[Congressional Record Volume 150, Number 128 (Saturday, October 9, 2004)]
[Senate]
[Pages S10967-S10978]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
UNANIMOUS-CONSENT AGREEMENT--S. 2845
Mr. STEVENS. Mr. President, I brought this to the Senate floor
because, as I stated previously, I was informed that tonight the moneys
for distribution in the hurricane area that FEMA supports will expire.
We have to pass the MilCon bill and we have to pass the Homeland
Security bill as rapidly as possible.
We do not have copies of the intelligence bill that was passed. All
of us have had requests for it.
I ask unanimous consent that the intelligence reform bill, S. 2845,
be printed as passed so we may distribute copies of that and so that
the conference committee can have copies of that bill.
The PRESIDING OFFICER. Without objection, it is so ordered.
Ms. LANDRIEU. I don't see anyone wanting to speak. I suggest the
absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. REID. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. REID. Mr. President, I ask unanimous consent that the Senator
from Ohio, Senator DeWine, be recognized for up to 12 minutes.
Ms. LANDRIEU. Reserving the right to object, only for the purposes of
his statement, and then I would like to be recognized. Otherwise, I
will object.
Mr. REID. Otherwise what?
Ms. LANDRIEU. I am going to object. Only to be recognized for the
purposes of reading a statement, after which the Senator from Louisiana
be recognized; otherwise, I will object.
Mr. REID. I will not agree to that.
The PRESIDING OFFICER. Is there objection?
Mr. DeWINE addressed the Chair.
The PRESIDING OFFICER. The Senator from Ohio.
Mr. DeWINE. Mr. President, I rise this evening to thank----
Ms. LANDRIEU. We are in a quorum call.
Mr. REID. There was an objection.
The PRESIDING OFFICER. We were out of a quorum call.
Ms. LANDRIEU. I note the absence of a quorum.
The PRESIDING OFFICER. The Senator from Ohio has the floor.
Ms. LANDRIEU. We were in a quorum call.
Mr. REID. There was a request for the Senator from Ohio to be
recognized. The Senator from Louisiana asked that it be modified so she
would be recognized afterwards. I said I wouldn't agree to that.
The PRESIDING OFFICER. The Senator is correct. But the Senator then
yielded the floor. The Senator from Ohio sought recognition and had
been recognized.
The Senator from Ohio.
(The remarks of Mr. DeWINE are printed in today's Record under
``Morning Business.'')
Mr. DeWINE. Mr. President, I thank the Chair and yield the floor.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. DeWINE. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DeWINE. Mr. President, I ask unanimous consent that I be allowed
to
[[Page S10968]]
speak for 12 minutes and that immediately after I speak Senator
Landrieu be recognized.
The PRESIDING OFFICER. Without objection, it is so ordered.
Justice For All Act
Mr. DeWINE. Mr. President, several hours ago, Senator Hatch came to
the floor to discuss the DNA bill that we have been able to pass. I
congratulate him for the fine work on that bill. A number of people
have worked on that bill.
I became interested in this issue a number of years ago. I have been
interested in the whole area of crime technology, frankly, going back
to my work as county prosecuting attorney in Greene County, OH, many
years ago.
In those days, we did not have DNA. We did not have a lot of the
technology we have today. I have been able to watch over the years, as
I know the current occupant of the chair has, the great development of
technology which has revolutionized what we can do today in law
enforcement to solve crime. It has been one of the things I have worked
on since I have been in public office--first, my time in the State
legislature, then in the House of Representatives, and when I was
Lieutenant Governor of the State of Ohio, and now, in the last decade,
in the Senate.
I specifically became interested in what turned out to be this bill
we have been talking about today, the DNA bill, several years ago when
I met with the BCI back in Ohio, which is our State lab and State
bureau, and went out there to find out some of the things that needed
to be done. I had a long discussion with them in London, OH, about the
real problem we have in Ohio and the problem we have across this
country.
It is a problem of what we call rape kits; where there is a rape
victim, the police go in, they take evidence from that victim, and then
many times, tragically, I have learned--I know my colleague who is in
the chair understands this--these rape kits are stored, they are never
processed, and that information never gets into any central database.
There is a tremendous backlog of this across this country.
Because of this, to try to help clear up this backlog, I introduced
S. 149, the Rape Kits and DNA Evidence Backlog Elimination Act of 2003.
About the same time, roughly the same time, Senator Biden introduced a
bill which had the same intent to deal with this problem. Chairman
Hatch asked me later on to combine my bill with his and those of other
Members to create the bill we have today. When he asked me to do that,
I gladly agreed.
Today, we all proudly stand as cosponsors of this bipartisan
legislation. I know my colleague in the chair has worked on this
legislation. I think it is a piece of legislation that all Americans
can be proud of and that will help Americans be safer. The provisions
of my original bill that are included in the legislation we passed
today will protect innocent victims and will, in fact, put criminals
behind bars. It will do both.
This bill includes my language to authorize over $1 billion to
eliminate the backlog of over half a million rape kits that are sitting
on the shelves of evidence lockers in police stations across this
Nation.
Let me emphasize again that there are over half a million rape kits
that have not been tested and therefore have not been put into a
central database. How many of these rape kits contain evidence that
would take a rapist off the streets? Well, we can't be sure, but we do
know statistically that approximately one in eight of all kits
currently tested in Ohio do, in fact, result in a match in our DNA
database to a rapist. That is an unbelievable figure, one in eight will
result in this statistical match.
In fact, approximately the same number will link the rape to another
crime scene, giving our law enforcement officers one more piece of
critical evidence that may, in fact, lead to the arrest of a criminal
and the prevention of future crimes.
If you add these two figures together, you can see that nearly one in
four of all rape kits tested will result in key evidence for law
enforcement. That is a staggering statistic and demonstrates the power
of modern technology when, in fact, it is used to fight crime.
This bill also includes my language that will expand the number of
criminals that we put in our Federal DNA database. Very simply, this
language will expand the current reporting requirement to include all
Federal felons, not just a few specific felons as required under
current law. Of course, the more information that goes into the DNA
database, the more likely it becomes that we will match evidence from
the crime scene to the DNA profile of the criminal in the database.
Additionally, this language will permit States to cross-reference DNA
information from people under State indictment with the current Federal
database. For example, if a criminal is arrested and indicted in New
York, and the New York law enforcement officers enter the DNA
information in their State database, this law permits New York to share
this information with the Federal database so all participating States
can access the information.
This means that a police officer could link DNA evidence from a crime
in Ohio to an arrestee in New York. Again, by realizing the full
potential of available technology, we will identify more criminals,
prevent more crimes, and protect more innocent victims.
Finally, this bill includes my language that will extend the period
of time in which law enforcement officers can utilize DNA evidence to
solve crimes. Under current law, the statute of limitations for all
Federal offenses starts when the crime is committed.
Under my language, if DNA evidence is found at the crime scene, the
statute of limitations for most crimes does not start to run until the
DNA evidence is matched to a criminal in the database. This means that
criminals will not be able to escape justice merely because they were
able to avoid capture for a specific period of time.
This bill also contains the Crime Victims Act for which I am an
original cosponsor. This act provides victims with the right to be
heard and considered during Federal criminal prosecutions.
As I know everyone here agrees, we owe it to rape victims, crime
victims in our society as a whole, to do all we can to apprehend
violent criminals. This bill takes a significant step in that
direction.
I thank Senator Hatch for his excellent leadership, being so
steadfast in doggedly pursuing the agreement necessary in the Senate to
pass this bill. Passage of this bill is a testament to his leadership
as chairman of our committee. I also thank Senators Leahy, Biden, and
Feinstein for working tirelessly to achieve this momentous outcome.
I thank Chairman Sensenbrenner, as well as Representative Delahunt in
the House for their outstanding leadership that resulted in a nearly
unanimous vote of support by that body.
Our great Nation will be safer and our confidence in our standing
judicial system will be reinforced as a result of this timely and much
needed legislation.
I would also like to thank the many staff who worked on this bill.
Specifically, I would like to recognize the Chief Counsels of the
Senate and House Judiciary Committees for their commitment to get this
bill done: Bruce Artim and Phil Kiko. I also thank Brett Tolman, who
crafted a key compromise in the bill that allowed the parties to come
together; Katy Crooks, who worked tirelessly to better this bill; Jay
Apperson and Mark Agrast, who brought their outstanding wisdom to the
process, Julie Katzman, Neil McBride, Jon Meyer, Christine Leonard,
Louisa Terrell, Bruce Cohen, Tara Magner, David Brog, Ted Lehman and
David Hantman for their strong knowledge of critical issues; and my
exceptional legislative team that worked so very hard on this for me
and the people of Ohio: Paul Palagyi, Peter Levitas, Robin Blackwell,
Ann O'Donnell and my Crime Counsel Robert Steinbuch. And my former
Crime Counsel Evelyn Fortier.
The PRESIDING OFFICER (Mr. Hatch). Under the previous order, the
Senator from Louisiana is recognized.
Ms. LANDRIEU. Mr. President, under the previous order, I asked to be
recognized after the remarks of Senator DeWine. I really appreciate the
leadership trying to work out our schedule. It has been a long couple
of days. It is getting late into the night. I really appreciate
everybody trying to work forward to getting some of these bills
[[Page S10969]]
passed. But as I said, one of the most important bills that we have
remaining to pass is a $137 billion tax relief bill.
