[Congressional Record Volume 150, Number 83 (Wednesday, June 16, 2004)]
[Senate]
[Pages S6894-S6898]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. WYDEN:
  S. 2531. A bill to assist displaced American workers during a jobless 
recovery, and for other purposes; to the Committee on Finance.
  Mr. WYDEN. Mr. President, as many as half a million Americans in the 
services sector have lost their jobs in the past three years; off-
shoring threatens to wipe out 3.3 million more jobs in the coming 
decade. An off-shoring tsunami is bearing down on workers in the 
information technology and services sector. The most vulnerable jobs 
are those considered the cream of the new economy: highly paid database 
managers, software coders, financial analysts and accountants.
  In places like my own State of Oregon, the prolonged jobless recovery 
is causing many people real pain. Highly educated and experienced 
workers are being forced to walk an economic tightrope. Displaced 
software workers with advanced degrees are forced to search for entry-
level positions, but employers won't hire them because they're 
overqualified. In Oregon and elsewhere, the number of discouraged 
workers leaving the workforce altogether is unprecedented. If these 
folks were counted the national unemployment rate would be 7.4 percent 
rather than the current 5.6 percent.
  Something in the country's tax and trade policy is seriously awry 
when productivity is generating wealth for a few, but not employment 
for the many who want to work. Something just isn't right when people 
can't find jobs but productivity is growing faster now than in the late 
1990's, corporate profits as a share of national income are at an all-
time high and all of the extra $220 billion in GDP has gone into 
corporate profits. In my view part of problem can be traced to U.S. tax 
and trade policies that actually encourage U.S. corporations to move 
jobs overseas rather than encourage American business to invest in 
American workers. These policies need to be changed.
  The legislation that I am introducing today, the Keep American Jobs 
at Home Act, takes a first step toward eliminating tax and trade 
policies that favor off-shoring and overseas outsourcing at the expense 
of American workers. It will eliminate tax breaks for off-shoring and 
extend wage and training and health care premium assistance to 
serviceworkers who lose their jobs because of trade.
  The first key feature of the bill will eliminate tax breaks for U.S. 
corporate off-shoring so that corporations cannot ship millions of jobs 
overseas courtesy of the American taxpayer. The average American 
probably does not know that his or her taxes are used to offset the 
off-shoring of their own jobs. That's right: current law allows the 
taxes of hard-working Americans to go right into the pockets of 
corporations to help them offshore and outsource American jobs. No 
corporation should get such a tax break, and no American taxpayer 
should be asked to foot the bill for their own pink slip.
  Today, when a corporation sends executives and staff overseas to 
scope out a new facility, to buy an existing firm, or to hire foreign 
workers to replace employees in the United States the corporation can 
deduct the costs from its gross income. This means that the corporation 
gets a tax break on the compensation of the executives, the salaries 
and wages of workers, travel, lodging, meals, the cost of Internet 
access, computer time, copies, faxes and anything else that falls into 
the broad category of deductions from gross income for trade and 
business expenses. This means a corporation get a business expense 
write-off for just about any item imaginable related to off-shoring.

[[Page S6895]]

