[Congressional Record Volume 150, Number 130 (Monday, October 11, 2004)]
[Senate]
[Pages S11191-S11222]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         AMERICAN JOBS CREATION ACT OF 2004--CONFERENCE REPORT

  The PRESIDENT pro tempore. Under the previous order, the Senate will 
resume consideration of the conference report to accompany H.R. 4520, 
which the clerk will report.
  The assistant legislative clerk read as follows:

       Conference report accompanying the bill (H.R. 4520) to 
     amend the Internal Revenue Code of 1986.
  The PRESIDENT pro tempore. The Senator from Iowa is recognized.
  Mr. GRASSLEY. Mr. President, I am glad that Senator Frist and other 
Senators were able to work out the parliamentary maneuvering that it 
takes to get us to finality on this JOBS bill.
  We obviously want to encourage the creation of jobs and manufacturing 
in America. We want to reduce reasons for outsourcing. This bill deals 
with all of those and some others as well.
  Throughout this debate, I feel as though I was whipsawed in arguments 
trotted out by opponents of this bill. They complain about 
accommodations we have made to Members. Some of these accomplishments 
and accommodations have even helped folks in States of the critics. 
Then they complain about what is not in this bill that should have been 
included in this bill.
  First of all, I don't know how many times I have to say this, but I 
think it

[[Page S11192]]

needs to be continually said. This bill is revenue neutral. Yes, we 
decrease taxes for partnerships, family-owned businesses, and 
corporations that are involved in manufacturing, reducing that from 35 
to 32 percent. Obviously, that brings in less revenue, but that does 
not mean the deficit of the United States is going to be increased. We 
pay for it by raising revenue from businesses, by closing corporate tax 
loopholes, and we collect that new revenue coming in to small 
businesses, especially to any size business that manufactures--large or 
small.
  This bill is basically about manufacturing jobs. That is where the 
revenue in this bill goes.
  There are those who talk about this bill as somewhat of a giveaway to 
business. You have some businesses not paying taxes because they are 
abusing the Tax Code through corporate loophole abuse, and they pay 
more money. Then you have the socially good provisions such as 
encouraging manufacturing in the United States to create jobs in the 
United States. I don't think people are correct in saying this is a 
giveaway to business because it balances out within the business sector 
of our country--some paying more and some not paying more. Because we 
are taxing them more, they are paying more because they can't cheat 
anymore. We are giving some benefits from that same revenue to create 
jobs in the United States.
  Those who call this a giveaway for business need to put on their 
reading glasses and take a look at revenue tables produced by the 
nonpartisan Joint Committee on Taxation. These people aren't Republican 
or Democrat. They are professionals who decide how many changes are in 
the Tax Code, where revenue comes from. These tables show that this 
bill is revenue neutral; that financial reductions are paid for in new 
revenue coming in from the closing of corporate loophole abuse.
  For those who are talking about this bill being a giveaway for 
business, I want them to stop using that argument. One statement was 
made last night that was egregiously in error. One of the hard-line 
opponents of this bill claimed that the tobacco buyout was paid for by 
the taxpayers.
  I don't support the tobacco buyout but realize it was necessary to 
get this bill through the other body. I insisted on one of the Senate's 
positions in the tobacco buyout, and that position is that tobacco 
companies pay for this buyout. Opponents need to read this bill and the 
revenue tables. If they bother to do so they will see the buyout is 
paid for not by the taxpayers of America but by the companies that 
produce tobacco.
  Now, let's put in context the mischaracterization of this bill as 
somewhat of a special interest bill. In part, the bill receives such 
widespread support because many Member items were accommodated. 
Literally dozens of tax benefits were adopted in committee and on the 
floor.
  Let me define ``Member items.'' Constituents of one State came to 
their Senator and said: This part of the Tax Code is wrong, it is 
hurtful; or they said: We think the Tax Code ought to be changed this 
way. Maybe they do not come to me. Maybe they do not go to the other 99 
Senators; they go to 1 Senator. That Senator is a representative of his 
people. It is his responsibility to bring that issue to the Senate. He 
does not have to. He can say: I don't agree with you, I will not do 
that. If he feels his constituents are justified in what they are 
requesting, then the matter is brought to the committee that has 
jurisdiction. That is the Senate Finance Committee, which I chair. 
Somehow there is something negative or derogatory about a Member 
bringing forth an item for all to consider. If we think that Member is 
crazy, we do not have to do it. If we think there is some justification 
to what that Member brings before the Senate, we ought to consider 
that. That is how our representative system of government works.
  Literally dozens of tax changes were adopted in committee or in the 
Chamber. Before the conference, Senator Baucus and I received letters 
from virtually every Member of the Senate. In some cases those letters 
asked for items from the Senate to be retained. In other cases those 
letters asked for the Senate to accept items from the House bill, and 
in still other cases Members wrote asking for items that were not in 
either bill. Finally, some Members asked us to not accept certain 
provisions not in either bill.
  I have a stack of letters with me. These letters are not all the 
letters, of course. There is no sense carrying a pile of letters out 
here. But Members representing the interests of their State bring these 
issues for our consideration.
  I will go to the first category and follow up items from the Senate 
bill.
  National care scholarships for nurses--Senator Murray and Cantwell 
asked for that. It is in the bill.
  Sickle cell disease and Medicaid, consideration of sickle cell 
disease, which is not covered by Medicaid--Senators Talent, Schumer, 
Campbell, Dayton, Cochran, Bond, Specter, Mikulski, Cantwell, Landrieu, 
Stabenow, Kennedy, Sarbanes, Voinovich, Lautenberg, Murkowski. It is in 
the bill.
  Some are going to say that Members' provision brought to us under the 
leadership of Senator Talent should not be considered by this body, and 
I will explain why this is all in one bill. People watching might think 
if you have a sickle cell disease issue come before the Senate, maybe 
it ought to come up as a separate issue. On the next item up is a life 
insurance taxation issue; maybe it ought to come as a separate bill. 
Why doesn't it? Because under the rules of the Senate every little bill 
that comes out here could be amended by anything that is in the Tax 
Code. Eventually you have a little life insurance bill that becomes a 
vehicle for every member to bring up any bill they want to bring up.

  So we saved the Senate from going through that exercise. That is what 
committees are about. We consider these issues--not always in 
committee; sometimes they are discussed when the bill comes to the 
Senate floor. Most of the time we give them a thorough study in the 
Senate Finance Committee. Sometimes we reject them and sometimes we 
include them. If we do not include them, maybe when they come to the 
Senate Chamber, that Senator is irritated with the chairman of the 
Senate Finance Committee and they add it on the Senate floor. They 
always end up in one bill.
  Somehow that makes all of our journalists concerned, those who seem 
to not have an understanding of how the Senate works, pointing out that 
this bill is full of a lot of little things in it that are unrelated to 
the underlying bill. That is true, but that is how the Senate works.
  The House of Representatives does not work that way. They put a bill 
together, they adopt a rule, and there is never an amendment. I 
shouldn't say never, but very seldom is a Member allowed to offer an 
amendment to a Ways and Means bill on the floor of the House. That is 
why the House of Representatives is like the House of Lords. That is 
why the Senate is like a House of Representatives. We allow the people 
of this country to bring anything they want to the floor of the Senate.
  Another item is suspension of section 815, a life insurance company 
taxation issue. That was brought to us by Senator Specter. It is in the 
bill.
  New York City revitalization tax benefits directly related to the 
attack of September 11, 2001, and the rebuilding of New York was 
brought to us by Senators Schumer and Clinton--most of that, but not 
all of it, is in the bill.
  Brownfields, unrelated business income tax relief--Senators 
Lautenberg, Reed, Jeffords, Stabenow, Specter, Sarbanes Dole, Akaka, 
Chafee, Inhofe--is in the bill. The use of green bonds for economic 
development in certain areas is something I was not for, but it is in 
the bill to satisfy Senators Allard, Schumer, Miller, Clinton, and 
Chambliss.
  We have IRS private debt collection. Senator Allen was pushing this. 
That is something I very definitely favor because this is one way of 
getting the private sector bringing in money from people who are tax 
cheats and are not paying their taxes.
  Tribal government bonds--Senator Campbell, very active in the Senate 
Committee on Indian Affairs--was also a matter of importance to Senator 
Baucus and others, but it is not in the bill despite being raised in 
conference.
  Comprehensive energy tax relief package--Senator Hutchison--is not in 
the bill despite being raised in conference because the House of 
Representatives took the position that

[[Page S11193]]

there shouldn't be anything on energy in this bill because they think 
energy items need to be put together in a bill that ought to be dealt 
with separately, next session. Quite frankly, the House of 
Representatives passed a comprehensive energy bill last fall, and we 
were two votes short in the Senate because of a Democrat filibuster 
against the bill. They say that instead of doing the energy provisions 
in this bill before us now, the Senate ought to take up the bill that 
we obviously have a majority for--but because of a Democrat filibuster 
we are two votes short--and do the energy stuff there, not in bill 
before the Senate.

  So I cannot blame the House of Representatives because they worked 
hard to get an energy bill passed, and it comes over here and you get a 
Democrat filibuster.
  By the way, those two votes could be supplied by Senator Kerry and 
Senator Edwards because now they think we ought to have a national 
energy policy, and they did not vote last November. If they come in 
here before we go home and cast the 59th and 60th vote, we would have 
the comprehensive energy policy, not just little slivers of it that we 
get in a bill here and a bill there, but we would have a very 
comprehensive energy policy. They would be fulfilling what they are 
saying out there on the campaign trail we need to get done: have a 
national energy policy. We have 58 votes for it. We need a 59th and 
60th vote, and they could be that. But at least I am telling you why we 
do not have the energy provisions in here that a Republican Senator, 
Senator Hutchison, wanted.
  We have a request from Senators Crapo, Bingaman, Voinovich, Biden, 
Pryor, Talent, Enzi, Chafee, Carper, Clinton, Allard, Bond, Coleman, 
Sununu, Bennett, Chambliss, Hutchison, Hagel, Nelson of Florida, 
Dayton, Dole, Reed of Rhode Island, Dodd, Kennedy, and Levin for 
mortgage revenue bonds liberalization. It is not in the bill, but it 
was raised in conference.
  We have heard a lot about Senator Landrieu's Guard and Ready Reserve 
amendment. That was raised by Senators Landrieu, Bond, Pryor, Murray, 
Dodd, Akaka, Cantwell, Dorgan, Schumer, Mikulski, Nelson of Florida, 
Lautenberg, Johnson, Feingold, Leahy, Dayton, Levin, Sarbanes, Wyden, 
and Durbin. We discussed that provision a lot, and like the three items 
above, this item was raised at conference and rejected by the other 
body.
  Mr. President, the letters I have cited reflect items Members raised. 
On some items we were able to reach agreement with the House, other 
items the House of Representatives rejected.
  Let me point out that I offered three amendments that I filed. I won 
one and lost two. The House accepted an amendment I put in for rural 
letter carriers. The House rejected an amendment I had dealing with 
energy-efficient home appliances. The House rejected another amendment 
dealing with elderly housing connected to the Warrior Hotel in Sioux 
City, IA.
  As the list above shows, a lot of Members of this body are satisfied 
because their items are in here; other Members are not satisfied. But 
that is not an unusual situation when you reach compromise. It also 
shows that for all of the unfair carping about this bill being a 
special interest bill, nearly every Member raised narrow-interest 
provisions. So if there is some fault about different provisions coming 
up, we all share that. We all do it. There is an old saying. It is: 
People who live in glass houses should not throw stones. We have a 
group of Members throwing stones at this JOBS bill. A lot of them are 
living in glass houses.
  I will continue the discussion of Member items. We had the State 
sales tax deduction. Senators Cantwell and Hutchison wrote Senator 
Baucus and me asking us to include the House sales tax deduction 
provision in the conference agreement. We also received letters from 
delegations of other States where the State tax base is a sales tax 
base. The House sales tax deduction is in this bill because we decided 
for our Senators from several States that it ought to be included.

  We had timber tax relief provisions: Senators Chambliss, Pryor, 
Cantwell, Sessions, Shelby, Cochran, Collins, Crapo, Craig, Coleman, 
Graham of South Carolina, Wyden, Cornyn, Lugar, and Murray.
  As many of these Senators know, the timber industry has been hard hit 
by the tax on our exports going to Europe. By the way, when this bill 
passes, those taxes go away. The industry is finally recovering from a 
long recession. Timber mills are reopening. Mill workers are returning 
to the mills. The House timber provisions are in this bill.
  Charitable whaling activities. Senator Murkowski wrote, asking us to 
accept the House provision that allows a deduction for charitable 
whaling activities. Now, some will criticize this provision, but it is 
important to the Natives of Alaska. Senator Murkowski is looking out 
for the Natives of Alaska. She ought to be applauded for bringing that 
to our attention. This is in the bill. But it has also passed the 
Senate several times.
  Senator Baucus and I received letters from Members asking us to take 
Senate provisions out of the conference agreement. One example is 
Senator Stabenow's letter regarding a revenue raiser involving 
donations of cars. As you heard yesterday, Senator Hatch shares Senator 
Stabenow's concerns. The conferees retained the Senate revenue raiser.
  There is another category of letters that we received. An example is 
a letter from Senator McCain and Senator Reed of Rhode Island. In that 
letter they asked me to keep out a provision dealing with the church 
tax exemption and political activities. The provision was not in either 
bill. Chairman Thomas and I kept provisions that were outside the scope 
of the bill out of the conference entirely. No matter what the merits 
of that proposal were, we played fair by Senator McCain and Senator 
Reed of Rhode Island.
  The final category of requests dealt with the opposite of the McCain 
and Reed of Rhode Island request; that is, we had requests for items to 
be included that were not in either bill. I will give you a couple of 
sympathetic examples: a liberalization of tax-exempt rules as applied 
to charitable hospitals. Senator Akaka raised this issue. 
Unfortunately, this provision was outside of scope.
  Another example is penalty-free withdrawals from IRAs for hurricane 
victims. Right now, if you are hit by four hurricanes in Florida, who 
is going to argue with Senator Nelson of Florida bringing that to our 
conference? He asked us to raise this item. It was not in either the 
House or Senate bill. It would have been an entirely new item that we 
could have put in in conference. However, there was no way to address 
the proposal without then opening the door for a lot of other items 
that were not in either bill that somebody would want included at the 
last minute.
  So at this point, Mr. President, I ask unanimous consent that these 
letters be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:
                                               September 21, 2004.
     Hon. Charles Grassley,
     Chairman, Finance Committee, U.S. Senate, Hart Senate Office 
         Building, Washington, DC.
     Hon. Max Baucus,
     Ranking Member, Finance Committee, U.S. Senate, Hart Senate 
         Office Building, Washington, DC.
       Dear Finance Chairman Grassley and Ranking Member Baucus: 
     We write to respectfully request that you include as part of 
     the FSC/ETI (S. 1637) conference report the sickle cell 
     amendment that would help treat and expand services for 
     patients with the sickle cell blood disorder. Sickle cell 
     disease affects approximately 70,000 Americans and more than 
     2,500,000 Americans, mostly African-Americans, have the 
     sickle cell trait. There is still no comprehensive cure.
       We are among the 49 Senate cosponsors of the bipartisan, 
     bicameral legislation that is the basis for this amendment 
     (S. 874/H.R. 1736) and strongly support its enactment into 
     law. Passage of this amendment in the Senate was great news 
     for the tens of thousands of Americans who suffer from this 
     disease, which affects 1 in 300 African-American newborns. 
     The disease causes normally round blood cells to take on a 
     sickle shape that clog the bloodstream. These obstructions 
     result in severe medical complications including strokes in 
     infants and limit the average lifespan to 45 years of age.
       In summary, this legislation is a disease management bill 
     that allows states to combine Medicaid-reimbursed services to 
     target sickle cell disease, and authorizes a small

[[Page S11194]]

     Health Resources and Services Administration grant for 
     research, treatment and community outreach through qualifying 
     community health centers. This bill does not expand Medicaid 
     eligibility or change the federal Medicaid matching formula 
     and has a very small cost to the federal government.
       This legislation has received exceptional support from 
     nationally prominent children's, health, African-American, 
     church and union groups including the National Association of 
     Children's Hospitals, the American Medical Association, the 
     NAACP, and the Catholic Health Association of America.
       We are hopeful that you will include the sickle cell 
     amendment as part of the FSC/ETI (S. 1637) conference report 
     to help tens of thousands of Americans lead longer, healthier 
     and more productive lives.
           Sincerely,
         Jim Talent, Chuck Schumer, Ben Nighthorse Campbell, Thad 
           Cochran, Arlen Specter, Maria Cantwell, Debbie 
           Stabenow, Ted Kennedy, George V. Voinovich, Norm 
           Coleman, Mark Dayton, Kit Bond, Barbara A. Mikulski, 
           May L. Landrieu, Jon Corzine, Paul Sarbanes, Frank R. 
           Lautenburg, Lisa Murkowski, Sam Brownback, Peter G. 
           Fitzgerald, Mike DeWine, Lindsey Graham, Barbara Boxer, 
           Elizabeth Dole, Lincoln Chafee, George Allen.
                                  ____



                                                  U.S. Senate,

                               Washington, DC, September 30, 2004.
     Chairman Charles Grassley,
     Hart Senate Office Building,
     Washington, DC.
       Dear Chairman Grassley: As you continue your work on the 
     FSC/ETI bill conference, I would like to ask your support for 
     a Native Alaska subsistence whaling tax deduction. This 
     legislation may be brought up as an amendment by Chairman 
     Thomas in conference.
       For your interest, I have enclosed a letter from the 
     Inupiat community in Barrow, Alaska. I believe they give a 
     good summary on the merits of this legislation. Thank you for 
     your attention to this matter.
           Sincerely,
                                                   Lisa Murkowski,
     U.S. Senator.
                                  ____