There are many good provisions in this bill. There are many
industries, large and small, in Louisiana that are going to be helped
by it. I would have liked to have voted for the bill. There are energy
tax breaks. There are shipping interests that are bolstered and
supported in here, which means a lot of jobs to Louisiana. I would have
wanted to vote for this bill.
I am not going to be able to vote for the bill, and won't vote for
the bill unless we have some specific action on one provision--not the
Landrieu provision, as some of the others have said, not an individual,
personal Landrieu provision, but the provision for the Guard and
Reserve, the men and women on the front line fighting for us whom every
Republican and every Democrat in this body voted to support. Everyone,
all of the Senators, from both parties, by unanimous vote, voted to
send that provision over to the House to give modest tax relief to
businesses, the small businesses and medium- and large-size businesses
that are keeping those paychecks going to the front line.
We thought it was a good idea to take $2 billion of the $137 billion
to provide some tax relief for those employers so that the Guard and
Reserve that make up 40 percent of our armed services that are picking
up more of the burden and are taking all the bullets on the front line,
whether it is in Iraq or Afghanistan or somewhere else, so their
paychecks could be made whole.
I want people to understand. The Senate of the United States felt
strongly about that. But we sent the provision over. And when it got
over to the House, it was summarily, unjustly, unconscionably cut out
by the House Republican leadership. And it is a shame.
So over the course of the last few days, as we have tried to have
debates about this bill in the morning and the afternoon and into the
evening, I have spoken about this issue. The reason this poster is up
is because it is a visual of what is in the bill and what is out of the
bill. Ceiling fans are in the bill. Ceiling fans are really important
in Louisiana. I know they are to the Senator from Nevada because we are
from States that are very hot. We like air-conditioning, and we like
ceiling fans. I am not picking on the ceiling fan industry. It is an
important industry, and I am sure there is a good reason. I can't
articulate what it is because it wasn't my provision. But someone could
probably give a good explanation as to why the ceiling fan industry is
getting a tax break.
But the Guard and Reserve, going to Iraq, taking the bullets,
fighting on the front line, were left out of the bill, and ceiling fans
are in the bill.
That is the truth. It is a shame. Many of us believe strongly that
this injustice needs to be corrected.
I see the Senator from Iowa, Mr. Harkin, has raised other issues that
he feels very strongly about that were either not addressed
appropriately or properly in either this bill or several others. I want
my constituents to know, and I would like my colleagues to know, I do
not want to make these schedules difficult. I do not. I understand the
pressures that are on the Members of this body.
But I also understand the pressures that are on the families who have
their father or mother or brother or sister or husband or wife on the
front line. I understand the pressures of these families. So do many
other colleagues in this Chamber. If we can do something to help them,
then we should. Maybe we cannot get them in this bill. But I have had
conversations with the good leadership on the Republican and Democratic
side, who are working as we speak to find a way to help the Guard and
Reserve so they are not left out of this $137 billion tax bill with
over 509 items. But they are not an item, they are not a line, they are
not a paragraph or diddly-squat in the bill. So we are talking about
how we could possibly get them included in some other bill that might
pass before we go home for the election.
I can promise you, in the elections that we are getting ready to
have, Members of Congress, Members of the Senate, the President, and
the challenger for the Presidency, our nominee, Senator Kerry--
everybody is going to be taking pictures with the troops. I guess that
is appropriate. But this Senator thinks that is enough of the pictures.
Could we please put them in the budget?
I am not up for reelection this year, so this is not a campaign
speech. The people in Louisiana have been supporting our troops. Our
Guard and Reserve are the best in the Nation. Maybe a Senator would
argue, but we have awards to prove it. We win awards. We are about the
best--in the top 5 in the Nation. I know these men and women. They
don't ask for much. They don't ask to be on the front of every tax
break and giveaway. They are willing to sacrifice. But for Heaven's
sake, we are going to pass a tax bill and give everybody in America
$137 billion and leave them out? I don't think that is right. I don't
think my colleagues think it is right or just.
I hope that sometime over the next 3 or 4 days that we are here--I
know it is Saturday night. I have two small children. I had to make
arrangements so I could be on the floor. I have a husband at home. I
know everybody is going to go to church tomorrow, and people were at
synagogue today and yesterday. I understand that. But I think we need
to spend a little time talking about this issue. Why were they left
out? How could we afford $137 billion and not afford a tax cut for
them? Was it too complicated to figure out?
There are a lot of complicated things in here. It would make people's
eyes twist if I explained how we were giving tax credits to foreign
corporations so they could close down here and go to the Bahamas and
open a post office box and get a tax check. There are more complicated
things in here than saying to businesses in America: Thank you for
being patriotic and for voluntarily sending that paycheck to the front
line, closing the gap between what the reservists make as part of the
Reserve and what they made for your company. We would like to honor
that and give you a tax credit. You can pick up 50 percent of the
burden, and the Government can pick up the other half.
Evidently, this is too much for us to pick up. It is not too much for
me to stand here. I know the hour is getting late. The Senator from
Iowa wants to speak. I just say again that I am going to get to the
floor over the course of the next few days and I will speak about this
issue. I thank the leadership for working in a cooperative manner to
allow that to happen because I am still hopeful that we can fix this
bill. Maybe the President will veto the bill when he finds out it is
not in there. Maybe it could be fixed in a different way. Maybe another
bill could be attached. I know if there is a way the leadership in this
body wants to fix this, they could. I think the men and women on the
front line deserve our best effort in that regard.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. HARKIN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Tobacco Regulation
Mr. HARKIN. Mr. President, first of all, I want to thank a number of
people. I thank Senator DeWine for his dynamic and great leadership on
the issue of FDA regulation of tobacco products. He has been in the
forefront of this fight for a long time. I thank him for his
leadership, working again with Senator Kennedy on this issue and so
many others on both sides of the aisle to get that position established
by the Senate, which we did, and that was that we would have a tobacco
buyout but also FDA regulation of tobacco, finally. We spoke on that,
but, of course, the House didn't go along, and we find ourselves now
with this great big tax bill of around 630 pages we have on our desk.
Guess what. No FDA regulation of tobacco.
I thank Senator DeWine and I thank Senator Landrieu for her strong
and dynamic leadership in being here on a Saturday night to continue to
make the point about what happened to our guardsmen and reservists in
the United States. It is unconscionable what the House and the
President did on this issue. We ought to put the blame where it really
lies; it is at the White House. That is where it lies. I might say the
House, but they are just doing what the White House wants them to do.
They
[[Page S10970]]
are just a rubberstamp for the White House. It is the White House that
called the shots on that one.
I thank Senator Landrieu for sticking up for our people in uniform,
for those all over the country who have been shortchanged by this so-
called tax bill.
Mr. President, I want to take some time here to speak about tobacco
and how unconscionable it is that this bill does not have FDA
regulation of tobacco included. Over the last several days, we have
heard a great deal about the dangers of smoking and the devastation
caused to millions of families every year. With the results of the
conference report on Wednesday, I fear colleagues have not been
listening to the details of the public health crisis our Nation faces
regarding tobacco and smoking.
Let me repeat them loudly and clearly so Members understand what they
are opposing and why we so urgently need FDA regulation of tobacco.
One, smoking kills more than 450,000 Americans every year.
Over the last 10 years, smoking has claimed more than 4.4 million
lives.
Smoking is the leading cause of preventable death in this country.
Smoking causes heart disease, cancer, emphysema, and a host of other
related illnesses.
Two-thousand kids start smoking every day, and, ultimately, one in
three will die of smoking-related causes.
Smoking-related medical expenditures have indirect costs resulting
from lost work activity.
There are 250 chemicals in tobacco smoke that are toxic or cause
cancer in humans.
Tobacco use accounts for at least 30 percent of all cancer deaths.
Smoking causes nearly 87 percent of all lung cancers, which is the
leading cause of cancer deaths.
Last year, nearly 70,000 women died from lung cancer in the United
States. That is more deaths than from breast cancer and all
gynecological cancers combined--70,000 women.
If these facts don't paint a stark picture of the urgency for FDA
regulation of tobacco, I don't know what will. You know, when there is
an outbreak of food poisoning in a local school, we move Heaven and
Earth to find the source and take appropriate action to make sure our
kids don't get sick again. But somehow, when it comes to protecting our
kids from a known toxin--tobacco--we find our hands tied. Why? Well, it
is because of big tobacco. There is too much at stake in terms of
profit loss for tobacco companies to allow this regulation to go
through. They have been fighting it for years.
I introduced the first-ever comprehensive bipartisan FDA regulation
with, I might say, Senator Bob Graham and former Senator John Chafee of
Rhode Island.
That bill was introduced almost 6 years ago. I heard the same reasons
then that I do now on how unnecessary FDA regulation is. Quite frankly,
our bill went much further and was much tougher than this one. Creating
a more sensible policy for tobacco has been a goal of mine for many
years. It was in 1977, in my second term in the House of
Representatives, over 21 years ago, that I first introduced legislation
calling for repeal of the tax deductibility of tobacco advertising and
marketing.
Unfortunately, victories in the tobacco wars for consumers and for
our kids have come few and far between. Tobacco wins every time.
With the mounting evidence we have today about the absolute dangers
of smoking, it is paramount we pass a comprehensive plan that would
once and for all change how this Nation deals with tobacco and
dramatically cut the number of our kids addicted to this deadly
product.