  The bill says the costs of off-shoring and outsourcing will no longer 
be ``ordinary and necessary expenses.'' When is it ever necessary that 
a taxpayer foot the bill for her own pink slip? When is it ever 
necessary that taxpayer dollars subsidize the traveling expenses of a 
group of executives looking to relocate a manufacturing facility in a 
foreign country?
  A respected industry research group predicts that by the end of this 
year, one of out every ten jobs in the U.S. IT provider industry will 
move to emerging markets and one out of every 20 IT jobs within user 
enterprises. And these figures cover jobs only in the IT sector. Under 
current law, all of the ``ordinary and necessary expenses paid or 
incurred'' in moving these millions of jobs overseas would be 
deductible from corporate gross income.
  If a corporation opts to fire U.S. workers here at home and instead 
hire workers overseas, then the company should make that business 
decision based on the full cost of the transaction, not the cost 
subsidized by tax deductions courtesy of the American taxpayer.
  Another important part of the bill will put in place a safety net for 
displaced IT and other service workers. Such a safety net, known as 
Trade Adjustment Assistance, or TAA, has been in place since l962 for 
displaced manufacturing workers. This provision will make service 
sector workers displaced by trade eligible for TAA, giving them 
retraining, income support and a health insurance tax credit.
  I was disappointed when this part of the legislation won a majority 
vote in the United States Senate recently, but failed to reach the 60 
vote threshold needed to overcome a point of order raised by opponents. 
I believe it is more necessary than ever to provide assistance to 
workers who lose their jobs because of policies the Federal Government 
has adopted.
  Globalization of technology is globalizing the technology workforce. 
Geography is increasingly less important in determining where a job can 
be done. The transformation from an economy built on smokestacks to one 
built on packets of light has come at a heavy price. Today, a software 
programmer in Beijing or Bangalore can perform the same tasks as a 
programmer in Beaverton, OR, but the programmer in Beijing or Bangalore 
will cost the company as little as one-fifth to one-tenth what the 
American programmer will be paid.
  The irony is that some of the very same workers who launched the 
technology revolution have now become its victims. Hardly a day goes by 
without a front page story about an American programmer on his way out 
having to train a foreign worker who will replace him.
  The average American may think the Federal Government is helping 
those tech workers displaced by trade. But it is not. That's because 
U.S. trade assistance laws were designed for the manufacturing era. 
Since 1962, when a worker lost his job in a manufacturing plant as a 
result of trade, he could get help through the TAA. TAA has helped 
hundreds of thousands of displaced workers.
  But workers in the services sector--which now accounts for four-
fifths of the U.S. workforce--are not eligible for TAA. Time after 
time, when a displaced software developer, accountant, or telemedicine 
support staff has gone knocking on TAA's door for help, they have been 
turned away. Our bill will open TAA's door to these and other displaced 
service sector workers. All of these workers who have been displaced by 
trade deserve the same benefits.
  This part of the bill will establish equity in the Trade Adjustment 
Assistance program between manufacturing and service workers. It will 
cover three categories of trade-impacted service workers: 1. those who 
lose their jobs when their employer closes or lays off because of 
import competition; 2. public and private sector service workers who 
lose their jobs when their facility moves overseas; and 3. secondary 
service workers who provide services to a primary firm where workers 
are eligible for TAA and whose closure causes the layoff or closure at 
the secondary firm.
  Why is TAA so important? Because it provides retraining, income 
support, health insurance tax credit and other benefits to workers who 
lose their jobs due to trade. It can also help ``secondary workers''--
those supplying parts or services and who may lose their jobs when the 
facility they service shuts down due to import competition or moves 
overseas.
  Another innovative way to encourage the unemployed to reenter the 
workforce is to provide wage insurance for qualifying displaced workers 
upon reemployment. Eligible workers receive up to $10,000 over two 
years to cover up to 50 percent of the difference in salary between a 
new, lower paying job and their former position. The bill also would 
lower the qualifying age from 50 to 40. Wage insurance helps ease the 
burden of reentry for eligible workers who cannot find new employment 
at wages comparable to their previous positions.
  Workers reeling from the off-shoring of service sector jobs cannot 
afford to wait for the higher-skilled jobs economists promise are 
around the corner. Higher-value, higher-paid systems integration jobs 
may come along, but in this jobless recovery unemployed IT 
professionals are more likely to see Elvis than a sudden proliferation 
of help wanted ads for new, highly-skilled IT jobs. The wage insurance 
and TAA pieces of this legislation address what American workers really 
need: a fighting chance to survive in a relentlessly global economy.
  This provision offers corporate boards of directors and officers a 
safe harbor against shareholder lawsuits involving a business decision 
not to outsource or off-shore American jobs. A corporation that chooses 
to keep its workers out of breadlines over the numbers on its bottom 
line should not run the risk that it could be sued for potentially 
lower profits or return to shareholders.
  In 2002, Congress offered TAA workers help in paying for health 
insurance while they pursue TAA training or retraining. The vast 
majority of unemployed workers just don't have the money to afford 
health care for themselves and their families. The Health Care Tax 
Credit program was intended to help workers keep coverage until they 
are reemployed. Unfortunately, the level of premium assistance and 
bureaucratic obstacles led to fewer than five percent of eligible 
workers taking advantage of the health care tax credit.
  The provisions in Title II of the bill seek to remove these barriers 
to participation. The bill would boost the premium coverage from 65 
percent to 75 percent, clarify that any TAA worker who had three months 
coverage prior to losing his job is eligible for the HCTC, allow 
workers to get less expensive group coverage, give coverage to spouses 
of Medicare-eligible TAA recipients workers, and require the IRS to 
expedite refunds of the first month's tax credit.
  In closing, I recall that the Chairman of the Council of Economic 
Advisors just a few months ago called off-shoring ``just a new way of 
doing international trade. More things are tradable than were tradable 
in the past, and that's a good thing. When a good or service is 
produced at lower cost in another country, it makes sense to import it 
rather than to produce it domestically.''
  If this is the ``new way of doing international trade,'' the United 
States needs a new policy to help the nearly 4 million Americans whose 
information technology and related jobs have been or are expected to be 
moved overseas. The country needs a tax and trade policy that promotes 
rather than discourages investment in American workers. The country 
needs a tax and trade policy that eases rather than increases the pain 
of worker dislocation and that eliminates the tax breaks that entice 
U.S. businesses to move overseas. These are the goals of the Keep 
American Jobs at Home Act, and 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. 2531

       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 ``Keeping American Jobs at 
     Home Act''.