                                                  U.S. Senate,

                               Washington, DC, September 30, 2004.
     Hon. Charles E. Grassley,
     Chairman, Committee on Finance,
     U.S. Senate.
       Dear Chuck: As we move closer to consideration of the 
     conference report on the JOBS bill, I write to reiterate my 
     request that you retain the Senate two-year suspension of 
     Internal Revenue Code Section 815.
       I wrote to you on July 19, 2004, concerning this matter and 
     its importance to several of my Pennsylvania constituents. It 
     would allow stockholder-owned life insurance companies to 
     eliminate the surtax based on earned income between 21 and 46 
     years ago that otherwise would be triggered upon reasonable 
     corporate restructuring. As I had stated, three of my 
     constituent companies would have large potential liability 
     under Section 815.
       Thank you very much for your consideration of this request.
           Sincerely,
     Arlen Specter.
                                  ____



                                                  U.S. Senate,

                               Washington, DC, September 30, 2004.
     Hon. Charles E. Grassley,
     Chairman, Committee on Finance,
     U.S. Senate.
     Hon. Max Baucus,
     Ranking Member, Committee on Finance,
     U.S. Senate.
     Hon. Bill Thomas,
     Chairman, Committee on Ways and Means,
     House of Representatives.
     Hon. Charles Rangel,
     Ranking Member, Committee on Ways and Means,
     House of Representatives.
       Dear Chairmen and Ranking Members: The Senate-passed 
     version of JOBS bill, S. 1637, contains an important 
     provision that will give a well-deserved tax cut to employers 
     who continue to pay the salaries of their employees who have 
     been called to active duty in Iraq and Afghanistan. As you 
     convene the conference committee on this important 
     legislation, we want to encourage you to retain this 
     provision in the final conference bill.
       Over 410,000 members of the National Guard and Reserve have 
     been activated to defend our Nation since September 11, 2001. 
     They have done so with valor and honor, but the frequent and 
     lengthy activations have exposed problems on the home front. 
     The Government Accountability Office reports that forty-one 
     percent of our Guard and Reserve personnel take pay cuts from 
     their civilian jobs when they put on their uniforms. While a 
     husband or wife is deployed overseas, spouses back home face 
     difficulties in making ends meet because active duty pay-
     checks are often far less than those received in the civilian 
     world. This causes our troops to divert their attention from 
     the mission to worrying whether or not their spouses can 
     afford the mortgage, auto repairs, or child care.
       Many employers have helped to ease this burden by making up 
     the ``pay-gap'' between the civilian and military pay of 
     their active duty employees, something that they are not 
     required to do. However, the economic downturn has made it 
     difficult for most employers to make up the pay-gap. 
     Additionally, as we continue to rely on the Guard and Reserve 
     for future deployments, those employers who currently make up 
     the pay-gap may no longer be able to provide payments to 
     employees frequently missing from work for months and years.
       The provision in S. 1637 gives employers a 50 percent tax 
     credit on the salaries they pay to employees during 
     activations up to $30,000 of salary. This tax credit will 
     encourage those employers already providing for their 
     employees to continue this patriotic response. In addition, 
     the provision also gives small businesses a $6,000 tax credit 
     for hiring a worker to replace an active duty employee. Small 
     manufacturers would receive a credit of up to $10,000 to help 
     find a replacement.
       We urge the Conference to retain the Reserve and Guard 
     employer tax credits in the final JOBS Act. Our troops are 
     putting everything on the line overseas. Their employers are 
     helping them at home. These patriotic employers deserve this 
     tax relief. Thank you for your consideration.
           Sincerely,
         Mary L. Landrieu, Mark Pryor, Chris Dodd, Daniel K. 
           Akaka, Byron L. Dorgan, Barbara A. Mikulski, Frank R. 
           Lautenberg, Kit Bond, Patty Murray, Jon Corzine, Maria 
           Cantwell, Charles Schumer, Bill Nelson, Tim Johnson, 
           Russ Feingold, Mark Dayton, Paul Sarbanes, Dick Durbin, 
           Patrick Leahy, Carl Levin, Ron Wyden.
                                  ____

                                                      U.S. Senate,
                                  Washington, DC, October 1, 2004.
     Hon. Charles E. Grassley,
     Chairman, Committee on Finance,
     U.S. Senate.
     Hon. Max Baucus,
     Ranking Member, Committee on Finance,
     U.S. Senate.
     Hon. Bill Thomas,
     Chairman, Committee on Ways and Means,
     House of Representatives.
     Hon. Charles E. Rangel,
     Ranking Member, Committee on Ways and Means,
     House of Representatives.
       Dear Chairmen and Ranking Members: I have been made aware 
     that my colleague, Sen. Graham, submitted an amendment 
     dealing with hurricane relief to the corporate tax bill 
     currently before your conference committee.
       Specifically, this amendment, which mirrors legislation 
     Sen. Graham and I introduced in response to the recent wave 
     of hurricanes that have ravaged Florida, would allow victims 
     of disasters to withdraw funds from retirement accounts 
     without incurring proscribed penalties.
       I respectfully request you support Sen. Graham's provision. 
     I understand that this amendment may go beyond the scope of 
     the conference, however I would argue that had the spate of 
     hurricanes happened prior to Senate-consideration of the tax 
     bill, a similar provision would have been included in the tax 
     bill.
       As you know, along with much of the Southeast, Florida has 
     withstood a barrage of hurricanes resulting in billions of 
     dollars in damage. Providing citizens of disaster areas with 
     the means to access funds that otherwise would carry a 
     substantial penalty can play an important role in alleviating 
     their financial hardships.
       With the conference working through various amendments to 
     the corporate tax bill, I would implore you to give serious 
     consideration to this provision, and to providing Americans 
     who have seen so much devastation access to the funds they 
     need to repair damage to their property and their lives.
           Sincerely,
                                                      Bill Nelson.

  Mr. GRASSLEY. Mr. President, I have spent a little time going through 
a sample of the many items that Members weighed in with at the 
conference. This is a small sample of those items raised. Many others 
were brought to the attention of Senator Baucus and this Senator 
through letters or oral communications. It is safe to say, Senator 
Baucus and I can relate to what Senator Byrd and Chairman Stevens go 
through on the appropriations bills.
  My point is, those who want to distort this bill by describing it as 
a special interest bill are ignoring a couple things. One, they are 
ignoring--perhaps conveniently, perhaps deliberately--their own efforts 
to advance their interests. Secondly, as I have said before, this bill 
is paid for by raising revenue, largely by closing abusive corporate 
tax loopholes.
  Let the record be clear that this bill is fair, this bill is 
balanced. It is a balanced effort at resolving four objectives. One 
objective is ending the European tax on our exports going to Europe 
that are legal and legitimate, even though I disagree that it should 
have been done. I disagree with that decision. The United States lost a

[[Page S11195]]

World Trade Organization decision that our previous tax laws were 
violating the agreements that Congress had made with Europe, Congress 
made, because we passed these trade agreements as law.

  If anybody thinks, well, it is wrong for Europe to levy a tax against 
us, we won a case against Europe on beef because they don't let our 
beef into Europe because we use hormones in the development of our 
beef, in the feed the cattle eat or that they are injected with, and 
Europe does not like that. But they are violating our right to send 
beef to Europe because they don't have a scientific basis for doing it. 
That is what the World Trade Organization said. But they still don't 
take our beef. So we put a tax on products coming from Europe to the 
United States to retaliate the same way they are retaliating for the 
reasons behind this bill.
  This bill ends that European tax because we are conforming our tax 
laws to the international trading agreements Congress passed 10 years 
ago. We are also going beyond doing away with an impediment to our 
exports so that we lose jobs here in America because of that tax. We 
are putting a replacement benefit to manufacturers in the United States 
so jobs will be created here by lowering the corporate rate from 35 to 
32.
  No. 3, we are providing international tax reforms that will aid 
domestic manufacturers so we can compete in the global marketplace.
  And lastly, we achieve these policy ends in a revenue-neutral way 
through the curtailment of abusive corporate tax shelters and abusive 
corporate loopholes by closing them.
  I hope everybody agrees this bill is a well-balanced bill, 
accomplishing a goal we should have accomplished a year and a half ago, 
at least no later than March when these European taxes started on our 
products. I apologize to any Americans who have been laid off because 
our products are not competitive in Europe because of that tax and why 
it takes Congress so long to wake up, particularly when there are 
Members of Congress always complaining about outsourcing.
  We started on this bill in March. It took us 15 days, over a period 
of 3 months, to get this bill through the Senate. And then we were a 
long period of time before the minority party agreed we could go to 
conference. But once we got to conference, thanks to the good 
cooperative working relationship between Senator Baucus and me for the 
Senate and between Mr. Baucus and me and Congressman Thomas, chairman 
of the House Ways and Means Committee, we have this bill.
  But for those laid-off workers, I am embarrassed this bill couldn't 
have been passed a long time ago and that we ran up against all of the 
impediments. Why? Because certain Members of this body don't want a 
Republican President signing a jobs bill a few days before the 
election.
  I yield the floor.
  The PRESIDING OFFICER (Ms. Murkowski). The Senator from California.


                           CHRISTOPHER REEVE

  Mrs. BOXER. Madam President, I send my deepest condolences to the 
family of Christopher Reeve, one of the bravest Americans, who fought 
so hard to prove that even with the most horrific injuries, one could 
still be involved in community life, and who dedicated himself to 
raising awareness for stem-cell research, for the hope and the dream of 
so many of our people who suffer every day, that they may have a cure 
in their lifetime.
  Christopher Reeve was Superman in the movies, but that was make-
believe. He was Superman in real life.
  My heart goes out to everyone who knew him and to the disabled 
community who counted on him. It is such a tragedy to lose him.


                         Expressions of Thanks

  Madam President, I have a number of people to thank.
  On Friday night, the Senate passed the Veterans' Benefits 
Improvements Act and included my bill to designate the memorial being 
built at Riverside Veterans Cemetery as the National POW-MIA Memorial. 
Congressman Calvert authored the House bill.
  I am so proud the Senate acted first on this bill. I have been to the 
cemetery. I have seen a model of the memorial. This is going to be the 
veterans cemetery, national POW memorial. It is going to draw people 
from all across the country. So many of our people were at one time 
POWs. The numbers are staggering. And, of course, there are some who we 
don't know what happened to. They deserve this kind of memorial.
  I thank Senators Specter and Graham for helping me with this bill.
  Second, last night the Senate passed a House bill by Representative 
George Miller--I introduced the Senate companion piece--to adjust the 
boundaries of the John Muir National Historic Site in Martinez, CA. We 
are glad about this because it is going to bring some improvements to 
this area. I thank Senators Domenici and Bingaman for that.
  Also last night something very special occurred here for the people 
of California and the people of this Nation. The Senate passed the 
California missions bill to help preserve the historic missions in the 
State of California. It has been a long, hard road. These missions are 
so important to the history of the West. These missions were built in 
the 1700s, and they are crumbling. We had to struggle to get the Senate 
into committee to pass the bill, and they did it.
  I thank Senators Domenici, Bingaman, Feinstein, and Smith. I thank 
Judge William Clark, Stephen Hearst, Rick Ameil, Dr. Knox Mellon for 
everything they did. It is a very important day for us in California 
for these missions and for California history and American history.


                       FSC/ETI Conference Report

  That gets me to the business at hand. I want to start off by thanking 
Senator Mary Landrieu of Louisiana for her impassioned defense of our 
National Guard and Reserve. Like her, I am shocked and dismayed that 
the House conferees on the FSC bill before us stripped out an important 
provision to give tax relief for those employers who continue to pay 
their reservist employees after they are called up for Active Duty and 
deployed.
  Four in 10 members of the Guard and Reserves suffer a pay cut when 
they are called up for Active Duty. In other words, the pay they 
receive when activated is not as much as the salary they receive in the 
private sector. As a result of this pay gap, their families suffer. Car 
payments are missed, medical insurance lapses, childcare is 
unaffordable. Our Guard and reservists are sent to the front lines with 
the burden of knowing their families back home will struggle to make 
ends meet.
  I could not say anything that could match the eloquence of Senator 
Landrieu and, of course, her chart that she gave me to hold up again. 
This says, ``What should $434 million pay for? One year of the Landrieu 
amendment on Guard and Reserve tax credit, or $44 million for ceiling 
fans?''
  I think the answer is clear to most Americans. As a result of Senator 
Landrieu's eloquence, now America knows what happened in the back 
rooms, when the only thing missing was the cigar smoke--but maybe that 
was there as well when these bills were written.
  Why is this so critical? Senator Landrieu explained it. Part of 
Senator Landrieu's amendment involves a bill that I wrote where we 
reimburse State and local governments who do the same thing. In other 
words, if a city in New York State suffers the loss of a policeman 
because he is called up and reactivated because he is in the Reserves, 
many cities across our great land are paying that differential to the 
Reservists or the National Guardsmen. I will tell you, it is hurting 
those entities very much to do this. I am very sad that part of the 
bill was dropped. And what we were able to get, with the help of 
Senator Landrieu, was a sense of the Senate that the conferees should, 
in fact, take a look at this, and the President ought to consider 
taking care of these governments and the cost of this payment to the 
Reservists and the Guard in his next budget.
  I am very glad we were able to do that. I thank Senator Daschle, who 
phoned me late last night; Senator Grassley, who was very helpful in 
writing that; of course, my staff, who worked hard with Senator 
Landrieu's staff to come to a solution; Senator Harry Reid, who is such 
a workhorse around here, who helped make it happen.
  I have to hope that this President, who is sending our Guard there 
every day, sending our Reserves, and extending their time there, would 
feel a little

[[Page S11196]]

compassion--compassionate conservative--for these reservists and these 
guardsmen who are suffering a cut in pay to put themselves in harm's 
way. As we all know, well over a thousand are dead--not just guardsmen 
and reservists, but other military personnel as well.
  I am confident that if we have a President Kerry, he will be eager to 
work with us to solve this problem because he knows war firsthand. He 
knows the worst thing you can do to someone who has a family back home 
is to put on top of their worry about whether they are going to make it 
through the war without a serious injury, or perhaps not make it 
through at all--put on top of that the fear that their families are 
going to be driven into poverty. Forty percent of the troops now in 
Iraq are members of the Guard and Reserve.
  Last year when I visited Walter Reed Army Medical Center to visit our 
wounded troops, I came across one young soldier who was severely 
wounded. During the course of the conversation, he told me that from 
the time he was wounded, every aspect of his care, treatment, and 
transportation was carried out by members of the Reserves. This soldier 
told me he had the highest respect for the capabilities of our Guard 
and Reserve, and he was eternally grateful for their professionalism.
  It is important to speak out and say we are in support of our troops. 
But in those closed-door meetings they are handing out tax breaks to 
people who import ceiling fans. It seems to me the first thing the 
conferees should have done is ensure that the Landrieu provision and 
Boxer provision were kept in. Senator Landrieu is on the floor of the 
Senate and, again, I thank her for her leadership. We all look forward 
to the day when our guards and reservists can return home, be reunited 
with their families, and have their jobs back and make sure their 
families are whole.
  I ask unanimous consent to have printed in the Record a list of the 
States that are paying this money to these reservists and are getting 
nothing from us, when the Federal Government is taking these people 
out--this President--and activating the Guard and Reserves, putting 
them in harm's way and not reimbursing State and local government.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

Examples of State, County and Local Governments Covering the Pay Gap of 
                               Reservists


                                Alabama

       State Government.


                                Arizona

       City of Phoenix Police Department, Arizona.


                                Arkansas

       State Government.


                               California

       State Government, City of Chula Vista, CA, Dos Palos Oro 
     Loma School District, CA, City of Fremont, CA, City of 
     Fresno, CA, City of Glendale, CA, City of Hercules, CA, City 
     of Los Angeles, CA, Los Angeles County, City of Longbeach, 
     CA, City of Sacramento, CA, City of San Diego, CA, City of 
     San Diego Police Department, CA, City of San Francisco, CA, 
     San Francisco County, CA, City of Santa Barbara, CA, City of 
     Roseville, CA.


                              Connecticut

       State Government, City of Glastonbury, CT, City of New 
     Britain, CT.


                                Delaware

       State Government.


                                Florida

       State Government, Broward County School Board, FLA, City of 
     Jacksonville Sheriff's Office, FLA, Miami-Dade County, FLA.


                                Georgia

       DeKalb County School System, GA.


                                Illinois

       State Government, City of Chicago, Illinois, Cook County, 
     Illinois.


                                  Iowa

       State Government.


                                Kentucky

       State Government.


                               Louisiana

       Caddo Parish Schools, LA.


                                 Maine

       State Government.


                                Maryland

       State Government, Howard County, MD.


                             Massachusetts

       State Government.


                                Michigan

       State Government.


                               Minnesota

       State Government.


                                 Nevada

       State Government, City of Las Vegas, NV.


                             New Hampshire

       State Government.


                               New Jersey

       State Government.


                                New York

       State Government, New York City Police Department, Nassau 
     County Police Department, City of Wallkill, NY, County of 
     Westchester, NY.


                             North Carolina

       State Government, City of Charlotte, NC.


                                  Ohio

       State Government, City of Dayton, OH, City of Toledo, OH, 
     Franklin County Police Department, OH, City of Kettering, OH.


                                Oklahoma

       State Government.


                              Pennsylvania

       State Government.


                              Rhode Island

       State Government.


                             south carolina

       State Government.


                               tennessee

       State Government, Davidson County, Tenn., City of 
     Nashville, Tenn.


                                 texas

       State Government, City of Austin, TX, City of Grapevine, 
     TX.


                                virginia

       State Government, City of Bedford, VA, County of Henrico, 
     VA, County of Prince William, VA.


                               washington

       City of Redmond, Washington.


                             west virginia

       State Government.


                                wyoming

       State Government.