That said, I am afraid the power of big tobacco has once again
superseded the need to protect public health. The fact is we know now
that 90 percent of current smokers became hooked on tobacco as kids.
That should sound alarms that something needs to be done to stop this
from happening, and to prevent senseless disease and death that is
linked with this addiction. This is a drug addiction. Tobacco is a
drug. It is addictive, just like methamphetamine, cocaine, and heroin.
It is addictive and it kills you.
For too long, kids have been getting an unfiltered message from the
tobacco industry: Smoking is cool. Smoking is harmless. Smoking is
glamorous. Smoking is for active young people and will make you look
more attractive.
Today, big tobacco companies spend more than $11.5 billion a year in
advertising and marketing their products. Children are exposed to
messages that are deliberately designed to attract a new generation to
the smoking habit. The motivations are clear: Anything to make more
money for big tobacco.
Now we hear from tobacco companies all the time that, oh, no, their
advertising is to get people to shift brands, go from one brand to the
other. Well, I will illustrate here very shortly that is not what they
are up to.
Many think regulation is unwarranted after some of the restrictions
that were agreed to as part of the master settlement agreement a few
years ago. The good old MSA, the master settlement agreement. Yes,
there are billboard restrictions and a few things such as that, but now
we have much more sophisticated mechanisms.
Let me refresh some memories. Here is Joe Camel, a smooth character,
Joe, flying his jet airplane with the afterburners going. He has a
beautiful young woman looking over her shoulder, looking at Joe Camel
with his Camel cigarette.
Who is this appealing to? Kids.
Now, there is another Joe Camel here. Here is Joe Camel, with Camel
Lights, cool Joe. He has his red convertible and black T-shirt and
Levi's, and Joe is cool. Joe Camel is a neat guy.
Well, we forced big tobacco to get rid of Joe. They did. We do not
see Joe Camel any longer so we can take old Joe down. Joe Camel is
gone. I want to refresh memories. I want to refresh memories, because
there was a time--and I will repeat this, there was a time--a study was
done that kids in America recognized Joe Camel more than
they recognized Mickey Mouse. It is true. But we got rid of Joe Camel.
One might ask, what now do you need? I will show my colleagues why we
need to have FDA regulation, because tobacco has gotten smart. They are
now spending more than ever on predatory marketing since the MSA was
agreed to. Big tobacco is spending 60 percent more on marketing than
they were before the master settlement agreement.
Again, are they trying to get people to switch? Let us take a look.
Here is Liquid Zoo. Now, I had a pack of those with me when we were in
conference. I was one of the conferees arguing to keep the FDA
regulation that we had in the Senate, and I had strawberry flavor. This
was Liquid Zoo, strawberry flavor. When you smell it, why, you would
swear you were in a strawberry patch. It smelled wonderful. It smelled
like strawberries.
This is the tobacco. Liquid Zoo-flavored cigarettes are an exotic
blend of strawberry-flavored tobaccos for a sweet, fresh taste and
aroma.
Do they really think they are trying to get someone to switch from
Marlboros or Winstons or Camels to that? That is going right to our
kids. That is what this is about.
Then we have Kool Rapper here. We have another one. Here is the Kool
Rapper. Here is a rapper. He is cool. He has his mike and he is
spinning the disk or CD or whatever it is there, and everyone is
dancing and that is called Kool Rapper.
Now, do my colleagues think they are trying to go after adults with
that? Do my colleagues think they are trying to go after 40 and 50-
year-old people to get them to switch from Marlboro or Winston or Camel
to that? No. This is for kids. They are getting to young people. They
are spending 60 percent more on marketing now than they did before the
master settlement agreement, and we took away Joe Camel on billboards,
but now they are spending 60 percent more and this is where it is
going.
Because what do they know? They know 90 percent of all tobacco
smokers today started when they were young. They get them hooked early.
I have another Kool Rapper here. This is just, again, special edition
packs. Now, they do not any longer have the little coupons where you
can get gear and all that kind of stuff. That is gone, but now they
have special edition packs: Celebrate the sound track to the streets.
It does not take a genius to figure out who they are targeting with
that.
[[Page S10971]]
So big tobacco has found tricks and dodges to circumvent the law, and
they have been very effective. From the birth of Joe Camel to the birth
of Liquid Zoo and Kool Rapper, we have seen broken promises and bad
faith again and again from big tobacco.
Giving the FDA the power it needs to end these false messages is
exactly what is needed to stop big tobacco's exploitation of our kids.
The only message our young kids should hear about tobacco is the truth:
Smoking is a killer. It is a drug. It is addictive. It causes cancer.
It causes emphysema. It causes a lot of other illnesses. That message
needs to come through loudly and clearly. Since industry will not
convey that message, we need strong FDA regulation to make it happen.
Instead, what do we do here now with this big tax bill we have? We
allow big tobacco to further confuse kids when it comes to the actual
safety of cigarettes.
This morning I got up and I had my Cheerios. I actually had a bowl of
Cheerios this morning. Now, the bowl of Cheerios I ate this morning had
to go through a multistep process set up by the Food and Drug
Administration to earn its health claims that it is heart healthy and
lowers cholesterol. It had to go through certain steps.
Somehow tobacco, a known health risk, does not have to go through any
of those steps whatsoever. In fact, tobacco companies are free to add
anything they want to their product without having to inform consumers
or without any regard to the health effects of those additives.
For example, tobacco companies have added ammonia to their products.
I do not know if my colleagues have ever smelled ammonia, but they get
an idea of what it is like. They add ammonia to tobacco products on the
ground that it improves ``tobacco satisfaction.'' They add the ammonia
in order to create a ``free base'' form of nicotine that creates the
highly addictive quick delivery form of nicotine to the brain. It goes
from your lungs to your brain in 8 to 10 seconds when they add ammonia.
We know this. So tobacco companies add ammonia so that you get a bigger
kick right away, in 8 to 10 seconds. Adding ammonia to cigarettes is
analogous to what crack cocaine was to cocaine--it just gives you a
faster high, it goes to your brain quicker. But guess what. The tobacco
companies do not have to tell you that. They just tell you have a Kool
Wrapper there. They don't have to tell you anything else.
The industry claims that many of its ingredients are benign flavoring
agents like strawberry that are on the FDA GRAS list. That stands for
Generally Recognized As Safe. The tobacco companies say we put these
ingredients in and they are benign; however, those ingredients such as
chocolate, licorice, and other flavors are not safe when they are
combusted, and they often create toxic chemicals when they are inhaled
by the smoker. So, yes, maybe licorice is safe to eat, but when you
combust it, then it creates toxics that you inhale. The industry will
not tell you that either.
No other industry in America is allowed to add ingredients to their
products without first having them tested and approved by the Federal
Drug Administration for safety. For example, Kraft Foods, a subsidiary
of Altria Group along with Philip Morris, could not add ammonia to
Kraft macaroni and cheese on the grounds that it improves cheese
satisfaction for its customers. Why can't they add ammonia to macaroni
and cheese? They can't add ammonia to macaroni and cheese because it is
not on the FDA list of products that are generally recognized as safe.
They can add ammonia to cigarettes; they can't add it to Kraft macaroni
and cheese. The FDA has more authority to regulate macaroni and cheese
than it does cigarettes. Imagine that.
I have this to show what I mean by that. Here is something called
Omni cigarettes. Here is what it reads:
Omni is the first premium cigarette created to
significantly reduce carcinogenic PAHs and nitrous amines,
which are the major causes of lung cancer in smoking.''
That is what they say.
Says who? The tobacco company says that. But we have no way of
verifying that. They can make all the claims they want, like low tar,
light, less carcinogenic, but we the public have no way to verify that
because the Federal Food and Drug Administration has no authority to
regulate tobacco or to go in and tell us what is in there or to make
the tobacco companies verify what they say.
I have an Eclipse one here, too. Here is an Eclipse. This is
interesting:
The best choice for smokers who worry about their health is
to quit. Here is the next best choice. Are you ready for
Eclipse? Get the facts.
I have the support of my wife..if I'm going to smoke, she'd
prefer I smoke Eclipse.
A better way to smoke.
Talk about a warped message:
Omni, there is no better way to smoke.
A better way to smoke? There is a better way to get cancer. There is
a better way to get emphysema. This cigarette will give it to you
faster. They don't tell you that, but that is what is happening.
During debate in the conference committee, one of my colleagues on
the House side mentioned that the Founding Fathers would be shocked if
they knew that Congress was trying to regulate an industry that was in
part responsible for the early prosperity of our country. It is more
likely that they are rolling over in their graves at the fact that we
have known for more than 30 years that tobacco kills and that we have
not done one thing about it. They didn't know it in the 1700s. They
didn't know, but we know now.
The Congress is now considering, one more time, giving immunity to
big tobacco and turning a blind eye to their responsibility to protect
our kids and the public health. That is what is not in this tax bill.
There are tax breaks for all kinds of things. There are tax breaks in
here for gamblers who come from foreign countries to gamble here.
Imagine that, they need a tax break. There is a tax break in here for
people who import ceiling fans from China.
Lord only knows what else is in this tax bill. No one has really read
it. No one knows what all these numbers and staff mean. There is a tax
break here and a tax gimmick there; a tax break here and a tax gimmick
there.