     SEC. 2. FINDINGS AND PURPOSE.

       (a) Findings.--The Senate finds the following:

[[Page S6896]]

       (1) The unusually prolonged period in which there has been 
     negative job growth has caused an unprecedented number of 
     people to refrain from actively looking for work and, 
     therefore, to be excluded from the unemployment measurement, 
     effectively creating a ``missing'' labor force. If the 
     unemployment rate in February 2004 took into account this 
     missing labor force, the unemployment rate would have been 
     7.4 percent or 1.8 percent greater than the official rate of 
     5.6 percent.
       (2) Newly released unemployment figures show that the trend 
     toward growing long-term unemployment continued last year, 
     the second year after the recession ended.
       (3) An analysis of long-term unemployment from 2000 to 2003 
     shows that the number of people without work for 6 months or 
     more has risen at the extraordinarily high rate of 198.2 
     percent over this period, from just over 649,000 in 2000 to 
     nearly 2,000,000 in 2003.
       (4) According to the Bureau of Labor Statistics, in 2003, 
     22.1 percent of all unemployed workers had been out of work 
     for more than 6 months, an increase from 18.3 percent in 
     2002. This proportion is higher than at comparable points in 
     the recovery periods of the 4 most recent recessions, and is 
     the highest rate since 1983.
       (5) In 2005, 588,000 American jobs are projected to be 
     moved overseas. In 2010, that number is expected to grow to 
     1,600,000 and by 2015, 3,300,000 American jobs will be moved 
     overseas.
       (6) In February 2004, the Chairman of the Council of 
     Economic Advisors, called offshoring ``just a new way of 
     doing international trade. More things are tradable than were 
     tradable in the past, and that's a good thing. When a good or 
     service is produced at lower cost in another country, it 
     makes sense to import it rather than to produce it 
     domestically.''.
       (7) Immediate action is necessary to encourage United 
     States companies to keep American jobs at home, to assist 
     displaced American workers in finding new, family wage jobs, 
     and to assure that the current American workforce has the 
     skills to compete and win in the global economy.
       (b) Purpose.--The purpose of this Act is to assist 
     displaced American workers during a jobless recovery by--
       (1) ensuring displaced workers in the software, information 
     technology, and services sectors have access to the same 
     trade adjustment assistance and health care tax credits as 
     displaced manufacturing workers;
       (2) providing wage insurance for qualifying displaced 
     workers upon reemployment (to make up part of the difference 
     between a new, lower salary and a previous, higher salary); 
     and
       (3) providing a legal safe harbor for United States 
     businesses that choose to keep American jobs at home.

           TITLE I--ASSISTANCE FOR DISPLACED AMERICAN WORKERS

     SEC. 101. ELIMINATION OF TAX SUBSIDIES FOR OUTSOURCING OF 
                   AMERICAN JOBS.

       (a) In General.--Part IX of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to items not 
     deductible) is amended by adding at the end the following new 
     section:

     ``SEC. 280I. ELIMINATION OF TAX SUBSIDIES FOR OUTSOURCING OF 
                   AMERICAN JOBS.

       ``(a) In General.--No deduction or credit shall be allowed 
     under this chapter with respect to any applicable outsourcing 
     item.
       ``(b) Applicable Outsourcing Item.--For purposes of this 
     section--
       ``(1) In general.--The term `applicable outsourcing item' 
     means any item of expense (including any allowance for 
     depreciation or amortization) or loss arising in connection 
     with 1 or more transactions which--
       ``(A) transfer the production of goods (or the performance 
     of services) from within the United States to outside the 
     United States, and
       ``(B) result in the replacement of workers who reside in 
     the United States with other workers who reside outside of 
     the United States.
       ``(2) Certain items included.--The term `applicable 
     outsourcing item' shall include with respect to any 
     transaction described in paragraph (1)--
       ``(A) any amount paid or incurred in training the 
     replacement workers described in paragraph (1)(B),
       ``(B) any amount paid or incurred in transporting tangible 
     property outside the United States in connection with the 
     transfer described in paragraph (1)(A),
       ``(C) any expense or loss incurred in connection with the 
     sale, abandonment, or other disposition of any property or 
     facility located within the United States and used in the 
     production of goods (or the performance of services) before 
     such transfer,
       ``(D) expenses paid or incurred for travel in connection 
     with the planning and carrying out of any such transaction,
       ``(E) any general or administrative expenses properly 
     allocable to any such transaction,
       ``(F) any amount paid or incurred in connection with any 
     such transaction for the acquisition of any property or 
     facility located outside the United States, and
       ``(G) any other item specified by the Secretary.
       ``(3) Certain items not included.--The term `applicable 
     outsourcing item' shall not include any expenses directly 
     allocable to the sale of goods and services without the 
     United States.
       ``(c) Regulations.--The Secretary shall prescribe such 
     regulations as are necessary or appropriate to carry out the 
     provisions of this section. The Secretary shall prescribe 
     initial regulations not later than 180 days after the date of 
     enactment of this section.''.
       (b) Conforming Amendment.--The table of sections for part 
     IX of subchapter B of chapter 1 of the Internal Revenue Code 
     of 1986 is amended by adding at the end the following new 
     item:

``Sec. 280I. Elimination of tax subsidies for outsourcing of American 
              jobs.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to transactions occurring on or after the date of 
     enactment of this Act.

