHS. This program provided grants to 16 
tribal universities and colleges during the period 1999-2001. The 
purpose of the program was to utilize the capabilities of these 
institutions of higher education to improve the quality of Head Start 
and Early Head Start programs funded through the American Indian 
Programs Branch, primarily by providing education and training 
opportunities for Head Start staff. Partnership agreements provided 
academic credits primarily toward Associate's or Bachelor's Degrees. 
Since the program began in 1999, 322 students have graduated from these 
programs and an additional 59 are expected to graduate by the end of 
2003.
  In my home State of New Mexico, Southwestern Indian Polytechnic 
Institute, SIPI, received a 3-year grant of $150,000 per year. This 
grant has supported the teaching of courses leading directly to an AA 
degree in early childhood. There are roughly 125 declared majors, 90 
percent of whom are Head Start teachers, enrolled in these classes each 
semester, distributed across eleven reservations and pueblos in New 
Mexico, the closest of which is 30 miles from the SIPI campus. Without 
access to this type of distance education, these dedicated Head Start 
teachers would not be able to receive the education that is crucial to 
both their own futures and to the lives of the many children they 
teach.

[[Page S10058]]

  Although the Head Start Partnerships discretionary grants program at 
HHS has been very successful, funding has been sporadic. No grants were 
awarded in 2001 and 2002. Although HHS just recently announced a new 
competition for these grants, it is unclear if new grants will also be 
awarded in future years. I believe that an authorized grants program 
would be the best way to insure a steady and dependable source of 
funding so that tribal Head Start teachers can obtain the education 
that is so crucial to their success.
  The TCU /Head Start Partnership Act would authorize 5-year grants to 
TCUs so that these institutions can develop programs resulting in 
increased numbers of advanced degrees for tribal Head Start teachers, 
particularly in technology mediated formats. The act authorizes 
$10,000,000 for fiscal year 2004 and such sums as may be necessary for 
fiscal years 2005-2008, in order to achieve these goals.
  I urge my colleagues to join me in supporting this extremely 
important program. At a time when we are rightfully demanding that Head 
Start teachers be highly credentialed, we must provide the supports 
that are necessary to help teachers gain these credentials.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1469

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Tribal Colleges and 
     Universities Head Start Partnership Act''.

     SEC. 2. FINDINGS; PURPOSES.

       (a) Findings.--Congress finds the following:
       (1) The Head Start Act requires that 50 percent or more of 
     teachers nationwide in center-based Head Start programs must 
     have at least an associate degree in early childhood 
     education, or a field related to early childhood education, 
     by 2003.
       (2) A goal of the Head Start Act is to ensure that all Head 
     Start programs nationwide will provide accredited continuing 
     education for Head Start staff that provides college or 
     university credit for such staff. However, Indian Head Start 
     programs are generally located in areas isolated from 
     mainstream colleges or universities where such credit can be 
     earned.
       (3) The vast majority of the Nation's 34 Tribal Colleges 
     and Universities have early childhood education programs and, 
     of these, 32 are accredited, or designated candidates for 
     accreditation, by national accrediting associations.
       (4) Tribal Colleges and Universities were created by 
     Indians for Indians primarily on rural and remote Indian 
     reservations, which were virtually excluded from the Nation's 
     system of higher education.
       (5) Tribal Colleges and Universities are engaged community 
     institutions, offering higher education and continuing 
     education opportunities to individuals who otherwise might 
     find attaining such education impossible due to family 
     responsibilities, and financial and geographic barriers.
       (6) Tribal Colleges and Universities have been more 
     successful than any other institutions of higher education in 
     educating Indians and helping to retain Indians in high-need 
     fields such as nursing and teaching. According to a 2000 
     survey, over 80 percent of Tribal College and University 
     graduates go on to further higher education or become 
     employed in the local community.
       (7) Through partnerships developed between Tribal Colleges 
     and Universities and Head Start programs nationwide--
       (A) Indian Head Start agency personnel can gain greater 
     access to accredited college and university programs in their 
     career field;
       (B) the knowledge, skills, and aptitude of those working at 
     Indian Head Start agencies will be increased, thus enabling 
     them to provide high quality and comprehensive services to 
     Indian children and their families; and
       (C) the health, early childhood development, and school 
     readiness of Indian children will be improved as a result of 
     increased staff knowledge, skills, and aptitude.
       (b) Purposes.--The purposes of this Act are to--
       (1) promote social competencies and school readiness in 
     Indian children; and
       (2) provide high quality, accredited educational 
     opportunities to Indian Head Start agency staff so that they 
     can better deliver services that enhance the social and 
     cognitive development of low-income children through the 
     provision of health, educational, nutritional, social, and 
     other services to low-income children and their families.

     SEC. 3. TRIBAL COLLEGE OR UNIVERSITY-HEAD START PARTNERSHIP 
                   PROGRAM.

       The Head Start Act (42 U.S.C. 9831 et seq.) is amended by 
     inserting after section 648A the following:

     ``SEC. 648B. TRIBAL COLLEGE OR UNIVERSITY-HEAD START 
                   PARTNERSHIP PROGRAM.

       ``(a) Tribal College or University-Head Start Partnership 
     Program.--
       ``(1) Grants.--The Secretary is authorized to award grants, 
     of not less than 5 years duration, to Tribal Colleges and 
     Universities to--
       ``(A) implement education programs that include tribal 
     culture and language and increase the number of associate, 
     baccalaureate, and graduate degrees in early childhood 
     education and related fields that are earned by Indian Head 
     Start agency staff members, parents of children served by 
     such an agency, and members of the tribal community involved;
       ``(B) develop and implement the programs under subparagraph 
     (A) in technology-mediated formats; and
       ``(C) provide technology literacy programs for Indian Head 
     Start agency staff members and children and families of 
     children served by such an agency.
       ``(2) Staffing.--The Secretary shall ensure that the 
     American Indian Programs Branch of the Head Start Bureau of 
     the Department of Health and Human Services shall have 
     staffing sufficient to administer the programs under this 
     section and to provide appropriate technical assistance to 
     Tribal Colleges and Universities receiving grants under this 
     section.
       ``(b) Application.--Each Tribal College or University 
     desiring a grant under this section shall submit an 
     application to the Secretary, at such time, in such manner, 
     and containing such information as the Secretary may require, 
     including a certification that the Tribal College or 
     University has established a partnership with 1 or more 
     Indian Head Start agencies for the purpose of conducting the 
     activities described in subsection (a).
       ``(c) Definitions.--In this section:
       ``(1) Institution of higher education.--The term 
     `institution of higher education' has the meaning given such 
     term in section 101(a) of the Higher Education Act of 1965 
     (20 U.S.C. 1001(a)).
       ``(2) Tribal college or university.--The term `Tribal 
     College or University' means an institution--
       ``(A) defined by such term in section 316(b) of the Higher 
     Education Act of 1965 (20 U.S.C. 1059c(b)); and
       ``(B) determined to be accredited or a candidate for 
     accreditation by a nationally recognized accrediting agency 
     or association.
       ``(d) Authorization of Appropriations.--There are 
     authorized to be appropriated to carry out this section, 
     $10,000,000 for fiscal year 2004 and such sums as may be 
     necessary for each of fiscal years 2005 through 2008.''.
                                 ______
                                 
      By Mr. SARBANES (for himself and Mr. Corzine):
  S. 1470. A bill to establish the Financial Literacy and education 
Coordinating Committee within the Department of the Treasury to improve 
the state of financial literacy and education among American consumers; 
to the Committee on Banking, Housing, and Urban Affairs.
  Mr. SARBANES. Mr. President, today I am introducing the Financial 
Literacy and Education Coordinating Act of 2003. This legislation 
creates an intergovernmental coordinating Committee whose goal is to 
improve the financial decision making of all Americans by strengthening 
education to raise financial literacy levels.
  The phrase ``financial literacy'' is one we often hear but often do 
not really understand. It is analogous in financial matters to basic 
literacy--the ability to read and understand what is read--in our 
everyday lives. We are keenly aware from our efforts to improve our 
schools and raise our students' ability to read that there are higher 
and lower levels of literacy. Numerous statistical studies indicate 
that in the field of personal finances, substantial numbers of people 
are financially illiterate. Among those who have some degree of 
literacy, the vast majority are performing below what their `grade 
level' ought to be.
  This bill addresses that problem. It reflects my long-standing 
concern that inadequate knowledge of financial issues leaves our 
consumers seriously vulnerable to exploitation, with devastating 
consequences for them and their families. As Chairman of the Committee 
on Banking, Housing and Urban Affairs, during the last Congress, I 
chaired a series of hearings to examine the state of financial literacy 
and education throughout the Nation. The Committee received testimony 
from a wide range of witnesses on the state of financial literacy and 
education among Americans of all ages and from all walks of life--from 
school age children to retirees, small investors to those without bank 
accounts, and first time workers to those saving for retirement. The 
witnesses were unanimous in the view that we needed to increase 
financial education in this country.
  Federal Reserve Chairman Alan Greenspan stated before the Committee

[[Page S10059]]

that: ``In considering means to improve the financial status of 
families, education can play a critical role by equipping consumers 
with the knowledge required to make wise decisions. . . . This is 
especially the case for populations that have traditionally been 
underserved by our financial system.'' Chairman Greenspan made the 
point that increased financial education has the potential to improve 
significantly the economic situation of the vast majority of Americans.
  The goal of this legislation is to promote better financial decision-
making among consumers. While at present substantial work is in 
progress both within the government and outside of it, it suffers from 
the lack of a single comprehensive strategy--there is too little 
coordination, and too much duplication. As Tess Canja, President of 
AARP testified before the Committee: ``We see a need for a coherent and 
coordinated national strategy for making available a well-researched 
and well-evaluated progression of financial literacy programs and 
services.'' By creating an underlying strategy to address these 
problems, the legislation will help enable Americans to make the 
financial decisions that best serve their needs and aspirations. This 
legislation seeks to address these problems and create a strategy to 
improve the financial choices and outcomes for all Americans.
  The bill creates a Coordinating Committee chaired by the Secretary of 
the Treasury, based in the Treasury Department's Office of Financial 
Education. The Committee will be responsible for coordinating and 
centralizing the various existing financial education activities in our 
government agencies as well as any future initiatives. Currently there 
are at least sixteen active financial-education programs. They operate 
in each of the Federal banking agencies--the Federal Reserve, FDIC, 
OCC, and OTS; the NCUA; the SEC; in six executive departments--
Education, Agriculture, Defense, Health and Human Services, Labor, and 
Veterans Affairs; and in such agencies as the Social Security 
Administration, Federal Trade Commission, the Commodities Futures 
Trading Commission, and the Office of Personnel Management.
  The Committee will coordinate these and other efforts. Additional 
members can be added at the discretion of the Chairperson of the 
Committee. All will benefit from the better coordination and the 
elimination of unnecessary duplication that the Committee will provide.
  In addition, many State and local governments, non-profit entities, 
and private enterprises have developed and implemented excellent 
financial education programs. A successful national strategy to 
increase financial literacy and education must involve a partnership 
that engages all levels of government, including at the State and local 
level, along with leaders of the non-profit and private sectors. As Don 
Blandin, President of the American Savings Education Council noted in 
his testimony before the Committee: ``Organizations in both the private 
and public sectors must collaborate on all levels to help educate 
Americans about the importance of taking control of their financial 
future. By combining and leveraging our comprehensive networks and 
resources, we have a better chance of reaching people that none of us 
would be able to reach alone.'' The Coordinating Committee established 
by this legislation will undertake just such a collaboration. It will 
develop a national strategy in conjunction with State and local 
governments and with the private and non-profit sectors, and will 
report its findings back to the Congress.
  It is disturbing to hear the statistics about the current situation 
and how financially under-educated the American people are. The 
Consumer Federation of America found that the typical American failed a 
14-question test of basic knowledge of personal finances. Fewer than 
one in ten, 8, answered three-quarters of the questions correctly. 
Eighty-two percent of high school seniors failed a 13-question personal 
financial quiz on such basic questions as interest rates, savings, 
loans, credit cards, and calculating net worth.
  The lack of financial education affects Americans of every age and 
background. There may be differing opinions on issues of financial 
security for retirees, but I suspect there is little disagreement on 
the importance to every family of budgeting and savings for retirement. 
We have data showing that households with a savings plan save twice as 
much as those without a plan, and yet surveys indicate that half of all 
Americans have not taken the basic step of calculating how much they 
will need to save for retirement. Teaching families how to budget and 
develop a savings plan as well as the importance of doing so would 
enhance many Americans' financial security.
  There are far too many people today who lack a bank account, which is 
the passport for access to mainstream financial services. The Wall 
Street Journal, in an article appearing June 28, 2001, estimated that 
10 million adult Americans have no relationship with a mainstream 
financial services provider. Of the millions of households that have no 
relationship with a bank, one-third are African American and 29 percent 
are Hispanic. The large costs of failing to bring people into the 
mainstream financial system makes it imperative to pursue all avenues 
to bring them in. A lack of basic consumer financial education on how a 
checking and a savings account work and why it's important to have such 
an account is one explanation for these disturbing figures. Once people 
enter into the financial mainstream a lot of the protections and 
safeguards which have been developed for the board mass of the public 
are enjoyed by these newly banked people.
  The Banking Committee heard from witnesses that many college students 
have access to significant credit through credit cards, but have little 
experience and often little to no education on how to use them 
responsibly. Kentucky State Treasurer Jonathan Miller, who has held a 
series of hearings on financial literacy throughout his state, 
testified before the Banking Committee that: ``for a significant and 
growing minority of college students, credit card use and misuse can be 
devastating.'' The Department of Education estimates that the average 
credit card debt among college students was over $3,000 in the year 
2000. College students are not the only ones susceptible to credit card 
debt: the average credit card debt per American family is over $8,000. 
Furthermore, too many people are unaware of their own credit score, how 
to access that score, and the impact that their credit score has on 
both their access to credit and the terms on which that credit is 
offered.
  Students are entering college with insufficient knowledge of the 
financial system and as a result, they are getting into serious 
financial problems. One of the Committee's witnesses, Ms. Ellen 
Frishberg, Director of Student Financial Services at John Hopkins 
University, testified that, ``Because of the case of getting credit, 
the lack of financial savy on the part of these otherwise very bright 
students, and the unchecked solicitation and giveaways that were going 
on during orientation, in 1994 the Dean of Students decided it was best 
to prohibit credit card vendors from the Homewood campus.'' We can all 
agree that college students who are better educated in the basics of 
the financial system will be less susceptible to falling into serious 
credit card debt.
  Special attention should also be paid to immigrants, often of modest 
means who send, or remit, a significant portion of their income to 
family in their country of origin. According to a recent study by the 
Inter-American Development Bank, in the aggregate $32 billion was 
remitted out of America last year, with over $10 billion going to 
Mexico alone. It is estimated that nearly 70 percent of all Hispanic 
immigrants send money home. The financial transaction of sending money 
internationally is complex: there are transaction fees, currency 
conversion fees and exchange rate spreads. The full costs can range up 
to $50 even when the amount being sent home is $300. A survey by 
Bendixen and Associates estimated that \2/3\ of Hispanic immigrants who 
send money home are unaware of the full costs. Before the Banking 
Committee, Mr. Bendixen testified that, ``When these immigrants were 
informed that besides a fee paid in the U.S., international money 
transfer companies often provide unfavorable exchange rates or discount 
additional commissions or charges in Latin America, a large majority of 
them felt that the fees paid for the service are excessive and unfair. 
Customers should have