  Mrs. BOXER. I see the Senator from Oklahoma here. His State pays for 
Guard and Reserve when they are called up, as do the others included in 
the list.
  I say thank you to all of these States and cities for stepping up to 
the plate. You deserve the support of the Senate. You deserve to have 
legislation passed and not just a sense of the Senate, which I am happy 
we did, but I am not naive about these things; I have been here too 
long to know it is kiss-off to get a sense of the Senate. But at least 
we got there. What happened was this provision that passed the Senate 
was knocked out in conference while goodies were given all around.
  I want to make a point about this bill. There are some good things in 
this bill. I wrote one of the main provisions, along with Senator 
Ensign, called the Invest In the USA Act. Some people don't understand 
it. It says we give a break to countries who have their funds abroad, 
and if they bring them home and put people to work with them, they get 
a tax break in the next 12 months. This is a stimulus and job creation. 
Economists, Democrats and Republicans, say it is going to be very 
effective.
  Senator Lincoln and I worked on runaway production. That is 
important. Of course, the underlying premise of a tax cut to encourage 
manufacturing is very important. We eliminate the preferential tax 
treatment of ethanol. That is important. We partially close the SUV 
loophole. I compliment Senator Nickles for that. I think we can do 
more, but he stepped up to the plate on that. The thing with the 
$100,000 loophole was ridiculous. I am happy we have gone back to the 
original loophole of $25,000, which is still too much, but it is a big 
improvement.
  I also thank Senator Snowe for her tax fairness for naval 
shipbuilders, which is important. What is bad in the bill is the 
tobacco cave-in, where the FDA doesn't get the authority to regulate 
this tobacco, and there is a bailout. I don't have a problem with the 
bailout with farmers, but this was an opportunity to save our children.
  The overtime regulation from Senator Harkin is stripped from the 
bill. It is going to hurt our people badly when they no longer get 
overtime. Outsourcing--the provision by Senator Dodd--passed 70-26. You 
would think we could have fought for that, but it is out. And, of 
course, the reservists tax credit that we talked about. There also was 
a tax credit for farmers for water conservation that I strongly 
supported. It was stripped from the bill.
  The film industry was treated very badly in this bill.
  We are killing the goose that lays the golden egg because the film 
business is a terrific export business and they get treated very badly.

[[Page S11197]]

  So we had a chance to have a great bill. Instead, we have a bill that 
has some good provisions but also has some horrific provisions in it. 
It is a terrible way to legislate, but the Landrieu-Boxer provision 
that was stripped out which dealt with our reservists and our National 
Guard, all I can say to Senator Landrieu is that a picture speaks a 
thousand words. Her poster showing the choices that this Republican 
Congress made is something that I hope the American people are watching 
because this is unforgivable. I am going to fight with my friend from 
Louisiana until we fix this problem.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Louisiana.
  Ms. LANDRIEU. Madam President, under the agreement last night I have 
up to 30 minutes to speak, and I will be happy to yield additional time 
to Senator Boxer at a later time because I most certainly want to 
support her comments and to thank her for her great support of this 
amendment. Without Senator Boxer and many other Senators, the victory 
that we have achieved this morning would not have been possible.
  Senator Boxer knows, because she represents the largest State in our 
Union, that 90,000 guardsmen and reservists reside in California. 
Today, as she and I are on this floor speaking on their behalf, 7,900 
are currently on duty from California, having left their homes from 
Bakersfield--the home of Chairman Thomas, or the center of his 
district--to San Francisco to Los Angeles, from Louisiana, from 
Oklahoma, and from Texas. Thousands of Guard and Reserve men and women 
have left their families, left their children, left their place of 
employment and gone to the front lines.
  We decide where the front line is and we send them. Wherever we say 
to go, they go, and they have gone in large numbers.
  I have spent the last few days speaking about this because it is of 
such critical importance for us in the Senate and for the Congress to 
understand that we are asking more and more of our Guard and Reserve. 
This was not always the case. It was not that way in World War I and 
World War II. It was not that way in the 1950s, 1960s, 1970s, or 1980s, 
but it is this way today.
  From 1990 to 2004, we have called up 690,500 Guard and Reserve 
members. The Guard and Reserve now make up 40 percent of our whole 
force. We have 1.6 million active members of all of our services, and 
we have 1.2 million men and women in the Guard and Reserve.

  Many of these men and women, as my colleagues know because I have 
said it--and I am sure my colleagues are now aware of this, that when 
many of our reservists signed up, they expected to make a sacrifice. 
They knew that one weekend a month they would go on duty, and they knew 
that in times of crisis they would be sent. What we did not tell them 
10 years ago is that there would have been a terrorist attack on 9/11. 
What we were not able to tell them 10 years ago was that we would make 
a decision to reduce our Active Forces, thereby putting a greater 
burden on them.
  They signed up under a different paradigm. Yet year after year some 
of us have come to this floor--not just this week, not just last year, 
but year after year. I have been here 8 years. There is not a year that 
I can think of that I have not mentioned this--maybe the first year I 
was here, but most certainly once I got on the Armed Services Committee 
and it became apparent to me and many others of the major shifts that 
we were making, and have argued, sometimes successfully and sometimes 
not successfully, not because I do not think our arguments are clear 
and compelling but because they seem to fall on deaf ears, that the 
Guard and Reserve need help.
  I wish I could spend the time reading some of the hundreds, thousands 
of e-mails that I have received since this filibuster started. The 
filibuster is no longer in place because basically the amendment we 
asked for has been agreed to. It is going to be put in another bill. 
That is how this whole thing started, was to say that I know that it 
was impossible for us to amend $137 billion. We could not procedurally 
amend this bill. The only thing we could have done would have been to 
vote against it or send it to the President and ask him to veto it 
because the Guard and Reserve were left out. Both of those strategies 
were probably not going to happen. So I said that I would accept that, 
and I would stay here until Thursday or Friday, until I had to, with 
others helping me, to make sure we could find another vehicle that 
would be appropriate to put this amendment on as much intact as we 
could, and that is what happened.
  There are a lot of Senators to thank, and I think I will spend a 
moment thanking the Senators before I go into more detail. First, I 
will just finish this one thought and then I will thank the Senators.
  I was explaining how the paradigms changed and we are relying more 
and more on our Guard and Reserve. So when this bill began to be put 
together 2 years ago, some of us knew that this bill was going to start 
out at about $50 billion. But we also knew that it would grow because 
any time there is a tax bill before this Congress, lots of things get 
attached. NASCAR racing got attached; ceiling fans are in here; 
railroad reimbursements for maintenance of tracks is in here. I do not 
have a complaint about one of those items. That is not why we 
filibustered the bill.
  What we complained about is the only item that was put in the Finance 
Committee and sent out of the Senate with 100 percent of us supporting 
it--all of the Republicans and all of the Democrats supported it--was 
stripped out by the House Republican leadership.
  If we cannot find $2 billion of $137 billion in tax cuts to give to 
the men and women who are taking 100 percent of the risk, 100 percent 
of the bullets, what are we doing here? That was the point we made. The 
point was heard loudly and clearly.

  So with the help of many colleagues, we have corrected the error. We 
have sent an amendment, in large measure whole. Senator Boxer is 
correct that a portion that she and I thought was very important, which 
was to help public entities that keep those paychecks whole as the 
Guard and Reserve go to the front line and lose 41 percent of their 
income, according to the GAO study--that was given to us not last week, 
not a month ago, this study was given to us 3 years ago. We knew 3 
years ago that our Guard and Reserve take a 41-percent pay cut. The 
soldiers do not mind the pay cut. They are eating rations. They are 
living in tents. They are sleeping on the ground. This is not--well, it 
is about the soldiers, but it is more about the families they leave 
behind, about the children without health care, about the wives who 
have to take two jobs, about the gasoline that has to be put in the 
car, the car notes that have to be paid.
  If we can find a tax bill and work on it for 2 years, which we did--2 
years of work went into this bill. I am not on the Finance Committee, 
but I have a great member in Senator Breaux. I know how hard he works, 
and I know how he supported this amendment as well. I have Congressman 
Jim McCrery and Congressman Jefferson who worked very hard. The 
Louisiana interests are well represented in this as well as in many 
other important bills. But what I objected to was that the Guard and 
Reserve amendment that would have given a tax credit to the thousands 
of businesses in this country that are doing the patriotic thing, the 
right thing, the good thing, and they are getting commended by our 
President and us, we could not provide them a 50-percent tax cut to 
keep this paycheck whole for those on the front line.
  Mrs. BOXER. Will my friend yield for a very brief moment and I will 
be finished.
  Ms. LANDRIEU. Yes.
  Mrs. BOXER. I wonder if my friend would place in the Record a number 
of letters--I didn't have a chance to do it before--from various cities 
in California, also from the International Association of Firefighters. 
Will my friend do that?
  Ms. LANDRIEU. Yes.
  Mrs. BOXER. I wonder if my friend would mind if I could read one 
letter, which will take about 60 seconds.
  Ms. LANDRIEU. No.
  Mrs. BOXER. This is one of the typical letters from the City of 
Sacramento:
       Dear Senator Boxer: On behalf of the City of Sacramento, I 
     am pleased to offer our support for S. 1845, which would 
     assist local governments that continue to pay employees who 
     are deployed to active duty.
       Last year, eight of our permanent employees were activated 
     to service in Iraq. We are

[[Page S11198]]

     proud of these employees and support them by making up the 
     difference between military and civilian pay. We also pay the 
     City contribution for their families to continue their health 
     benefits.
       The cost to the City of Sacramento was approximately 
     $73,000 last year. With the current budget crisis affecting 
     California cities, S. 1845 is needed to ensure that cities 
     like ours do not shoulder this financial burden alone.
       If we can provide any further information or support as 
     your office moves this legislation, please contact Aaron 
     Chong, Law and Legislation Coordination, at (916) 808-6762. 
     Thank you for your support of our brave men and women and 
     their families.

  This is a specific letter that wraps it up just the way the Senator 
has, in a very simple, straightforward way. But I do appreciate the 
Senator putting these letters in the Record and being able to stand 
shoulder to shoulder with the Senator until we fix this problem.
  I thank the Senator.
  Ms. LANDRIEU. Mr. President, I ask unanimous consent to have those 
letters printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                              City of Chula Vista,


                                   Office of the City Council,

                                   Chula Vista, CA, March 3, 2004.
     Re notice to support S. 1845 (Boxer): Service to Country 
         Reimbursement Act.

     Hon. Barbara Boxer,
     Senate Hart Office Building,
     Washington, DC.
       Dear Senator Boxer: The Chula Vista City Council, in 
     keeping with the guidelines established in the City's 
     Legislative Program, has taken unanimous action to support S. 
     1845 (Boxer), as introduced November 11, 2003. This proposal 
     would require the Federal government to reimburse state and 
     local governments for the salary costs of our employees who 
     serve in the military reserves and have been called to active 
     duty.
       Under existing law, the City of Chula Vista pays the 
     salaries of our reservist employees for the first 30 days of 
     their active duty assignment. Beyond those first 30 days, the 
     City pays the employees the difference between their military 
     pay and their normal civilian salary. In addition, we incur 
     the cost of hiring supplementary personnel to carry out the 
     responsibilities of the reservists who have been called away.
       Chula Vista has already incurred costs in excess of 
     $500,000 during the current military actions in Iraq and 
     Afghanistan. Passage of S. 1845 would be a tremendous benefit 
     to local government agencies throughout the Nation. On behalf 
     of our city, I am pleased to offer Chula Vista's strong 
     support for your bill, and look forward to its successful 
     passage.
           Sincerely,
                                               Stephen C. Padilla,
     Mayor.
                                  ____

                                                 City of Roseville


                                                 City Council,

                                  Roseville, CA, January 15, 2004.
     Subject support for S. 1845--service to Country Reimbursement 
         Act.

     Hon. Barbara Boxer,
     Senate Hart Office Building,
     Washington, DC.
       Dear Senator Boxer, On behalf of the citizens of the City 
     of Roseville, California, I offer my support for S. 1845, 
     which would assist local governments that continue to pay 
     employees who are deployed to active duty.
       Last year, five of our 946 permanent employees were 
     activated to service in Iraq. We are proud of these employees 
     and support them by making up the difference between military 
     and civilian pay. We also pay the City contribution for their 
     families to continue their health benefits.
       The cost to our City was approximately $105,000 last year. 
     With the current budget crisis hitting California cites, S. 
     1845 is needed to ensure that cities like ours do not 
     shoulder this financial burden alone.
       If we can provide any further information or support as you 
     move this legislation, please contact Ellen Powell, 
     Legislative Analyst, at (916) 774-5219. Thank you for your 
     support for our brave men and women and their families.
           Sincerely,
                                                    F.C. Rockholm,
     Mayor.
                                  ____

                                            City of Santa Barbara,


                                          Office of the Mayor,

                              Santa Barbara, CA, January 27, 2004.
     Re Service to Country Reimbursement Act--S. 1845.

     Hon. Barbara Boxer,
     Senate Hart Office Building,
     Washington, DC.
       Dear Senator Boxer. On behalf of the Council of the City of 
     Santa Barbara, we unanimously support the Service to Country 
     Reimbursement Act. We also want to express our sincere 
     appreciation for your leadership in sponsoring this bill.
       Since October 2001 the City has voluntarily provided 
     approximately $250,000 in salaries, benefits and retirement 
     fund contributions for City employees who have been called to 
     active military duty. While we remain committed to this 
     policy, we do not have unlimited resources. The City has not 
     yet recovered from the revenue losses due to the economic 
     recession and September 2001 terrorist attack. In addition we 
     have incurred significant increased costs to provide higher 
     levels of police security and emergency preparedness.
       This situation in combination with the loss of revenue 
     (incurred and projected) due to the California state budget 
     crisis places us in a very untenable position. Although S. 
     1845, if enacted, will not resolve all of these issues, it 
     will provide resources to fund a major portion of our 
     potential future costs for continuing support for our 
     employees, and their families, who are activated for military 
     service.
       We encourage you to make enactment of this bill a high 
     priority and ask that you call on us for support and advocacy 
     with others as the bill progresses through hearings. Thank 
     you again for taking the initiative to sponsor this bill.
           Sincerely,
                                                       Marty Blum,
     Mayor.
                                  ____

                                                  City of Fremont,


                                          Office of the Mayor,

                                   Fremont, CA, November 24, 2003.
     Re Support for S. 1845, the Service to the Country 
         Reimbursement Act

     Hon. Barbara Boxer,
     Senate Hart Office Building,
     Washington, DC.
       Dear Senator Boxer: I am writing on behalf of the Fremont 
     City Council to let you know of our strong support for your 
     S. 1845, the Service to the Country Reimbursement Act.
       This needed legislation will reimburse state and local 
     governments for the costs of paying the difference between 
     the civilian salary of government employees and the military 
     pay of a National Guard or reserve member who is activated 
     for more than 30 days.
       We have several employees who have been called to active 
     duty since September 11, 2001. We are supplementing their 
     military pay with City funds during their deployment because 
     we strongly believe that serving your country should not 
     become a financial hardship. We have already spent more than 
     $120,000 to supplement the salaries of our active duty 
     employees and more than $30,000 on their health benefits. 
     With the significant budget problems we are facing this year, 
     we greatly appreciate any assistance the federal government 
     can provide us.
       Thank you for introducing this important legislation.
           Sincerely,
                                                     Gus Morrison,
     Mayor.
                                  ____

                                         International Association


                                             of Fire Fighters,

                                   Washington, DC, April 24, 2003.
     Hon. Tom Lantos,
     House of Representatives,
     Washington, DC.
       Dear Congressman Lantos: On behalf of the 260,000 
     professional firefighters and emergency medical services 
     personnel who are members of the International Association of 
     Fire Fighters (IAFF), I am pleased to offer our enthusiastic 
     support for H.R. 1345, a bill to support our citizen 
     soldiers.
       As you are aware, many fire fighters serve in either the 
     National Guard or Reserves. As a result of our nation's 
     multi-front war against terrorism, many of these brave men 
     and women of the IAFF have been called up to active duty.
       While some conscientious jurisdictions have voluntarily 
     agreed to make up the difference between military pay and 
     fire fighter pay, too many have not. H.R. 1345 would address 
     this issue by helping local governments with the burden of 
     making up the difference in the lost wage. We applaud your 
     efforts to ensure that those serving abroad will have the 
     comfort of knowing that their families will not face 
     financial hardships.
       Please contact me if the IAFF can be of additional service.
           Sincerely,
                                                   Barry Kasinitz,
     Governmental Affairs Director.
                                  ____

                                           State of New Hampshire,


                                       Office of the Governor,

                                       Concord, NH, June 19, 2003.
     Senator John Sununu,
     Manchester, NH.
       Dear Senator Sununu: I am writing to express my support for 
     House Resolution 1345 which provides incentives to State and 
     Local governments, as well as private employers, who 
     reimburse their employees who are called to active military 
     duty for the difference between their civilian pay and their 
     military pay. I feel strongly that the men and women who are 
     called to active military duty should not be penalized 
     financially for serving our country. When I was chief 
     executive officer of Cabletron, I was proud to support my 
     employees who were called to active duty during the Gulf War 
     by making up the difference in pay between what they were 
     paid by Cabletron and what they received from the military. 
     As Governor, I again had the opportunity to support our 
     military by issuing an executive order that ensures that 
     state employees who were called to serve in Operation Iraqi 
     Freedom will not lose any benefits or receive a reduced 
     salary as a result of their service.
       House Resolution 1345 provides reimbursements to states 
     like New Hampshire who support our military. I urge you to 
     support this bill on behalf of our State and on behalf

[[Page S11199]]

     of the men and women who serve our country.
           Sincerely,
                                                  Craig R. Benson,
                                                         Governor.

