[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.
____________________