When this bill was before the Senate, this Senate added a provision
that did two things. It allowed for a buyout of tobacco farmers'
quotas--which I have been in favor of for years, by the way. Coupled
with that is FDA regulation of tobacco.
Again, as someone who sits on the Agriculture Committee and also on
the HELP Committee, I have been involved in both sides. I have espoused
for a long time that we have a tobacco buyout, that we buy out these
quotas. Why should we do that? These quotas were put on 60 or 70 years
ago. They have been built into the price of the land. I can't go back
and undo that. It is a fact of life. Many farmers in tobacco growing
States--some of them are small farmers. All they have is that quota.
They don't have anything else. The land is really not worth that much.
So it is like taking away their income base. So I have always said we
need to buy these quotas out and get rid of this tobacco program for
once and for all. On the HELP Committee side, I have also said, if we
are going to do that, then we ought to have FDA jurisdiction over
tobacco.
This debate went on and on for years, and final we agreed. I might
say that Philip Morris was one of those who agreed with us. I commend
them for that. So we got it through the Senate.
It goes to the House. Guess what the House did. The tobacco buyout
that we passed in the Senate, the money that is going to go to those
tobacco farmers did not come from the taxpayers. It came from the
tobacco companies. Of course, the tobacco companies will pass that on
to tobacco smokers, so the smokers were going to pay for the buyout of
the quotas. That is as it should be. Why should the taxpayers pay for
it? We agreed on that. Philip Morris agreed on that. We agreed that we
would have FDA jurisdiction.
Here is what the House did. They broke that agreement. First of all,
the House of Representatives, and I am sure with the approval of the
Bush White House because they wouldn't have done it unless the White
House agreed, they made the buyout of the quotas paid for by the
taxpayers of the country. All of you who do not smoke, you are now
going to pay to buy out those tobacco farmers. That is what was in the
House bill, plus they took away the FDA jurisdiction over tobacco.
[[Page S10972]]
In the final analysis, they put back in the companies paying for the
buyout, but they left out the FDA regulation of tobacco. So here we
are. No FDA regulation. That is what is not in this FSC bill.
It was my understanding the purpose of this bill was to repeal an
illegal export subsidy. Now it has morphed into a big special interest
giveaway that will help everyone from restaurant owners to makers of
bows and arrows, tackle boxes, sonar fishfinders, NASCAR track owners,
Alaskan whalers, foreign gamblers, as I mentioned, who win at U.S.
horse and dog tracks.
I want to repeat that.
In this bill, there are provisions to give tax breaks to foreign
gamblers who win at U.S. horse and dog tracks. Those interests trump
the 2,000 kids hooked on smoking every day by the big tobacco
companies. Imagine that.
What are our priorities around here? What is the priority of the
White House? I am telling you it could never have happened unless the
President signed off on it.
You go out there, Mr. President. You have some more days before the
election. Go out there and tell the American people how you pulled the
rug from underneath FDA regulations of tobacco, how you sided with the
big tobacco companies to get our kids hooked on tobacco every day--
2,000 every day. Go out and look those mothers and fathers in the eye
and tell them your priority is the big tobacco companies and not their
kids.
Yes. This would never have been done if the White House had not OK'd
taking FDA jurisdiction away. Shame on the White House.
We had the opportunity here to pass this legislation once and for
all, and to stamp out youth smoking in this country and protect kids
from joining the ranks of the 450,000 who die from smoking each year.
The tobacco industry has been engaged in a systematic campaign of
distortion and deceit to hook kids and hide the facts from the American
people for far too long.
I met a fifth grader, Ted Stanton, from Des Moines, IA, a few months
ago who reminded me how important regulation is. Ted won a statewide
poster contest sponsored by the American Academy of Family Physicians
for his efforts to raise awareness about smoking. He is a fifth grader.
What happened was Ted has had to watch his dad struggle with the habit
of smoking for years. He drew a poster. His poster is an attempt to
warn kids about smoking.
Here is his poster and here is why he won the prize. ``Invest in your
future.'' He has the date 2054. ``Pay to the order of big tobacco
companies $73,000.'' That is $4 a pack every day times 50 years. In
other words, you smoke a pack a day for 53 years and you will pay big
tobacco companies $73,000.
I thought Ted Stanton, a fifth grader, really pointed it out. That is
what you are doing when you start smoking. You are going to smoke for
50 years, if you are a teenager, a pack a day, $73,000.
We do have some kids like Ted and others who realize they are being
targeted by big tobacco, but they are defenseless. What are we doing to
help them? What we are doing is protecting big tobacco--the same guys
who conspired years ago to hide the truth about tobacco and instead
pushed their deadly products on our most valued treasure, our kids.
It is disgraceful that this body has not acted yet. It is disgraceful
that we are getting half of the deal we had worked on for years, the
tobacco buyout of the quotas. Guess what happened. The way they worked
this tobacco quota buyout is you are going to buy out the quotas, but
now tobacco will be growing cheaper. Now the tobacco companies will be
able to buy tobacco cheaper than they had before, making more money,
hooking more kids, without FDA authority.
The reason I say that is because when we passed the bill in the
Senate, we had a provision that provided for a licensing program that
would prohibit more and more people growing tobacco in this country.
The House took that out. So we got the worst of all possible worlds--no
FDA regulation, a buyout of the quotas, more people will be able to
grow tobacco, and the tobacco companies will get it cheaper and make
more money to hook our kids. What a deal. Yet we can take care of
foreign gamblers who come to bet on horses. But we can't take care of
our kids. Shame on us.
(Mr. HATCH assumed the Chair.)
I know the hour is getting late. I see the occupant of the Chair,
someone for whom I have great respect, the Senator from Utah.
I will state publicly that the senior Senator from Utah has also been
in the forefront of the fight against tobacco. He always has been. I
compliment him for that. I know he feels as strongly about antismoking
and stopping kids from smoking as I do, or as Senator DeWine does, or
Senator Kennedy, or anybody else does. The Senator from Utah has been
stalwart in his support for getting FDA regulation of tobacco. I thank
him for that. I encourage him to keep up his leadership on that because
we have not yet fired the last shot. We are going to be back.
I wish the President of the United States, using the bully pulpit of
the White House, had come out in an address to the Nation and said we
need FDA regulations for tobacco, we need to stop our kids from getting
hooked, and call upon the House and the Senate and say he will not sign
this bill, he will veto this bill unless we protect our kids.
Think of what would have happened if the President of the United
States had said that. We would have a tax bill here, but we would have
FDA regulation of tobacco in here. I am sorry the President missed a
golden opportunity and thus we have missed a golden opportunity. Thus,
tomorrow and the day after, and next month, and next month, and next
year, thousands of kids every day might pick up a pack of Liquid Zoo,
because it smells nice. It tastes like strawberries. They will say,
There is no harm in that, plus it makes me look glamorous. That is what
all the ads say.
Think about it. That is what is going to happen. Shame on us.
I yield the floor and I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. HARKIN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. HARKIN. I see the occupant of the chair, and I know he wants to
go home. But I said to the managers I can be interrupted when they are
ready to wrap up. I want the occupant to know I am not holding him
here.
I will talk about one other item that is not in this FSC bill that we
got stiffed on. We passed it four times in the Senate and twice in the
House. I am talking about overturning the regulations that this
administration put out that will deny overtime rights to over 6 million
people.
Again, just last week, in a replay of what happened a year ago, the
Bush administration used the conference to kill my provision to stop
the Department of Labor's new rule on overtime pay that if allowed to
stand will strip 6 million people of their right to time and a half
overtime.
The bill before the Senate today serves the simplest of purposes.
This tax bill has everything in it for everyone, but what is not in it
is protection for the workers of America, protection for those who make
over $23,660 a year. Actually, for some below because of little
gimmicks that can be used to deny them their right to overtime.
Again, this is simply a matter of fairness. People believe if they
put in more than 40 hours of work a week, they are giving up premium
time, time with their family. I had a woman who wrote me and said:
Look, I go home from work and my second job starts. I go home, take
care of my kids, I get dinner ready, help them with their homework, and
then I have to do washing, and this and that. But my time with my
family is my premium time. If I am asked to give up my premium time
with my family to work on my job, I ought to get premium pay.
What the Bush administration has done is said: No, sorry, we will ask
you to work overtime and we will not pay you one cent more.
Again, a little history. It has been sacrosanct since 1938, the Fair
Labor Standards Act. If you work over 40 hours a week, you get time-
and-a-half pay. It has been that way since 1938. We
[[Page S10973]]
have modified it a little bit here, a little bit there, but every
single time we have changed the Fair Labor Standards Act, we have
enlarged the pool of people who get covered by time and a half. This is
the first time where up to 6 million people will lose their right to
overtime pay.
Now, some will say but they raised the base to $23,660. In other
words, anyone who earns under that is automatically eligible for
overtime. Quite frankly, most people working there are already eligible
because they are not salaried, they are hourly workers. While that is
fine, we should raise the base. The administration then went and took
away overtime pay rights for anyone making over $23,660 a year. If you
are making $23,661, you are in a separate category. Just barely over--
well, that is poverty wages--and you still are not eligible for time
and a half overtime.
I also say every time since 1938 when we have changed the Fair Labor
Standards Act, it has come to Congress. We go through the committees,
the committees have hearings, we bring in witnesses, they draft a bill,
it is debated in the Senate, and it finally goes to the President. That
is the way it ought to be. That is transparent; it is open; everyone
gets their say. We can debate it and amend it. We, the elected
representatives of the people, get to debate and amend it--a strange
concept, I guess, to this administration.