  Ms. LANDRIEU. I thank the Chair.
  Mr. President, I would like to continue by thanking all of the 
Members of this body, particularly the members of the Finance 
Committee, particularly the Senator from Oklahoma, who stepped forward 
and helped us to negotiate a very good end to this situation. But the 
original cosponsors of this amendment were Senator Murray, Senator Tim 
Johnson, Senator Maria Cantwell, Senator Jon Corzine, Senator Kerry, 
Senator Durbin, Senator Dodd, and Senator Pryor. There were 21 Senators 
who signed the letter to the conferees and I am going to submit their 
names to the Record, but among them was Senator Bond, who has been a 
strong advocate for the Guard and Reserve; Senator Akaka, who came to 
the floor over the weekend to lend his support and his help; Senator 
Bill Nelson, who came to the floor as well and gave his help and his 
support. I also wish to thank the leadership, Senator Daschle and 
Senator Reid in particular, as well as the Republican leadership, who 
worked hard through these couple of days to make this good end come to 
be today; particularly Senator Harkin, who was in the Chamber 
advocating for a different issue that was his primary focus, but 
without his help in being able to hold the floor and being able to keep 
the procedure moving in the direction that helped us to make our point, 
it would not have happened. I also wish to thank the Senator from 
Alabama, Mr. Sessions, for spending many hours in the Chamber. He and 
the Senator from South Carolina, Lindsey Graham, have spoken hour after 
hour after hour on this floor about the needs of the Guard and Reserve.
  Perhaps we are not making our arguments clear enough; I do not know. 
But they seem to sometimes leave our mouths and fall on deaf ears. I do 
not think it is complicated; 690,000 Americans have been called up by 
our Commander in Chief to go to the front line. As we put bills 
together here, tax bills, health care bills, education bills, 
transportation bills, could we please not keep them in mind but put 
them in the bill and not leave them out. They are not asking for much. 
They are not asking for 100 percent of any tax credit. But surely $2 
billion out of 137 is something we could have done. I know there were 
arguments, and I think somewhat legitimate--perhaps the amendment was 
not written in the correct way. Perhaps it was a little more 
complicated. We have successfully cleared up those complications. I 
have said there were other amendments in here that to me seemed quite 
complicated.
  One in particular was a reimbursement for railroad track maintenance. 
I guess we trust the railroads to tell us how many miles. I don't think 
we send out people to walk the tracks and measure the railroad tracks. 
So I think we trust employers when they say they are paying their Guard 
and national Reserve and they put that on their tax return. I think 
most certainly we can trust them and trust the members of our Guard and 
Reserve. We are trusting them to fight for us and we stand with them. 
We are honoring the employers, small and large companies that are 
keeping those paychecks whole, and the least we can do is to provide a 
50-percent tax credit.
  I also wish to thank the floor staff: Lula Davis and Mary Paone, as 
well as the Republican staff who helped this weekend, and the Senate 
Finance Committee staff which helped us to work out the final details. 
On my own staff: Jason Matthews, Jeffrey Wiener, Kevin Avery, Kathleen 
Strottman, Brian Geiger, Amy Cenicola, and Linda Cox, and particularly 
my husband and my children, who were supportive of this effort because 
it could have gone on for many more days.

  I want to, in the few minutes I have remaining, submit a few more 
things to the Record.
  One of them is a letter that came to this Congress, not from the 
current Secretary of Defense, but from the former Secretary of Defense, 
Bill Cohen, in 1998, saying basically, while we support the concept of 
providing incentives to employees of Reserve component members, the 
Federal Government, we at this time cannot afford such a program, but 
with the increased use of the Guard and Reserve, particularly for 
unplanned contingency operations, employers of our Guard and Reserve 
members are often faced with the unplanned absences of their reservist 
employees. They may incur additional business expenses associated with 
the unplanned absences. The report suggests that a financial incentive 
might be helpful to ameliorate some of the employer problems, 
particularly for small business owners.
  There you have the Secretary of Defense, the former Secretary of 
Defense, outlining that while they couldn't afford to do it in a 
Defense bill, we most certainly could afford to do it in a tax bill. 
That is why we started working with the tax bill and with the Finance 
Committee. I am pleased to say we have come to a good end. So in a few 
minutes, by a voice vote, this amendment will be adopted. It will go 
over to the House and to the House leadership on both the Republican 
and the Democratic side. I urge them to look carefully at what we have 
sent over there, to pass it the way it is. If they do, it will become 
law right away. Perhaps when we come back after this election or 
perhaps before the election, that could be done. But clearly the Senate 
has acted with respect, with care, with cooperation, and again I thank 
the Republican leadership and the Democratic leadership for working so 
well over the weekend to send this amendment, basically intact as we 
put it together, over to the House. It is now in their court.
  How much time do I have remaining?
  The PRESIDING OFFICER (Mr. Coleman). There is 11 minutes remaining.
  Does the Senator ask unanimous consent to have the documents printed 
in the Record?
  Ms. LANDRIEU. Yes.

                                     The Secretary of Defense,

                                   Washington, DC, March 17, 1998.
     Hon. Floyd D. Spence,
     Chairman, Committee on National Security, House of 
         Representatives, Washington, DC.
       Dear Mr. Chairman: The Department of Defense report, 
     enclosed, has been prepared in response to the National 
     Defense Authorization Act for Fiscal Year 1997. Section 1232 
     of that Act directed submission of a report and draft 
     legislation to provide tax incentives to employers of members 
     of Reserve components.
       The Department of Defense does not support submission of 
     legislation at this time but is submitting draft legislation 
     as a drafting service.
           Sincerely,
                                                       Bill Cohen.
       Enclosure: As stated.

 A Report to Congress Concerning Incentives to Employers of Members of 
                         the Reserve Components

       This report responds to the requirements of section 1232 of 
     the National Defense Authorization Act for Fiscal Year 1997 
     (P.L. 104-201, September 23, 1996), which requires a report 
     to the Committee on the Armed Services of the Senate and the 
     Committee on National Security of the House of 
     Representatives regarding tax incentives to employers of 
     members of Reserve components to compensate for absences of 
     Reserve employees due to required training and performance of 
     active duty.


                                overview

       Increasingly, members of the National Guard and Reserve are 
     being called upon to augment the active duty forces in the 
     post-Cold War world. This is a sound use of resources and an 
     integral part of our national military strategy. More 
     recently, Reserve component members have responded to the 
     call in Operation RESTORE HOPE in Somalia, Operation UPHOLD 
     DEMOCRACY in Haiti, and Operation JOINT ENDEAVOR/JOINT GUARD 
     in Bosnia.
       Previous Congresses have viewed legislation that would 
     provide incentives such as tax expenditures as having a fixed 
     and recurring budgetary effect. A number of methods could 
     resolve such a problem.


                               background

       Generally, members of the Reserve components (both National 
     Guard and Reserve members) are required to attend one weekend 
     of inactive duty training per month and 14 days of active 
     duty training annually. Over and above this training, members 
     are often required to participate in mobilization training, 
     formal schools, and special training. Additionally, 
     many Reservists are called upon to provide PERSTEMPO 
     relief (reducing the active duty Service members time away 
     from home station). For some individuals, this may exceed 
     the normal Reserve participation requirements. Some 
     Reserve members, who support specific weapons platforms, 
     are actually spending up to 180 days a year on military 
     duty. This is compounded by involuntary call-ups to 
     support missions such as Operation DESERT STORM and JOINT 
     ENDEAVOR, which required the use of the Reserve 
     components.
       In addition to this busy Reserve schedule, the vast 
     majority of Reserve component (RC)

[[Page S11200]]

     members are employed full-time in civilian occupations. So, 
     not only are RC members working full-time in the civilian 
     community, they are meeting their Reserve obligation, which 
     has substantially increased beyond the minimum 38 days a year 
     prescribed by law.
       This ``part-time'' Reserve obligation is substantially 
     different from any other part-time activity in which most 
     employees participate. They may be involuntarily called to 
     active duty in times of national emergencies. Although 
     efforts are made to reduce any conflict these absences may 
     cause, some conflict is unavoidable. Title 37 U.S.C. section 
     1008(b) mandates that each Quadrennial Review of Military 
     Compensation (QRMC) conduct ``a complete review of the 
     principles and concepts of the compensation system for 
     members of the uniformed services.'' The Sixth QRMC stated 
     that conflicts between RC members and their full-time 
     civilian employers account for nearly one-third of all 
     personnel losses incurred by the Reserve components.


                           demonstrated need

                           Employer concerns

       From an employer's viewpoint, unscheduled absences create a 
     variety of problems.
       While Reservists repeatedly demonstrate that their military 
     training and experience benefit their civilian employers, 
     budget-minded employers must also consider the impact of 
     unexpected long-term absences on their businesses. positive 
     approach to the pressures caused by unplanned employee 
     absences than simply enforcing Reservists rights.

                     Department of Defense concerns

       Trained and equipped members of the National Guard and 
     Reserve are an integral part of the national military 
     strategy. With a smaller active duty force, the Department is 
     maximizing all available resources to meet mission 
     requirements. This has increased the day to day use of the 
     Reserve components. There are substantial economic benefits 
     to the government to use the Reserve components as they cost 
     the government less to maintain--anywhere from 25% to 75% of 
     the cost of their active duty counterparts. This is part of 
     the rationale for the dramatic shift of missions and force 
     structure from the active to the reserve forces. It is the 
     nation's advantage, therefore, to use its Reserve components.
       Retention of RC members becomes critical. It is in the 
     government's best interest to keep well-trained individuals 
     in the military, rather than incurring the additional 
     training costs (roughly $26,000 per new recruit). The train-
     up time associated with recruiting new individuals into the 
     force is also considerable. In spite of our efforts to 
     provide a benefits package that makes continued Reserve 
     service an attractive proposition, employer conflict is often 
     cited as the number one reason why individuals decide to 
     leave Reserve component military service.


                     department of defense efforts

       The DoD has undertaken several initiatives to reduce 
     conflicts between Reservists and their employees. Since 1970, 
     the DoD has developed an aggressive program to encourage 
     employer support. The National Committee for Employer Support 
     of the Guard and Reserve (NCESGR) is an agency within the 
     Office of the Assistant Secretary of Defense for Reserve 
     Affairs that promotes cooperation and understanding between 
     RC members and their civilian employers. This program has 
     grown from several hundred employers and professional and 
     labor organizations to more than 3000 community leaders 
     nationwide. Despite these efforts, the Sixth QRMC stated that 
     10 to 20 percent of RC members continue to experience 
     significant employment-related conflicts.
       In an effort to protect Reserve employees, the 103rd 
     Congress passed the Uniformed Services Employment and 
     Reemployment Rights Act (USERRA). This legislation protects 
     ``non-career service members'' from job discrimination based 
     on Uniformed Service. USERRA has simplified statutory 
     employment protections and provided a system of local 
     arbitration for individual cases. While protecting the 
     employee, USERRA does not, however, address any adverse 
     effects Reserve service may impose upon employers. Employers 
     are required to provide seven basic entitlements by statute: 
     prompt reinstatement, status, accrued seniority, health 
     insurance coverage, training/retraining, special protections, 
     and other non-seniority benefits.
       Despite these efforts, the major employer disincentive to 
     encouraging employee participation in the Reserve components 
     is the additional costs and reduced profits stemming from 
     Reserve participation.


                     previous legislative proposals

       Recognizing the substantial role that employee attitudes 
     and practices have on Reserve readiness, legislative 
     proposals granting a monetary incentive (in the form of a tax 
     credit) to employers of National Guard and Reserve members 
     have been introduced several times, the most recently in the 
     103rd Congress. The Department understands that there may be 
     other methods to soften the employer's burden. The main 
     points of the most recent legislative proposals are outlined 
     below.

                       Summary of past proposals

       DoD 100-49 (100th Congress): Credit and deduction; 20 
     percent of amount paid and 10 percent of amount unpaid; any 
     training; nonrefundable; and annual maximum of $2000 per 
     member.
       H.R. 71 (103rd Congress): 50 percent of amount paid and 10 
     percent of amount unpaid of actual compensation paid when 
     employee was performing qualified active duty; annual maximum 
     of $2000 per member; and no credit for employee not scheduled 
     to work.
       Additionally, the Sixth QRMC made the following 
     recommendations:
       Nonrefundable credit of 50% paid to Reservist on military 
     leave and 10% credit for amount unpaid;
       Include credit for self-employed individuals; and
       Certification of Veterans' Reemployment Rights compliance.


                           draft legislation

       The Department has developed draft legislation, as a 
     drafting service, for a tax credit program for employers of 
     Ready Reservists and self-employed Reservists as required by 
     section 1232 of the National Defense Authorization Act for 
     Fiscal Year 1997. Because of associated costs in the form of 
     federal tax receipt losses for such a program, neither the 
     Department of Defense nor the Administration support 
     submission of the legislation at this time. Because section 
     1232 requests the draft legislation, however, the attached 
     draft is submitted as a drafting service pursuant to 
     paragraph 7i, Office of Management and Budget Circular A-19, 
     dated September 20, 1979.


                               conclusion

       Assistance to employers who support National Guard and 
     Reserve participation by their employees could reduce an 
     employer's costs associated with employee absence due to 
     their participation in the National Guard and Reserve on 
     contingency operations. The Department understands the 
     loyalty of the employers burdened with the costly and 
     unanticipated absences of their Reserve employees. We salute 
     such employers and seek their continued support. Tax or other 
     incentives for employers might help to ameliorate some of 
     their problems. Any such plan, of course, must compete for 
     resources in the ever shrinking availability of Federal 
     programs.

  Ms. LANDRIEU. I will reserve the remainder of my time.
  The PRESIDING OFFICER. Who yields time? If no one yields time, the 
time not used will be equally divided.
  The Senator from Oklahoma.
  Mr. NICKLES. I yield myself 5 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. NICKLES. Mr. President, I want to make a couple of comments on 
the bill and a couple of comments on the amendment which has been 
discussed by Senator Landrieu and Senator Boxer.
  On the bill itself, let me just say, again, I want to compliment 
Senator Grassley and Senator Baucus, and, frankly, all the conferees, 
for their work on this bill. There was a lot of work that went in on 
this bill. This bill has a lot of good provisions, and in this 
Senator's opinion it has a lot of bad provisions. It has a lot of tax 
cuts, and it has a lot of tax increases. So you have to kind of weigh 
the pluses and the minuses. The plus is we are going to be WTO 
compliant and get away from these enormous fees that are on our 
exports, taxes that are on our exports that make our exports less 
competitive. It is a 12-percent tax right now, that goes to 17 percent 
by next March. We don't need a trade war with Europe.
  I remember talking to Chancellor Helmut Kohl when they were pushing 
the European Union. I said: I am a little concerned about the European 
Union becoming more protectionist. He assured me that is not the case. 
But, frankly, the European Union is becoming more protectionist. We 
don't need a trade war. They don't need a trade war, and we don't need 
a trade war. So it is necessary for us to pass a bill to be compliant. 
I don't want to give the World Trade Organization too much of a blank 
check, but it is important that export subsidies not be egregious. They 
have determined in the past FSC/ETI was; the foreign sales corporation 
was. So we repealed that in this bill.
  We are replacing it with a tax cut for manufacturers. We defined 
``manufacturers'' very broadly. We didn't give a corporate tax cut for 
corporations that are in the services, financial services or other 
services. I object to that. I think that is a mistake. I used to be a 
manufacturer, so if I went back into manufacturing I guess I should say 
this is great because you are going to reduce my income tax by 10 
percent in about 7 years, 6 or 7 years. So maybe I should be happy. But 
I just look at the complexity of it, trying to determine what portion 
of income is manufacturing and what portion is financial or other 
services, and I can see it is going to be very confusing.

[[Page S11201]]

  For example, in the bill we defined construction as manufacturing. So 
if you had a contractor who was working in construction, their tax rate 
would be 32 percent in a few years. If they also do service work, that 
work will be taxed at 35 percent, i.e., a plumbing contractor who is 
building new units is going to be taxed at 32 percent. If he is doing a 
service, replacing your plumbing, that would be taxed at 35 percent. 
That doesn't make sense. That is what is in this bill.
  Take a big corporation--and they have a lot of accountants and 
lawyers--they will work it out. But General Electric, they have big 
manufacturing. Those units will be taxed at 32 percent, but they are 
probably bigger in financial services and other services. That will be 
taxed at 35 percent. So they are going to have to allocate resources 
and expenses to whichever category they belong. I find that to be far 
too confusing and will cause a lot of compliance problems. It is 
probably more trouble than it is worth.
  Canada had a differential rate for manufacturing for about 20 years, 
and they repealed it. My guess and prediction is that Congress will 
come back and have to fix this as well because the differential rate is 
not worth it, and we should have a uniform corporate rate.

  I tried that. Senator Kyl tried that. I compliment my colleague, 
Senator Kyl. We were not successful in convincing our colleagues, House 
or Senate, in doing it. That being said, we tried our best. But it is 
still important for us to pass this bill, and we and others will be 
trying in the future, I am sure. I hope in the administration, when 
they do a comprehensive tax reform proposal, they will come up with a 
uniform corporate rate. I bet they will, and I bet any commission or 
group that says we need tax overhaul, simplification, they will come up 
with a uniform corporate rate. It only makes sense. This proposal does 
not, this differential rate.
  But we are not going to be able to fix that now, and we can't fix it 
in the next 3 months, not with the current makeup. So I urge our 
colleagues to vote for it.
  I heard a couple of our colleagues say this provision Senator 
Landrieu was talking about was stripped in the conference. That is not 
correct. Not one member of the conference--we have 23 Senate conferees, 
and not one person raised this in an individual amendment. I will say 
all conferees had amendments that we wanted. Some were accepted and 
some were not accepted. But to be accepted, you had to raise the 
amendment. You had to fight for the amendment. You had to have it 
offered. I think this particular amendment was offered in a large group 
of 10 or 12 amendments. The House did not concur. That didn't mean it 
was stripped out in conference. There were hundreds of amendments that 
were proposed by the Senate, not agreed to by the House, or vice versa. 
That is the makeup of a conference. So I want to make sure people 
understand that.
  On the substance of the bill, I heard it was supported by 100 percent 
of the Congress. It passed by a voice vote. It was not supported by 
this Senator. On the substance of it, I am not sure that we should give 
reservists and guardsmen serving in the trenches with Active-Duty--give 
them $20,000 more or $15,000 more in pay from the Government. That is 
what the essence of the proposal was.
  It says we will give a credit to employers for keeping them whole. 
But think about it. If you have a guardsman driving a truck doing the 
same thing an Active-Duty person is doing, should they be paid $20,000 
more for doing the exact same job? I am not sure that makes sense. I do 
know, if you are going to do it--Mr. President, I yield myself an 
additional 2 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. NICKLES. If we are going to do it, we should not do it through 
the Tax Code. I believe it should be done through the Armed Services 
Committee. I have great respect for Chairman Warner and Senator Levin. 
Let them have hearings on it. Let them decide if there should be 
greater incentives for Guard and Reserve. If they believe it is 
necessary, that is the way it should be done. The money should be 
appropriated in the Appropriations Committee. Chairman Stevens, head of 
the DOD subcommittee--they should be making these decisions to keep a 
proper balance between Reserve and Active-Duty.
  I happen to be a former guardsman. I support the Guard. But I don't 
think they should be paid through a tax credit that may funnel to them 
or may not funnel to them. I don't think that is good policy. If they 
are to be paid, they should be paid by the Government and they should 
be paid on a monthly basis by the Government and their benefits should 
be given by the Government, not through a refundable tax credit that 
they may or may not receive down the road.