[[Page S10060]]

access to information about the full costs of their transactions, and 
they need a level of financial literacy that enables them to interpret 
the information. Only then will they be able to shop effectively, 
compare costs, and make wise financial choices.
  Increased financial education is a first step in the consumer 
education process but as Federal Reserve vice-Chairman Roger Ferguson 
testified before the Committee, ``legislation, careful regulation and 
education are all components of the response to these emerging consumer 
concerns.'' The legislation I introduce today will make a significant 
contribution to improving the quality of financial education in this 
country. It is modeled closely on the Trade Promotion Coordinating 
Committee established by the Export Enhancement Act of 1992.
  A number of Senators have taken a strong interest in this issue. 
Senator Corzine is a co-sponsor of this legislation and has been 
actively involved on the issue. I particularly want to acknowledge the 
outstanding leadership of Senators Stabenow and Enzi as well as Senator 
Akaka. I know that Senators Stabenow and Enzi are working on a bill and 
I look forward to working closely with them.
  I also want to express my appreciation to Senate Banking Committee 
Chairman Shelby for the time and attention is devoting to this subject. 
Tomorrow Chairman Shelby is holding a hearing in the Committee on 
``Consumer Awareness and Understanding of the Credit Granting 
Process.'' These issues are directly related.
  I ask unanimous consent that a summary of the Financial Literacy and 
Education Coordinating Act and the bill be printed in the Record 
together with letters in support of the bill. I urge my colleagues to 
work toward speedy enactment of meaningful legislation to improve the 
financial literacy and education of all Americans.
  There being no objection, the summary and letters of support were 
ordered to be printed in the Record, as follows:

       Financial Literacy and Education Coordinating Act of 2003

       This legislation establishes an interagency Committee, 
     based in the Department of the Treasury, with assistance 
     provided by Treasury's Office of Financial Education. The 
     Committee shall be chaired by the Secretary of the Treasury 
     and charged with coordinating governmental financial literacy 
     initiatives and developing a national strategy, in 
     cooperation with state and local governments, and non-profit 
     and private enterprises, to improve financial education and 
     literacy of all Americans.
       The Committee initially includes representatives from the 
     Federal Reserve Board, the Federal Deposit Insurance 
     Corporation, the Securities and Exchange Commission, the 
     Office of the Comptroller of the Currency, the Office of 
     Thrift Supervision, the National Credit Union Administration, 
     the Departments of Treasury, Agriculture, Defense, Education, 
     Health and Human Services, Labor, Veterans Affairs, the 
     Social Security Administration, the Federal Trade Commission, 
     the Commodities Futures Trading Commission, and the Office of 
     Personnel Management. The chairperson has the authority to 
     include other agencies and departments that are engaged in a 
     serious effort to improve the state of financial literacy and 
     education among any group of Americans. The Committee shall 
     meet no less than quarterly.
       There is substantial evidence that many Americans do not 
     have an adequate basis for making sound decisions about their 
     personal and household finances, especially given the myriad 
     choices of financial products and services available to them. 
     A more comprehensive financial education would help provide 
     individuals with the necessary tools to create household 
     budgets, initiative savings plans, manage debt, and make 
     strategic investment decisions for education, retirement, 
     home ownership or other savings goals. While increased levels 
     of financial literacy and education are critically important, 
     improved financial decision making by consumers, not simply 
     improved knowledge, should be the most important financial 
     education goal.
       The Committee is required to: review financial literacy and 
     education efforts throughout the federal government; identify 
     and remove duplicative financial literacy efforts within the 
     federal government; coordinate and promote financial literacy 
     efforts including partnerships between federal, state and 
     local governments, non-profit organizations and private 
     enterprises; develop within one year a national strategy to 
     promote financial literacy and education among all Americans; 
     develop and implement the strategy with the participation of 
     non-profit and private sector institutions; coordinate 
     efforts towards the implementation of the strategy; and 
     submit an annual report, providing testimony if requested, to 
     Congress detailing the state of financial literacy and 
     education as it relates to the strategy.
                                  ____



                               Consumer Federation of America,

                                                    July 25, 2003.
     Hon. Paul S. Sarbanes,
     Ranking Member, Committee on Banking, Housing and Urban 
         Affairs, U.S. Senate, Washington, DC.
       Dear Senator Sarbanes, the Consumer Federation of America 
     commends you for introducing legislation to boost financial 
     awareness and improve financial decision-making by Americans. 
     There has never been a greater need to advance financial 
     education. CFA strongly supports the creation of the 
     Financial Literacy and Education and Coordinating Committee 
     within the Department of the Treasury, as called for in this 
     bill, and looks forward to working with you to enact this 
     timely legislation.
       The financial education needs of the least affluent and 
     well-educated Americans are especially pressing, in part 
     because recent changes in the financial services marketplace 
     have increased the vulnerability of these households. In 
     particular, the dramatic expansion of high-cost and sometimes 
     predatory lending to moderate and lower income Americans in 
     the last decade has put many of these people at great 
     financial risk. Because these individuals lack financial 
     resources and often are charged high prices, they cannot 
     afford to make poor financial choices. But because of low 
     general and financial literacy levels, they often have 
     difficulty making smart financial decisions, in part because 
     they are especially vulnerable to abusive seller practices.


   This Legislation Would Establish Effective Federal Leadership on 
                          Financial Education

       While many worthwhile financial education programs exist, 
     they are not well-coordinated, effectively reach only a small 
     minority of the population, and do not reflect any broad, 
     compelling vision. Many focus only on increasing consumer 
     knowledge of how to best operate in the financial services 
     marketplace, and not on actually changing consumer behavior 
     to improve decisions about spending, saving, and the use of 
     credit. Moreover, there is no clear consensus about how to 
     effectively provide financial education, especially to those 
     who have completed their secondary education and to those 
     with low literacy levels. What is most needed is a 
     comprehensive needs assessment and plan to guide and inspire 
     financial educators and their supporters. Such a plan could 
     also convince a broad array of government, business and 
     nonprofit groups to work together to persuade the nation to 
     implement that plan.
       This legislation recognizes that, for any comprehensive 
     plan to win broad public and private support and 
     participation, the federal government must provide 
     leadership. The bill would give the Department of Treasury 
     the authority to establish a federal governmental network to 
     coordinate financial literacy efforts and requires every 
     relevant agency to participate at a high level, including the 
     Securities and Exchange Commission, the Department of 
     Education, the Federal Reserve, and the Department of 
     Defense. It emphasizes the importance of assessing the 
     federal government's capacity for promoting financial 
     literacy. It requires the Coordinating Committee to evaluate 
     different financial programs and strategies and identify 
     those that are most effective in improving consumer decision 
     making--not just awareness. It makes the Coordinating 
     Committee directly accountable to Congress for its activities 
     and accomplishments. Most importantly, it requires the 
     Coordinating Committee to develop and implement a national 
     strategy to promote basic financial literacy, with broad 
     input from business, educational and nonprofit leaders.


     lower income consumers need better financial literacy efforts

       There is no large population that would benefit more from 
     improved financial education than the tens of millions of the 
     least affluent and well-educated Americans. In 1998, 37 
     percent of all households had incomes under $25,000. With the 
     exception of older persons who had paid off home mortgages, 
     these households had accumulated few assets. In 1998, 
     according to the Federal Reserve Board's Survey of Consumer 
     Finances, most of these least affluent households had net 
     financial assets (excluding home equity) of less than $1,000. 
     Moreover, between 1995 and 1998, a time of rising household 
     incomes, the net worth of lower-income households actually 
     declined.
       For lower income households with few discretionary 
     financial resources, failing to adequately budget 
     expenditures may pressure these consumers into taking out 
     expensive credit card or payday loans. Mistakenly purchasing 
     a predatory mortgage loan could cost them most of their 
     economic assets.
       These households also need to make smart buying decisions 
     because they tend to be charged higher prices than more 
     affluent families: higher homeowner and auto insurance rates 
     because they live in riskier neighborhoods; higher loan rates 
     because of their low and often unstable incomes; higher 
     furniture and appliance prices from neighborhood merchants 
     that lack economies of scale and face relatively high costs 
     of doing business; and higher food prices in their many 
     neighborhoods without stores from major supermarket chains. 
     Lower-income families are also faced with higher prices for 
     basic banking services and they lack access to essential 
     savings options.

[[Page S10061]]

       Lower-income households with low literacy levels are 
     especially vulnerable to seller abuse. Consumers who do not 
     understand percentages may well find it impossible to 
     understand the costs of mortgages, home equity, installment, 
     and credit card, payday, and other high-cost loans. 
     Individuals who do not read well may find it difficult to 
     check whether the oral promises of salespersons were written 
     into contracts. And, those who do not write fluently are 
     limited in their ability to resolve problems by writing to 
     merchants or complaint agencies. Consumers who do not speak, 
     read, or write English well face special challenges 
     obtaining good value in their purchases.


     More Available Credit Has Increased Financial Education Needs

       Over the past decade, the financial vulnerability of low- 
     and moderate-income households has increased simply because 
     of the dramatic expansion of the availability of credit. The 
     loans that subjected the greatest number of Americans to 
     financial risk were made with credit cards. From 1990 to 
     2000, fueled by billions of mail solicitations annually and 
     low minimum monthly payments of 2-3 percent, credit card debt 
     outstanding more than tripled from about $200 billion to more 
     than $600 billion. Just as significantly, the credit lines 
     made available just to bankcard holders rose to well over $2 
     trillion. By the middle of the decade, having saturated 
     upper- and middle-class markets, issuers began marketing to 
     lower-income households. By the end of the decade, an 
     estimated 80 percent of all households carried at least one 
     credit card. Independent experts agree that expanding credit 
     card debt has been the principal reason for rising consumer 
     bankruptcies.
       Also worrisome has been the expansion of high-priced 
     mortgage loans and stratospherically-priced smaller consumer 
     loans. In the 1990s, creditors began to aggressively market 
     subprime mortgage loans carrying interest rates greater than 
     10 percent and higher fees than those charged on conventional 
     mortgage loans. By 1999, the volume of subprime mortgage 
     loans peaked at $160 billion. Mortgage borrowers in low-
     income neighborhoods were three times more likely to have 
     subprime loans than mortgage borrowers in high-income 
     neighborhoods. A significant minority of these subprime 
     borrowers would have qualified for much less expensive 
     conventional mortgage loans. Some of these borrowers were 
     victimized by exorbitantly priced and frequently refinanced 
     predatory loans that ``stripped equity'' from the homes of 
     many lower-income households.
       The 1990s also saw explosive growth in predatory small 
     loans--payday loans, car title pawn, rent-to-own, and refund 
     anticipation loans--typically carrying effective interest 
     rates in triple digits. The Fannie Mae Foundation estimates 
     that these ``loans'' annually involve 280 million 
     transactions worth $78 billion and carrying $5.5 billion in 
     fees. The typical purchaser of these financial products has 
     income in the $20,000 to $30,000 range with a 
     disproportionate number being women.
       Both proper regulation and education are necessary to 
     insure that lower and moderate income Americans are not 
     subject to abusive lending practices and that they have the 
     knowledge to make effective decisions in an increasingly 
     complex financial services marketplace. We applaud you for 
     proposing this comprehensive and achievable vision for 
     improving financial awareness and decision-making. We look 
     forward to working with you and leaders in the House of 
     Representatives to put such an approach in law as soon as 
     possible.
           Sincerely,
                                               Travis B. Plunkett,
     Legislative Director.
                                  ____