What this administration did 1\1/2\ years ago, sort of in the stealth
of night without having one public hearing, they promulgated these new
rules on overtime.
Some might say: Well, they have had hearings since then. Yes, thanks
a lot, after the horse is out of the barn and they closed the door.
Fine. But that is not the way it should have been.
So now we have a situation where they finalize the rules on August
23. We have never really debated or amended that in the Senate. I have
on four different occasions in the Senate offered amendments to
overturn those rules, to go back to square one, to start over. Let's do
it the right way. We have passed them here, but the administration says
no every time.
I watched the debate last night, and I heard the President talking
about domestic policies and jobs and economic growth. And I thought,
wait a minute, he even talked about overtime. He said people are
working overtime. I heard him say it last night. I thought, they are
working overtime, but what the administration wants to do is take away
their overtime pay.
That is exactly what is happening. We have facts. We have the data.
People are now being denied time and a half overtime for working over
40 hours a week because they are being ``reclassified.'' Guess who is
getting hit first. Women. Why do I say that? Many women raise families,
start later in life, and start at lower income jobs. Many of these are
salaried positions. Because they are on a salary, they will be
reclassified. As they get reclassified, they will be exempt from the
overtime laws. If overtime is free to the employer, it will be
overused.
This chart shows a study by the Center for Women's Work at Rutgers
University. The chart shows those who are eligible for overtime, in the
green, are protected; the red are not protected. Those protected by
overtime work are about 20 percent of workers working 40 hours a week.
If they are protected, chances are 20 percent of these people work over
40 hours a week. If they are not protected by overtime, 44 percent of
these people work over 40 hours a week--twice as many. So now we will
take away this protection from this 20 percent. Then they will be
working overtime, and they will not get paid for it.
Right now, if they are covered by overtime protection, only 5 percent
work over 50 hours a week. If they are not covered by overtime, 15
percent, three times as many people not covered by overtime laws work
over 50 hours a week.
That says it right there. If the employer does not have to pay you
time and a half, work them more, and they will not hire any new
workers.
It is interesting to note--the occupant of the chair will find this
interesting--in 1933, 5 years before the Fair Labor Standards Act was
signed into law, the Senate voted 53 to 30 to set a cap on the number
of hours in a workweek. Was the cap 50 hours? Was it 40 hours? No, it
was 30 hours. Imagine in 1933, this Senate, in this Chamber, voted 53
to 30 to say that the workweek would be 30 hours. You could not pass 60
hours here now. Imagine that. In 1933, this Senate voted 53 to 30 to
set a 30-hour workweek. Amazing. The compromise was reached 5 years
later at 40 hours a week, and that is what it has been ever since.
Again, we know what the intent of this proposed rule is. The intent
of this proposed rule is to allow employers to work employees longer
than 40 hours a week and not have to pay them time and a half. And we
have a final rule on that, a final rule. These are going to be low- to
middle-income workers. They are not organized. They do not have a
strong voice. So the administration feels they can run roughshod over
their rights.
For the life of me, I cannot understand this. People work hard. Many
families are working two jobs where the husband and wife are both
working, trying to make ends meet, trying to save a little money to put
away for the kid's college education, maybe to buy a better house, move
up the ladder a little bit. For those who work overtime, 25 percent of
their income comes from overtime.
I see the managers are here to wrap up. I will just conclude by
saying that, again, just as it is a shame and a shame on us that we do
not have FDA control of tobacco, shame on us also, and shame on this
administration, for taking away the overtime rights of 6 million people
in this country.
With that, I yield the floor.
Mr. HATCH. Mr. President, I express my strong support for the
conference report to accompany the American Jobs Creation Act. In order
to protect our domestic manufacturers, strengthen our economy, better
help U.S.-based multinational firms compete globally, and honor our
trade obligations, the Senate must pass this critically important and
overdue legislation before recessing for the elections.
I wish to start by congratulating the chairman of the conference
committee on this bill, Congressman Bill Thomas, and the cochairman,
Senator Chuck Grassley, for their leadership and exceptional
cooperation in finishing the conference on this bill in time to bring
it to the House and Senate floor this week. Many thought completion of
this task would be difficult or impossible, given the large differences
in the Senate and House versions and the time constraints the
conference committee faced.
The innovative conference process developed by the chairman and
cochairman made success possible. Conferencing a large and diverse pair
of tax bills in the usual fashion could have taken many weeks and led
to a likely failure to finish this bill before sine die adjournment of
the 108th Congress. Again, I recognize the extraordinary achievement of
this conference committee and thank its leaders and my fellow conferees
for their hard and dedicated work.
This conference report represents what we hope will be the
culmination of a very lengthy and fascinating issue that had its
genesis decades ago but has festered into a growing problem over the
past several years.
I will leave to others to go into detail about the long history of
the export subsidies in our tax law that gave rise to this conference
report, but the unusual nature of this bill and its difficulty in
passing the Congress are reflections of the complexity of this issue.
The crux of the difficulty of the bill is that the rulings of the
World Trade Organization on the trade-legality of our export tax
subsidies put the Congress in a very tough position. In essence, we
found ourselves needing to repeal these export subsidies, known as the
Foreign Sales Corporation, FSC, provision and its replacement regime
known as the Extraterritorial Income, ET, exclusion.
By repealing these provisions, which we must do in order to honor our
trade obligations, we effectively raise taxes by almost $6 billion per
year on thousands of U.S. businesses that manufacture goods for export.
Leaving it at this is simply unacceptable. Why should we have to
convert a provision designed to help U.S. manufacturers compete in an
ever-increasingly difficult global marketplace to a
[[Page S10974]]
situation where they suffer a competitive disadvantage?
Yet, this is exactly the problem the Congress faces now that it is
forced to repeal the export tax benefits.
When confronted with a similar problem in 2000 after the WTO ruled
the FSC provision to be in violation of international trade rules,
Congress passed the ETI in its place. With the ETI, we were able
largely to replicate the benefits of the FSC regime, so that exporting
taxpayers paid few if any extra taxes with the repeal of FSC.
Unfortunately, the WTO subsequently ruled that the ETI provision also
was an illegal trade subsidy that also must be repealed.
So, the conundrum facing the Congress with this situation was to find
a way to enact other tax cut benefits for exporting manufacturers, to
offset the increase from repealing ETI, without violating the WTO
rules.
Unfortunately, this has proven impossible, so both the Senate and
House bills attempted to find rough justice for business taxpayers by
finding other ways to deliver tax benefits besides basing them on
exports. Such attempts gave rise to the political and practical
difficulties of this bill, including the fact that it took many months
of hard effort to reach the point we are today.
For example, my own bill to address the FSC/ETI problem was S. 1475,
the Promote Growth and Jobs in the USA Act, which I introduced in July
2003. This bill would have delivered rough justice tax relief in two
ways.
First, it would simplify and rationalize the international tax rules
that currently harm the ability of U.S. firms to compete globally, and
second, it would provide incentives for companies to increase their
ability to produce goods by acquiring new equipment and engaging in
more research and development.
Other FSC/ETI solution bills were also introduced. On the same day I
introduced S. 1475, Chairman Thomas introduced H.R. 2896, the American
Jobs Creation Act. The two bills were similar in many ways, and both
included international tax reforms. The Thomas bill, however, included
a number of other provisions designed to help U.S. businesses create
jobs and better compete.
Another bill, introduced last year by Congressmen Crane, Rangel, and
Manzullo, offered a different direction still. This bill provided a
deduction equal to 10 percent of a company's production activities.
In the Senate, Senators Grassley and Baucus introduced a bill that
included some of the best elements of all the other bills. Even though
I preferred the solution set forth in my bill, I cosponsored the
Grassley-Baucus bill because it represents a solid and reasonable
solution to the problem. This bill, as modified, became the legislation
reported by the Finance Committee and passed by the Senate.
After a great deal of travail and adjustments, the House also passed
a FSC/ETI bill, and it was quite similar in many respects to the first
Thomas American Jobs Creation Act. These are the bills the conference
committee had to combine into one.
The result, as we all know, is a bill that is far from perfect. Its
enactment will result in a net tax increase for some exporting
companies that now use the ETI provision, and in a net tax cut for many
other U.S. manufacturing firms that may have not taken advantage of the
ETI exclusion.
And while the bill includes many important other provisions, it
leaves out some very important provisions that the Senate conferees
agreed with me should be in there. Unfortunately, the House conferees
disagreed and they were omitted from the final product.
For example, I am personally very disappointed that the House
conferees voted against including the CLEAR ACT in this conference
report. This bill, which has passed the Senate at least three times and
also has passed the House, would transform our auto industry by
granting strong tax incentives for consumers who buy alternative fueled
and advance technology vehicles, such as hybrid electric cars.
Moreover, it would move us to a more responsible age of cleaner air
and less fuel dependency on the Middle East by simultaneously breaking
down the three barriers that keep our nation from adopting the already-
existing technology to help us meet these goals--the higher cost of
such vehicles, the higher cost of alternative fuel, and the lack of a
refueling infrastructure.
From a broader point of view, most of my fellow Senate conferees and
I would have liked to see the entire set of energy tax provisions from
the Senate-passed bill included in the conference report. It was a
mistake to omit these important provisions.