  We sometimes pass amendments by voice vote to expedite passage. We 
passed the sense-of-the-Senate amendment by voice vote, and I 
compliment the authors. But I would have voted no. Just because 
something passes by voice doesn't mean every Senator concurs. I did not 
and still do not agree with this amendment.
  I do agree with one portion of it, and I compliment my colleague from 
Louisiana. We worked to make something acceptable. Legislation is the 
art of compromise. We compromised on one thing. One section is let's 
have GAO do a study about what kind of compensation we need for Guard 
and Reserve: How does it balance with the Regular Army? A tax credit, 
would this be the proper mix? So I think we need some additional study 
on it, and we will do that. I think we improved her amendment 
substantially, we changed it substantially, and I compliment her as 
well.
  Again, on final passage, I think the underlying product leaves a lot 
to be desired, but I still think it is an improvement. We need to fix 
the WTO problem, and I urge our colleagues to vote in favor of the 
conference report. I yield the floor.
  The PRESIDING OFFICER. Who yields time? The Senator from Louisiana.
  Ms. LANDRIEU. Under the previous order, I think I still have----
  The PRESIDING OFFICER. The Senator has just under 11 minutes.
  Ms. LANDRIEU. Mr. President, I want to take the time to thank the 
Senator from Oklahoma. I know he has some concerns about some of the 
details of this amendment. But because of his work and because of other 
Senators who worked through the weekend on this, we have put a very 
solid, substantial, largely intact amendment in place that is going to 
be passed to the House. Now it will be in the hands of the House 
leadership to decide if they want to pass this amendment, which is a 
tax bill specifically for the Guard and Reserve. The underlying bill 
actually will allow the Guard and Reserve a tax benefit to remove the 
10-percent penalty if they would want to take money out of their IRA to 
help them through tough financial times.
  According to the hundreds and thousands of e-mails that we have 
received, myself and many others, we know that our Guard and Reserve 
are having a tough time.
  I would just like to read this for the Record. I know the Senator 
himself has received notices like this.
  This is from--Janice is her name. I will find out where she is from 
in a moment. She writes,

       Senator Landrieu, I have 3 nephews and 2 nieces that are in 
     our National Guard and they are being sent over to Iraq. I am 
     so angry right now that I hope that I don't have to see 
     others go to this war. But let me just say that my nephews 
     and nieces have left behind 11 children without health 
     coverage. I am their aunt and my husband is their uncle. 
     We are taking care of these three children. It is hard for 
     us. We are tired living on a fixed income.

  This is what this amendment is all about--taking on the burden of 
having the Guard and Reserve on the front line, and paying those 
paychecks. Yes, it helps the soldier on the front line, but mostly it 
helps the families back home. That is what the Senator was able to help 
us come to terms with. That is what the Senate is sending over to the 
House--supporting this effort on the House side.
  I look forward to working with them when we come back in, perhaps 
after the election--working with the Senators who have spoken up over 
the weekend and others who were not able to speak up and sent letters 
in support and cosponsored this effort, Republicans and Democrats, to 
say let us craft a tax provision, or several tax provisions, that will 
help our Guard

[[Page S11202]]

and Reserve, or let us dig a little deeper in the Defense bill to give 
them the support they need, whether it is health care, whether it is 
paycheck protection, whether it is other support services, so they can 
do the job better we are asking them to do.
  Frankly, I don't think they could do it any better, but they could do 
it with more peace of mind knowing their families are able to pay the 
bills, are able to keep the roofs over their heads, are able to put 
gasoline in their automobiles, and pay the extra childcare expenses.
  I know other Senators feel as strongly as I do--everyone in this 
Chamber. But let us not only feel strongly but remember them when we 
pass these bills. Again, we don't have to remember them only on the 
Defense bill. Then we end up having to make tough choices and ask the 
military, Do you want a rifle, or a helmet, or health coverage, or to 
send a whole paycheck to your family? I don't think our men and women 
in uniform should be asked to make those decisions, not when we are 
giving $137 billion in tax cuts to everybody else. That is my point.
  I know people may disagree. Maybe this vehicle was the right one. But 
because we were told 3 years ago there was no money in the Defense bill 
to do this, what option were we left with? We asked it be included. It 
was included when it left the Senate.
  I am proud of that. Now we have a chance again sometime in the near 
future to get this fixed. I am proud of the effort.
  I reserve the remainder of my time.
  The PRESIDING OFFICER. Who yields time?
  Mr. GRASSLEY. Mr. President, I yield 4 minutes to the Senator from 
Texas.
  The PRESIDING OFFICER. The Senator from Texas.
  Mrs. HUTCHISON. Thank you, Mr. President. I thank the Senator from 
Iowa, the distinguished chairman of the committee. I also thank the 
chairman and ranking member of the Finance Committee for working with 
the House to produce an excellent bill which will reduce taxes on more 
people in our country and, therefore, help this economy to continue the 
recovery.
  I am very pleased. I have heard the debate on the tax credit for 
employers for Guard and Reserve units. I know all of us will be working 
to try to assure that this is done. Our Guard and Reserve units have 
stepped up to the plate.
  I have been to Iraq. I have been to Afghanistan. I have visited with 
Guard troops who are on their second and third call who didn't expect 
this kind of activity when they signed up. But they are there doing 
their job, and doing a great job.
  On the other hand, the people at home are, too. The employers are, 
too. The families are, too. They are sacrificing as well. I think help 
for families, help for the men and women on the ground in Iraq and 
Afghanistan and other places, and help for the employers is certainly 
something we should do in the right way.
  I am very pleased we are going to continue to work on this issue. We 
need to do everything we can to support our young men and women in the 
field and the people who are supporting them at home.
  I will never forget when I was visiting a base in Saudi Arabia and 
asked one of the young guardsmen what was their biggest problem, 
thinking he was going to say something about his tour of duty, or 
something on the ground there. He said, My biggest problem is my wife 
can't get a pediatrician for our child at home who is having heart 
problems. I said we can't let this happen. We have to make sure we are 
giving them all the support they need.
  This is a good bill. It is a bill that is going to help our 
manufacturers in this country compete on a level playing field.
  A ruling by the World Trade Organization found our existing extra-
territorial income tax regime was prohibited under an international 
treaty. Therefore, the European Union imposed retaliatory sanctions on 
a variety of United States products in March of this year. These 
tariffs have increased every month we have not acted. They are now at 
12 percent. A tariff like that can be the difference between whether an 
American product can be purchased overseas, whether it gets in and can 
compete on a level playing field.
  We will restructure our Tax Code for businesses in order to replace 
the ETI and end the confiscatory tariffs that are hurting manufacturers 
in this country.
  At a time when our country is losing manufacturing jobs, we talk 
about outsourcing every day. We have to act to give our manufacturers 
every possible advantage we can to be competitive with Europe. That is 
what the heart of this bill is. It is very important for jobs in our 
country. It is very important for the manufacturers who are trying to 
keep jobs in our country to be able to have that level playing field. I 
am very pleased about that.
  In addition, there is a broad range of manufacturers who are helped, 
including certain oil and gas producers. We know with the prices of oil 
and gas so high right now that we need to encourage our producers to be 
out there cutting costs wherever possible, and hopefully this will 
allow them to be able to produce more in our country and create those 
manufacturing jobs.
  Lastly, there is a sales tax deduction that is very important to my 
State and six other States in our country. Some States in America do 
not have a State income tax. That doesn't mean our State taxpayers 
aren't paying taxes. We pay very high, substantial sales taxes and we 
pay high property taxes. Some of those are going up. For us not to have 
a deduction for our State sales taxes on our Federal income taxes like 
those who pay an income tax do is unfair.
  That inequity is eliminated in this bill for the next 2 years. We 
will be able now to have equity in our Tax Code. We will now be able to 
give those in a non-income tax State the ability to deduct sales taxes 
just as those who pay income taxes are able to do. In fact, it allows 
people in an income-tax State to choose to deduct sales taxes instead 
of income taxes if they want to. It is for everyone.
  But in reality, the States that have been shortchanged are the ones 
that choose to tax with sales tax and rather than income tax. That 
inequity is going to go away in this bill. It will mean $300 on average 
for every family in Texas. That is going to be welcome news for people 
who have had to live with this inequity since 1986.
  Thank you. I urge adoption of this very important bill.
  Mr. LOTT. Mr. President, I thank the distinguished chairman of the 
Finance Committee for yielding me this time.
  When we look back on the results of this year, the legislation that 
had the greatest impact, this will be the bill we will refer to and 
remember. This is the most important achievement of this session of 
Congress.
  I give credit to the chairman of the Finance Committee, and the 
ranking Member, Senator Baucus of Montana. They were diligent and hung 
in there. They were determined we would get this result. Yes, we had to 
go a little overtime, but here we are. We will get it done today. They 
deserve an awful lot of credit.
  Also we should give credit to Congressman Thomas, the chairman of the 
Ways and Means Committee in the House. This is very complicated 
legislation, but he worked with these two Senators and they produced a 
very important product.
  I could not fathom the idea that we might leave here and not complete 
legislation that will stop the fees that were being put on American 
products as a result of the WTO ruling on our domestic tax provisions. 
That import fee was going up 1 percent a month. It was up to 12 percent 
and going to 13 percent. How in the world could we not complete 
legislation that would deal with this alleged subsidy and take that 
money that was saved by eliminating some provisions and move it into 
other areas in manufacturing and small business in a way to create 
jobs? It was important we complete this legislation. We got it done. We 
will comply with the WTO ruling, but we will take that money that was 
going into the questionable provisions and move it into areas that will 
create jobs for the American people. We will keep more jobs here. This 
is a very significant achievement.
  At long last we repeal the 4.3-cent-per-gallon diesel fuel tax that 
railroads and barges have had to pay. This is not

[[Page S11203]]

about one railroad or just a barge company; all the other parts of the 
economy that have been paying that 4.3-cent-per-gallon tax had been 
released from having to pay it or send it to an infrastructure trust 
fund. This was a question of fairness. Once again, it is in an area 
where we can create more jobs. The railroad industry is saying in the 
next few months they will create thousands of new jobs. This is a 
critical provision.
  I thank Senator Grassley particularly for working with me to make 
sure this provision to repeal that tax over a period of 3 years would 
be included in this bill. The bill also improves the tax treatment for 
shipbuilding. Unfortunately, shipbuilding companies have to pay the tax 
on the entire amount of a ship even though they do not get the money 
sometimes for 3 or 4 years down the road. Incremental funding is how 
you should pay your taxes.
  There are important timber provisions in the legislation. We should 
encourage the planting of more trees as well as responsible harvesting 
of trees. There are three different provisions that will help the 
timber industry in this country.
  It also includes income averaging for farmers and fishermen. Others 
have that opportunity; why shouldn't farmers and fishermen? This will 
be very helpful.
  The tobacco buyout provision is included. This is a provision I 
opposed, and I do oppose it now, but the conferees, working with the 
Senators from the States that were affected, came up with the best 
possible of the solutions they could have reached; therefore, I was 
willing to support what they came up with because I thought it was as 
fair as you could get for all involved.
  We have tax incentives for United States-flag shipping companies, 
short-line railroads, energy provisions that will produce more energy, 
critical improvements for small businesses, small subchapter S reform 
and expensing.
  This is a big achievement. I commend those involved and tell the 
American people this will help the economy of our country.
  Mr. LEVIN. Mr. President, I voted for the Senate version of this FSC/
ETI legislation. While I had a number of misgivings about that bill, 
those were outweighed by my concerns over the crisis in our Nation's 
manufacturing sector and the sanctions being imposed as a result of the 
FSC/ETI regime. However, I will oppose this conference report. It fails 
to include too many of the important provisions from the Senate bill 
and has a number of added bad provisions.
  The Senate bill we passed in May did a lot to crack down on tax 
dodgers, but the House Republican leadership, with pressure from the 
administration, has refused to include most of these provisions in this 
legislation. While men and women in our military are putting their 
lives on the line every day for America, too many corporations are 
stiffing our country by dodging their taxes. They are depriving our 
country of funds needed to strengthen homeland security, support our 
troops, care for the sick, educate kids, and more. To make things fair 
for our U.S. manufacturers that play by the rules, we need to close 
loopholes that allow the tax dodging corporations to avoid paying their 
fair share.
  One of the most glaring of these omissions from this legislation is 
the provision passed by the Senate numerous times that would have 
required business transactions to have actual ``Economic Substance'' in 
order to receive tax benefits. Refusing to include this anti-abuse tool 
means that tax dodgers will still be able to escape paying their fair 
share by using phony transactions that have no business purpose other 
than tax avoidance. It also means we miss the opportunity to collect 
from these tax dodgers a much needed $15 billion over 10 years.
  Another distressing decision by the House Republicans is the slashing 
of the penalty imposed on those who design and peddle abusive tax 
shelters. These abusive shelters are undermining the integrity of our 
tax system, robbing the Treasury of tens of billions of dollars a year, 
and shifting the tax burden from high-income corporations and 
individuals onto the backs of the middle class. The amendment Senator 
Coleman and I offered, which became part of the Senate bill, set the 
penalty on an abusive tax shelter promoter at 100 percent of the fees 
earned from the abusive shelter. This penalty would have ensured that 
the abusive tax shelter hucksters would not get to keep a single penny 
of their ill-gotten gains. But that provision was cut in half in this 
conference report, setting the penalty at 50 percent of the fees 
earned, meaning the promoters of abusive shelters get to keep half of 
their gain.
  Why should anyone who pushes an illegal tax shelter that robs our 
Treasury of much needed revenues get to keep half of his ill-gotten 
gains? And what deterrent effect is created by a penalty that allows 
promoters to keep half of their fees if caught, and all of them if they 
are not? This half-hearted penalty is not tough enough to do the job 
that needs to be done.
  And this conference report completely leaves out yet another Senate 
provision that is critical in the fight against abusive tax shelters. 
In addition to those who are considered ``promoters'' of these abusive 
shelters, there are the professional firms--the law firms, banks, and 
investment advisors--that aid and abet the use of abusive tax shelters 
and enable taxpayers to carry out these abusive tax schemes. For 
example, a law firm is often asked to write an ``opinion letter'' to 
help taxpayers head off IRS questioning and fines that they might 
otherwise confront for using an abusive shelter. Under current law, 
these aiders and abetters face a penalty of only $1,000, or $10,000 if 
the offender is a corporation. This penalty is a joke. It provides no 
deterrent at all, when law firms are getting $50,000 for each of these 
cookie-cutter opinion letters. A $1,000 fine is like a parking ticket 
for raking in millions illegally. With the Levin-Coleman amendment, our 
Senate bill upped this fine to 100 percent of the gross income derived 
from the prohibited activity. Unfortunately, it appears the House 
conferees thought it was ok to let these aiders and abetters continue 
to profit handsomely from their wrongdoing instead attempting to deter 
this behavior that robs tens of billions of dollars from the U.S. 
Treasury.
  Another gaping tax loophole that this conference report weakened is 
the unfairness to the taxpayers that arises when companies renounce 
their citizenship, going through phony reincorporations by establishing 
a shell headquarters on paper in Bermuda or other tax-haven countries 
when, in reality, their primary offices and production or service 
facilities remain right here in the U.S. These corporate expatriates 
get all the benefits of being U.S. companies without contributing their 
fair share of the bill.
  The Senate FSC/ETI bill had a provision that would have shut down a 
significant portion of this loophole. I have long preferred an even 
stronger fix, such as the one Senator Reid of Nevada and I put forward 
in S. 384, the Corporate Patriot Enforcement Act of 2003. But at least 
the provision passed by the Senate went much further than the one 
before us. The provision included in the conference report lets all the 
companies that used this gimmick prior to March of 2003 continue to 
avoid the taxes that their American-based competitors face. The Senate 
version would have cracked down on these tax dodgers to the tune of 
more than $3.1 billion over 10 years while this weak provision raises 
only $830 million. It is shocking that the House Republican conferees 
were willing to leave $2.3 billion in dodged taxes on the table when 
that money could have gone to implement Senator Landrieu's amendment 
that would offer real help to our activated guardsmen and reservists.
  I understand that during the conference negotiations, the Senate 
conferees offered an amendment that would have reinstated many of these 
important curbs on tax dodges. The amendment would have raised an 
additional $40 billion over 10 years. But, once again the House GOP 
refused to accept these anti-abuse measures, and the amendment was 
defeated on a party line vote.
  The problems with this legislation are not limited to the fact that 
we are letting tax dodgers off way too easy. At a time when many 
corporations pay no tax at all and corporate tax revenues are at 
historic lows, this bill is full of special interest tax breaks. It 
also includes new tax benefits for the offshore operations of U.S. 
multinational companies, such as allowing companies