                                                         AARP,

                                                    July 28, 2003.
     Hon. Paul Sarbanes,
     Ranking Member, Committee on Banking, Housing and Urban 
         Affairs, U.S. Senate, Washington, DC.
       Dear Senator Sarbanes: AARP is pleased to offer our support 
     for your legislation, the ``Financial Literacy and Education 
     Coordinating Act of 2003,'' that will begin to address this 
     nation's need to improve financial literacy.
       Last year, at the Senate Banking Committee's hearing on the 
     status of financial literacy and education in America, AARP 
     President Tess Canja documented in her testimony the need for 
     a coherent and coordinated national strategy to make 
     available a well-researched and well-evaluated progression of 
     financial literacy programs and services. Your legislation 
     establishes a permanent inter-agency platform for developing 
     a national financial literacy strategy, and it will begin to 
     provide the necessary coordination to integrate and to help 
     deliver educational and training programs that already exist 
     at the federal, state and local levels. For example, the 
     Congress is working to expand the availability of credit 
     reports and credit scores to all Americans. This is critical 
     information for consumers, but it does not become effective 
     knowledge until it is understood.
       The dramatic loss in stock market valuations in recent 
     years highlights the financial vulnerability facing many 
     retired Americans. The haunting prospect of an underinformed 
     generation of Baby-Boomers nearing retirement age suggest 
     that there is little time to waste in developing, testing and 
     arraying improved financial education and training services.
       We look forward to actively working with you to enact the 
     ``Financial Literacy and Education Coordination Act of 
     2003.'' If there are further questions, please do not 
     hesitate to call upon me, or have your staff contact Roy 
     Green of our Federal Affairs staff at (202) 434-3800.
           Sincerely,
                                                Michael W. Naylor,
     Director of Advocacy.
                                  ____

                                      National Council on Economic


                                                    Education,

                                                    July 25, 2003.
     Hon. Paul Sarbanes,
     U.S. Senator, Dirksen Building, Washington, DC.
       Dear Senator Sarbanes: We at the National Council on 
     Economic Education (NCEE) strongly endorse the Financial 
     Literacy and Education Coordination Committee Act. This Act, 
     which proposes establishing a committee chaired by the 
     Secretary of the Treasury, to coordinate the activities of 
     all Federal Agencies with an interest in financial and 
     literacy, could not come at a better time.
       This is a time of growing public interest in financial 
     education. Parents everywhere want their children to know how 
     the world works before they go to work in it, and to possess 
     the basic knowledge and decision-making skills that will help 
     them to become productive and responsible citizens, 
     employees, consumers, savers and investors.
       In response to the growing interest in financial literacy, 
     a number of government agencies have set up departments 
     focusing on this issue. In our opinion, the fact that the 
     Coordinating Committee will bring the various departments 
     together will reduce duplication of much needed resources, 
     and get new programs into the community more quickly. We also 
     understand that the Coordinating Committee will work with 
     non-profits, and state and local organizations--both private 
     and public--to develop strategies for improving financial 
     literacy. We welcome this inclusive approach to getting a 
     sound economic education into the hands of our young people.
       The NCEE is pleased to support the Financial Literacy and 
     Education Coordination Committee Act. Please keep us informed 
     of its progress.
           Yours sincerely,
                                                 Robert F. Duvall,
     President & Chief Executive Officer.
                                  ____

                                                Howard University,


                                      Office of the President,

                                    Washington, DC, July 25, 2003.
     Hon. Paul S. Sarbanes,
     Committee on Banking, Housing, and Urban Affairs, Senate 
         Dirksen Building, Washington, DC.
       Dear Senator Sarbanes: Last year, as a representative of 
     higher education and Historically Black Colleges and 
     Universities, I testified before the Committee in support of 
     its proposed national strategy to promote financial literacy 
     and education. Today, I remain steadfast in my advocacy of 
     this initiative.
       Financial illiteracy continues to plague many American: an 
     unfortunate reality that further underscores the urgent need 
     for The Financial Literacy and Education Coordinating Act. It 
     provides the most effective solution to establishment of a 
     nationwide program that will protect and educate our 
     citizens.
       Although financial literacy should be a lifelong program 
     beginning in elementary school, I believe that higher 
     education has a special responsibility to ensure that 
     students in postsecondary institutions develop sound 
     financial competency as early in their college careers as 
     possible.
       The typical college graduate leaves school with an average 
     of $19,400 in student loans. Throughout their matriculation, 
     students are routinely bombarded by aggressive credit card 
     companies who entice them with offers of free gifts and easy 
     credit. The addition of credit card debt creates an 
     overwhelming burden on recent graduates.
       Promoting financial education for our youth is consistent 
     with Howard University's core values. The University, in 
     collaboration with other organizations--including our 
     strategic partner Fannie Mae--is addressing the national 
     financial literacy problem as it relates to African Americans 
     and other minorities, who are already disadvantaged by the 
     wealth gap. Howard believes that the ability to make informed 
     financial decisions is an increasingly important skill.
       We have introduced a number of initiatives to empower our 
     students and members of the community by teaching them the 
     importance of effectively managing their money and improving 
     their credit so that the dream of homeownership and other 
     personal financial opportunities can become a reality.
       We now look to the Congress to enact legislation that will 
     buttress our efforts in this regard. The Financial Literacy 
     and Education Coordinating Act is indeed representative of a 
     worthy, collective, non-partisan effort that will have a 
     lasting impact on generations to come.
           Respectfully,
                                               H. Patrick Swygert,
                                                        President.

  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

[[Page S10062]]

                                S. 1470

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Financial Literacy and 
     Education Coordinating Act of 2003''.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) there is substantial evidence that many Americans do 
     not have an adequate basis for making sound decisions about 
     personal and household finances;
       (2) financial education could play a critical role in 
     equipping consumers with the knowledge to make wise 
     decisions, especially for lower income consumers and those 
     underserved by the mainstream financial system;
       (3) an increased awareness of the availability of credit 
     scores and credit reports, the process of accessing them, 
     their significance in obtaining credit, and their effects on 
     credit terms, are of paramount importance to consumers;
       (4) easily accessible and affordable resources which inform 
     and educate investors as to their rights and avenues of 
     recourse should be provided when an investor believes his or 
     her rights have been violated by unprofessional conduct of 
     market intermediaries;
       (5) a basic understanding of the operation of the financial 
     services industry would help consumers and their families to 
     make more informed choices about how best to progress 
     economically, avoid harmful personal debt, avoid 
     discriminatory and predatory practices, invest wisely, 
     develop financial planning skills necessary for maximizing 
     short- and long-term financial well being, and better prepare 
     for retirement;
       (6) comprehensive financial education would help to provide 
     individuals with the necessary tools to create household 
     budgets, initiate savings plans, manage debt, and make 
     strategic investment decisions for education, retirement, 
     home ownership, or other savings goals; and
       (7) improved financial decision making, not simply more 
     knowledge, should be the primary financial education goal.

     SEC. 3. FINANCIAL LITERACY AND EDUCATION COORDINATING 
                   COMMITTEE.

       (a) Establishment.--The Secretary of the Treasury shall 
     establish within the Office of Financial Education of the 
     Department of the Treasury, the Financial Literacy and 
     Education Coordinating Committee (in this Act referred to as 
     the ``Committee'').
       (b) Purposes.--The purposes of the Committee shall be--
       (1) to coordinate financial literacy and education efforts 
     among Federal departments and agencies;
       (2) to develop and implement a national strategy to promote 
     basic financial literacy and education among all Americans;
       (3) to reduce overlap and duplication in Federal financial 
     literacy and education activities;
       (4) to identify the most effective types of public sector 
     financial literacy programs and techniques, as measured by 
     improved consumer decision making;
       (5) to coordinate and promote financial literacy efforts at 
     the State and local level, including partnerships among 
     Federal, State, and local governments, nonprofit 
     organizations, and private enterprises; and
       (6) to carry out such other duties as are deemed to be 
     appropriate, consistent with this Act.

     SEC. 4. COMMITTEE DUTIES.

       (a) In General.--The Committee shall--
       (1) not later than 1 year after the date of enactment of 
     this Act, develop a national strategy to promote basic 
     financial literacy among all American consumers;
       (2) coordinate Federal efforts to implement the strategy 
     developed under paragraph (1);
       (3) not later than 1 year after the date of enactment of 
     this Act, and annually thereafter, submit a report to the 
     Committee on Banking, Housing, and Urban Affairs of the 
     Senate and the Committee on Financial Services of the House 
     of Representatives regarding actions taken and progress made 
     by the Committee in carrying out this Act during the 
     reporting period, and any challenges remaining to 
     implementation of such purposes; and
       (4) provide testimony by the chairperson of the Committee 
     to either Committee referred to in paragraph (3), upon 
     request.
       (b) Strategy.--The strategy to promote basic financial 
     literacy required to be developed under subsection (a)(1) 
     shall provide for--
       (1) participation by State and local governments and 
     private, nonprofit, and public institutions in the creation 
     and implementation of such strategy;
       (2) the development of methods--
       (A) to increase the general financial education level of 
     current and future consumers of financial services and 
     products; and
       (B) to enhance the general understanding of financial 
     services and products;
       (3) review of Federal activities designed to promote 
     financial literacy and education and development of a plan to 
     improve coordination of such activities;
       (4) the identification of areas of overlap and duplication 
     among Federal financial literacy and education activities and 
     proposed means of eliminating any such overlap and 
     duplication; and
       (5) a proposal to the President of a Federal financial 
     literacy and education budget that supports such strategy and 
     eliminates funding for such areas of overlap and duplication.

     SEC. 5. COMMITTEE MEMBERSHIP.

       (a) Composition.--The Committee shall be comprised of--
       (1) the Secretary of the Treasury, who shall serve as the 
     chairperson of the Committee; and
       (2) a representative from--
       (A) each Federal banking agency (as defined in section 3 of 
     the Federal Deposit Insurance Act), the National Credit Union 
     Administration, the Securities and Exchange Commission, each 
     of the Departments of Education, Agriculture, Defense, Health 
     and Human Services, Labor, and Veterans Affairs, the Social 
     Security Administration, the Federal Trade Commission, the 
     Commodity Futures Trading Commission, and the Office of 
     Personnel Management; and
       (B) a representative from any other department or agency 
     that the Secretary determines to be engaged in a serious 
     effort to improve financial literacy and education.
       (b) Assistance.--The Director of the Office of Financial 
     Education of the Department of the Treasury shall provide to 
     the Committee, upon request, such assistance as may be 
     necessary.
       (c) Member Qualifications.--Members of the Committee shall 
     be appointed by the heads of their respective departments or 
     agencies. Each member and each alternate designated by any 
     member unable to attend a meeting of the Committee, shall be 
     an individual who exercises significant decisionmaking 
     authority.
       (d) Meetings.--Meetings of the Committee shall occur not 
     less frequently than quarterly, and at the call of the 
     chairperson.
       (e) Consultation.--The Committee shall consult with private 
     and nonprofit organizations and State and local agencies, as 
     determined appropriate by the chairperson and the Committee.
                                 ______
                                 
      By Mr. TALENT:
  S. 1472. A bill to authorize the Secretary of the Interior to provide 
a grant for the construction of a statue of Harry S Truman at Union 
Station in Kansas City, Missouri; to the Committee on Energy and 
Natural Resources.
  Mr. TALENT. Mr. President, I ask unanimous consent that the text of 
the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:
       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. HARRY S TRUMAN STATUE, KANSAS CITY, MISSOURI.

       (a) Grant Authority.--The Secretary of the Interior 
     (referred to in this Act as the ``Secretary'') may provide a 
     grant to pay the Federal share of the costs for the 
     construction of a statue of Harry S Truman at Union Station 
     in Kansas City, Missouri.
       (b) Requirements.--To receive a grant under subsection (a), 
     an eligible entity shall submit to the Secretary a proposal 
     for the use of the grant funds.
       (c) Maintenance.--The Federal Government shall not be 
     responsible for the costs of maintaining the statue.
       (d) Federal Share.--The Federal share of the costs 
     described in subsection (a) shall not exceed $50,000.
       (e) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this Act $50,000, to remain 
     available until expended.
                                 ______
                                 
      By Mr. ALEXANDER:
  S. 1474. A bill to amend the Head Start Act to designate up to 200 
Head Start centers as Centers of Excellence in Early Childhood, and for 
other purposes; to the Committee on Health, Education, Labor, and 
Pensions.
  Mr. ALEXANDER. Mr. President, I introduce today a bill to be 
considered as part of the legislation reauthorizing Head Start. My bill 
would create a way for states to help strengthen and coordinate Head 
Start, but would continue to send federal funds directly to grantees 
for the 19,000 Head Start centers that serve one million disadvantaged 
children.
  My proposal authorizes the Secretary of Health and Human Services to 
create a nationwide network of 200 Centers of Excellence in Early 
Childhood built around exemplary Head Start programs. These Centers of 
Excellence would be nominated by Governors. Each Center of Excellence 
would receive a Federal bonus grant of at least $100,000 in each of 5 
years, in addition to its base funding. And each State would receive a 
grant to establish and fund a State Council in Early Childhood, which 
would work with the State Head Start collaboration office to showcase 
the work of exemplary Head Start centers within a state, capture and 
disseminate best practices, and identify barriers to and opportunities 
for coordinated service delivery.
  The bill would authorize $100 million for those grants for each of 
the 5 years.
  The Centers of Excellence bonus grants will be used for centers:


[[Page S10063]]


       (1) to work in their community to model the best of what 
     Head Start can do for at-risk children and families, 
     including getting those children ready for school and ready 
     for academic success;
       (2) to coordinate all early childhood services in their 
     community;
       (3) to offer training and support to all professionals 
     working with at-risk children;
       (4) to track these families and ensure seamless continuity 
     of services from prenatal to age 8;
       (5) to become models of excellence by all performance 
     measures and be willing to be held accountable for good 
     outcomes for our most disadvantaged children; and
       (6) to have the flexibility to serve additional Head Start 
     or early Head Start children or provide more full-day 
     services to better meet the needs of working parents.