     SEC. 102. EXTENSION OF TRADE ADJUSTMENT ASSISTANCE TO 
                   SERVICES SECTOR.

       (a) Adjustment Assistance for Workers.--Section 
     221(a)(1)(A) of the Trade Act of 1974 (19 U.S.C. 
     2271(a)(1)(A)) is amended by striking ``firm)'' and inserting 
     ``firm, and workers in a service sector firm or subdivision 
     of a service sector firm or public agency)''.
       (b) Group Eligibility Requirements.--Section 222 of the 
     Trade Act of 1974 (19 U.S.C. 2272) is amended--
       (1) in subsection (a)--
       (A) in the matter preceding paragraph (1), by striking 
     ``agricultural firm)'' and inserting ``agricultural firm, and 
     workers in a service sector firm or subdivision of a service 
     sector firm or public agency)'';
       (B) in paragraph (1), by inserting ``or public agency'' 
     after ``of the firm''; and
       (C) in paragraph (2)--
       (i) in subparagraph (A)(ii), by striking ``like or directly 
     competitive with articles produced'' and inserting ``or 
     services like or directly competitive with articles produced 
     or services provided''; and
       (ii) by striking subparagraph (B) and inserting the 
     following:
       ``(B)(i) there has been a shift, by such workers' firm, 
     subdivision, or public agency to a foreign country, of 
     production of articles, or in provision of services, like or 
     directly competitive with articles which are produced, or 
     services which are provided, by such firm, subdivision, or 
     public agency; or
       ``(ii) such workers' firm, subdivision, or public agency 
     has obtained or is likely to obtain such services from a 
     foreign country.'';
       (2) in subsection (b)--
       (A) in the matter preceding paragraph (1), by striking 
     ``agricultural firm)'' and inserting ``agricultural firm, and 
     workers in a service sector firm or subdivision of a service 
     sector firm or public agency)'';
       (B) in paragraph (2), by inserting ``or service'' after 
     ``related to the article''; and
       (C) in paragraph (3)(A), by inserting ``or services'' after 
     ``component parts'';
       (3) in subsection (c)--
       (A) in paragraph (3)--
       (i) by inserting ``or services'' after ``value-added 
     production processes'';
       (ii) by striking ``or finishing'' and inserting ``, 
     finishing, or testing'';
       (iii) by inserting ``or services'' after ``for articles''; 
     and
       (iv) by inserting ``(or subdivision)'' after ``such other 
     firm''; and
       (B) in paragraph (4)--
       (i) by striking ``for articles'' and inserting ``, or 
     services, used in the production of articles or in the 
     provision of services''; and
       (ii) by inserting ``(or subdivision)'' after ``such other 
     firm''; and
       (4) by adding at the end the following new subsection:
       ``(d) Basis for Secretary's Determinations.--
       ``(1) Increased imports.--For purposes of subsection 
     (a)(2)(A)(ii), the Secretary may determine that increased 
     imports of like or directly competitive articles or services 
     exist if the workers' firm or subdivision or customers of the 
     workers' firm or subdivision accounting for not less than 20 
     percent of the sales of the workers' firm or subdivision 
     certify to the Secretary that they are obtaining such 
     articles or services from a foreign country.
       ``(2) Obtaining services abroad.--For purposes of 
     subsection (a)(2)(B)(ii), the Secretary may determine that 
     the workers' firm, subdivision, or public agency has obtained 
     or is likely to obtain like or directly competitive services 
     from a firm in a foreign country based on a certification 
     thereof from the workers' firm, subdivision, or public 
     agency.
       ``(3) Authority of the secretary.--The Secretary may obtain 
     the certifications under paragraphs (1) and (2) through 
     questionnaires or in such other manner as the Secretary 
     determines is appropriate.''.
       (c) Training.--Section 236(a)(2)(A) of the Trade Act of 
     1974 (19 U.S.C. 2296(a)(2)(A)) is amended by striking 
     ``$220,000,000'' and inserting ``$440,000,000''.
       (d) Definitions.--Section 247 of the Trade Act of 1974 (19 
     U.S.C. 2319) is amended--
       (1) in paragraph (1)--
       (A) by inserting ``or public agency'' after ``of a firm''; 
     and
       (B) by inserting ``or public agency'' after ``or 
     subdivision'';
       (2) in paragraph (2)(B), by inserting ``or public agency'' 
     after ``the firm'';
       (3) by redesignating paragraphs (8) through (17) as 
     paragraphs (9) through (18), respectively; and
       (4) by inserting after paragraph (6) the following:
       ``(7) The term `public agency' means a department or agency 
     of a State or local government or of the Federal Government.