[[Page S11204]]

with earnings held overseas to bring them back at a tax rate lower than 
the rate paid on domestic profits. The cost of these international 
provisions is estimated at $43 billion over 10 years, but this estimate 
is misleadingly low because some of these provisions are ``temporary'' 
or do not kick in until later years. While I support incentives to 
create and support U.S.-based manufacturing jobs, I am concerned that 
some of these international provisions will provide an incentive for 
companies to keep resources, facilities, and employees abroad, and 
subsidize the movement of jobs and resources overseas.
  Furthermore, while the official cost estimate of this bill says that 
it is essentially budget neutral over the next 10 years, this paints a 
deceptively optimistic picture. Throughout the measure there are many 
gimmicks to keep the numbers even, like phasing in some of the tax cuts 
and setting up others as ``temporary.'' According to the Center on 
Budget and Policy Priorities, just extending the ``temporary'' 
provisions would reduce revenues by nearly $80 billion over the next 10 
years.
  I am also troubled by the elimination of provisions pertaining to 
regulation of tobacco by the Food and Drug Administration, FDA. 
According to a recent report by the Surgeon General, tobacco 
consumption by America's youth is one of our country's leading health 
risks. The Senate passed strong bipartisan provisions that would deal 
with both the FDA and tobacco regulation: provisions that would give 
the FDA sweeping authority to prevent overt marketing of tobacco 
products to children under the age of 18; provisions that would allow 
the FDA to regulate prior approval of statements on tobacco products; 
and provisions that allow the FDA to restrict the sale, distribution 
and promotion of tobacco if they are deemed to be a danger to public 
health. These provisions are essential to protecting our children from 
the dangers of smoking, but the House conferees have killed any chance 
in the near future to give the FDA the tools it needs in this critical 
area.
  I am also troubled by the exclusion of Senator Harkin's overtime 
amendment that would keep essential overtime protections for middle 
class working Americans. And finally, it seems unfathomable that in 
this $137 billion bill the conference committee would leave out the 
Senate provision sponsored by Senator Landrieu that would have helped 
the large number of our activated Guardsmen and Reservists who face a 
reduction in their salaries during activation by assisting those 
civilian employers who continue to pay these employees after they have 
been called up.
  While this legislation includes some provisions which I support, 
overall it falls far short of the bill which the Senate sent to 
conference, and I cannot support it.
  Mr. FEINGOLD. Mr. President, I will support this conference report, 
but I do so with a great deal of reluctance.
  One of the more frequently used phrases voiced on the Senate floor is 
that we must not let the perfect be the enemy of the good. That 
hackneyed expression is flung about when the body is asked to support a 
measure that may not be everything that it should be. It would be an 
overstatement to suggest that this measure even rises to that level. 
This bill falls far short of being good, but it is necessary. At its 
most fundamental, it meets two essential tests. First, it repeals the 
Foreign Sales Corporation/Extra Territorial Income, USC/ELI, tax 
provisions that have resulted in the imposition of increasingly 
punitive tariffs on American-made products, including products made in 
Wisconsin.
  Second, it provides a needed tax break for domestic manufacturers, a 
group that has been especially hard hit in recent years. If this 
absolutely vital sector is to have a chance to get back on its feet, 
providing this tax incentive is essential.
  I regret that much of the rest of this bill is wholly unmerited. 
There are some exceptions, of course, but if Congress had focused its 
efforts on just those two essential tasks--repealing USC/ETI, and 
providing some tax incentives for domestic manufacturers--the bill 
would have been much better.
  I was pleased to cosponsor S. 970, introduced by Senator Hollings, 
which was just such a bill. And I was encouraged when the Senator from 
Iowa, Mr. Grassley, and the Senator from Montana, Mr. Baucus, offered a 
proposal based on S. 970, along with some sensible improvements.
  But as this measure has worked its way through the legislative 
process, it has only degenerated. Dozens of special interests have 
nosed their way into this bill, and have taken advantage of what is 
essentially a ``must-pass'' measure. I can only say that I am glad we 
are passing this measure now, before it gets any worse.
  There are many candidates for worst tax policy in this measure, but 
at the very top of that list must be those provisions that actually 
provide a tax incentive for those corporations that move their 
operations overseas. Such a policy is never justified, but in the 
current economic climate it is particularly hurtful and 
counterproductive. During the debate on this measure in the Senate, I 
was pleased to support the Senator from North Dakota, Mr. Dorgan, in 
his effort to eliminate one of these perverse incentives and I was 
pleased to support an amendment offered by the Senator from Louisiana, 
Mr. Breaux, and the Senator from California, Mrs. Feinstein, which was 
similarly targeted. I regret the body rejected those sensible 
proposals.

  I will vote for this bill with the hope that its net effect will be 
to improve the climate for domestic manufacturers. But we should remove 
all doubt by acting at the next opportunity to close down the tax 
provisions in this bill that provide incentives for corporations to 
move facilities overseas.
  On this same subject I was disappointed that conferees stripped 
Senate provisions relating to the disturbing trend of the outsourcing 
of American jobs. These provisions would have prohibited federal 
funding from being used to support the outsourcing of goods and 
services contracts that are entered into by the Federal government, or 
by the States if those contracts are being supported by Federal 
dollars.
  With this bill, Congress had an opportunity to support American 
workers by ensuring that taxpayer money is not used to encourage 
companies to relocate American jobs. With the deletion of this 
outsourcing provision, we missed an opportunity for the Federal 
Government to set a strong example of buying its goods and services 
from American companies that use American workers.
  I also regret that the administration was again successful in 
blocking language included in the Senate-passed bill that would have 
reversed the harmful provisions of the Department of Labor's new 
overtime rule. Despite repeated bipartisan opposition to this rule in 
both Houses of Congress, members of the conference committee stripped 
this provision, which would have prevented millions of workers from 
losing their overtime benefits under the Bush administration's rule.
  Finally, let me briefly mention the energy tax provisions. I remain 
committed to supporting legislation to encourage alternative energy 
research and production. With respect to overall energy policy, we must 
develop cleaner, more efficient energy sources and promote 
conservation.
  During Senate debate on this bill, I voted for the amendment offered 
by the senior Senator from Arizona, Mr. McCain, to strike the energy 
tax title to the Senate version because the bill did not extend the 
energy tax credits in a more fiscally responsible way. I support many 
of the tax credits in the conference report, such as the volumetric 
ethanol excise tax credit fix and provisions that would specifically 
benefit rural cooperatives and small renewable fuel producers. I also 
support provisions that would result in the increased supply of 
renewable fuels like biodiesel and ethanol.
  I remain concerned, however, about the fiscal and environmental costs 
of this section of the bill. The oil and gas incentives in the bill, 
for example, would cost taxpayers billions and allow companies to 
deduct the costs of mineral exploration and marginal oil wells. The 
conference report still includes a ``nonconventional fuel credit'' to 
the synfuels industry and coalbed methane industry, which could cost 
the taxpayers over $2.5 billion. The bill also opens a loophole for 
energy companies to take advantage of a manufacturing

[[Page S11205]]

tax credit. The revenues dedicated to these tax expenditures would have 
been better used to relieve the burden of debt we are heaping onto our 
children and grandchildren.
  It is the very need for the central provisions of this bill that has 
invited the kind of abusive provisions we have seen included in it. 
Were this bill something less than absolutely necessary, we could just 
defeat it, and hope for something better down the road.
  But we do need to pass it. We have to stop these trade sanctions, and 
we need to help our manufacturers. For that reason, I will vote for 
this flawed legislation.
  Mrs. FEINSTEIN. Mr. President, I will vote against this FSC/ETI 
conference report and I want to explain why.
  The original purpose of this legislation was simple and clear--to 
bring the United States into compliance with a World Trade 
Organization, WTO, ruling which said that portions of our Federal Tax 
Code run counter to international trade regulations.
  It is critical that we fix this problem, or U.S. companies will face 
increased European tariffs, costing U.S. jobs.
  This conference report, however, goes far beyond the simple 
legislative fix needed to bring the U.S. into compliance with the WTO 
ruling.
  In fact, the cost of bringing the U.S. into compliance with the WTO 
is $49 billion, while the cost of the final bill is $145 billion. The 
difference is $96 billion in benefits to special interests paid for 
with certain revenue fixes that should be used to balance the budget.
  In fact, this bill provides billions of dollars in benefits to 
special interests at a time of unprecedented budget deficits. Let me 
give you a few examples cited in Thursday's Washington Post, 
``Conferees Agree on Corporate Tax Bill'':

       NASCAR racetrack owners get a provision to write off $101 
     million worth of improvements over ten years.
       Foreign gamblers at U.S. horse and dog racing tracks would 
     no longer have to pay taxes on their winnings upfront. This 
     is estimated to be worth $27 million.
       Home Depot would secure a temporary suspension of tariffs 
     it owes for imported Chinese ceiling fans. This is estimated 
     to be worth $44 million.

  At a time when we are facing unprecedented Federal deficits and a 
mounting debt, it is simply unconscionable to approve this giveaway to 
special interests. Although the 10-year cost is offset, these offsets 
could well be used to bring down the deficit.
  Policymakers should be taking steps to reduce the deficit and improve 
the economy, not eroding it further by doling out tax breaks to special 
interests. But one industry was singled out for penalty in this bill. I 
cannot accept that--and that industry happens to be the film industry.
  In fact, this final conference report will cost the motion picture 
industry $5 billion over the next 10 years--because they will have to 
make changes in the way they account for revenues.
  The film industry employs 750,000 people nationwide, and the major 
motion picture studios are publicly owned and pay annual dividends to 
shareholders.
  Rather than allowing the industry to account for its activities on a 
product line-by-product line basis as was done in the Senate bill, this 
conference report means that the industry will have to adopt unified 
accounting.
  For example, the Disney film called The Alamo was produced in the 
United States and did not perform as well as expected.
  Under the final conference report, the losses from The Alamo are 
lumped with all other company revenues--TV, DVD sales, theme parks, 
merchandise, and music. This is known as unified accounting.
  In the Senate version of the bill, Disney would have been able to 
account for this loss within its film division, separate from its other 
divisions. This is known as product line-by-product line accounting.
  If you assume a $50 million loss, requiring unified accounting will 
cost the studio an additional $2.6 million in additional taxes.
  If you assume a $75 million loss, requiring unified accounting will 
cost the studio an additional $3.9 million in additional taxes.
  So the bottom line is that unified accounting will mean that Disney, 
and other entertainment companies, will have to pay significantly more 
in taxes as much as $5 billion over the next 10 years.
  I cannot believe that we would in effect raise taxes on an industry 
that does so much to help our economy.
  This simple accounting change would have significantly helped reduce 
the impact from this legislation.
  But in the end, this provision was stripped from the final conference 
report.
  What is worse are reports that this was not due to the merits of the 
provision, but out of base, political concerns.
  A story in yesterday's edition of Roll Call, ``Studios Take Hit in 
Tax Bill'', asserts that lawmakers stripped the Senate film amendment 
in retribution for the film industry's decision to hire a Democrat--a 
former Cabinet Secretary in fact--to head its trade association.
  Let me quote from the article:
  One GOP Lobbyist for the industry said:

       The Glickman thing is going to cost them. No Republican 
     will fight for the movie industry.

  Another Republican Lobbyist added:

       They were not overly helpful to Republicans, so Republicans 
     don't want to be overly helpful to them.

  Ordinarily, I do not believe much of what I read on many days and so 
there would be reason perhaps to dismiss this.
  But I also know that the word has been put out on K Street that only 
Republicans are welcome as lobbyists so this article takes on new 
credibility.
  This is especially egregious given the fact that the film industry 
was not even involved in the unfair trade practices that led the WTO to 
declare that U.S. international tax rules were unfair.
  I have the opinions of two former U.S. Trade Representatives--one 
Republican and one Democrat--Carla Hills and Mickey Kantor--which make 
the case.
  Carla Hills wrote:

       Having previously served as [U.S. Trade Representative], I 
     would like to share with you my views regarding the 
     consistency of your amendment with applicable trade law The 
     [General Agreement on Tariffs and Trade] does not apply to 
     `audiovisual services' and does not include any general 
     prohibition against export contingent subsides.

  Mickey Kantor wrote:

       Audiovisual services are . . . not within the purview of 
     the WTO FSC/TTI decisions In my view the adoption of [your 
     amendment] . . . would not violate or contravene the WTO 
     rulings in the FSC/ETI case.

  As one can see, two former U.S. Trade Representatives agree that the 
entertainment industry was not involved in the unfair trade practices.
  However, the entertainment industry is being singled out for a tax 
increase in this bill in order to pay for tax cuts going to 
multinational firms that hold their profits overseas in order to avoid 
paying taxes.
  The bill allows many of these companies having profits overseas to 
repatriate these billion at a 5.25 percent tax rate.

  These are the multinational firms which now will be allowed to bring 
those foreign-earned profits back to the United States at one half the 
rate that the poorest American's are required to pay on their income 
under this bill. This is not fair and equal treatment.
  I cannot believe that the other House would utilize political 
vengeance to disadvantage a sector of American business, while so 
advantaging other sectors.
  Another major flaw with this bill is that it removes the Senate 
language permitting long-sought FDA regulation of tobacco. The Senate 
voted overwhelmingly--78 to 15--in favor of a carefully crafted 
amendment to allow FDA regulation of tobacco.
  This amendment linked FDA regulation with a 5-year, $12 billion 
buyout of tobacco growers. Regulatory authority over tobacco would have 
allowed the FDA to begin to reduce the addictive and carcinogenic 
elements of these products. It would have made a difference and, over 
the long run, it, alone, could have saved millions of lives.
  Despite the broad, bipartisan support for this provision, the House 
rejected a proposal by Senator Kennedy to provide an additional $2 
billion for tobacco growers as long as it was linked with FDA 
regulation of tobacco. Even Philip Morris supports FDA regulation of 
tobacco. Let me quote from two letters

[[Page S11206]]

from senior executives from Altria, the parent company of Philip 
Morris.
  Steven Parrish, Senior Vice President, Corporate Affairs, Altria 
Group wrote that the provision on FDA regulation of tobacco ``is the 
result of many difficult choices and compromises by all those involved, 
and it reflects a balance of the perspectives of many stakeholders. We 
believe the bill embraces the core principles that are necessary to 
provide the Food and Drug Administration with comprehensive, meaningful 
and effective regulatory authority over tobacco products.
  Together with our domestic tobacco operating company, Philip Morris 
USA, we enthusiastically support passage of your bill in its 
entirety.''
  John Scruggs, vice president, Government Affairs, Altria Group wrote 
separately that the provision on FDA regulation of tobacco 
``address[es] nearly all'' of the ``issues relating to retailers'' and 
we should ``disregard the strident and unfounded arguments of those who 
refuse to look to the future and the need for change in the tobacco 
industry.''
  Congress had the opportunity to finally allow the FDA to regulate 
tobacco--but it failed to do so. This is deeply disappointing and shows 
the true colors of the House Republicans.
  You may ask, what would FDA regulation of tobacco do to help stop 
smoking and prevent these premature deaths? FDA regulation of tobacco 
would do two important things.
  First, it would control the deceptive and manipulative advertising 
used by cigarette companies. Young people across the country are 
bombarded every day with deceptive advertising and misleading claims 
made by cigarette manufacturers.
  The tobacco industry spends $11 billion on marketing their products. 
Their latest campaign involves cigarettes that come in fruit flavors 
and bright colors to target adolescents and women. The cigarettes are 
given names such as California Dreams, Midnight Madness and Kauai 
Kolada. The cartons are a different shape and size so as to be hidden 
from unsuspecting parents and teachers.