  Head Start has been one of our country's most successful and popular 
social programs. That is because it is based upon the principle of 
equal opportunity, which is at the core of the American character. 
Americans uniquely believe that each of us has the right to begin at 
the same starting line and that, if we do, anything is possible for any 
one of us.
  We also understand that some of us need help getting to that starting 
line. Most Federal funding for social programs is based upon this 
understanding of equal opportunity.
  Head Start began in 1965 to make it more likely that disadvantaged 
children would successfully arrive at one of the most important of our 
starting lines, the beginning of school.
  Head Start over the years has served hundreds of thousands of our 
most at risk children. The program has grown and changed. It has been 
subjected to debates and studies touting its successes and decrying its 
deficiencies. But Head Start has stood the test of time because it is 
so very important.
  We have made great progress in what we know about the early growth 
and development of young children since Head Start began in 1965. At 
that time very few professionals had studied early childhood education. 
Even fewer had designed programs specifically for children in poverty.
  The origins of Head Start had its roots in an understanding that 
success for these children was not only about education. The program 
was designed to be certain these children were healthy, got their 
immunizations, were fed hot meals, and, of crucial importance that 
their parents were deeply involved in the program.
  From the beginning comprehensive services and parent and community 
involvement were essential parts of good Head Start programs. And that 
is still true today. In the early days, teacher training and curriculum 
were seen as less important. But we now know a great deal more about 
brain development and how children learn from birth.
  Today young children are expected to learn more and be able to do 
more in order to succeed in school. Public schools offer kindergarten 
and 40 states now offer early childhood programs.
  In addition to the $7 billion spent each year on federal Head Start 
programs, there are 69 other federal and state programs costing $18 
billion a year. The greatest increases have come in private spending as 
parents seek early childhood development services for their own 
children.
  As Congress approached the 5-year reauthorization of Head Start, 
President Bush challenged Congress to make a ``good Head Start program 
excellent.'' The President suggested four objectives for strengthening 
Head Start:

       (1) Improve school readiness by focusing more attention on 
     specific cognitive development;
       (2) Increase accountability;
       (3) Improve coordination with other programs that serve 
     young children, including public and private schools.
       (4) Increase state involvement in strengthening Head Start 
     by transferring federal funding for Head Start to states, 
     with certain criteria and restrictions.

  The House of Representatives completed work last week on the 
reauthorization bill. It is called the School Readiness Act. It made 
significant progress toward the President's first three objectives: 
school readiness, accountability, and coordination.

       (1) On school readiness, the bill would ensure a greater 
     number of Head Start teachers are adequately trained.
       (2) On accountability, the triennial reviews are 
     strengthened by adding unscheduled visits, and chronic 
     underachievers would be subject to a more aggressive review.
       (3) On coordination, the bill expands the requirements for 
     the State Head Start Collaboration Offices to coordination.

  As for the idea of letting states administer Head Start, the House 
created a pilot program that would allow eight states to take over Head 
Start as long as they maintain or improve the level of services.
  As the Senate begins its consideration of Head Start, I believe there 
is consensus about the need to improve school readiness, 
accountability, and coordination of programs--but no consensus on how 
to involve the states more actively.
  I believe that states should be more involved with Head Start. States 
have primary responsibility for setting standards for and funding 
public education. A child who arrives at school too far behind the 
starting line may never catch up. In addition, the state is in the best 
position to help coordinate the variety of public and private programs 
that have grown up since Head Start began.
  But the need to involve states does not necessarily mean sending 
federal dollars first to states and then to Head Start centers. As 
important as the state is, education and caring for children is 
primarily local--a community and family responsibility. I believe that 
in education and in child care local solutions work best.
  While Head Start centers are uneven in performance, they have 
generally excelled in two areas critical to success in caring for 
and educating children--developing community support and encouraging 
parental involvement. I do not believe that it would be wise--at least 
at this stage of the Head Start program--to risk interrupting the 
strong community support and parental involvement in the 19,000 Head 
Start centers by transferring funding to the states. There are other 
and better ways to meet this objective.

  That is why I believe creating a nationwide network of 200 Head Start 
Centers of Excellence in Early Childhood is the right step for the next 
5 years. Governors would nominate 149 of these centers. Governors would 
create or designate a State Council for Early Childhood. Governors 
could then use these Centers of Excellence and the State Council to 
encourage other centers to adopt best practices and to improve 
coordination of programs.
  At the federal level additional funds will be made available--$100 
million is authorized--for research on the effectiveness of these 
Centers of Excellence as a strategy for coordination of all early 
childhood federal and state programs and ensure school success for at-
risk children.
  In addition, I would hope the President would convene an annual 
conference of these Centers of Excellence and State Councils to 
highlight their successes. After four years, we would learn from these 
activities how state involvement in Head Start might be increased in 
the next 5-year authorization.
  Alex Haley, the author of Roots lived by these six words, ``Find the 
good and praise it.'' For me that was an invaluable lesson. My mother 
taught me another invaluable lesson--the importance of preschool 
education. When I was growing up, she ran a kindergarten in a converted 
garage in our backyard in Maryville, Tennessee. She helped our 
community appreciate the value of a good preschool program. I have 
remembered both lessons in trying to fashion this proposal to bring out 
the best in Head Start.
  The work that the House of Representatives has done on readiness, 
accountability and coordination--plus the adoption of this proposal for 
200 Centers of Excellence in Early Childhood should provide a strong 
basis for our Head Start reauthorization bill.
  The president would have challenged the Congress to improve Head 
Start in four major respects--readiness accountability, coordination, 
and state involvement--and he will be able to sign legislation that 
will do just that.
  I ask unanimous consent to have printed in the Record a one-page 
summary of my bill and a copy of the bill itself.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

          Head Start Centers of Excellence in Early Childhood

       What are the objectives for reauthorization? The 
     reauthorization should strengthen Head Start for one million 
     disadvantaged

[[Page S10064]]

     children in all 19,000 Head Start Centers by improving (1) 
     school readiness, (2) accountability, and (3) coordination 
     with other programs that serve young children, including 
     public and private schools.
       What is the proposal? In support of these objectives, to 
     create a nationwide network of 200 Centers of Excellence in 
     Early Childhood built around exemplary Head Start centers. 
     These Centers of Excellence will receive a special grant to 
     serve as a ``magnet'' for teachers and others working with 
     at-risk young children to come, learn, and develop action 
     plans to take back to improve their own practices.
       Exactly how would the Centers of Excellence do this? The 
     Centers of Excellence will strengthen Head Start, early 
     childhood programs and public and private schools by: (1) 
     modeling excellence in high quality seamless service 
     coordination while achieving measured academic success in 
     pre-literacy, number recognition and school readiness; (2) 
     modeling the use of effective accountability systems; (3) 
     coordinating services for low-income children from prenatal 
     through age 8; (4) following children who transition from 
     Head Start to public or private schools, working with both 
     their parents and their teachers; (5) providing support and 
     training to teachers and others working with those low-income 
     children, sharing best practices and dramatically leveraging 
     themselves; (6) having the flexibility to serve additional 
     Head Start or Early Head Start children or to provide more 
     full-day services to better meet the needs of working 
     parents.
       Who could become a Center of Excellence? All 19,000 Head 
     Start centers would be eligible to apply for five-year 
     designations as a Center of Excellence in Early Childhood.
       Who would pick the Centers of Excellence? The Secretary of 
     HHS. One hundred forty-nine (149) of the Centers picked would 
     be selected from among applicants nominated by governors; the 
     other 51 would be picked by the Secretary to try to achieve a 
     goal of one in each state.
       What are the criteria for selection? (1) a track record of 
     achieved measured academic success including school 
     readiness, (2) a strong demonstrated ability to work with 
     parents and the community, (3) the ability to serve as a 
     model of high quality seamless service coordination, (4) the 
     ability to provide outreach support and training for teachers 
     in other Head Start programs, and in other early childhood 
     settings and in public and private schools, (5) ability to 
     work in partnership with the State Head Start Collaboration 
     Office.
       What would the states' role be in these Centers of 
     Excellence? (1) For 149 of the 200 Centers the Governor's 
     nomination is a necessary part of the application. (2) Each 
     state will receive a grant to establish and fund a State 
     Council in Early Childhood which will work with the Head 
     Start Collaboration Office to tie together the work of 
     exemplary Head Start centers within a state, capture and 
     disseminate emerging best practices and identify barriers to 
     and opportunities for better coordination of service 
     delivery.
       How will Centers of Excellence be funded? Each Center of 
     Excellence will receive a five-year grant directly from HHS. 
     These excellence grants are bonus grants and are in addition 
     to the center's base Head Start funding.
       What is the total Cost of the Centers of Excellence? $100 
     million--which includes grants to 200 Centers of Excellence 
     in Early Childhood, the grants to state council as well as 
     the costs of research and HHS administrative costs.

                                S. 1474

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Head Start Centers of 
     Excellence Act of 2003''.

     SEC. 2. CENTERS OF EXCELLENCE IN EARLY CHILDHOOD.

       The Head Start Act is amended by inserting after section 
     641A (42 U.S.C. 9836a) the following:

     ``SEC. 641B. CENTERS OF EXCELLENCE IN EARLY CHILDHOOD.

       ``(a) Definitions.--In this section:
       ``(1) Center of excellence.--The term `center of 
     excellence' means a Center of Excellence in Early Childhood 
     designated under subsection (b).
       ``(2) State council.--The term `State council' means a 
     State Council for Excellence in Early Childhood described in 
     subsection (e).
       ``(b) Designation and Bonus Grants.--The Secretary shall 
     establish a program under which the Secretary shall--
       ``(1) designate up to 200 exemplary Head Start agencies as 
     Centers of Excellence in Early Childhood; and
       ``(2) make bonus grants to the designated centers of 
     excellence to carry out the activities described in 
     subsection (d).
       ``(c) Application and Designation.--
       ``(1) Application.--
       ``(A) In general.--To be eligible to receive designation as 
     a center of excellence under subsection (b), a Head Start 
     agency in a State shall be nominated by the Governor of the 
     State and shall submit an application to the Secretary at 
     such time, in such manner, and containing such information as 
     the Secretary may require.
       ``(B) Contents.--At a minimum, the application shall 
     include--
       ``(i) evidence that the Head Start program carried out by 
     the agency has improved the school readiness of, and enhanced 
     academic outcomes for, children who have participated in the 
     program;
       ``(ii) evidence that the program meets or exceeds Head 
     Start standards and performance measures described in 
     subsections (a) and (b) of section 641A, as evidenced by 
     successful completion of programmatic and monitoring reviews, 
     and has no citations for substantial deficiencies with 
     respect to the standards and measures;
       ``(iii) information demonstrating the existence of a 
     collaborative partnership between the Head Start agency and 
     the Governor's office;
       ``(iv) a nomination letter from the Governor, demonstrating 
     the agency's ability to carry out the coordination, 
     transition, and training services of the program to be 
     carried out under the bonus grant involved, including 
     coordination of activities with State and local agencies that 
     provide early childhood services to children and families in 
     the community served by the agency; and
       ``(v) information demonstrating the existence of, or the 
     agency's plan to establish, a local council for excellence in 
     early childhood, which shall include representatives of all 
     the institutions, agencies, and groups involved in the work 
     of the center for and the local provision of services to 
     eligible children and other at-risk children, and their 
     families.
       ``(2) Selection.--In selecting agencies to designate as 
     centers of excellence under subsection (b), the Secretary 
     shall designate at least 1 from each of the 50 States and the 
     District of Columbia.
       ``(3) Term of designation.--
       ``(A) In general.--Subject to subparagraph (B), the 
     Secretary shall designate a Head Start agency as a center of 
     excellence for a 5-year term. During the period of that 
     designation, subject to the availability of appropriations, 
     the agency shall be eligible to receive a bonus grant under 
     subsection (b).
       ``(B) Revocation.--The Secretary may revoke an agency's 
     designation under subsection (b) if the Secretary determines 
     that the agency is not demonstrating adequate performance.
       ``(4) Amount of bonus grant.--The Secretary shall base the 
     amount of funding provided through a bonus grant made under 
     subsection (b) to a center of excellence for the center's 
     staff costs on the number of children served at the center of 
     excellence. The Secretary shall make such a bonus grant in an 
     amount of not less than $100,000 per year.
       ``(d) Use of Funds.--
       ``(1) Activities.--A center of excellence that receives a 
     bonus grant under subsection (b) may use the funds made 
     available through the bonus grant--
       ``(A) to provide Head Start services to additional eligible 
     children;
       ``(B) to better meet the needs of working families in the 
     community served by the center by serving more children in 
     Early Head Start programs or in full-working-day, full 
     calendar year Head Start programs;
       ``(C) to model and disseminate best practices for achieving 
     early academic success, including achieving school readiness 
     and developing preliteracy and prenumeracy skills for at-risk 
     children, and to provide seamless service delivery for 
     eligible children and their families;
       ``(D) to coordinate early childhood and social services 
     available in the community served by the center for at-risk 
     children (prenatal through age 8) and their families, 
     including services provided by child care providers, health 
     care providers, and providers of income-based financial 
     assistance, and other State and local services;
       ``(E) to provide training and cross training for Head Start 
     teachers and staff, and to develop agency leaders;
       ``(F) to provide effective transitions between Head Start 
     programs and elementary school, to facilitate ongoing 
     communication between Head Start and elementary school 
     teachers concerning children receiving Head Start services, 
     and to provide training and technical assistance to providers 
     who are public elementary school teachers and other staff of 
     local educational agencies, child care providers, family 
     service providers, and other providers of early childhood 
     services, to help the providers described in this 
     subparagraph increase their ability to work with low-income, 
     at-risk children and their families; and
       ``(G) to carry out other activities determined by the 
     center to improve the overall quality of the Head Start 
     program carried out by the agency and the program carried out 
     under the bonus grant involved.
       ``(2) Involvement of other head start agencies and 
     providers.--Not later than the second year for which the 
     center receives a bonus grant under subsection (b), the 
     center, in carrying out activities under this subsection, 
     shall work with the center's delegate agencies, several 
     additional Head Start agencies, and other providers of early 
     childhood services in the community involved, to encourage 
     the agencies and providers described in this sentence to 
     carry out model programs. The center shall establish the 
     local council described in subsection (c)(1)(B)(v).
       ``(e) State Councils for Excellence in Early Childhood.--
       ``(1) Establishment.--The Secretary shall make grants to 
     States to enable the States to establish State Councils for 
     Excellence in Early Childhood. The State council established 
     by a State shall include representatives of Head Start 
     agencies, public elementary schools, providers of early 
     childhood services (including family service providers), and 
     other entities working with centers of