[[Page S6897]]

       ``(8) The term `service sector firm' means an entity 
     engaged in the business of providing services.''.
       (e) Technical Amendment.--Section 245(a) of the Trade Act 
     of 1974 (19 U.S.C. 2317(a)) is amended by striking ``, other 
     than subchapter D''.

     SEC. 103. WAGE INSURANCE FOR QUALIFYING DISPLACED WORKERS 
                   UPON REEMPLOYMENT.

       (a) In General.--Section 246 of the Trade Act of 1974 (19 
     U.S.C. 2318) is amended to read as follows:

     ``SEC. 246. WAGE INSURANCE FOR DISPLACED WORKERS.

       ``(a) In General.--
       ``(1) Establishment.--The Secretary shall establish a wage 
     insurance program for displaced workers that provides the 
     benefits described in paragraph (2).
       ``(2) Benefits.
       ``(A) Payments.--A State shall use the funds provided to 
     the State under section 241 to pay, for a period not to 
     exceed 2 years, to a worker described in paragraph (3)(B), 50 
     percent of the difference between--
       ``(i) the wages received by the worker from reemployment; 
     and
       ``(ii) the wages received by the worker at the time of 
     separation.
       ``(B) Health insurance.--A worker described in paragraph 
     (3)(B) participating in the program established under 
     paragraph (1) is eligible to receive, for a period not to 
     exceed 2 years, a credit for health insurance costs under 
     section 35 of the Internal Revenue Code of 1986, as added by 
     section 201 of the Trade Act of 2002.
       ``(3) Eligibility.--
       ``(A) Firm eligibility.--
       ``(i) In general.--The Secretary shall provide the 
     opportunity for a group of workers on whose behalf a petition 
     is filed under section 221 to request that the group of 
     workers be certified for the wage insurance program under 
     this section at the time the petition is filed.
       ``(ii) Criteria.--In determining whether to certify a group 
     of workers as eligible for the wage insurance program, the 
     Secretary shall consider the following criteria:

       ``(I) Whether the workers in the workers' firm possess 
     skills that are not easily transferable.
       ``(II) The competitive conditions within the workers' 
     industry.

       ``(iii) Deadline.--The Secretary shall determine whether 
     the workers in the group are eligible for the wage insurance 
     program by the date specified in section 223(a).
       ``(B) Individual Eligibility.--A worker in the group that 
     the Secretary has certified as eligible for the wage 
     insurance program may elect to receive benefits under the 
     wage insurance program if the worker--
       ``(i) is covered by a certification under subchapter A of 
     this chapter;
       ``(ii) obtains reemployment not more than 26 weeks after 
     the date of separation from the adversely affected 
     employment; and
       ``(iii) earns not more than $50,000 a year in wages from 
     reemployment;
       ``(iv) is employed on a full-time basis as defined by State 
     law in the State in which the worker is employed; and
       ``(v) does not return to the employment from which the 
     worker was separated.
       ``(4) Total amount of payments.--The payments described in 
     paragraph (2)(A) made to a worker may not exceed $10,000 per 
     worker during the 2-year eligibility period.
       ``(5) Limitation on other benefits.--Except as provided in 
     section 238(a)(2)(B), if a worker is receiving payments 
     pursuant to the program established under paragraph (1), the 
     worker shall not be eligible to receive any other benefits 
     under this title.
       ``(b) Termination.--
       ``(1) In general.--Except as provided in paragraph (2), no 
     payments may be made by a State under the program established 
     under subsection (a)(1) after the date that is 5 years after 
     the date on which such program is implemented by the State.
       ``(2) Exception.--Notwithstanding paragraph (1), a worker 
     receiving payments under the program established under 
     subsection (a)(1) on the termination date described in 
     paragraph (1) shall continue to receive such payments 
     provided that the worker meets the criteria described in 
     subsection (a)(3)(B).''.
       (b) Conforming Amendment.--The table of contents for title 
     II of the Trade Act of 1974 is amended by striking the item 
     relating to section 246 and inserting the following:

``Sec. 246. Wage insurance for displaced workers.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to workers certified as eligible for adjustment 
     assistance under chapter 2 of title II of the Trade Act of 
     1974 on or after the date of enactment of this Act.

     SEC. 104. BUSINESS JUDGMENT DEFENSE FOR NON-OUTSOURCING.