  And the manufacturer describes them by saying: `Each is as enchanting 
and mysterious as the darkest night. And, live in color with California 
Dreams `cigarettes in color' for your individual taste and attitude.' 
This is truly a new low. These slogans, these flavors, and these 
colored wrappers cannot hide the fact that cigarettes kill more than 
400,000 American each year--and that's the second reason that FDA 
regulation is so important.
  FDA regulation, over time, would ratchet down the carcinogenic and 
addicting ingredients of tobacco products. Just think how many fewer 
Americans--young people, old people would avoid the addiction.
  Today, 42 million Americans today are addicted to cigarettes and 
other tobacco products. A number of these will end up with lung disease 
and many of them will die.
  Lung cancer is the number one cancer killer--and the number one cause 
of lung cancer is smoking. Today and every day, 4,000 children under 
the age of 18 will try smoking for the first time, 2,000 of these 
children will become regular smokers, and 1,300 will die prematurely 
because of smoking.
  The bottom line is this: Congress had the opportunity to take a major 
step forward in improving the health of America's children. But the 
Republican members of the House chose the tobacco industry over our 
children--and they should be held accountable for that choice.
  There is one more item that did not make it into this bill, which I 
find deeply troubling. The Senate language to protect overtime rights 
was removed from the bill. This means that millions of American workers 
may very well lose long-guaranteed job overtime protection. This is a 
setback for the American worker.
  There are a number of items contained within this conference report 
that I do support. This bill will provide an expansion of the 
production tax credit for renewable energy including open-loop biomass, 
geothermal energy, and solar energy; a provision to eliminate the 
preferential treatment for ethanol-blended gasoline. Without this 
provision, California would lose $2.7 billion in highway funds over the 
next 5 years; and a provision that removes a business tax deduction for 
the purchase of gas-guzzling SUVs.
  These provisions do not make up for the rest of the bill. I think we 
all would have supported a straight fix to the WTO ruling, but this 
bill goes too far. It fixes the WTO problem, but then it contains all 
these other giveaways.
  So what was a $49 billion problem to solve becomes a $145 billion 
bill. This is just plain wrong. I hope in the future that we can remedy 
some of the shortcomings of this bill, but on balance, this is a deeply 
flawed billed which I simply cannot support.''
  Mr. President, I ask unanimous consent to print in the Record a 
``Roll Call'' article, to which I referred, and three letters dealing 
with different provisions of the FSC/EIT bill.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                   [From the Roll Call, Oct. 7, 2004]

                      Studios Take Hit in Tax Bill

                           (By Brody Mullins)

       Three months after Hollywood slapped the Republican Party 
     by hiring Democrat Dan Glickman to head its Washington trade 
     association, Congressional Republicans sliced more than $1 
     billion in tax credits for movie studios from a far-reaching 
     international tax bill that the House and Senate plan to take 
     up today.
       Though the tax credits for Hollywood were included in a 
     version of the bill approved by the Senate this summer, a 
     Republican-dominated conference committee voted Tuesday 
     evening to leave the provisions on the cutting-room floor.
       Led by Ways and Means Chairman Bill Thomas (Calif.) and 
     Majority Leader Tom DeLay (Texas), House GOPers on the 
     conference committee voted as a bloc to oppose the tax 
     breaks, calling them bad policy and too expensive to be 
     included in the $140 billion bill.
       But other lawmakers, Congressional aides and movie industry 
     lobbyists said Republicans refused to fight for the Senate 
     tax credits in order to punish Hollywood for hiring Glickman, 
     a former House Member from Kansas and secretary of 
     Agriculture under then-President Bill Clinton, to head the 
     Motion Picture Association of America.
       ``The Glickman thing is going to cost them. No Republican 
     will fight for the movie industry,'' said one GOP lobbyist 
     for the industry.
       Another Republican lobbyist added: ``They were not overly 
     helpful to Republicans, so Republicans don't want to be 
     overly helpful to them.''
       Thomas, the chairman of the conference deliberations, 
     declined to comment on the motivation for removing the tax 
     credits for the movie industry.
       ``I don't deal with rumors and unconfirmed reports,'' he 
     said.
       DeLay said he voted against the provision because ``it just 
     cost too much.''
       When asked whether the MPAA's move influenced his vote, 
     DeLay said that employment decisions in the private sector 
     ``don't enter into our consideration. That's the first time I 
     ever thought of Glickman.''
       A spokeswoman for the MPAA declined to comment on the vote.
       Despite DeLay's comments, Glickman was on the minds of 
     other Republican lawmakers in the past few weeks as votes on 
     the tax bill neared, according to Republicans on the Ways and 
     Means Committee.
       Before the vote, Rep. Mark Foley (R-Fla.), a key Hollywood 
     advocate, said he worried that GOP resentment about 
     Glickman's hire could scuttle the tax credits for the 
     studios.
       ``Thomas has said some things. I've heard a lot of 
     grumblings. They have said that they thought that a 
     Republican should have gotten'' the job, Foley said. ``Mr. 
     Thomas has to acquiesce to the Senate language and right now 
     that doesn't look good with the lingering resentment. That's 
     probably a tough sell right now.''
       Foley added that the movie studios ``may get dealt a bad 
     hand, but I'm not sure it's based entirely on Mr. Glickman.''
       Rep. Jim McCrery (La.), a top Republican on the Ways and 
     Means Committee and a member of the conference deliberations 
     on the tax bill, said he did not think Glickman's hire was 
     ``a deciding factor'' in the decision by Republicans to 
     exclude the movie studio tax credits.
       Still, he acknowledged that Republicans on Capitol Hill 
     were upset the MPAA tapped a Democrat for the position.
       ``It's a fact that the Republicans control the Congress and 
     the Ways and Means Committee so it's a good idea to have 
     someone who can communicate with those who are in power,'' 
     McCrery said. ``It's a consideration that any organization 
     hiring a lobbyist should take into account.''
       At issue is an international tax bill being put together on 
     Capitol Hill to replace $50 billion in U.S. export subsidies 
     that have been struck down by the World Trade Organization.
       Current law provides movie studios such as MGM, Universal 
     Studios and 20th Century Fox with about $600 million a year 
     in tax credits to export movies to other countries.
       The tax incentive helped transform the U.S. movie industry 
     into one of the nation's leading exporters, surpassing 
     exports of Boeing's jets and Detroit's autos, according to 
     figures provided to Congress by the movie industry.

[[Page S11207]]

       When the export subsidy was found to be illegal by the WTO, 
     Hollywood figured to be one of the biggest losers. At issue 
     was just how much they would lose.
       The Senate version of the corporate tax bill would retain 
     $350 million annually in export subsidies for the studios. 
     The House bill, authored by Thomas, provided less than $100 
     million per year for the industry.
       In a partisan vote Tuesday evening, Republicans on the 
     conference committee rejected an effort by Sen. Max Baucus 
     (D-Mont.) to include the Senate's credits for the industry.
       Senators on the conference committee voted 14-8 to add the 
     credits, but House Members voted along party lines against 
     the industry.
       A majority vote of both chambers is needed to add 
     amendments to legislation in conference committee.
       Some were quick to point out that Republicans had 
     legitimate policy reasons to vote against the credits.
       Grover Norquist, the president of Americans for Tax Reform, 
     said there were three reasons Republicans voted against the 
     movie industry provisions: ``One, it's bad tax policy because 
     it's industry specific. Two, it's bad tax policy because it 
     subsidizes an industry for signing bad labor contracts and, 
     three, Hollywood has recently expressed contempt for the 
     Republican leadership in the House, Senate and White House.''
       Well before the Glickman hire, Republicans on Capitol Hill 
     have been unhappy with Hollywood and its Washington trade 
     association.
       Since 1990, U.S. movie studios and Hollywood executives 
     have contributed $42 million in political donations to 
     Democrats, while giving just $6 million to the GOP, according 
     to figures from the nonpartisan Center for Responsive 
     Politics.
       After controversial documentary filmmaker Michael Moore 
     began promoting ``Fahrenheit 9/11'' this spring, GOP 
     bitterness against Hollywood spilled over in a closed-door 
     Republican meeting.
       During the meeting, Manzullo complained that the 
     international tax bill being crafted by Thomas and the Ways 
     and Means Committee included expensive tax breaks for the 
     movie studios while small businesses and manufacturers were 
     losing thousands of jobs.
       ``Why should we vote on an international tax reform bill 
     that rewards Hollywood while disadvantaging our nation's 
     manufacturers,'' Rep. Don Manzullo (R-III.) asked in a letter 
     he sent to his colleagues.
       Other Members agreed. Thomas quickly watered down the 
     industry's tax credits and the situation seemed to go away.
       But Hollywood infuriated Congressional Republicans again in 
     early July when the MPAA announced its hire of Glickman.
       Two weeks after Glickman was hired, Sen. Rick Santorum (R-
     Pa.) convened a meeting of top Republicans to discuss the 
     move.
       In the weeks leading up to the tax vote, Republicans 
     continued to whisper about punishing the MPAA. As a result, 
     Glickman has let it be known that he is looking to hire a 
     big-name Republican lobbyist to join him at the MPAA after 
     the November elections.
       In the meantime, supporters of the industry on Capitol 
     Hill, like Foley, hope the whole thing will blow away. 
     ``There may be a few people's noses out of joint, but people 
     get over these things pretty quickly,'' Foley said.
                                  ____



                                              Hills & Company,

                                   Washington, DC, March 19, 2004.
     Hon. Dianne Feinstein,
     U.S. Senate,
     Washington, DC.
       Dear Senator Feinstein: I write with respect to the 
     amendment (S. AMDT. 2690) that you have offered to the FSC-
     ETI legislation (S. 1637) pending in the Senate.
       S. AMDT. 2690 provides, in part, that the present-law ETI 
     rules would remain in place with respect to income from 
     activities treated as ``audiovisual services'' under the 
     General Agreement on Trade in Services (``GATS'').
       Having previously served as USTR, I would like to share 
     with you my views regarding the consistency of your amendment 
     with applicable trade law. The underlying legislation (S. 
     1637) is intended to bring the United States into compliance 
     with the World Trade Organization rulings that the ETI regime 
     violates the General Agreement on Tariffs and Trade 
     (``GATT'') prohibition on export-contingent subsidies. The 
     GATT does not apply to ``audiovisual services'' governed by 
     the General Agreement on Trade in Services (``GATS''). 
     Further, the GATS does not include any general prohibition 
     against export-contingent subsidies.
       Thus, the adoption of S. AMDT. 2690, which would preserve 
     ETI benefits for audiovisual services covered by the GATS, 
     would not violate GATT or contravene the WTO rulings.
           Sincerely,
     Carla A. Hills.
                                  ____



                                     Mayer, Brown, Rowe & Maw,

                                   Washington, DC, March 19, 2004.
     Hon. Dianne Feinstein,
     U.S. Senate,
     Washington, DC.
       Dear Dianne: I am writing with respect to your amendment 
     (S. AMDT. 2690) to S. 1637, the JOBS Act, that would repeal 
     the current FSC/ETI tax regime in order to bring the U.S. 
     into compliance with the WTO rulings in this case.
       As a former U.S. Trade Representative, I would like to 
     share my views regarding the consistency of your amendment 
     with applicable trade law. Specifically, your amendment would 
     allow the ETI rules to remain in place for income from 
     activities defined as ``audiovisual services'' under the 
     General Agreement on Trade in Services (GATS). The WTO 
     decisions in the FSC/ETI cases found that the U.S. FSC/ETI 
     regimes violated provisions in the Agreement on Subsidies and 
     Countervailing Measures (SCM Agreement), which is a part of 
     the General Agreement on Trade and Tariffs (GATT). The GATT 
     governs trade in goods, while the GATS covers trade in 
     services. Audiovisual services are covered by the GATS and 
     are not subject to the SCM agreement, and thus are not within 
     the purview of the WTO FSC/ETI decisions. Further the GATS 
     does not include any general prohibition against export-
     contingent subsidies.
       It is my view that adoption of the S. AMDT. 2690, which 
     preserves benefits for audiovisual services covered by the 
     GATS, would not violate or contravene the WTO rulings in the 
     FSC/ETI case.
           Sincerely,
     Mickey Kantor.
                                  ____



                                           Altria Group, Inc.,

                                    Washington, DC, July 15, 2004.
     U.S. Senate,
     Washington, DC.
       Dear Senator: After many years of debate, the Senate today 
     is considering comprehensive tobacco legislation that will 
     address a range of issues important to all Americans, from 
     the diseases caused by smoking to the plight of our nation's 
     tobacco farmers. There were some legitimate issues connected 
     to FDA regulation of concern to retailers; the good news is 
     that the DeWine/Kennedy bill has already addressed nearly all 
     of these. The continued opposition of one national retailer 
     group to this important legislation, notwithstanding all that 
     has been done to address their concerns, is unfair and 
     unfounded. This is the same organization that expressly 
     promised to remain neutral in 1998 when FDA legislation--with 
     far fewer protections for retailers--was debated in the 
     Senate.
       Below are just a few of the inaccuracies contained in the 
     attacks on this legislation that would finally empower FDA to 
     work on reducing the harm caused by smoking:
       All Retailers Treated Equally. The bill expressly provides 
     that any access and advertising restrictions cannot 
     discriminate against any category of retail outlet, and 
     cannot favor ``adult-only'' stores over other kinds of 
     outlets.
       Enforcement Will be Fair, and Apply to All. The bill 
     requies FDA to contract with State officials for enforcement 
     to the extent feasible.
       Responsible Retailers Benefit. In total contrast to some 
     claims, the legislation explicitly provides a ``good faith'' 
     defense against enforcement actions for any retailer that 
     takes the necessary steps to train its employees. The great 
     majority of outlets that take pride in working hard to keep 
     tobacco products away from kids should have nothing to fear 
     from enforcement of FDA rules.
       New Tools for Retailers. Under the authority granted to FDA 
     under the legislation, the agency will be authorized to 
     implement all manner of innovative new tools to assist 
     retailers with their compliance efforts, including electronic 
     age verification. Moreover the legislation is adequately 
     funded, to better ensure that new approaches can be pursued.
       Advertising Restrictions Are Subject to Review. Some of the 
     advertising restrictions FDA issued in 1996 may well be 
     unconstitutional; that is exactly why the DeWine/Kennedy bill 
     empowers FDA to re-examine those rules to ensure that they 
     comport with the First Amendment. And, even if the agency 
     decides not to change them, interested parties would still be 
     able to test them in court, where any remaining 
     Constitutional objections can and will be resolved.
       Beyond these specific points, the arguments advanced by one 
     national retailer association conveniently make no mention of 
     some key benefits the legislation provides for retailers--
     enlisting FDA in the fight against counterfeit tobacco 
     products, and authorizing the agency to regulate Internet 
     sales to ensure that kids can't buy tobacco online. Both of 
     these provisions could result in substantial long-term 
     benefit for brick-and-mortar retailers for years to come.
       I respectfully request that you disregard the strident and 
     unfounded arguments of those who refuse to look to the future 
     and the need for change in the tobacco industry, from growers 
     to manufacturers to retailers. Thank you for your 
     consideration of the DeWine/Kennedy/McConnell amendment.
           Sincerely,
                                                  John F. Scruggs,
     Vice President, Government Affairs.
                                  ____



                                           Altria Group, Inc.,

                                       New York, NY, May 20, 2004.
     Hon. Mike DeWine,
     Hon. Edward M. Kennedy,
     U.S. Senate,
     Washington, DC.
       Dear Senators DeWine and Kennedy: It has been a pleasure to 
     work with you on the Family Smoking Prevention and Tobacco 
     Control Act. This legislation has the potential to reduce the 
     harm caused by smoking, and to establish clear rules 
     applicable to all manufacturers of tobacco products sold in 
     this country.
       The DeWine/Kennedy bill is the result of many difficult 
     choices and compromises by all those involved, and it 
     reflects a balance of the perspectives of many stakeholders. 
     We

[[Page S11208]]

     believe the bill embraces the core principles that are 
     necessary to provide the Food and Drug Administration with 
     comprehensive, meaningful and effective regulatory authority 
     over tobacco products.
       Together with our domestic tobacco operating company, 
     Philip Morris USA, we enthusiastically support passage of 
     your bill in its entirety. We hope the Senate will give your 
     legislation favorable consideration at the earliest 
     opportunity. We stand ready to work with you and others in 
     support of your bill.
       Among the bill's many important features are:
       FDA would be given the authority to impose performance 
     standards for the design and manufacture of cigarettes in 
     order to reduce the harm caused by smoking. Under the bill, 
     FDA would, as part of its effort to reduce or eliminate 
     harmful ingredients and smoke constituents, consider whether 
     a new performance standard would significantly increase the 
     demand for contraband cigarettes. We believe this is an 
     important consideration in order to prevent the unintended 
     consequences of black market cigarettes. It is also important 
     that the bill provides the FDA cannot ban the sale of 
     cigarettes to adults.
       The bill would change the language of the current cigarette 
     health warnings, substantially enlarge the size and authorize 
     FDA to require new warnings in the future. The bill would 
     not, however, change the Supreme Courts rulings regarding the 
     product liability implications of compliance with warning 
     requirements.
       The bill would authorize FDA, as well as states and 
     localities, to replace the time, place and manner of 
     cigarette advertising and promotion, consistent with the 
     First Amendment's protection of commercial free speech to 
     adults.
       The bill provides that FDA's product standards would be 
     consistent on a nationwide basis.
       FGA would be authority to combat the existence of 
     counterfeit, contraband and other illicit tobacco products.
       The bill contains a number of other provisions that would 
     benefit the public health and provide important oversight for 
     all tobacco manufacturers. For example, FDA would be 
     authorized to: conduct educational efforts regarding the 
     dangers of tobacco use; take new steps to curb underage 
     tobacco use; strictly regulate new tobacco products that may 
     reduce the risk of disease or exposure to harmful compounds 
     in cigarette smoke; and ensure that tobacco products are not 
     adulterated.
       As noted above, you have attempted to address the views of 
     a wide range of stakeholders in your FDA bill. We look 
     forward working with all stakeholders in order to make 
     progress on the many issues surrounding tobacco use in this 
     country. In particular, we believe it is imperative that the 
     plight of the American tobacco grower be addressed. We 
     believe it is time for a tobacco quota buyout and we hope to 
     be able to work with you and other stop make that a reality.
       Your bill is a truly historic opportunity to establish, for 
     the first time, a comprehensive and coherent national tobacco 
     policy. Thank you for your leadership and for the hard work 
     of your staffs on this extremely important legislation.
           Sincerely,
                                                Steven C. Parrish.