[[Page S10065]]

     excellence in the State. The State council shall be chaired 
     by a Director of a center of excellence in the State.
       ``(2) Functions.--The State council shall work with the 
     State Head Start Office of Collaboration. The State council 
     shall review and compile information on the work of the 
     centers of excellence in the State, collecting and 
     disseminating information on the findings of the centers, and 
     identifying barriers to and opportunities for success in that 
     work that could be addressed at a State level. The State Head 
     Start Office of Collaboration shall address the barriers and 
     opportunities.
       ``(f) Research and Reports.--
       ``(1) Research.--The Secretary shall make a grant to an 
     independent organization to conduct research on the ability 
     of the centers of excellence to improve the school readiness 
     of children receiving Head Start services, and to positively 
     impact school results in the earliest grades. The 
     organization shall also conduct research to measure the 
     success of the centers of excellence at encouraging the 
     center's delegate agencies, additional Head Start agencies, 
     and other providers of early childhood services in the 
     communities involved to meet measurable improvement goals, 
     particularly in the area of school readiness.
       ``(2) Report.--Not later than 48 months after the date of 
     enactment of the Head Start Centers of Excellence Act of 
     2003, the organization shall prepare and submit to the 
     Secretary and Congress a report containing the results of the 
     research described in paragraph (1).
       ``(g) Authorization of Appropriations.--There are 
     authorized to be appropriated for fiscal year 2004 and each 
     subsequent fiscal year--
       ``(1) $90,000,000 to make bonus grants to centers of 
     excellence under subsection (b) to carry out activities 
     described in subsection (d);
       ``(2) $2,500,000 to pay for the administrative costs of the 
     Secretary in carrying out this section, including the cost of 
     a conference of centers of excellence;
       ``(3) $5,500,000 to make grants to States for State 
     councils to carry out the activities described in subsection 
     (e); and
       ``(4) $2,000,000 for research activities described in 
     subsection (f).''.
                                 ______
                                 
      By Mr. HATCH:
  S. 1475. A bill to amend the Internal Revenue Code of 1986 to promote 
the competitiveness of American businesses, and for other purposes; to 
the Committee on Finance.
  Mr. HATCH. Mr. President, I rise today to introduce legislation to 
change the way this country taxes business income, whether earned at 
home or abroad. The bill I am introducing, the ``Promote Growth and 
Jobs in the USA Act of 2003,'' or the ``Pro Grow USA Act,'' was made 
necessary because the World Trade Organization has ruled that a 
significant feature of our current tax system, the Extraterritorial 
Income Exclusion (or ETI), is an impermissible trade subsidy under WTO 
rules.
  This final WTO ruling followed a similar decision of that body made a 
few years ago that a previous U.S. tax provision, the Foreign Sales 
Corporation (or FSC), was also an illegal trade subsidy under the WTO 
rules. After that first WTO decision, Congress replaced the FSC 
provision with the ETI provision, which generally replicated the 
benefits of the FSC to its recipients. Both provisions were designed to 
help U.S. exporters better compete in the global economy.
  Unfortunately, we now find ourselves in the very unpleasant situation 
of having to repeal the ETI tax benefit. This repeal will cost the 
exporters of this nation more than $4 billion per year. Failure to 
repeal it by the end of 2003 could bring upon us trade sanctions by the 
European Union, which has already been authorized by the WTO to assess 
these sanctions in an amount exceeding $4 billion per year.
  Even though I am not enthusiastic about introducing legislation to 
repeal that tax benefit, I believe we should make a virtue out of 
necessity. This is what I am trying to accomplish with this bill. We 
know we cannot, in a WTO-compliant way, give those lost tax benefits 
back to the companies that are losing them by the repeal. What we can 
do, however, is pass tax reform measures to strengthen all American 
businesses.
  I see this as an opportunity to once again make America the world's 
greatest location to start a business, and the world's greatest 
location to grow a business.
  Today, savings and investment dollars flow around the world at the 
speed of light, and businesses look all over the world when deciding 
where to put their global headquarters, their research departments, and 
their manufacturing operations. We need to take these facts into 
account when we reform our tax rules, which we now are forced to do. 
Our goal should be to make the U.S. economy a magnet for greater 
innovation and greater capital formation.
  I believe, that this is the right time to look at how our companies 
do business overseas, both how they export products abroad and how they 
expand their operations abroad. And, I believe we should also take this 
opportunity to examine whether our tax policy can be improved to better 
help U.S. firms that operate only domestically grow and thrive.
  In my view, the ETI repeal has to address the legitimate concerns of 
both domestic producers and U.S.-based multinationals. Both kinds of 
companies hire Americans, both kinds of companies make interest 
payments and dividend payments to Americans, and both kinds of 
companies pay American taxes.
  In response to this situation, Members of Congress have introduced 
several proposals to repeal and replace the ETI benefit. One leading 
proposal would create a new, lower tax rate for American manufacturers. 
While I am certainly not opposed to lowering tax rates on U.S. 
manufacturers, I am convinced that such a solution, by itself, is not 
adequate. This is because it ignores the very real problems our tax 
code presents to U.S. businesses that expand overseas.
  As with several of my colleagues on the Finance Committee, I have 
long been interested in improving our tax rules that govern 
international transactions. They are woefully out of date and harm the 
ability of U.S. firms to compete on a global basis. Moreover, the rules 
are mind numbingly complex.
  Legislation I introduced with Senator Baucus in 1999 would have gone 
a long way toward updating and simplifying these laws so they work much 
better. Some of those provisions were included in a large tax bill that 
both the Senate and House passed that year that was unfortunately 
vetoed by President Clinton for reasons unrelated to the international 
provisions.
  Since then, however, there has been a great deal of interest in 
reforming the international rules, but the opportunities to bring such 
measures to the floors of the House and Senate have been quite limited, 
until now. As I mentioned, I believe that the repeal of the ETI 
represents a rare opportunity to address these much-needed changes.
  Another major solution to the ETI repeal and replacement problem is 
the one taken by Chairman Bill Thomas of the House Ways and Means 
Committee in the bill he introduced last Friday. I want to emphasize 
that while my bill and Chairman Thomas's bill are very different in 
many respects, they are very much alike in the approach they take to 
the problem. Both Chairman Thomas and I believe it is vital to address 
the issues presented by both domestic businesses and by multinational 
firms.
  There are three principles underlying my legislation. The first is 
that as we repeal ETI, we should strive to replace it with provisions 
that would increase the competitiveness of U.S. companies at home as 
well as abroad, and that would increase the productivity growth of our 
economy. I want to increase the ability of all American firms to 
compete, both those just at home and those that also operate abroad
  There is a false notion we hear from time to time that if we make it 
easier for U.S. companies to operate effectively on a worldwide basis, 
we are making them more likely to move U.S. jobs abroad. I believe just 
the opposite is true--that making U.S. firms more competitive worldwide 
increases the quality and quantity of American jobs.
  When companies expand overseas, they likely hire more people at the 
U.S. headquarters. The R&D jobs, the marketing jobs, management and 
support jobs--we can have those jobs here, supporting a U.S. company's 
worldwide operations. I think we should make it easier to grow those 
kind of good-paying headquarters jobs right here at home.
  The second principle is that we ought to simplify the tax code to the 
extent possible. My bill would do this both in the international arena 
and in the depreciation rules.
  Finally, I want to make it clear that I disagree with the notion that 
replacing the ETI provision has to be a zero

[[Page S10066]]

sum game. The Senate budget resolution calls for nearly $500 billion 
more in tax cuts outside of budget reconciliation. I believe we should 
be willing to spend some of this tax cut money to ensure that all 
American businesses are better able to grow and compete.
  Notwithstanding our new deficit projections, I still believe that 
President Bush and those who support him are on the right track in 
trying to pass tax cuts to increase economic growth and productivity, 
combined with spending discipline. One thing is for certain--we will 
never get out of a deficit mode with the slower growth that comes from 
tax hikes and more government spending.
  I understand the political realities facing the Senate in this, the 
108th Congress. I understand that a bill featuring $200 billion or more 
in additional tax cuts is not likely to attract the kind of bipartisan 
support it needs in order to be marked up in the Finance Committee and 
to make it to the floor of the Senate.
  Therefore, my goal in introducing this legislation is threefold. 
First, I hope to help convince my colleagues of the importance of 
meeting our WTO obligations this year, by repealing the ETI provision. 
As our economy struggles to shake off the last recession, the last 
thing we need is to impose large and onerous trade sanctions upon it.
  Second, I want to expand the options on the table for the Finance 
Committee to consider when we start putting the bill together this 
autumn. Even in a revenue neutral environment, the ideas put forward by 
my bill should provide many additional choices for the Committee to 
consider.
  Finally, I hope that by introducing this legislation, we will end up 
with a final bill that will be more beneficial to U.S. domestic and 
U.S.-based multinational companies and their workers. In my view, we 
simply cannot afford to focus on just workers for domestic companies or 
just on employees of global companies. We need both for our long-term 
prosperity.
  The bill I am introducing today has four major components. First, of 
course, it repeals the ETI provision and provides three years of 
generous transition relief. When a representative of the U.S. Trade 
Representative's office testified before the Finance Committee a few 
weeks ago, I asked him what the appropriate phase-out of the ETI 
benefit might be, so as not to trigger the trade sanctions by the E.U. 
In reply to my question, he stated that he believed the Europeans would 
view one or two years as a normal and expected phase out period.
  On the other hand, the USTR official indicated that he believed that 
a longer period of, four or five years I believe he said, would 
definitely cause some real concern on the part of the Europeans. 
Therefore, I included a three-year phaseout of the ETI benefit in my 
bill. Specifically, the benefits of the ETI exclusion would be phased 
out at the rate of 25 percent in 2004, 50 percent in 2005, 75 percent 
in 2006, and no benefits in 2007 and thereafter.
  Second, the bill contains a substantial international tax reform 
title. Our international tax system is based on two key principles, 
neither of which work very well in practice under our current outdated 
laws. The first principle is that U.S. companies that pay income tax to 
other countries should not be double taxed on that income. The second 
principle is that companies engaged in active overseas businesses 
should not pay tax on that income until it is returned to the U.S. 
parent corporation. Our current rules violate these principles again 
and again, and I think it's time to return to these principles.
  For example, our foreign base company tax rules, which make it 
expensive for companies to create an overseas regional marketing and 
distribution network for U.S. products, are an anachronism. They hurt 
U.S. exports, and need to be fixed. But we are told that repealing 
these rules would cost the Treasury too much revenue, and that they may 
open up opportunities for transfer pricing abuses.
  Recognizing this revenue concern, I am proposing to allow a repeal of 
the foreign base company rules as long as the base company is in a 
country with which we have a comprehensive tax treaty, or when the U.S. 
parent has an advanced pricing agreement in place with the IRS. These 
backstops should reduce these concerns about base company repeal.
  Further, I want to open a debate on the merits of a territorial tax 
system. I want to open that debate by proposing an expansion of the 
temporary dividend repatriation proposal that some of my colleagues 
have embraced, and that I myself voted for in the Finance Committee and 
on the floor. While I believe that such a temporary provision has merit 
from an economic stimulus standpoint, I have real tax policy concerns 
about it.