       Notwithstanding any other provision of law, a determination 
     by the officers or directors of a corporation that it is in 
     the best interest of the corporation to keep jobs within the 
     United States and to not locate the domicile of the 
     corporation outside of the United States, or move or carry 
     out production or other business activities of the 
     corporation or any portion thereof, outside of the United 
     States, shall be considered in any action brought against the 
     corporation based on such determination by the court of 
     competent jurisdiction to be a matter of business judgment, 
     and such officers or directors may not be found to have 
     violated their fiduciary duty to the corporation in any such 
     action, based on that determination.

TITLE II--IMPROVEMENT OF CREDIT FOR HEALTH INSURANCE COSTS OF ELIGIBLE 
                              INDIVIDUALS

     SEC. 201. EXPEDITED REFUND OF CREDIT FOR PRORATED FIRST 
                   MONTHLY PREMIUM AND SUBSEQUENT MONTHLY PREMIUMS 
                   PAID PRIOR TO CERTIFICATION OF ELIGIBILITY FOR 
                   THE CREDIT.

       Section 7527 of the Internal Revenue Code of 1986 (relating 
     to advance payment of credit for health insurance costs of 
     eligible individuals) is amended by adding at the end the 
     following:
       ``(e) Expedited Payment of Premiums Paid Prior To Issuance 
     of Certificate.--The program established under subsection (a) 
     shall provide for payment to a certified individual of an 
     amount equal to the percentage specified in section 35(a) of 
     the premiums paid by such individual for coverage of the 
     taxpayer and qualifying family members under qualified health 
     insurance for eligible coverage months (as defined in section 
     35(b)) occurring prior to the issuance of a qualified health 
     insurance costs credit eligibility certificate upon receipt 
     by the Secretary of evidence of such payment by the certified 
     individual.''.

     SEC. 202. TAA PRE-CERTIFICATION PERIOD RULE FOR PURPOSES OF 
                   DETERMINING WHETHER THERE IS A 63-DAY LAPSE IN 
                   CREDITABLE COVERAGE.

       (a) ERISA Amendment.--Section 701(c)(2) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1181(c)(2)) 
     is amended by adding at the end the following:
       ``(C) TAA-eligible individuals.--
       ``(i) TAA pre-certification period rule.--In the case of a 
     TAA-eligible individual, the period beginning on the date the 
     individual has a TAA-related loss of coverage and ending on 
     the date the individual is certified by the Secretary (or by 
     any person or entity designated by the Secretary) as being 
     eligible for a qualified health insurance costs credit 
     eligibility certificate for purposes of section 7527 of the 
     Internal Revenue Code of 1986 shall not be taken into account 
     in determining the continuous period under subparagraph (A).
       ``(ii) Definitions.--The terms `TAA-eligible individual', 
     and `TAA-related loss of coverage' have the meanings given 
     such terms in section 605(b)(4)(C).''.
       (b) PHSA Amendment.--Section 2701(c)(2) of the Public 
     Health Service Act (42 U.S.C. 300gg(c)(2)) is amended by 
     adding at the end the following:
       ``(C) TAA-eligible individuals.--
       ``(i) TAA pre-certification period rule.--In the case of a 
     TAA-eligible individual, the period beginning on the date the 
     individual has a TAA-related loss of coverage and ending on 
     the date the individual is certified by the Secretary (or by 
     any person or entity designated by the Secretary) as being 
     eligible for a qualified health insurance costs credit 
     eligibility certificate for purposes of section 7527 of the 
     Internal Revenue Code of 1986 shall not be taken into account 
     in determining the continuous period under subparagraph (A).
       ``(ii) Definitions.--The terms `TAA-eligible individual', 
     and `TAA-related loss of coverage' have the meanings given 
     such terms in section 2205(b)(4)(C).''.
       (c) IRC Amendment.--Section 9801(c)(2) of the Internal 
     Revenue Code of 1986 (relating to not counting periods before 
     significant breaks in creditable coverage) is amended by 
     adding at the end the following:
       ``(D) TAA-eligible individuals.--
       ``(i) TAA pre-certification period rule.--In the case of a 
     TAA-eligible individual, the period beginning on the date the 
     individual has a TAA-related loss of coverage and ending on 
     the date the individual is certified by the Secretary of 
     Labor (or by any person or entity designated by the Secretary 
     of Labor) as being eligible for a qualified health insurance 
     costs credit eligibility certificate for purposes of section 
     7527 shall not be taken into account in determining the 
     continuous period under subparagraph (A).
       ``(ii) Definitions.--The terms `TAA-eligible individual', 
     and `TAA-related loss of coverage' have the meanings given 
     such terms in section 4980B(f)(5)(C)(iv).''.