I also very much regret that the House conferees refused to adopt the
amendment I offered, accepted by the Senate conferees, which would have
bolstered our research tax credit. While it is true that the research
credit was extended for a short time in the most recently passed tax
bill dealing with individual tax cuts, that legislation left out an
important element that was contained in the Senate FSC/ETI bill
designed to improve the incentives this provision gives for companies
to engage in R&D activities.
Nevertheless, the conference report is worthy of our support. As I
mentioned, as a nation we must honor the obligations under the World
Trade Organization. Of more immediate importance is the fact that the
Europeans are levying an increasing level of trade sanctions against
certain of our products exported to the E. U. This level is currently
at 12 percent and is growing by one percentage point per month and is
definitely having a very serious negative effect on certain U.S.
industries.
Moreover, the trade sanctions are authorized to continue to increase
until next March, when they will have reached 17 percent. After this,
the E. U. may authorize even more serious sanctions against us that
would surely harm our economic growth.
As all of my colleagues well know, if we do not succeed in passing
this conference report before sine die adjournment of the 108th
Congress, we must start the process all over again next year.
Will this result in a better bill?
Perhaps, but such an outcome is far from certain. What is more likely
is that the resolution to this issue would be delayed for many more
months, giving the trade sanctions more time to damage our economy and
harm U.S. businesses.
Now, I take a few minutes to discuss some of the specific provisions
that did make it into the conference report and why I believe my
colleagues should enthusiastically support them.
First, let me express my satisfaction that this conference report has
a good balance to it. In addition to the vital repeal of the ETI
provision and the quite reasonable transition relief it provides for
current ETI users, the bill offers significant provisions for both
small businesses and large multinational firms. Mixed in is a generous
portion of important tax relief for business interests of all kinds.
Central among these relief provisions is the manufacturing deduction.
This provision is designed to lower the tax burden of any business
entity that engages in production activities in the United States. I am
happy to see that the Senate provision allowing this deduction to be
taken by unincorporated businesses was retained in conference.
Also included in the conference report is a significant section of
relief designed specifically for small businesses. Foremost in this
category are the five sections that would simplify and reform the
taxation of S corporations. These are changes I have long sought. Along
with my colleagues, Senators Breaux, Smith, and Lincoln, we have
attempted to get these and other S corporation improvements passed for
several years now. I am gratified to see them included in the
conference report.
Other provisions that are very important to the balance of this bill
are those designed to simplify and improve the rules by which this
Nation taxes international business transactions. Quite simply, the
current state of our international tax rules is appalling. This part of
our Tax Code generally dates back to the early 1960s, and was designed
for a different world from the one in which we live now.
U.S. businesses, whether large, medium, or smaller, that decide to
expand their markets beyond the borders of the United States confront a
set of tax rules that are not only mind-numbingly complex, but far
worse result in double taxation and often leave them on the down side
of a tilted playing board when compared with competitors based in most
other industrialized nations.
[[Page S10975]]
Our rules governing the foreign tax credit, for example, which are
designed to eliminate the double taxation of income, often are
ineffective, some blatantly so. A provision added to the Internal
Revenue Code in 1986 reduces the foreign tax credit by 10 percent to
the extent it reduces the alternative minimum tax. There is little or
no justification for this double taxation that I can see, and this
conference report repeals this unfair provision.
The bill includes about two dozen provisions that will help improve
the tax law for our companies that have expanded their markets
overseas. I have long been interested in getting this type of reform
passed by the Congress, having introduced bills to do this since the
mid-1990s. It is gratifying to finally see this long overdue relief
come to pass.
Some of my colleagues have incorrectly concluded that improving our
rules on international taxation will give an incentive to U.S.
companies to move their jobs overseas. This is unfortunate. Cross-
border investing is not only a necessity of our modern world, it is
usually beneficial to both nations. Most U.S. companies that invest in
expansion into markets in other nations do so to compete effectively
with other suppliers in those markets and here at home.
A fact of life of our modern economy is that our U.S.-based business
enterprises face competition from all parts of the globe. It is
unrealistic to think that an American business can simply focus on
markets here at home and thrive. Instead, most of today's businesses
must be mindful of both markets and material and labor supplies around
the world if they are to stay in business very long.
While no one likes to see U.S. jobs move overseas, we should be more
concerned about creating and maintaining in the United States the kind
of environment that attracts businesses. Part of that environment is
ensuring that our tax system does not drive businesses offshore to
other nations that tax them in a more favorable fashion. This bill
moves our tax system a big step in that direction, and I am pleased to
see these changes finally reach the point where they are about to
become law.
I now say a few words about the issues regarding tobacco associated
with this conference report. I have not forgotten that at the center of
the tobacco buyout is the tobacco farmer. I understand that the tobacco
price support and tobacco quota programs have helped to secure a
reasonable living for many family farmers.
I have also come to the understanding that breaking the dependency of
U.S. citizens and especially children on nicotine requires us to
address the dependency of tobacco growers on the tobacco industry and
on the government programs. It will not be an easy transition for many
tobacco growers, and we need to help these families to survive it.
Contrary to the belief of some, the United States Department of
Agriculture, USDA, does not provide a direct subsidy to tobacco
growers. However, the USDA does maintain artificially high prices for
tobacco leaf by managing the loan, or-price support, program for
tobacco growers which serves to maintain artificially high prices for
tobacco and cigarettes in this country.
The USDA also manages the tobacco quota system to keep down the
amount of tobacco grown each year. This, again, keeps the price of
tobacco and cigarettes high. All direct and administrative costs for
these two programs are reimbursed to the USDA by tobacco farmers and
their trade association. There is no net cost to the government as a
result of the tobacco program. In fact, smokers carry most of the
burden of the tobacco program through higher costs for the tobacco
products they purchase.
Shifting tobacco farming away from tight government management toward
the free market has risks for our farmers. This proposal does a good
job of getting the government out the farming business while making
temporary assistance available to farmers as they adjust to the free
market. And, it is at no cost to our government.
As far as the provision requiring the Food and Drug Administration to
regulate tobacco, let me say that I fully support measures to end
tobacco use in the United States.
I can think of few public health dangers worse than tobacco, and this
is especially true for young people.
I have heard from many concerned parents and health advocates in Utah
who point out the need to stop the devastating health consequences of
tobacco use.
In many aspects, the DeWine/Kennedy language was written to achieve
that goal, and in that spirit I supported it in conference. In fact,
much of the bill is taken from a measure that I authored several years
ago with Senator Dianne Feinstein.
That being said, I am concerned about some aspects of the way the
bill was written, and especially the impact of this language on the
resources of the Food and Drug Administration.
First, the Committee of jurisdiction, the HELP Committee, should have
the opportunity to consider this legislation before it is brought to
the full Senate for a vote the next time. Having been the chairman of
that committee for several years, I know full well the complexities of
the Federal Food, Drug and Cosmetic Act. Three hours of debate on the
Senate floor was not enough time to consider legislation that made such
dramatic changes to current law.
I also want to make sure that we in the Congress are clear about the
impact that such legislation would have on the Food and Drug
Administration and whether or not the FDA has adequate resources to
regulate tobacco, and, in addition, keep up with its other, extremely
important responsibilities, such as the approval of drugs, medical
devices, and protecting our food supply.
While I understand that user fees were included in the legislation, I
am not convinced that those user fees would have provided the FDA with
sufficient resources to regulate tobacco. I am someone who has fought
to provide FDA with adequate resources and have led the fight on
unifying the FDA campus. I do not want anything to jeopardize the
progress we have made in those areas so before we consider similar
legislation again. I believe it is imperative to work closely with the
FDA to find out exactly how much money is necessary for the agency to
regulate tobacco, and whether or not the agency is capable of
overseeing the regulation of tobacco.
Again, let me make one thing perfectly clear--I believe that tobacco
should be regulated, however, it needs to be a well-thought-out
process. Therefore, allowing the proper committees of jurisdiction to
review and consider the legislation and consultation with the FDA must
take place before similar legislation is voted upon by the full Senate
and House of Representatives before we consider another measure.
Finally, I want to touch on some of the revenue offsets included in
the conference report. I want to make it clear that I support the
principle of keeping this bill revenue neutral, and I congratulate the
conferees for doing so. This was a particularly sticky problem with the
House Members, so I especially recognize their hard work in bowing to
the Senate's demands that this bill be fully offset.
I am very pleased to see that several revenue offset provisions that
were in the Senate bill are not part of the conference report. One of
these is the codification of the economic substance doctrine. I believe
enactment of this provision would have led to a great deal of
unnecessary conflicts between taxpayers and the Internal Revenue
Service, and would have unfairly penalized companies for engaging in
legitimate tax planning techniques.
One provision that did make it into the conference report raises
revenue in connection with the donation of used vehicles. In essence,
the provision requires that taxpayers wait to take a deduction for the
donation of a used vehicle until the donee charity has sold the item in
an auction. Then, the deduction is limited to the actual purchase
price.
While this may appear to be a reasonable requirement, particularly in
light of some of the alleged abuse surrounding the charitable donation
of used vehicles, I am concerned that these changes will result in far
fewer used vehicles being donated to charities. Some charities, such as
the National Kidney Foundation of Utah, rely heavily on such donation
programs for a great deal of their funding. A chilling
[[Page S10976]]
effect on the donation of these used cars could leave many worthy
charities short of vital funds needed to perform their invaluable
services to needy citizens in Utah and elsewhere.
