[Congressional Record Volume 150, Number 103 (Thursday, July 22, 2004)]
[Senate]
[Pages S8755-S8757]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SPECTER:
  S. 2767. A bill to provide an economic stimulus; to the Committee on 
Finance.
  Mr. SPECTER. Mr. President, I seek recognition today to introduce the 
Small Business Economic Stimulus Act of 2004. In recent months, there 
have been clear signs that America's economic downturn has ended and 
that we are entering a period of renewed growth and prosperity. Yet not 
all of the economic news has been good. As I travel through 
Pennsylvania, I still hear from too many companies that they cannot 
afford to make needed investments in equipment or research at this 
time. As they postpone such investments, they also push off into the 
future the economic growth and opportunity that would flow from them. 
As a result, I continue to meet far too many Pennsylvanians who are out 
of work. Thus while the economy is improving, it is still incumbent 
upon us in Congress to do everything in our power to aid this recovery 
and grow jobs. There is more we can do.
  The bill I introduce today, the Small Business Economic Stimulus Act 
of 2004, will help American companies take the steps they need to grow 
and hire. Since small businesses create approximately 75 percent of new 
jobs in America, my bill focuses on the needs of small business in 
particular. My bill has three parts. Part one renews and extends three 
tax provisions which are crucial to encouraging new investments in R&D 
and equipment. Part two provides greater resources to trade offices and 
trade promotion with a particular emphasis on programs that will enable 
America's small businesses to better compete in foreign markets. Part 
three creates a structure for association health plans which will 
enable small businesses to negotiate less expensive health plans for 
their employees, thereby saving money while continuing to provide 
coverage. Together, these provisions amount to a targeted, measured, 
yet crucial shot in the arm for American small business and the 
American economy.
  The bill I introduce today will permanently extend the research and 
development tax credit. The R&D tax credit, which expired on June 30, 
has proven to be of enormous value to American business. We all 
understand the importance of research and development to the American 
economy. Most leading American companies owe their market dominance to 
the innovations coming from R&D labs. Yet R&D is expensive, and it is 
often among the