  Therefore, in my bill I propose a permanent, reduced corporate tax 
rate of 5.25 percent to companies that repatriate foreign earnings to 
the U.S., as long as they spend that money on higher levels of business 
equipment and research expenditures. Overseas profits can pay for new 
machines, new research, and better jobs right here at home, and 
multinational businesses will be given a strong incentive in my bill to 
invest in such economically positive activities. I hope that my 
colleagues will give serious consideration to this proposal.
  In the 107th Congress, Senator Breaux and I introduced S. 1475, a 
bill to provide an appropriate and permanent tax structure for 
investments in the Commonwealth of Puerto Rico and the possessions of 
the United States. That bill would have allowed subsidiaries of U.S. 
companies incorporated in Puerto Rico and the U.S. possessions to 
repatriate active business income earned in these jurisdictions at the 
equivalent of a 5.25 percent tax rate.
  As I just mentioned, the bill I am introducing today would provide 
generally comparable treatment for U.S. subsidiaries incorporated in 
all foreign jurisdictions, including Puerto Rico and the U.S. 
possessions, to the extent the companies invested those repatriated 
earnings on higher levels of business equipment and research.
  As a result of expanding the scope of last year's bill, I recognize 
that U.S. companies might not be encouraged to invest in Puerto Rico 
and the U.S. possessions as compared to any foreign country. Since 
1921, the United States has accorded preferential tax treatment to the 
business operations of U.S. companies in Puerto Rico and the U.S. 
possessions. This tax treatment offsets U.S. regulatory mandates--such 
as minimum wage and environmental and safety regulations--and has 
supported Puerto Rico's industrial development program, which has 
resulted in an increase in Puerto Rico's per capita income from 16 
percent of the U.S. average in 1948 when the industrial incentives 
program began, to 32 percent today.
  I remain concerned about the economic development of Puerto Rico and 
the U.S. possessions and therefore will continue to support separate 
legislation that supports employment and economic opportunity for 
American citizens living in the Commonwealth and the possessions.
  The third section of my bill extends and expands the research credit 
on a permanent basis. This provision is identical to the bill that 
Senator Baucus and I introduced earlier this year. And as many of my 
colleagues know, a permanent research credit enjoys significant 
bipartisan support here in the Senate, both on and off the Finance 
Committee.
  Finally, the bill offers real depreciation reform. The bill offers 
three years of complete expensing of business equipment and leasehold 
improvements. It builds on the bonus depreciation incentives we 
included in both the 2002 stimulus tax cut bill and the growth tax cut 
bill we passed earlier this year.
  Essentially, all the same kinds of assets that qualified for the 
bonus depreciation benefits in those two bills would now qualify for 
100 percent immediate expensing under this bill. Moreover, the bill 
would extend the Section 179 expensing provision for small businesses 
by one full year. Economists tell us that what this recovery lacks is 
capital spending by business. By building on the incentives we passed 
in the earlier tax bills, we can get capital spending moving again. 
This will lead to higher productivity and higher wages.
  I would like to comment on more aspects of the depreciation section 
of my bill. I have been told by some of my business constituents in 
Utah that the bonus depreciation provisions are not

[[Page S10067]]

helpful to them. This is because those companies are currently 
suffering losses and have no current taxable income. Moreover, some of 
these businesses have been having difficulties for so long that they 
have no recent year when tax was paid to which they may carry back a 
net operating loss.
  One tax attribute that many of these companies do have, however, is 
prepayment credits under the Alternative Minimum Tax. As many of my 
colleagues know, the AMT has the perverse effect of hurting companies 
when business conditions are poor, thus exacerbating an already 
difficult financial situation. So, unprofitable companies often find 
themselves continuing to pay the alternative minimum tax.
  In order to assist companies like the ones I described, my bill 
includes a provision that would allow a taxpayer to elect to forego the 
expensing of newly acquired business property and instead to 
effectively monetize their corporate alternative minimum tax credits to 
that extent. This simple proposal bestows no new tax benefits on these 
companies, but rather delivers the full expensing provision at the time 
it is most needed by the company and in the economy generally.
  Moreover, this provision helps to equalize the tax treatment between 
fully taxable companies that can take full advantage of tax incentives 
and their less fortunate competitors that cannot at the present fully 
utilize those benefits. Having Congress assist those companies who are 
enjoying good times at the expense of those who are struggling is not 
in the best interest of this nation.
  I hope this bill will make a positive contribution to the debate in 
both the Senate and the House. And, I hope the final ETI repeal and 
replacement bill that the President signs will be more beneficial to 
more domestic and multinational companies because of the ideas we are 
proposing.
  Finally, I hope that throughout this debate, as accusations and 
proposals fly back and forth regarding how best to help the U.S. 
economy, we keep our eyes on the real goal--keeping America's workers 
the most productive in the world, whether they work in an office park 
or in a factory. And as the 1990s proved beyond doubt, high 
productivity and lower unemployment rates can easily go hand in hand. 
As we saw in the 1990s, higher productivity is the key to higher wages 
and better jobs.
  I ask unanimous consent that a section-by-section summary of my bill 
be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

ETI Repeal and Replacement Bill--Promote Growth & Jobs in the USA (PRO 
                         GROW USA) Act of 2003


                     Section-by-Section Description

            Title I--Repeal ETI & Provide Transition Relief

       Section 101. Repeal of exclusion for extraterritorial 
     income.
       Provides for repeal of ETI regime with three years of 
     transition relief, (i.e., 75 percent of current benefit in 
     2004, 50 percent in 2005, and 25 percent in 2006).

    Title II--Simplification of Rules Relating to Taxation of U.S. 
                      Businesses Operating Abroad

        Subtitle A--Treatment of Controlled Foreign Corporations

       Section 201. Exceptions from foreign base company sales and 
     services income rules.
       Provides for repeal of the foreign base company sales and 
     services income rules for income derived either from 
     transactions covered by an Advanced Pricing Agreement with 
     IRS (APA) or from transactions with countries with whom the 
     U.S. has a comprehensive income tax treaty and exchange of 
     information program, excluding Barbados. Provides that 
     transactions in which an APA would not apply will not trigger 
     subpart F income in any case. This provision allows companies 
     to centralize their offshore marketing and sales operations 
     in one country without triggering current U.S. tax.
       Section 202. Look-thru treatment of payments between 
     related controlled foreign corporations under foreign 
     personal holding company income rules.
       Dividends, interest, rents, and royalties received by one 
     CFC from a related CFC would not be treated as foreign 
     personal holding company income to the extent attributable to 
     non-subpart F earnings of the payor. Under current law, many 
     companies can already achieve this result through the use of 
     hybrid branches. This provision would simplify the subpart F 
     rules and reduce the expense of international tax planning.
       Section 203. Look-thru treatment for sales of partnership 
     interests.
       Treats the sale of a partnership interest by a CFC as the 
     sale of a proportionate share of partnership assets for 
     purposes of determining foreign personal holding company 
     income under subpart F.
       Section 204. Repeal of foreign personal holding company 
     rules and foreign investment company rules.
       Eliminates redundancy in the U.S. tax code. Recommended by 
     the Joint Committee on Taxation, in its simplification study.
       Section 205. Clarification of treatment of pipeline 
     transportation income.
       Foreign base company oil-related income would not include 
     income derived from a source within a foreign country in 
     connection with the pipeline transportation of oil or gas 
     within such foreign country. Pipeline transportation income 
     is not mobile income, and the arms-length price of such 
     income is readily determined.
       Section 206. Permanent extension and modification of 
     Subpart F exemption for active financing.
       Permanently extends the subpart F exemption for active 
     financing income, currently due to expire January 1, 2007. 
     This provision first became law in 1997, and accords with the 
     underlying policy that income earned by a domestic parent 
     corporation from active foreign operations conducted by 
     foreign corporate subsidiaries generally is subject to U.S. 
     tax only when repatriated. Until such repatriation, the U.S. 
     tax on such income is generally deferred. In addition, for 
     purposes of defining ``qualified banking or financing 
     income'' (under section 954(h)(3)), activities conducted by 
     employees of certain related persons are treated as conducted 
     directly by an eligible CFC or qualified business unit in its 
     home country.
       Section 207. Expansion of de minimis rule under subpart F.
       Expands Subpart F de minimis rule to be the lesser of 5 
     percent of gross income or $5 million. Current law threshold 
     is 5 percent of gross income or $1 million. Recommended by 
     the Joint Committee on Taxation in its simplification study, 
     this provision would simplify tax planning for small- and 
     medium-sized companies just starting their overseas 
     operations.
       Section 208. Modification of interaction between Subpart F 
     and PFIC rules.
       Adds an exception to the rules governing the overlap of the 
     Subpart F and passive foreign investment company rules for 
     U.S. shareholders that face only a remote likelihood of 
     incurring a Subpart F inclusion in the event that a CFC earns 
     Subpart F income, thus preserving the potential application 
     of the passive foreign investment company rules in such 
     cases. Recommended by the Joint Committee on Taxation in its 
     Enron report. This provision would raise a small amount of 
     revenue.
       Section 209. Determination of foreign personal holding 
     company income with respect to transactions in commodities.
       Allows a company to hedge its commodities without 
     triggering Subpart F as long as the company uses these 
     commodities in the course of its business. Since hedging 
     allows companies to lock in long-term prices on commodities 
     with fluctuating spot-market prices, this hedging simplifies 
     long-run business planning, and is an integral part of a 
     company's active operations.
       Section 210. Repeal of foreign base company shipping income 
     rules.
       Foreign base company shipping rules are repealed outright. 
     The proposal also relaxes the ``active rents'' test under 
     subpart F for rents derived from aircraft or vessels. 
     Requires the CFC receiving such rental income to be actively 
     in the business of renting or leasing such aircraft or 
     vessels. The current ``active rents'' test, by looking at the 
     CFC's active leasing expense rather than its actual activity, 
     sets too high a bar for companies leasing aircraft and 
     vessels.
       Section 211. Reduced tax on repatriated earnings previously 
     exempt from tax under Subpart F.
       Allows companies to repatriate overseas profits at a 
     reduced tax rate as long as those funds are spent to increase 
     U.S. innovation. Specifically, reduces the tax on repatriated 
     earnings by 85 percent, to a 5.25 percent rate, to the extent 
     that a company's spending on equipment and research exceeds 
     an ``innovation baseline.'' The innovation baseline is 
     defined as 85 percent of the average spending on equipment 
     and research over the past three years. This permanent 
     provision encourages companies to repatriate overseas profits 
     that would otherwise likely remain offshore.

         Subtitle B--Provisions Relating to Foreign Tax Credit

       Section 221. Interest expense allocation rules.
       Modifies current-law interest expense allocation rules by 
     providing a one-time election for the common parent of an 
     affiliated group to allocate and apportion interest expense 
     of domestic members of a worldwide affiliated group on a 
     worldwide-group basis and allows a one-time election for 
     financial subgroups to allocate interest expense by applying 
     fungibility principles on a worldwide basis. Current interest 
     allocation rules assume that money borrowed in the U.S. is 
     used in overseas operations, and thereby reduces reported 
     foreign source income. This may artificially reduce the 
     foreign tax credit limitation, even for companies that have 
     paid substantial foreign taxes.
       Section 222. Extension of period to which excess foreign 
     taxes may be carried.
       Allows a 20-year carryforward of foreign tax credits. 
     Extending the carryforward from five years to 20 years allows 
     companies more opportunities to avoid double taxation.

[[Page S10068]]

       Section 223. Ordering rules for foreign tax credit 
     carryforwards.
       Reorders the utilization of foreign tax credits so that 
     credits carried from prior years would be used before current 
     year credits under a first-in-first-out rule, instead of the 
     current-law last-in-first-out rule. By allowing companies to 
     use their oldest foreign tax credits first, this provision 
     would reduce the possibility of double taxation.
       Section 224. Repeal of limitation of foreign tax credit 
     under alternative minimum tax.
       Eliminates the arbitrary and unfair 10 percent haircut on 
     foreign tax credits that can be applied to the alternative 
     minimum tax.
       Section 225. Look-thru rules to apply to all dividends from 
     noncontrolled section 902 corporations.
       Current law provides look-through treatment to dividends 
     from section 902 corporations for dividends paid out of 
     earnings and profits accumulated from 2003 onward. This 
     provision gives such treatment to all dividends, regardless 
     of the year the earnings and profits from which a dividend is 
     paid were accumulated. The current rules for dividends from 
     section 902 corporations are complex and result in compliance 
     burdens for taxpayers; this provision would simplify the Code 
     and remove these burdens. This proposal is based on a Joint 
     Committee on Taxation recommendation.
       Section 226. Reduction to 2 foreign tax credit baskets.
       Reduces number of foreign tax-credit baskets to two: 
     General Category Income and Typically-Low-Taxed Income 
     (TyLT). The TyLT tax basket would include income from the 
     eliminated passive, shipping, and DISC/FSC baskets. The 
     General Category Income basket would include income from the 
     old general limitation basket, as well as income from the 
     high withholding interest income and financial services 
     income baskets. The current-law division of income into 
     multiple baskets is a leading source of tax complexity.
       Section 227. Recharacterization of overall domestic loss.
       Allows companies with an overall domestic loss to more 
     easily use their foreign tax credits. This proposal would 
     provide symmetry in the treatment of U.S. and foreign losses 
     for foreign tax credit limitation purposes. Current law makes 
     it difficult for companies to use these credits when they 
     have overall domestic losses.
       Section 228. Repeal of special rules for applying foreign 
     tax credit in case of foreign oil and gas income.
       Repeals special rules for applying foreign tax credits in 
     the case of foreign oil and gas income. Current law places 
     special restrictions on foreign tax credits derived by the 
     foreign oil and gas extraction industry.
       Section 229. Increase in individual exemption from foreign 
     tax credit limitation.
       Increases the current exemption from the foreign tax credit 
     limitation for certain individuals under section 904(j) from 
     $300, $600 in the case of a joint return to $500, $1,000 in 
     the case of a joint return, and indexes those amounts for 
     inflation. This simplifies tax filing for individual 
     investors who hold small amounts of foreign investments.
       Section 230. U.S. property not to include certain assets of 
     CFCs.
       Reforms the rules regarding investments in U.S. property by 
     CFCs so that ``U.S. property'' does not include certain 
     securities acquired and held by a CFC in the ordinary course 
     of its business as a dealer in securities.
       Section 231. Attribution of stock ownership through 
     partnerships to apply in determining section 902 and 960 
     credits.
       For foreign tax credit purposes, allows stock owned 
     indirectly through a partnership to be treated as 
     proportionately owned by the partners. By allowing foreign 
     tax credits to pass through to partners, potential for double 
     taxation is reduced. Recommended by the Joint Committee on 
     Taxation in its simplification study.
       Section 232. Provide equal treatment for interest paid by 
     foreign partnerships and foreign corporations.
       Provides foreign partnerships with the same sourcing 
     treatment on interest payments as foreign corporations. 
     Current law states that if a foreign partnership has any U.S. 
     operations, then any interest paid by that partnership is 
     U.S. source. By contrast, for foreign corporations with U.S. 
     branch operations, only interest payments from the U.S. 
     branch are U.S. source.
       Section 233. Application of look-thru rules to interest, 
     rents, and royalties.
       Applies look-through rules to interest, rents, and 
     royalties received or accrued from noncontrolled 902 
     corporations and entities that would be CFCs if they were 
     foreign corporations.
       Section 234. Clarification of treatment of certain 
     transfers of intangible property.
       This resolves an uncertainty that arose in connection with 
     changes made to section 367(d) in 1997.