I will keep a watchful eye over the implementation of this change in
the law, to make certain it does not harm the charities that have
relied on donated vehicles for funding. While I agree that we should
preclude any real abuse of the law, I do not think we should create a
burdensome new requirement that would discourage charitable giving. It
may well be that we need to revisit this area of the law in the future.
In conclusion, the conference report before us represents a good bill
that deserves our support.
As I have tried to indicate in these remarks, the bill is far from
perfect. But given the very difficult political and other circumstances
surrounding the issues this bill addresses, it is remarkable we were
able to bring to the Senate floor a product that is as good as it is. I
urge my colleagues to support the conference agreement.
section 422
Mr. SMITH. Mr. President, I would like to ask if the Chairman of the
Committee on Finance would entertain additional questions regarding the
American Jobs Creation Act of 2004.
Mr. GRASSLEY. Mr. President, I would be glad to take questions from
the Senator from Oregon.
Mr. SMITH. I ask for additional clarification regarding the
conferees' intent with respect to the rule in section 422 of the
American Jobs Creation Act of 2004 that disallows deductions for
expenses ``properly allocated and apportioned to the deductible
portion.'' I would ask for clarification of the type of expenses that
may be ``properly allocated and apportioned''. Would it be reasonable
to say that properly allocable and apportioned expenses would not
include general and administrative costs not directly related to
generating the income being repatriated and such indirect expenses as
research and development costs, interest, state and local income taxes,
sales and marketing costs, depreciation, and amortization.
Mr. GRASSLEY. Yes, your understanding is correct. I would add that
directly related expenses would include, but is not limited to,
stewardship costs and directly related legal and accounting fees.
Mr. SMITH. Thank you Mr. Chairman. Under the conference report's
provision on the temporary dividends received deduction, the amount
that may be brought back to the United States may be determined by the
reference to the ``applicable financial statement''. In general, this
term looks to the most recently certified financial statement filed on
or before June 30, 2003. In the case of a taxpayer that subsequently
re-filed or restated its pre-July 1, 2003 certified financial
statement, it is not clear how this would be determined. Is it the
legislative intent to lock in the earnings permanently reinvested
amount from the most recent pre-June 30, 2003 financial statement,
which had been certified, regardless of any subsequent restatement?
Mr. GRASSLEY. The applicable financial statement is the most recent
statement that had been certified, and filed with the Securities and
Exchange Commission if required, on or before June 30, 2003. However,
in the event of a subsequent restatement of a financial statement that
had been certified, and filed if required, on or before June 30, 2003,
if the subsequent restatement contains a lower permanently reinvested
amount, then the lower amount shall apply.
Mr. SMITH. I thank the chairman for this clarification.
irs
Mr. SANTORUM. Mr. President, I read with great interest an exchange
of letters in the House between my colleague from Pennsylvania, Mr.
English and the chairman of the Committee on Ways and Means, regarding
regulations issued by the Internal Revenue Service under section 263(g)
of the Internal Revenue Code in the context of the Conference Report on
H.R. 4520.
The issue raised in their discussion relates to the IRS decision in
regulations published on January 17, 2001, to expand its authority
under that section. Without at this point questioning the IRS
interpretation of the law, the colloquy notes that the IRS has in some
case imposed its new interpretation retroactively. The colloquy urges
the Department of Treasury to take the position that the new
interpretation should be applied only on a prospective basis.
I rise to agree with my friends in the House. Our practice in
Congress is to give taxpayers notice when we intend to change the law
in ways that could affect ongoing transactions that were undertaken in
reliance on the law as it existed. Certainly Treasury can and should
follow the same rules.
I hope the Treasury Department will take note and act accordingly.
business aircraft
Mr. BROWNBACK. I want to thank the distinguished chairman of the
Committee on Finance, as well as the chairman of the Ways & Means
Committee, Mr. Thomas, and all the conferees on H.R. 4520, for
retaining the provision allowing business aircraft purchased this year
to qualify for bonus depreciation if the aircraft is delivered and
placed in service in 2005.
This provision is important to the hard-working Kansans who build
these aircraft. Provisions such as this will help to further bolster
our rebounding economy with respect to expensive and complicated
equipment like business aircraft. Without bonus depreciation, there is
a risk of a shortage of orders for delivery next year with a resulting
impact on employment.
It would have been better if this legislation had been enacted
earlier this year, but, even now, this provision will allow
manufacturers several extra weeks to take orders for delivery by the
end of 2005. That should help to ensure that there will be planes to
build in 2005.
I ask the chairman a technical question on the effective date of this
provision.
Mr. GRASSLEY. I thank the Senator from Kansas for his kind words, and
would be happy to respond
Mr. BROWNBACK. The effective date of the placed-in-service-extension,
section 336 of the conference report, states that the amendments
``shall take effect as if included in the amendments made by section
101 of the Job Creation and Worker Assistance Act of 2002.'' I believe
that this means only that, if a purchaser orders a plane for delivery
in 2005, the limitations on the amount of the deposit, time for
construction and purchase price must be met. It does not mean that
taxpayers who did not or will not take delivery and place the aircraft
in service after December 31, 2004, would retroactively be subjected to
these limitations. The limitations apply only if a taxpayer wishes to
take advantage of the extended placed-in service period. Does the
Chairman agree with this interpretation?
Mr. GRASSLEY. The Senator is correct. The new provision is not
intended to apply to aircraft placed in service before January 1, 2005
and does not limit or deny bonus depreciation for aircraft or any other
asset that would qualify under the general rules. I would refer the
senator to page 30 of the Conference Report. On that page, the
conferees clearly state that this provision ``will modify the treatment
only of property placed in service during calendar year 2005,''
Mr. BROWNBACK. I ask the chairman for a further clarification.
Section 336 of the conference report includes amendment of clause (iv)
of Internal Revenue Code section 168(k)(2)(A) to apply the additional
year to place an asset in service to assets described in subparagraphs
(B) and (C). Subparagraph (B) of the Code applies to certain property
having longer production periods. Section 336 of the bill adds
subparagraph (C). I would like to be sure that, by using the word
``and'', the conferees did not intend that a business aircraft would
have to be described in both the existing subparagraph (B) and the new
subparagraph (C) in order to qualify for the additional year to place
the aircraft in service. As the chairman knows, the standards for
qualification are substantially different under the two subparagraphs.
Mr. GRASSLEY. I agree that the drafting is not as clear as it might
have been. However, it is very clear from all the legislative history
that, by adding the new subparagraph, we intended to add a new class of
property, business aircraft, to those assets which qualify for the
additional year to be placed in service. We did not intend
[[Page S10977]]
that aircraft which qualify under subparagraph (C) must also qualify
under subparagraph (B).
Mr. BROWNBACK. I would like to ask the chairman to address one final
point. As the chairman knows, an amendment added to the Senate bill
during floor debate temporarily reversed a Tax Court decision, affirmed
by the Eighth Circuit Court of Appeals, concerning the limitation of
business deductions for personal entertainment use of a business
aircraft. This provision was drastically expanded and made permanent in
the conference report. I am very concerned that this provision will
have a substantial negative impact on the sales of new aircraft
because, much of the business deduction for a new aircraft in its first
few years is depreciation. In the same bill that Congress extends the
period to place an aircraft in service and still qualify for bonus
depreciation, Congress also reverses current law and limits
depreciation and other business deductions, even when an employee has
income imputed to him for any personal use of the aircraft.
I can understand that the facts of the tax court case that was
intended to be reversed involved a high percentage of nonbusiness use.
However, it would seem to me that some sort of de minimis amount of
personal travel treated as taxable compensation should be allowed
without reducing otherwise applicable business deductions. I can also
understand limiting deductions for incremental operating costs incurred
for a personal flight, but the aircraft depreciates whether it is in
the air or on the ground. I do not see the rationale for this
extraordinary provision in the conference agreement far beyond the
scope of the original Senate provision. The section which the
conference report amends concerns entertainment facilities such as
hunting and fishing lodges which have no other use than for business or
personal entertainment. An aircraft is purchased by a business because
they have a business need to be served. It is not the same thing as a
hunting lodge. It is difficult for me to believe that, if a court
addressed the specific question of whether a business aircraft were an
``entertainment facility'' under present law, that it would rule
against the taxpayer.
I hope that the chairman would be willing to consider a de minimis
rule or other modification to limit the scope of this limitation in
future tax legislation to allow occasional personal use without
limiting otherwise deductible business expense deductions relating to
the ownership and use of a business aircraft.
Mr. GRASSLEY: I appreciate the Senator's concerns and will keep them
in mind in the future, although I would not anticipate repeal of the
full provision included in this conference report.
section 422
Mr. SMITH. Mr. President, I ask if the chairman of the Committee on
Finance would entertain additional questions regarding the American
Jobs Creation Act of 2004.
Mr. GRASSLEY. Mr. President, I would be glad to take a question from
the Senator from Oregon.
Mr. SMITH. Mr. President, I have a question about how to interpret
one of the rules contained in section 422 of the conference agreement
for the American Jobs Creation Act. Would the chairman please clarify
what the rule that disallows deductions for expenses ``properly
allocated and apportioned to the deductible portion'' of the dividend
is intended to cover?