     SEC. 203. CLARIFICATION OF ELIGIBILITY OF SPOUSE OF CERTAIN 
                   INDIVIDUALS ENTITLED TO MEDICARE.

       (a) In General.--Subsection (b) of section 35 of the 
     Internal Revenue Code of 1986 (defining eligible coverage 
     month) is amended by adding at the end the following:
       ``(3) Special rule for spouse of individual entitled to 
     medicare.--Any month which would be an eligible coverage 
     month with respect to a taxpayer (determined without regard 
     to subsection (f)(2)(A)) shall be an eligible coverage month 
     for any spouse of such taxpayer.''.
       (b) Conforming Amendment.--Section 173(f)(5)(A)(i) of the 
     Workforce Investment Act of 1998 (29 U.S.C. 2918(f)(5)(A)(i)) 
     is amended by inserting ``(including with respect to any 
     month for which the eligible individual would have been 
     treated as such but for the application of paragraph 
     (7)(B)(i))'' before the comma.

     SEC. 204. IMPROVEMENT OF THE AFFORDABILITY OF THE CREDIT.

       (a) In General.--Section 35(a) of the Internal Revenue Code 
     of 1986 (relating to credit for health insurance costs of 
     eligible individuals) is amended by striking ``65'' and 
     inserting ``75''.
       (b) Conforming Amendment.--Section 7527(b) of such Code 
     (relating to advance payment of credit for health insurance 
     costs of

[[Page S6898]]

     eligible individuals) is amended by striking ``65'' and 
     inserting ``75''.
       (c) Effective Date.--The amendments made by this section 
     apply to taxable years beginning after December 31, 2004.

     SEC. 205. EXTENSION OF NATIONAL EMERGENCY GRANTS TO 
                   FACILITATE ESTABLISHMENT OF GROUP COVERAGE 
                   OPTION AND TO PROVIDE INTERIM HEALTH COVERAGE 
                   FOR ELIGIBLE INDIVIDUALS IN ORDER TO QUALIFY 
                   FOR GUARANTEED ISSUE AND OTHER CONSUMER 
                   PROTECTIONS; CLARIFICATION OF REQUIREMENT FOR 
                   GROUP COVERAGE OPTION.

       (a) In General.--Section 173(f) of the Workforce Investment 
     Act of 1998 (29 U.S.C. 2918(f)) is amended--
       (1) by striking paragraph (1) and inserting the following:
       ``(1) Use of funds.--
       ``(A) Health insurance coverage for eligible individuals in 
     order to obtain qualified health insurance that has 
     guaranteed issue and other consumer protections.--Funds made 
     available to a State or entity under paragraph (4)(A) of 
     subsection (a) shall be used to provide an eligible 
     individual described in paragraph (4)(C) and such 
     individual's qualifying family members with health insurance 
     coverage for the 3-month period that immediately precedes the 
     first eligible coverage month (as defined in section 35(b) of 
     the Internal Revenue Code of 1986) in which such eligible 
     individual and such individual's qualifying family members 
     are covered by qualified health insurance that meets the 
     requirements described in clauses (i) through (iv) of section 
     35(e)(2)(A) of the Internal Revenue Code of 1986 (or such 
     longer minimum period as is necessary in order for such 
     eligible individual and such individual's qualifying family 
     members to be covered by qualified health insurance that 
     meets such requirements).
       ``(B) Additional uses.--Funds made available to a State or 
     entity under paragraph (4)(A) of subsection (a) may be used 
     by the State or entity for the following:
       ``(i) Health insurance coverage.--To assist an eligible 
     individual and such individual's qualifying family members in 
     enrolling in health insurance coverage and qualified health 
     insurance.
       ``(ii) Administrative expenses and start-up expenses to 
     establish group coverage options for qualified health 
     insurance.--To pay the administrative expenses related to the 
     enrollment of eligible individuals and such individuals' 
     qualifying family members in health insurance coverage and 
     qualified health insurance, including--

       ``(I) eligibility verification activities;
       ``(II) the notification of eligible individuals of 
     available health insurance and qualified health insurance 
     options;
       ``(III) processing qualified health insurance costs credit 
     eligibility certificates provided for under section 7527 of 
     the Internal Revenue Code of 1986;
       ``(IV) providing assistance to eligible individuals in 
     enrolling in health insurance coverage and qualified health 
     insurance;
       ``(V) the development or installation of necessary data 
     management systems; and
       ``(VI) any other expenses determined appropriate by the 
     Secretary, including start-up costs and on going 
     administrative expenses, in order for the State to treat at 
     least 1 of the options described in subparagraphs (B) through 
     (H) of subsection (e)(1) of section 35 of the Internal 
     Revenue Code of 1986 as qualified health insurance under that 
     section.