                      Subtitle C--Other Provisions

       Section 251. Application of uniform capitalization rules to 
     foreign persons.
       Requires the use of U.S. generally accepted accounting 
     principles rather than UNICAP rules for purposes of 
     determining earnings and profits as well as subpart F income. 
     For most firms, this will prevent companies from having to 
     keep accounting books in both UNICAP and GAAP formats. This 
     simplification proposal was recommended by the Joint 
     Committee on Taxation in its simplification study.
       Section 252. Treatment of certain dividends of regulated 
     investment companies.
       Exempts from U.S. withholding tax certain dividends 
     received by nonresident alien individuals or foreign 
     corporations from a regulated investment company. Such 
     exemption would apply to dividends paid out of short-term 
     capital gains and interest income that would itself be exempt 
     from withholding.
       Section 253. Repeal of withholding tax on dividends from 
     certain foreign corporations.
       Extends an exemption from the withholding tax to dividends 
     paid by certain foreign corporations. Recommended by the 
     Joint Committee on Taxation in its simplification study.
       Section 254. Airline mileage awards to certain foreign 
     persons.
       Grants Treasury authority to exempt from the air travel 
     excise tax amounts attributable to mileage awards issues to 
     persons outside the United States.
       Section 255. Interest payments deductible where 
     disqualified guarantee has no economic effect.
       Eliminates the limitation for the deduction of interest as 
     a result of section 163(j) for interest payments on debt 
     guaranteed by a foreign person as long as the taxpayer 
     establishes that it could have borrowed the same amount of 
     debt from an unrelated lender without a guarantee. The 
     Secretary would be granted authority to disregard such a 
     showing if the terms of the loan are substantially 
     dissimilar. This proposal properly focuses the U.S. earnings 
     stripping rules on the realm of possible abuse: related party 
     debt.
       Section 256. Modifications of reporting requirements for 
     certain foreign-owned corporations.
       Creates de minimis exception for reporting, and provides 
     companies a 60-day window for translating documents into 
     English.
       Section 257. Repeal of tax on certain U.S. source capital 
     gains of nonresident aliens.
       Repeals the tax on net U.S. source capital gains of 
     nonresident alien individuals present in the U.S. for 183 
     days or more during a taxable year. Recommended by the Joint 
     Committee on Taxation in its simplification study.
       Section 258. Election not to use average exchange rate for 
     foreign tax paid other than in functional currency.
       Allows companies an election to use the effective exchange 
     rate on the day of payment rather than an annual average 
     exchange rate. Exchange rates in many countries are volatile, 
     which can turn an annual average rate into an inaccurate 
     indicator of taxable income.
       Section 259. Study of impact of international tax laws on 
     taxpayers other than large corporations.
       The Secretary of the Treasury shall conduct a study 
     regarding the impact of the international tax rules on 
     smaller taxpayers, in particular regarding the compliance 
     burden on such taxpayers. The study shall set forth 
     suggestions of how the compliance burden could be reduced for 
     smaller taxpayers. Not later than 180 days after the date of 
     enactment, the Secretary shall submit to the Congress a 
     report of such study.

 Title III--Credit for Increasing Research Activities, provisions are 
   identical to S. 664, the Hatch-Baucus research credit bill, which 
             enjoys the bipartisan support of 30 senators.

       Section 301. Permanent extension of research credit.
       The research credit, which is scheduled to expire on June 
     30, 2004, would be extended permanently.
       Section 302. Increase in rates of alternative incremental 
     credit.
       The rates of the current-law alternative incremental 
     credit, which is elective, would be increased as follows:
       Tier One, qualified research expenditures (QREs) in excess 
     of 1.0 percent of base amount,--increase from 2.65 percent to 
     3 percent.
       Tier Two, QREs in excess of 1.5 percent of base amount,--
     increase from 3.2 percent to 4 percent.
       Tier Three, QREs in excess of 2.0 percent of base amount,--
     increase from 3.75 percent to 5 percent.
       Section 303. Alternative simplified credit for qualified 
     research expenditures.
       The proposed alternative simplified credit (ASC) would 
     provide a meaningful incentive for companies to perform R&D 
     activities in the United States as opposed to other countries 
     that provide more substantial incentives for such activities. 
     The ASC is an elective credit that equals 12 percent of the 
     excess of current-year qualified research expenses 
     (``QREs''), as defined under section 41(b), over 50 percent 
     of the taxpayer's average QREs for the prior three years. For 
     start-up taxpayers, the credit would equal 6 percent of 
     current-year QREs.
       The election, once made, would apply for taxable years 
     ending after the date of enactment, and all subsequent 
     taxable years, unless revoked with the consent of the 
     Secretary of Treasury. Taxpayers that have previously elected 
     the Alternative Incremental Research Credit (AIRC) could 
     apply the new computational rules or continue to calculate 
     the credit under the AIRC rules.

         Title IV--Reform of Depreciation of Business Property

       Section 401. 100 percent expensing for certain property 
     through 2006.
       Provides immediate write-off for all business equipment and 
     leasehold improvements, the same property which benefits from 
     the

[[Page S10069]]

     2002 and 2003 Tax Acts' bonus depreciation provisions. 
     Effectively, this provision would expand the bonus 
     deprecation to 100 percent and extend it through 2006.
       Section 402. One-year extension of expensing for small 
     businesses.
       The expansion of section 179 (allowing small businesses to 
     immediately write off their business property) is extended 
     through 2006, rather than expiring at the end of 2005 as is 
     now the law.
       Section 403. Election to increase minimum tax credit 
     limitation in lieu of bonus depreciation.
       Would allow taxpayers making investments in business 
     equipment and leasehold improvements (which would otherwise 
     qualify for immediate expensing under Section 401) to elect 
     to claim accumulated AMT credits in lieu of claiming 
     immediate expensing. Specifically, a taxpayer making the 
     election would forego the expensing and would either reduce 
     its current-year regular or minimum tax liability or be 
     allowed an unlimited carryback of AMT credits in an amount 
     not to exceed the amount of foregone expensing multiplied by 
     0.35, i.e., the assumed corporate tax rate. The provision 
     would expire at the same time as the expensing provision. 
     Taxpayers making the election would not reduce the basis of 
     eligible property and the depreciation adjustments of the AMT 
     would not apply to such property. Provision would expire at 
     the end of 2006.
                                 ______
                                 
      By Mr. HARKIN (for himself and Mr. Dayton):
  S. 1476. A bill to amend the Internal Revenue Code of 1986 to 
encourage investment in facilities using wind to produce electricity, 
and for other purposes; to the Committee on Finance.
  Mr. HARKIN. Mr. President, I am introducing today the Wind Power Tax 
Incentives Act of 2003. I am pleased to be joined by Senator Dayton. 
This legislation makes it easier for farmers and others around the 
country to invest in wind power for commercial electricity production. 
Wind power is a clean, economical, and reliable source of renewable 
energy abundant on farms and in rural areas in Iowa and elsewhere.
  With this legislation we can help farmers help themselves by 
developing a new source of income, and help the rest of the country in 
the production of renewable energy. Farmers are ready to take on this 
effort. A recent study found that 93 percent of corn producers support 
wind energy generally. They also strongly support the farm bill's 
historic energy title.
  This bill complements the farm bill's energy programs and other wind 
power initiatives currently being considered by this body. The bill 
would make changes to Federal tax law to make the section 45 wind 
production tax credit more widely available to farmers, farm 
cooperatives, and other investors. Section 45 of Federal tax law 
provides a tax credit, currently 1.8 cents per kiowatthour, for 
electricity actually produced and sold during the first ten years of 
the life of a wind turbine. The credit has been extraordinarily 
successful in spearheading the installation of new wind power capacity 
by utilities and in bringing down the cost of this sustainable energy 
source to consumers. However, certain barriers have prevented wide use 
by farmers and other investors.
  It's time to take the next step and help our family farmers and other 
investors benefit from the credit as well. Our legislation does this by 
making three changes to the tax code. First, under current tax law most 
losses, deductions, and credits from passive investments cannot be used 
to reduce taxes on wages or other income. So a farmer who passively 
invested in wind energy could not use the tax credits to offset taxes 
on farm income. This bill creates an exception to passive loss 
restrictions for an interest in a wind facility that qualifies for the 
section 45 credit. The wind facility's loss or tax credits could then 
offset the income or taxes on the taxpayer's farming business. Similar 
exceptions currently apply to oil and gas investments. To prevent 
potential abuse by wealthy taxpayers, the exception is limited to 
taxpayers with income under $1 million.
  Second, under current law individual and corporate taxpayers are 
subject to an alternative minimum tax (AMT) if their tax rates fall 
below certain levels. Taxpayers subject to an AMT cannot currently use 
the section 45 wind tax credit. This bill allows a farmer or other 
taxpayer who invests in a wind electric generating facility to use the 
resulting tax credit against the taxpayer's alternate minimum tax 
(AMT). Similar provisions already exist for several other tax credits. 
Again, this provision is limited to taxpayers with income under $1 
million.
  Third, the bill allows cooperatives to invest in qualified wind 
facilities and pass through the section 45 credits to cooperative 
members. This will allow farmers to join together and pool their 
resources in a cooperative and still take advantage of the credit.
  The benefits of this legislation are obvious. Increased renewable 
energy production lessens our dependence on foreign oil, provides 
environmental and public health gains, bolsters farm income, creates 
jobs and boosts economic growth, especially in rural areas. The Nation 
must move toward energy independence, and domestically produced wind 
power, along with other forms of renewable energy like biofuels, play 
an important part in this endeavor.
  I want to thank Senator Dayton for co-sponsoring this legislation 
with me. His leadership in this area will be instrumental to moving the 
bill forward. I am hopeful we can pass this legislation soon to help 
secure a brighter future for our Nation's farmers and fellow citizens.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1476

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Wind Power Tax Incentives 
     Act of 2003 ''.

     SEC. 2. OFFSET OF PASSIVE ACTIVITY LOSSES AND CREDITS OF AN 
                   ELIGIBLE TAXPAYER FROM WIND ENERGY FACILITIES.

       (a) In General.--Section 469 of the Internal Revenue Code 
     of 1986 (relating to passive activity losses and credits 
     limited) is amended by redesignating subsections (l) and (m) 
     as subsections (m) and (n) and by inserting after subsection 
     (k) the following new subsection:
       ``(l) Offset of Passive Activity Losses and Credits From 
     Wind Energy Facilities.--
       ``(1) In general.--Subsection (a) shall not apply to the 
     portion of the passive activity loss, or the deduction 
     equivalent (within the meaning of subsection (j)(5)) of the 
     portion of the passive activity credit, for any taxable year 
     which is attributable to all interests of an eligible 
     taxpayer in qualified facilities described in section 
     45(c)(3)(A).
       ``(2) Eligible taxpayer.--For purposes of this subsection--
       ``(A) In general.--The term `eligible taxpayer' means, with 
     respect to any taxable year, a taxpayer the adjusted gross 
     income (taxable income in the case of a corporation) of which 
     does not exceed $1,000,000.
       ``(B) Rules for computing adjusted gross income.--Adjusted 
     gross income shall be computed in the same manner as under 
     subsection (i)(3)(F).
       ``(C) Aggregation rules.--All persons treated as a single 
     employer under subsection (a) or (b) of section 52 shall be 
     treated as a single taxpayer for purposes of this paragraph.
       ``(D) Pass-thru entities.--In the case of a pass-thru 
     entity, this paragraph shall be applied at the level of the 
     person to which the credit is allocated by the entity.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to facilities placed in service after the date of 
     the enactment of this Act.

     SEC. 3. CREDIT FOR WIND ENERGY FACILITIES OF AN ELIGIBLE 
                   TAXPAYER ALLOWED AGAINST MINIMUM TAX.