Mr. GRASSLEY. I thank the Senator from Oregon for his question. The
rule and the statement of managers contain some ambiguity as to which
deductions are disallowed. The intent of the rule is to disallow only
deductions for expenses that relate directly to generating the dividend
income in question.
Mr. SMITH. I thank the chairman.
Mr. McCONNELL. The tobacco buyout is very important to Kentucky, and
it is also important that the provisions of the buyout included in the
conference report are interpreted and implemented properly. The
conference report provides financial assistance for producers in return
for the termination of tobacco marketing quotas and related price
support. For kinds of tobacco other than fluecured and burely tobacco,
the payments to producers will reflect ``the basic tobacco farm acreage
allotment for the 2002 marketing year established by the secretary for
quota tobacco produced on the farm.''
My understanding is that for this calculation, the secretary will
take into account non-disaster transfer of allotments that were made
for the 2002 marketing year. As the Chairman of the Agriculture
Committee, is that correct?
Mr. COCHRAN. Yes. For producer payments, such transfers for these
crops will be taken into account as they are for the other tobaccos.
The payments will be based on the actual amount available on the farm
after those transfers.
Mr. McCONNELL. I thank the Chairman of the Agriculture Committee for
clarifying this point for me on this important aspect of the conference
report.
Mr. LAUTENBERG. Mr. President, I rise to discuss the FSC/ETI
conference report. What the Republican Leadership did to this bill in
conference is downright shameful.
In July, I supported an amendment Senators DeWine and Kennedy offered
to this bill that combined a tobacco buyout with a provision giving the
Food and Drug Administration regulatory authority over tobacco.
The Senate passed the FDA amendment by a vote of 78-15. That is a
strong show of support.
But something strange happened in conference. The FDA portion
disappeared. So in this conference report we have the buyout, but not
FDA authority over tobacco products. That is unacceptable.
It is nothing more than a sweetheart deal for tobacco companies. They
get cheaper tobacco and continue to avoid FDA regulation.
I have a long history of working on tobacco control. As a former
smoker, this is a personal issue to me. And the more I learn about that
menace the happier I am for myself and my loved ones.
I have worked hard in the Senate to protect Americans--especially
children--from the deadly effects of cigarettes and other tobacco
products.
In 1987, long before tobacco control became a mainstream issue, I
worked with then Congressman Durbin to author the law banning smoking
on airplanes. That law brought about a seachange in our society's
attitudes about smoking.
Once non-smokers could experience a smoke-free environment--in this
instance, the cabin of an airplane--they began to demand it.
I also wrote the law banning smoking in all federally-funded places
that serve children. And I have long supported FDA jurisdiction over
this deadly addiction.
I am deeply disappointed that the Republican leadership is putting
politics ahead of the health of our children by opposing FDA authority
over tobacco.
Make no mistake: tobacco addiction is still a huge problem in
America. Tobacco continues to be the number one cause of preventable
death and disease in our Nation. Each year, tobacco claims an estimated
440,000 lives prematurely here in the United States.
According to the Centers for Disease Control, if current tobacco use
patterns continue in the United States, over five million children
alive today will die prematurely from a smoking-related disease. That
is because nearly 4,000 young people try cigarettes for the first time
each and every day--a statistic I find mind-boggling.
In addition to the terrible human costs, there are massive economic
costs to our Nation. It is estimated that direct medical expenditures
attributed to smoking now total more than 75 billion dollars per year.
Despite all of this, the FDA has not been able to take actions to
reduce tobacco's harm on society.
A pro-tobacco Congressman recently said:
Tobacco faces enough federal regulation.
But that is a joke. Cigarettes are essentially unregulated. When you
go in a grocery store, the only consumable product you can't find a
listing of the ingredients for is what's in cigarettes.
The Republican leadership is throwing away an historic opportunity to
give the FDA the legal authority it needs to protect the public's
health.
Today, we have worthless health warnings on cigarettes, no control
over what tobacco companies claim about the relative health effects of
their products, no authority to curtail marketing tobacco to kids, and
no ability
[[Page S10978]]
to order the industry to remove especially hazardous ingredients.
The bottom line is: FDA authority will protect kids and save lives.
The 1998 legal settlement between the States and the tobacco
companies prohibited the companies from taking ``any action, directly
or indirectly, to target youth . . . in the advertising, promotion or
marketing of tobacco products.''
But the tobacco companies are ignoring these promises.
Since the settlement, the tobacco companies have actually increased
their marketing expenditures by 66 percent. According to the Federal
Trade Commission, the tobacco industry spends more than $11.2 billion
per year--over $30.7 million a day--marketing its deadly products just
in the United States alone, often targeting youth.
For example, in 2002, Brown & Williamson unveiled a new marketing
promotion for their Kool brand of cigarettes called Kool Mixx. This
advertising campaign was designed with one simple goal: target young
African-Americans and addict them to nicotine.
The ``Kool Mixx'' campaign included new cigarette packages with
images of young DJs and dancers:
It is an outrageous attempt to addict youth.
Brown & Williamson doesn't even bother to be subtle when it comes to
targeting African-American youth in this campaign.
The press release from Brown & Williamson announcing the campaign
contained almost comical sentences revealing their racial targeting.
This is what the company's press release said:
Kool understands the vibrant urban world of the
trendsetting, multicultural smoker.
It goes on to say:
Kool keeps it real and remains linked to the latest urban
trends.
This campaign to addict young African Americans to cigarettes doesn't
stop at product packaging and slick ads. Kool is sponsoring a
nationwide ``DJ Competition'' in cities such as New York, Atlanta,
Washington, St. Louis, and Chicago.
It seems that ``Kool Mixx'' is the new ``Joe Camel'' for minority
teenagers.
This overt racial targeting of youth shows that the tobacco industry
has not really changed its ways since its settlement with the State
attorneys general.
The big tobacco companies have reverted back to the same atrocious
behavior we all saw before they promised they would become good
``corporate citizens.''
Here is something even more outrageous difficult as that is to
believe: one of the tobacco industry's new tactics is the introduction
of candy-flavored cigarettes and other sweet-flavored tobacco products.
R.J. Reynolds--the same company that once marketed cigarettes to kids
with the infamous cartoon character, Joe Camel has launched a series of
flavored cigarettes,
One flavor is a pineapple and coconut cigarette called ``Kauai
Kolada''; another is a citrus-flavored cigarette called ``Twista
Lime.''
These names sound more like bubble gum flavors than deadly
cigarettes--which is the point.
These new marketing techniques aimed at kids are especially
troubling, given that over 550,000 children will become regular smokers
this year alone.
FDA regulation is critical for many reasons. One reason--as we see
with these candy-flavored cigarettes--is to keep kids away from these
deadly products. Another reason we need FDA regulation is to make sure
that preventable dangers in cigarettes are removed.
There are thousands of products for sale in America that people
consume, but tobacco products are the only ones--the only ones--which
don't have their ingredients disclosed.
That is amazing when you consider that cigarettes are by far the most
deadly product you can buy in a grocery store.
Right now, the FDA can regulate a box of macaroni and cheese, but not
a pack of cigarettes. If you wanted to know the ingredients of macaroni
and cheese, they're listed on the package. But for cigarettes, there is
no information whatsoever on the ingredients, toxins, chemicals, etc.
It makes no sense.
When a smoker lights a cigarette, the burning ingredients create
other chemicals. Some of these are carcinogenic. But tobacco
manufacturers are not required by law to disclose the ingredients of
their products to the public, including the toxic and cancer-causing
ingredients.
A Surgeon General's report in 1989 reported that cigarettes contain
43 known carcinogens.
I wonder how many smokers realize that one of these chemicals is
arsenic. I bet most smokers don't know that.
It boils down to this: by stripping out the FDA regulatory authority
over tobacco products, we are failing our children. We are putting
their health in jeopardy.
This conference report provides billions of dollars to tobacco
farmers and boosts tobacco industry profits, but it does absolutely
nothing nothing to reduce tobacco's terrible human and economic toll.
I don't know how any Member of this body who is truly concerned about
children's health can, in good conscience, support this bill without
the FDA provision.
We had a deal; everyone knew it: the tobacco buyout in exchange for
FDA regulation. The Republican leadership broke that deal.
I urge my colleagues to oppose this conference report until we give
the FDA the authority it needs to regulate tobacco as it does other
products.
Mr. FRIST. Mr. President, it has been a long day, and I thank those
Senators who have been here, and especially the presiders who we have
had throughout the evening. We now have two appropriations conference
reports at the desk ready for consideration. They are military
construction appropriations and the homeland security appropriations,
obviously two enormously important pieces of legislation, especially
given the disaster relief package that is part of the military
construction legislation.
It had been my hope to act on these as quickly as possible. I
understand there are objections to these and that we will need to file
cloture motions to bring these to a vote. I understand there is an
issue relating to the military construction bill, but I am unaware of
any issue with the appropriations bill relating to homeland security.
Homeland security clearly has important resources that address just
what the title says; that is, the safety and security of the American
people. I believe the American people, indeed, deserve that we act on
this bill in a timely way and in an expeditious way, but it looks like
we are being stopped from doing so.
I will file the cloture motions on both of these measures, but I
would ask my colleagues on the other side of the aisle who are
objecting to proceeding to please consider their objections overnight
and allow us to proceed. I urge them, do not force a cloture vote on
the homeland security bill, which addresses the security and safety of
the American people. I ask that they consider allowing us to vitiate
this cloture and move forward tomorrow.
____________________