       ``(iii) Outreach.--To pay for outreach to eligible 
     individuals to inform such individuals of available health 
     insurance and qualified health insurance options, including 
     outreach consisting of notice to eligible individuals of such 
     options made available after the date of enactment of this 
     clause.''; and
       (2) by striking paragraph (2) and inserting the following:
       ``(2) Qualified health insurance.--For purposes of this 
     subsection and subsection (g), the term `qualified health 
     insurance' has the meaning given that term in section 35(e) 
     of the Internal Revenue Code of 1986.''.
       (b) Funding.--Section 174(c)(1) of the Workforce Investment 
     Act of 1998 (29 U.S.C. 2919(c)(1)) is amended--
       (1) in the paragraph heading, by striking ``Authorization 
     and appropriation for fiscal year 2002'' and inserting 
     ``Appropriations''; and
       (2) by striking subparagraph (A) and inserting the 
     following:
       ``(A) to carry out subsection (a)(4)(A) of section 173--
       ``(i) $10,000,000 for fiscal year 2002; and
       ``(ii) $300,000,000 for the period of fiscal years 2004 
     through 2006; and''.
       (c) Report Regarding Failure To Comply With Requirements 
     for Expedited Approval Procedures.--Section 173(f) of the 
     Workforce Investment Act of 1998 (29 U.S.C. 2918(f)) is 
     amended by adding at the end the following:
       ``(8) Report for failure to comply with requirements for 
     expedited approval procedures.--If the Secretary fails to 
     make the notification required under clause (i) of paragraph 
     (3)(A) within the 15-day period required under that clause, 
     or fails to provide the technical assistance required under 
     clause (ii) of such paragraph within a timely manner so that 
     a State or entity may submit an approved application within 2 
     months of the date on which the State or entity's previous 
     application was disapproved, the Secretary shall submit a 
     report to Congress explaining such failure.''.
       (d) Clarification of Requirement To Establish Group 
     Coverage Option.--Subsection (g) of section 35 of the 
     Internal Revenue Code of 1986 (relating to special rules) is 
     amended--
       (1) by redesignating paragraph (9) as paragraph (11); and
       (2) by inserting after paragraph (8) the following:
       ``(9) Requirement to establish group coverage option.--With 
     respect to a State, no credit shall be allowed under this 
     section to an individual who resides in that State on or 
     after the date that is 2 years after the date of the 
     enactment of this paragraph unless, not later than such date, 
     the State has elected to have at least 1 of the options 
     described in subparagraphs (B) through (H) of subsection 
     (e)(1) treated as qualified health insurance under this 
     section.
       ``(10) Group health plan.--For purposes of this section, 
     the term `group health plan' has the meaning given that term 
     in section 5000(b)(1).''.
       (e) Technical Amendment.--Effective as if included in the 
     enactment of the Trade Act of 2002 (Public Law 107-210; 116 
     Stat. 933), subsection (f) of section 203 of that Act is 
     repealed.

     SEC. 206. ALIGNMENT OF COBRA COVERAGE WITH TAA PERIOD FOR 
                   TAA-ELIGIBLE INDIVIDUALS.

       (a) ERISA.--Section 605(b) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1165(b)) is amended--
       (1) in the subsection heading, by inserting ``and 
     Coverage'' after ``Election''; and
       (2) in paragraph (2)--
       (A) in the paragraph heading, by inserting ``and period'' 
     after ``Commencement'';
       (B) by striking ``and shall'' and inserting ``, shall''; 
     and
       (C) by inserting ``, and in no event shall the maximum 
     period required under section 602(2)(A) be less than the 
     period during which the individual is a TAA-eligible 
     individual'' before the period at the end.
       (b) Internal Revenue Code of 1986.--Section 4980B(f)(5)(C) 
     of the Internal Revenue Code of 1986 is amended--
       (1) in the subparagraph heading, by inserting ``and 
     coverage'' after ``election''; and
       (2) in clause (ii)--
       (A) in the clause heading, by inserting ``and period'' 
     after ``Commencement'';
       (B) by striking ``and shall'' and inserting ``, shall''; 
     and
       (C) by inserting ``, and in no event shall the maximum 
     period required under paragraph (2)(B)(i) be less than the 
     period during which the individual is a TAA-eligible 
     individual'' before the period at the end.
       (c) Public Health Service Act.--Section 2205(b) of the 
     Public Health Service Act (42 U.S.C. 300bb-5(b)) is amended--
       (1) in the subsection heading, by inserting ``and 
     Coverage'' after ``Election''; and
       (2) in paragraph (2)--
       (A) in the paragraph heading, by inserting ``and period'' 
     after ``Commencement'';
       (B) by striking ``and shall'' and inserting ``, shall''; 
     and
       (C) by inserting ``, and in no event shall the maximum 
     period required under section 2202(2)(A) be less than the 
     period during which the individual is a TAA-eligible 
     individual'' before the period at the end.
                                 ______