       (a) In General.--Section 38(c) of the Internal Revenue Code 
     of 1986 (relating to limitation based on amount of tax) is 
     amended by redesignating paragraph (4) as paragraph (5) and 
     by inserting after paragraph (3) the following new paragraph:
       ``(4) Special rules for wind energy credit.--
       ``(A) In general.--In the case of the wind energy credit of 
     an eligible taxpayer--
       ``(i) this section and section 39 shall be applied 
     separately with respect to such credit, and
       ``(ii) in applying paragraph (1) to the credit--

       ``(I) the tentative minimum tax shall be treated as being 
     zero, and
       ``(II) the limitation under paragraph (1) (as modified by 
     subclause (I)) shall be reduced by the credit allowed under 
     subsection (a) for the taxable year (other than the wind 
     energy credit).

       ``(B) Wind energy credit.--For purposes of this subsection, 
     the term `wind energy credit' means the portion of the 
     renewable electric production credit under section 45 
     determined with respect to a facility using wind to produce 
     electricity.
       ``(C) Eligible taxpayer.--For purposes of this paragraph, 
     the term `eligible taxpayer' has the meaning given such term 
     by section 469(l)(2).''
       (b) Conforming Amendments.--Paragraphs (2)(A)(ii)(II) and 
     (3)(A)(ii)(II) of section 38(c) of such Code are each amended 
     by inserting ``or wind energy credit'' after ``employee 
     credit''.

[[Page S10070]]

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

     SEC. 4. APPLICATION OF CREDIT TO COOPERATIVES.

       (a) In General.--Section 45(d) of the Internal Revenue Code 
     of 1986 (relating to definitions and special rules) is 
     amended by adding at the end the following new paragraph:
       ``(8) Allocation of credit to shareholders of 
     cooperative.--
       ``(A) Election to allocate.--
       ``(i) In general.--In the case of a cooperative 
     organization described in section 1381(a), any portion of the 
     credit determined under subsection (a) for the taxable year 
     may, at the election of the organization, be apportioned pro 
     rata among shareholders of the organization on the basis of 
     the capital contributions of the shareholders to the 
     organization.
       ``(ii) Form and effect of election.--An election under 
     clause (i) for any taxable year shall be made on a timely 
     filed return for such year. Such election, once made, shall 
     be irrevocable for such taxable year.
       ``(B) Treatment of organizations and patrons.--The amount 
     of the credit apportioned to any shareholders under 
     subparagraph (A)--
       ``(i) shall not be included in the amount determined under 
     subsection (a) with respect to the organization for the 
     taxable year, and
       ``(ii) shall be included in the amount determined under 
     subsection (a) for the taxable year of the shareholder with 
     or within which the taxable year of the organization ends.
       ``(C) Special rules for decrease in credits for taxable 
     year.--If the amount of the credit of a cooperative 
     organization determined under subsection (a) for a taxable 
     year is less than the amount of such credit shown on the 
     return of the cooperative organization for such year, an 
     amount equal to the excess of--
       ``(i) such reduction, over
       ``(ii) the amount not apportioned to such shareholders 
     under subparagraph (A) for the taxable year,

     shall be treated as an increase in tax imposed by this 
     chapter on the organization. Such increase shall not be 
     treated as tax imposed by this chapter for purposes of 
     determining the amount of any credit under this subpart or 
     subpart A, B, E, or G.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.
                                 ______
                                 
      By Mr. CORZINE (for himself, Mr. Lautenberg, Mr. Schumer, and 
        Mrs. Clinton):
  S. 1477. A bill to posthumously award a Congressional gold medal to 
Celia Cruz; to the Committee on Banking, Housing, and Urban Affairs.
  Mr. CORZINE. Mr. President, I rise to honor the magnificent life, and 
the legacy, of Celia Cruz, and to introduce legislation to award her 
posthumously our Nation's highest civilian award, the Congressional 
Gold Medal. This award would be an appropriate tribute to Ms. Cruz's 
life, given her innumerable accomplishments in the world of 
entertainment, her work as an ambassador of Latino culture, and her 
many contributions to American society.
  Celia de la Caridad Cruz Alonso was born on October 21 during the 
1920's. She died on July 17, 2003, at her home in Fort Lee, NJ.
  Over a prolific 50-year career as an entertainer, Celia Cruz, the 
``Queen of Salsa,'' recorded more than 50 albums. Each was a showcase 
of her talent, flair, and the passion she brought to her work. Her 
collaborative efforts ranged from work with legendary salsa artist Tito 
Puente, pop star David Byrne, and hip-hop producer Wyclef Jean. Through 
those cross-cultural efforts, Cruz's music reached over four 
generations of fans, and helped break down ethnic and cultural 
barriers.
  Celia Cruz's gifts as an entertainer were recognized throughout the 
world, and she won hundreds of awards, most notably a 1990 Grammy Award 
and Billboard Magazine's ``Lifetime Achievement Award'' in 1995. In 
1994, Ms. Cruz was recognized by President Clinton with a National 
Endowment of the Arts award.
  While best known for her work as an entertainer, Celia Cruz was much 
more than a singer to her fans, especially to Latinos in America. She 
touched the lives of millions. The outpouring of sorrow that 
accompanied the news of her passing underscores that point. More than 
100,000 people turned out to pay their respect, and honor the memory of 
Celia Cruz at her wake in Miami, FL. More than 75,000 people lined the 
streets of Manhattan--some crying, many singing and fondly recalling 
Ms. Cruz's life--as her funeral procession made its way from the St. 
Patrick's Cathedral.
  The enormous outpouring of support that accompanied news of the death 
of Celia Cruz provides some indication about the special nature of this 
amazing woman. Her story is that of a girl from meager means in Havana, 
Cuba who eventually grew up to become a ``queen.''
  Celia Cruz was one of 14 children raised in Havana's Santa Suarez 
district. As a child, she could be heard by neighbors as she sung her 
siblings to sleep. She received her first award in a competition on the 
talent show La Hora Del Te on Radio Garcia Serra, in which she won 
first prize.
  Her first break came in 1950 when she took over as the lead singer 
with Cuba's Sonora Matancera. Cruz's first recording was a 78 rpm 
single released with Sonora Matancera in January 1951, entitled ``Cao 
Cao Mani Picao''.
  On July 15, 1960, Cruz and members of her band fled Cuba for the 
United States, to escape the regime of Fidel Castro. They were able to 
get out by convincing Castro's officials that the group was simply 
going on another tour abroad. Enraged by the singer's choice to pursue 
freedom, Castro never forgave Cruz for this and refused to let Celia 
return to Cuba--even as her mother was sick and when her father passed 
away.
  In the 60's, Celia Cruz and Pedro Knight, her husband and a member of 
the band, decided to make America their permanent home and Celia Cruz 
became a citizen of the United States.
  During that time, Celia Cruz transformed from a gifted, charismatic 
Cuban-American singer to a woman who would become the ``Queen of 
Salsa.''
  In 1966, she teamed up with the legendary Tito Puente and together 
they released eight albums. Although her classic style, the origins of 
salsa, did not immediately appeal to Latin youth during the 1960's, 
Celia Cruz returned with a vengeance after a stint in the Operetta 
``Hommy,'' in the early 1970's.
  By 1973, Latin pride had begun to take hold in American cities with 
large Latino communities--particularly in New York, New Jersey and 
Florida.
  In New York, Latin musicians had begun to mix classical musical 
styles from Puerto Rico, such as Bomba and Plena, with classical 
musical styles from Cuba, such as Mambo and Son, combining them with 
the trombone for a more urban sound. This combination created what is 
now known as salsa--and Celia Cruz was a pioneer of the genre.
  Ms. Cruz signed with Fania Records, one of the major salsa record 
labels of the time, and in the summer of '74 released Celia & Johnny, 
the first in a series of collaborations with Johnny Pacheco. Building 
upon the success of these albums, Cruz then recorded albums with other 
top leaders on the Fania roster, like Willie Colon, Papo Lucca and Ray 
Barretto, whose bands each had their own trademark sound. She toured 
with the Fania until 1988.
  While Latin music has historically been predominately dominated by 
male artists the talent of Celia Cruz could not be ignored. Her 
flamboyant clothing, charismatic presence, proud
voice and her trademark ``Azuuuuuuuuuuuuucar!'' tag line became 
legendary.
  In addition to her lucrative recording career, Cruz also had roles in 
several American films such as Salsa, the Mambo Kings and the Perez 
Family. She was a true pioneer.
  As I mentioned earlier, Celia Cruz received hundreds of awards as a 
result of her contributions to music, most notable the Grammy Award and 
the National Endowment of the Arts Award from President Clinton. Her 
contributions to society and her contributions to Latino culture have 
also been well recognized. Among those the Presidential Medal in Arts 
from the Republic of Colombia and the Hispanic Heritage Award's 
Lifetime Achievement Award.
  Other notable recognitions bestowed upon Ms. Cruz include an honorary 
Doctorate of Music from Yale, a star on Hollywood's ``Walk of Fame,'' 
and the keys to the cities of Union City, NJ; Miami, FL; Dallas, TX; 
and New York City.
  Those recognitions are all noteworthy, and the life of Celia Cruz 
warrants each and every one of them. But of the hundreds of awards won 
by Celia Cruz, there is one award that she did not receive, but most 
certainly deserves the Congressional Gold Medal.
  This award is considered our Nation's highest civilian honor, and has 
been

[[Page S10071]]

awarded to a rare and esteemed group of individuals. Notable recipients 
include George Washington, Sir Winston Churchill, Bob Hope, Robert 
Frost, Joe Louis, Mother Teresa, and most recently Tony Blair.
  The standards for considering legislation authorizing Congressional 
Gold Medal state that, among other things, ``the recipient shall have 
performed an achievement that has an impact on American history and 
culture that is likely to be recognized as a major achievement in the 
recipient's field long after that achievement.''
  Celia Cruz, music pioneer and the acknowledged ``Queen of Salsa,'' 
certainly fits the criteria to receive the Congressional Gold Medal. 
Celia Cruz, ambassador of Latin culture, impassioned voice of freedom, 
and American is what the Congressional Gold Medal is about.
  This award would properly honor the legacy, and the life, of Celia 
Cruz. I urge my colleagues to support this important legislation, and 
ask unanimous consent that the text of the legislation be printed in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:
       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Congressional Tribute to 
     Celia Cruz Act''.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) Celia de la Caridad Cruz Alonso was raised as one of 14 
     children in the Santa Suarez district of Havana, Cuba;
       (2) in 1960, Cruz and members of her band fled Cuba for the 
     United States to escape the oppressive regime of Fidel 
     Castro;
       (3) Celia Cruz and Pedro Knight, her husband of 40 years, 
     chose to make America their permanent home, where she became 
     a naturalized American citizen;
       (4) while best known for her work as an entertainer, Celia 
     Cruz influenced the lives of millions of people as an 
     ambassador of Latino culture and a powerful voice of freedom;
       (5) over a prolific 50-year career as an entertainer, Celia 
     Cruz became know as the ``Queen of Salsa'';
       (6) she recorded over 50 albums, and her collaborative 
     efforts with other performers helped break down ethnic and 
     cultural barriers;
       (7) the musical talent of Celia Cruz earned her hundreds of 
     awards worldwide, most notably a 1990 Grammy Award and 
     Billboard Magazine's ``Lifetime Achievement Award'' in 1995;
       (8) in 1994, Cruz was recognized by President Clinton with 
     the National Endowment of the Arts Award;
       (9) on July 17, 2003, ``Celia Cruz'', as she was more 
     commonly known, passed away at her Fort Lee, New Jersey home 
     after battling brain cancer; and
       (10) Celia Cruz was much more than just a singer to 
     millions of fans worldwide, especially to Latinos in America, 
     and her contributions to music, Latino culture, and American 
     society make her most deserving of America's highest civilian 
     award, the Congressional Gold Medal.

     SEC. 3. CONGRESSIONAL GOLD MEDAL.

       (a) Presentation Authorized.--The Speaker of the House of 
     Representatives and the President pro tempore of the Senate 
     shall make appropriate arrangements for the posthumous 
     presentation, on behalf of Congress, of a gold medal of 
     appropriate design in commemoration of Celia Cruz, in 
     recognition of her enduring contributions to music, Latino 
     culture, and American society.
       (b) Design and Striking.--For purposes of the presentation 
     referred to in subsection (a), the Secretary of the Treasury 
     (referred to in this Act as the ``Secretary'') shall strike a 
     gold medal with suitable emblems, devices, and inscriptions, 
     to be determined by the Secretary.

     SEC. 4. DUPLICATE MEDALS.

       The Secretary may strike and sell duplicates in bronze of 
     the gold medal struck pursuant to section 2 under such 
     regulations as the Secretary may prescribe, at a price 
     sufficient to cover the cost thereof, including labor, 
     materials, dies, use of machinery, and overhead expenses, and 
     the cost of the gold medal.

     SEC. 5. STATUS OF MEDALS.

       (a) National Medals.--The medals struck pursuant to this 
     Act are national medals for purposes of chapter 51 of title 
     31, United States Code.
       (b) Numismatic Items.--For purposes of section 5134 of 
     title 31, United States Code, all medals struck under this 
     Act shall be considered to be numismatic items.

     SEC. 6. AUTHORITY TO USE FUND AMOUNTS; PROCEEDS OF SALE.

       (a) Authority to use Fund Amounts.--There is authorized to 
     be charged against the United States Mint Public Enterprise 
     Fund, such amounts as may be necessary to pay for the costs 
     of the medals struck pursuant to this Act.
       (b) Proceeds of Sale.--Amounts received from the sale of 
     duplicate bronze medals authorized under section 3 shall be 
     deposited into the United States Mint Public Enterprise Fund.

                          ____________________