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first items to be cut when budgets get tight. The R&D tax credit serves 
America by providing an economic incentive to companies to continue to 
invest in the R&D that will provide the growth and opportunities of the 
future.
  Studies have shown that the R&D tax credit significantly increases 
research and development expenditures. The marginal effect of $1 of the 
research credit creates approximately $1 of additional private research 
and development spending in the short-run, and as much as $2 of extra 
R&D spending in the long run. This is good for the American economy and 
the American taxpayer. In fact, one study estimates that a permanent 
research credit would result in our gross domestic product increasing 
by $10 billion after 5 years and by $31 billion after 20 years.
  In addition, the extension of the R&D tax credit will have benefits 
beyond the purely economic. For example, the research and development 
tax credit has proven to be critical to the U.S. biomedical research 
arena. The tax credit has contributed to many successes in U.S. 
scientific research and innovation, such as rapid progress in finding 
cures for life threatening diseases such as AIDS, cancer and multiple 
sclerosis. Today's diseases--Alzheimer's, AIDS, heart, liver and kidney 
disease, prostate cancer and arthritis--are complex and are in the 
final stages for research breakthroughs. If we allow the incentives to 
invest in medical progress to lapse, the consequence may be irrevocable 
and society may rue that decision for years to come.
  Given the importance of the R&D tax credit, it makes little sense for 
Congress to continue to renew it for short terms. The investment of 
funds in research and development is not a temporary fix but something 
that should be consistently encouraged. Towards this end, my bill 
permanently extends the R&D tax credit. Such a permanent extension will 
send a strong signal to American companies that the value of R&D is 
recognized here in Washington. The permanent extension will also 
provide greater certainty to companies seeking to make plans years in 
advance.
  My legislation will also renew two less well known but important tax 
provisions which encourage capital investments. My bill extends for 
another year a provision that allows companies to take an immediate 50-
percent depreciation on purchases of qualified equipment and machinery. 
This accelerated depreciation is currently set to expire in December, 
2004; equipment purchased thereafter would be subject to standard 
depreciation tables. My bill provides that necessary equipment 
purchased between December 2004 and December 2005 will continue to 
qualify for the accelerated depreciation.
  The availability of accelerated depreciation--especially at the high 
rate of 50 percent--makes an enormous difference to companies 
contemplating large capital investments. Companies which simply could 
not afford these investments under standard depreciation face a 
dramatically altered balance sheet once the accelerated depreciation is 
factored in. Investments that did not previously make economic sense 
will now be economically advantageous. As these investments are made, 
companies will grow and hire. This change in the balance sheet will 
reap a concrete benefit in jobs and growth.
  In addition, my legislation extends the section 179 exclusion at the 
current level of $100,000 through December 2007. This is another 
esoteric sounding provision that will produce very real economic 
benefits. Under this provision, companies can immediately expense, that 
is, recognize as an expense to be deducted from revenues for tax 
purposes, up to $100,000 invested in equipment and machinery. The 
standard section 179 deduction is only $25,000. Once again, this 
provision will have the effect of making investments economically 
advantageous when they otherwise would not be. The greater capital 
investment thereby fostered will lead to greater growth and job 
opportunities.
  Beyond these tax incentives, my bill also seeks to help American 
business through our trade policy. My legislation focuses on two 
programs in particular which help small businesses find markets for 
their products abroad. My bill includes an increase in funding of $27 
million for the U.S. Trade and Development Agency, USTDA. The USTDA has 
proven to be critical to small businesses seeking to sell their 
products abroad. The USTDA helps American businesses study and identify 
opportunities in foreign markets so that they can determine which 
options will be profitable. To a small American business facing a very 
large global economy, the USTDA serves as an accessible and inexpensive 
international sales department.
  USTDA's unique public-private partnership truly extends the 
effectiveness of taxpayers' dollars. Historically, $35 worth of exports 
are generated for every dollar invested by USTDA. As a result, $21 
billion in U.S. exports have been shipped overseas in concert with 
USTDA's programs.
  My legislation also includes $5 million in funding to promote the 
benefits available under the Export Trading Company Act of 1982. This 
legislation was enacted to stimulate U.S. exports by authorizing the 
Secretary of Commerce to issue export trade certificates of review to 
groups of small businesses. A certificate of review protects the holder 
and the members identified in the certificate from State and Federal 
Government antitrust actions and from private treble damage antitrust 
actions for the export conduct specified in the certificate and carried 
out in compliance with its terms and conditions.
  Given the realities of international trade, these antitrust 
exemptions are crucial. In order to compete in a challenging foreign 
market such as China, for example, it is extremely advantageous to have 
a full-time sales representative on the ground there. Yet few small 
businesses can afford to hire full-time representatives and send them 
to China. The antitrust exemptions in the Export Trading Company Act of 
1982 would enable a group of small businesses to band together to hire 
a sales representative, open an office, and pursue the other 
necessities of international trade.
  The Export Trading Company Act is good legislation which solves a 
critical problem. Yet few American businesses exploring international 
trade are aware of the opportunities under this act, let alone take 
advantage of them. As a result, the enormous economic opportunities 
created by this law continue to go unrealized. I think that a minimal 
investment in marketing and promoting this act will pay for itself many 
times over in increased exports, growth and jobs.
  Finally, my bill includes a provision that will enable small 
businesses to join together to negotiate more affordable health care 
plans for their employees. This provision will provide an enormous 
economic boost to America's businesses--with the saving they gain from 
better health insurance rates they can invest, grow and hire. Yet this 
provision also provides clear benefits beyond the purely economic. By 
making health insurance more affordable, this provision will help 
reverse the growth in the ranks of the uninsured.
  According to a poll conducted by the Kaiser Family Foundation, 
Americans worry more about rising health care costs than they do about 
terrorist attacks. There is a reason for such concern. More than 43 
million Americans under age 65 lack health insurance coverage. The 
ranks of the uninsured consist primarily of working families with low 
and moderate incomes--not just the unemployed. Nearly 26 million 
individuals are employed and still are without health care coverage.

  My bill will give small businesses the same market-based advantages 
when negotiating health insurance for their employees that large 
companies and unions currently enjoy. As independent entities, small 
businesses have little leverage when they negotiate with health 
insurance providers, and the situation they face is often one of take 
it or leave it. Even when small businesses band together in local 
purchasing pools, the group is often not large enough to attract new 
insurance companies with less expensive plans.
  My act will allow small businesses to join together in large national 
pools under the auspices of bona fide associations and either purchase 
insurance from a provider or self-insure the same way that large 
employers and unions do. For example, the American Restaurant 
Association could negotiate a plan on behalf of the hundreds of 
thousands of employees who work for its member businesses. Once the 
plan is in place, each individual restaurant could

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choose to participate in this plan at much better rates than they could 
ever have negotiated on their own.
  I thank Senator Snowe for her leadership and hard work on this issue 
of association health plans. On March 6, 2003, Senator Snowe introduced 
S. 545, the Small Business Health Fairness Act of 2003. This long and 
very detailed bill addresses all of the issues needed to make 
association health plans a reality. I signed on as a cosponsor of S. 
545 on June 9, 2003, and I have included the text of S. 545 in my bill.
  It is my sincere hope that the economic recovery will continue and 
will pick up steam in the months to come. There is great reason for 
optimism. But our optimism must not blind us to the continuing problems 
that Americans face. There are measures that Congress can take--today--
which will help our businesses to grow, hire new employees, and provide 
health insurance to these employees at a more affordable rate. These 
measures will, in the long run, more than pay for themselves. We must 
take these steps and do our part. I hope that my colleagues will join 
me in supporting the Economic Stimulus Act of 2004.
                                 ______