  Mrs. FEINSTEIN. A September 22, 2004 report by the Citizens of Tax 
Justice and the Institute of Taxation and Economic Policy reveals that 
82 of the 275 (30 percent) large and profitable, Fortune 500 companies 
studied paid no tax on federal income or received rebates from the 
Treasury in at least one year from 2001 to 2003.
  In the years they paid no income tax, these 82 companies reported 
$102 billion in pretax U.S. profits. Moreover, instead of paying $35.6 
billion in income taxes as the statutory 35 percent corporate tax rate 
required, these companies received tax rebate checks from the U.S. 
Treasury totaling $12.6 billion. These rebates meant that the companies 
made more after taxes than before taxes in those no-tax years.
  Twenty-eight corporations enjoyed negative federal income tax rates 
over the entire 2001-2003 period. These companies, whose pretax U.S. 
profits totaled $44.9 billion over the 3 years, included: Pepco 
Holdings (-59.6 percent tax rate), Prudential Financial (-46.2 
percent), ITT Industries (-22.3 percent), Boeing (-18.8 percent), 
Unisys (-16.0 percent), and CSX (-7.5 percent), the company previously 
headed by Secretary of the Treasury Snow. General Electric topped the 
corporate tax breaks recipients with $9.5 billion in tax breaks over 3 
years.
  The average effective rate for the 275 Fortune 500 companies was only 
17.2 percent in 2002-2003, though the corporate tax rate is 35 percent.
  How is this happening? Accelerated depreciation. Legislation adopted 
in 2002 and 2003 vastly increased corporate write-offs for 
``accelerated depreciation'' and made it easier for corporations to use 
their excess tax subsidies to generate tax-rebate checks from the U.S. 
Treasury, at a 3-year cost of $175 billion.
  Offshore tax sheltering. Over the past decade, corporations and their 
accounting firms have become increasingly aggressive in seeking ways to 
shift their profits, on paper, into offshore tax havens, in order to 
avoid their tax obligations. Corporate offshore tax sheltering is 
estimated to cost the U.S. Treasury anywhere from $30 to $70 billion a 
year.
  Senator Levin has been aggressive in trying to close these loopholes 
and some of his ideas were adopted in the Senate version of the 
Jumpstart Our Business Strength (JOBS) bill.
  Stock options. Of the 275 corporations studied, 269 received stock-
option tax benefits during the 2001-2003 periods, which lowered their 
taxes by a total of $32 billion over three years. Microsoft had the 
largest tax savings with $5 billion.
  Tax credits. The federal tax code provides tax credits for companies 
that engage in research, exporting, hiring low-wage workers, affordable 
housing, and enhanced coals usage. For example, Bank of America cut its 
taxes by $590 million over 2001-2003 by purchasing affordable-housing 
tax credits.
  Ms. SNOWE. Mr. President, I rise today to express support for this 
conference report on the American Jobs Creation Act of 2004. At the 
outset, I commend Finance Committee Chairman Grassley and Ways and 
Means Committee Chairman Bill Thomas for their leadership during the 
conference negotiations and bringing this bill to completion.
  We're here, after nearly 2 years of discussion and work on 
legislation that, once enacted, will jumpstart the manufacturing sector 
of our economy and create jobs. Indeed, although this legislation is to 
repeal the FSC/ETI rules and stop the imposition of WTO sanctioned 
trade tariffs, the real reason we must pass this legislation is to 
assist our struggling manufacturers throughout the country.
  According to the National Association of Manufacturers, between 
January 2001 through January 2004, manufacturing employment in our 
Nation declined by 16 percent. In New England, there was a 20 percent 
decrease in manufacturing employment during that same time period. This 
means that between January 2001 and January 2004, New England's 
manufacturing sector employment declined by an alarming 28 percent 
faster rate than it did nationally.
  My home State of Maine has shed manufacturing jobs at an alarming 
rate over the past decade and all the more so in the past two years. 
From January 1993 through June 2003, a 10\1/2\ year period, Maine lost 
18,900 manufacturing jobs. More specifically, from July 2000 to June 
2003, Maine has lost 17,300 manufacturing jobs, the highest loss of any 
state during that time period.
  Our objective was clear: not only must we adopt a conference report 
that complies with international trade law, but more importantly, we 
need to offer our country's manufacturers a solution that will 
jumpstart their production and create jobs, and we must do so now. As a 
result of our loss at the WTO, certain U.S. goods exported to Europe 
are being hit with a 12 percent tariff. Critically, this bill will 
remove that tax on our exports.
  Were we to neglect this duty to ensure that our nation's 
manufacturers are simply given the chance to compete on a level playing 
field with foreign competitors, we would only be compounding the 
current situation.
  Instead, this conference report will ``reallocate'' the nearly $50 
billion in revenues that replacing the FSC/ETI rules will generate and 
provides an additional $25 billion towards a tax deduction for our 
manufacturers. I am pleased that the conference report follows the 
Senate manufacturing deduction that is available to all domestic 
manufacturers and does not discriminate based on the manufacturers 
entity classification.
  Indeed, the original legislation in the House would have extended the 
tax relief benefits solely to regular corporate entities, or C-
corporations. In the Senate, I fought to secure the benefits for S-
corporations and partners in partnerships as well.
  This decision to provide a manufacturing deduction that is not entity 
specific, rather than a corporate income

[[Page S11209]]

tax cut, is cruial because the ETI rules applied not only to 
corporations but also to S-corporations. As small business 
manufacturers constitute over 98 percent of our nation's manufacturing 
enterprises, employ 12 million people, and supply more than 50 percent 
of the value-added during U.S. manufacturing, it is imperative that we 
do not increase taxes on our country's job creators--small businesses.
  In the face of record deficits, this bill also maintains our fiscal 
responsibility by including offsets that will crack down on abusive tax 
cheats. Both the Senate and House bills contain a variety of provisions 
that stop the proliferation of abusive tax shelters. Enacting these 
rules and other revenue offsets will ensure that we will be able to pay 
for this bill without adding to the deficit. This was a key priority 
for me during this conference and I am pleased that the conference 
supported a revenue neutral final bill.
  I am also pleased that the conference report includes a provision 
that will restore equity and fairness into the tax code for our 
country's naval shipbuilders.
  Quite simply, this provision would put navy shipbuilders on par with 
commercial shipbuilders in that they would be able to pay a portion of 
their income taxes upon delivery of the ship rather than during 
construction. Currently, navy shipbuilders must estimate profits during 
the construction phases of the shipbuilding process, and they must pay 
tax on those estimated profits--a process known as the ``percentage of 
completion method'' of accounting.
  The major shortcoming of this method is that shipbuilders must report 
progress payments as ``revenue'' rather than as a source of financing, 
whch had been recognized and permitted for the 64 years between 1918 
and 1982. Additionally, this accounting method creates a ``legal 
fiction'' of an ``interim profit,'' when in reality a profit or loss is 
not reasonably known until after a ship is completed. This places a 
financial burden on shipbuilders during the critical construction 
phase, reduces the resources available to invest in facilities and 
process to reduce construction costs, places a burden on the cash flow 
management of the shipbuilder, and weakens the financial health of the 
defense shipbuilding industrial base.
  The provision in the conference eport will permit navy shipbuilders 
to pay 40 percent of their estimated income tax during the contract and 
pay the remaining 60 percent in the year in which construction is 
completed. In addition, shipbuilders will be able to report their taxes 
on a ship-by-ship basis rather than on a contract-by-contract basis, 
which therefore reduces the potential for abuse.
  Now, naval shipbuilders will be able to pay their income taxes in a 
manner similar to how commercial shipbuilders pay their taxes. The main 
difference, though, is that commercial shipbuilders are permitted to 
utilize this 40/60 treatment for only 5 years rather than the 8-year 
period under my amendment. This 5-year period for commercial 
shipbuilders is appropriate for them because most commercial ships take 
no more than three years to build. However, as many navy shipbuilders 
spend at least 8 years when building submarines, aircraft carriers, and 
destroyers, a 5-year window for them is simply inadequate. 
Consequently, this amendment provides for an 8-year window because that 
is the necessary time to assist the majority of our navy shipbuilders.
  Let me stress that this provision in no way reduces the amount of 
taxes that these shipbuilders ultimately pay. Rather, it merely allows 
them to defer paying their taxes until their profit is actually known, 
just as commercial shipbuilders are already permitted to do.
  Not only does this change embody sound tax policy, but so too does it 
improve our National Security. Indeed, this provision is limited 
exclusively to naval shipbuilders, that are charged with building our 
Navy's fleet of ships that protect our homeland. During this time of 
war, the last thing we should do is allow an inequity in the tax code 
to cause these companies financial hardship that might affect their 
production and output. I am certainly not saying these companies should 
get a free pass, and this provision in no way provides them with one, 
but what I am saying is that they deserve to be treated fairly given 
the instrumental role they play for our Nation, and this amendment will 
do just that.

  This conference report contains a great many benefits for small 
businesses that will play a vital role in improving our economy. For 
example, the report includes an amendment I offered that will extend 
the current $100,000 small business expensing limitation and $400,000 
phase-out through the end of 2007. Although the Jobs and Growth Tax Act 
increased these levels from their previous $25,000 limitation and 
$200,000 phase-out, these limits will sunset at the end of 2005 and 
return to those lower levels. I believe it is imperative to inject 
certainty into the tax code so our small business owners can plan 
accordingly in purchasing the capital and equipment they need to run 
their operations, and this amendment will go a long way toward doing 
so.
  It was imperative that Congress take action to extend these benefits 
for our Nation's small businesses. By doing so, qualifying businesses 
will be able to deduct more of their equipment purchases in the current 
tax year rather than waiting 5, 7, or more years to recover such costs 
through depreciation. This change represents substantial savings both 
in tax dollars and also in the time small businesses would otherwise 
have to spend complying with the complex depreciation rules.
  For example, the IRS estimates that a taxpayer should expect to 
invest nearly 50 hours in order to learn the law, perform the necessary 
bookkeeping, and complete the forms in order to claim a depreciation 
deduction for an average amount of depreciable property. That is 
valuable time that the owner must take away from running the business. 
And in too many cases, it translates into additional fees for 
accountants to figure out these indecipherable depreciation rules.
  By maintaining the $100,000 limitation, small businesses will save 
time and accounting costs, freeing them to spend their scarce time and 
resources on what they do best--running successful businesses and 
creating jobs in America.
  I am also pleased that the report includes my amendment to modify the 
unrelated business taxable income rules to allow small business 
investment companies to receive investments from tax-exempt entities. 
By enacting this provision into law, small businesses will have better 
access to capital through the Small Business Investment Company 
Program.
  Small Business Investment Companies are government licensed, 
government regulated, privately managed venture capital firms created 
to invest only in original issue debt or equity securities of U.S. 
small businesses that meet size standards set by law. In the current 
economic environment, the SBIC program represents an increasingly 
important source of capital for small enterprises.
  While Debenture SBICs qualify for SBA-guaranteed borrowed capital, 
the government guarantee forces a number of potential investors, namely 
pension funds and university endowment funds, to avoid investing in 
SBICs because the woul be subject to tax liability for unrelated 
business taxable income UBTI. More often than not, tax-exempt investors 
opt to invest in venture capital funds that do not create UBTI. As 
such, an estimated 60 percent of the private-capital potentially 
available to these SBICs is effectively ``off limits.''
  The amendment I offered corrects this problem by excluding 
government-guaranteed capital of Debenture SBICs from debt for purposes 
of the UBTI rules. This change would permit tax-exempt organizations to 
invest in SBICs without the burdens of UBTI record keeping or tax 
liability.
  As a result, small businesses will have greater access to capital, 
enabling them to grow and hire new employees. According to the National 
Association of Small Business Investment Companies, a conservative 
estimate of the effect of this amendment would be to increase 
investments in Debenture SBICs by $200 million per year from tax-exempt 
investors. Together with SBA-guaranteed leverage, that will mean as 
much as $500 million per year in new capital assets for Debenture SBICs 
to invest in U.S. small businesses.
  Moreover, as people know, Maine is a rural State. In that light, I am 
pleased that this bill contains important to the

[[Page S11210]]

timber industry patterned after S. 1381, the Reforestation Tax Act, a 
bill I introduced last year.
  Under the conference report, owners of timber lands would be able to 
elect to immediately deduct their reforestation expenditures on their 
timber property--up to $10,000 per year. This change would allow 
taxpayers to recoup more of their investments in qualifying timber 
property at a more rapid pace, thereby encouraging investments in 
reforestation and strengthening the future growth of our forests. The 
bill provides other relief important to the timber industry, such as 
the ability to treat outright sales of timber as a capital gain and be 
taxed at a lower rate. Likewise, it contains a provision to allow real 
estate investment trusts that own timberland to avoid a 100 percent 
penalty tax when they sell timber land in the ordinary course of their 
business. With foreign competition in the timber industry fierce, these 
provisions will enhance the ability of U.S. timber companies to 
compete.
  Furthermore, I am pleased that tax credits for biomass facilities are 
included, which are similar to the ones I introduced. For the first 
time, the current production tax credit will be available to biomass 
facilities that use waste products to produce energy. This will put the 
industry, currently at a competitive disadvantage, on a more equal 
footing with other renewable power, such as wind. The biomass 
facilities in my state of Maine are not only an alternate electricity-
producing source, but they supply good paying jobs in rural areas of 
the state and are a large source of tax revenues.
  The Maine biomass industry uses forest waste, such as those unused 
portions of trees--tops and limbs--that are not put into making paper 
products, to produce electricity at their biomass plants. This helps to 
lessen the use of fossil fuel to make electricity. Since a barrel of 
crude oil has gone over $50 a barrel for the first time in history in 
recent days, these savings help what is becoming a critical--and 
expensive--situation. Using the forest waste also helps avoid an 
environmental and safety problem the mills would have if they had to 
store the wood waste on site.
  Additionally, the report contains a provision that co-sponsored that 
will greatly benefit our domestic film industry, which is an industry 
that plays a vital role in the economy of our country and also in my 
home state of Maine.
  Film makers will now be able to deduct up to $15 million of qualified 
costs during the first year of production. The remaining costs incurred 
will then be amortized over a 7-year period. Similar to the small 
business expensing provision, it is critical that we provide taxpayers 
with opportunities to recover their costs in a more expeditious manner 
rather than under the time-consuming and cumbersome depreciation rules. 
This film provision provides just that, and will in turn provide a key 
incentive for film makers to make their products in the United States.

  Another ``job-creating'' provision contained in the bill is a 
provision that I was pleased to cosponsor that will potentially 
increase the number of taxpayers that are eligible to claim new markets 
tax credits. Without question, the new markets tax credit program has 
had a profound impact on my home state. This conference report will 
further improve that program by extending the geographic area to low-
income communities regardless of whether they fell under the 
previously-designated census tracts. Indeed, this provision will 
benefit rural communities throughout America, particularly those in 
Maine, because now areas will qualify for this critical investment 
opportunity based on their income and not on an arbitrary ``census 
tract'' determination.
  This report contains even more tax incentives to encourage job 
creation throughout America. For example, rail operators will not be 
able to claim a tax credit based on the amount of expenses incurred to 
maintain and upgrade short-line railroad tracks. Insurance companies 
will now not incur a penalty tax on old policy holder income when they 
restructure their operations, which in turn will permit them to save 
this money and reinvest it in their operations.
  Clearly, the provisions in this bill to assist our manufacturing base 
are numerous, deserved, and long overdo. Fortunately, however, we were 
also able to provide other sectors of our economy with much needed tax 
relief. For example, the bill contains a provision to permit rural 
letter carriers to deduct more of their carrier expenses. In addition, 
the report contains a provision that will allow fishermen to 
``average'' their income over a period of several years to account for 
the cyclical nature of their industry and to ensure they will be able 
to fully take advantage of the losses that unfortunately often arise in 
their business.
  I am also pleased that the conference report includes measures I 
cosponsored to assist our Nation's shipping industry. For example, the 
Report includes a provision to permit shippers that adhere to the ``two 
ship'' rule to avoid falling under the complex, cumbersome subpart F 
rules. While the subpart F rules have an important role under the tax 
code in preventing the deferral of passive investment income, shippers 
should not be subject to them regarding their profits earned from their 
active shipping business.
  An additional provision that will benefit our shippers is one that 
will permit them to satisfy their tax liability in a manner similar to 
how shippers in other countries pay their taxes. Specifically, the 
report contains a provision to permit shippers to elect to pay tax on 
the ``tonnage'' of weight of their freight, rather than a tax based on 
their income. Providing for this election will increase the 
competitiveness of domestic shippers because it allows them to pay 
their taxes in a more efficient, less complicated manner, which in turn 
will allow them to spend less time and money in trying to navigate the 
complicated Tax Code.
  Notwithstanding all of the considerable benefits contained in this 
conference report, I want to take a moment to lament the report's 
coverage of tobacco legislation.
  As you all know, the Senate reached an important compromise on the 
issue of tobacco in order to get this bill to conference by adopting 
both an industry-funded buyout of tobacco growers' quotas and a grant 
of authority to the Food and Drug Administration to regulate tobacco. 
The agreement crafted by my colleagues, Senators DeWine, Kennedy, and 
McConnell, would have given the FDA the authority to require tobacco 
manufacturers to list the ingredients on all of their packaging; to 
submit specified health information to the FDA for analysis; to 
regulate sale, distribution, and advertising related to tobacco; and to 
force the cigarette makers to substantiate, through scientific testing, 
any labels they might use to indicate that their product posed a lower 
health risk, such as ``light,'' ``mild,'' or ``low.''
  I believe FDA regulation of tobacco is imperative because we simply 
cannot afford to ignore the toll that smoking has taken on our society. 
Every year 400,000 Americans die as a result of cigarette smoking, and 
approximately 8.6 million people suffer from smoking-related illnesses 
or conditions. In addition to the human cost, these staggering numbers 
have taken a financial toll on our country's health care system as 
well: annual public and private health care expenditures caused by 
smoking amount to over $75 billion, $23.5 billion of which is 
shouldered by federal and state governments.
  Even more disturbing is the fact that the next generation is being 
targeted by ``Big Tobacco'' while they are still in middle and high 
school. Virtually all of my colleagues have been visited in the past 
several weeks by members of the Coalition for Tobacco Free Kids, who 
brought in samples of new candy-flavored cigarette packs such as 
``Caribbean Chill,'' ``Midnight Berry,'' and ``Mocha Taboo.'' Everyone 
knows that lifelong adult smokers have no interest in buying these 
flavored cigarettes. That kids are the targets of this marketing is 
consistent with a Brown & Williamson memorandum uncovered 6 years ago 
which stated, ``It's a well known fact that teenagers like sweet 
products. Honey might be considered.''
  In the final analysis, I wanted to vote for a conference report that 
contained the Senate's tobacco provisions. As we know, the Senate 
conferees agreed and voted 15-8 to include FDA regulation in the 
conference report--but the House rejected its adoption. Failing that, I 
would have wanted the buyout provision stricken as well, and I voted 
for an

[[Page S11211]]

amendment in conference to do just that, but that was also rejected. In 
short, at every opportunity I supported FDA regulation. At the end of 
the day, the conference report--designed to create jobs, bolster our 
exports overseas, and end the penalties against Maine's and America's 
manufacturers--was simply too critical to the economic future of our 
nation, and therefore I voted for this vital jobs bill.
  Likewise, I am disappointed that this conference report failed to 
include an important provision in the Senate bill that would have 
benefitted our military reservists. Under the Senate bill, businesses 
would have received a tax credit for payments made to an employee who 
was called to active military reservist duty. Proudly, I supported this 
provision when it was offered to the Senate bill, and I supported it 
during the Senate and House conference. Nevertheless, the final report, 
regrettably, failed to include this sensible, deserved tax relief. 
While we must pass this conference report to stop the imposition of 
World Trade Organization tariffs, I am deeply disappointed we did not 
take this opportunity to compensate our military reservists and their 
employers for their sacrifices. Unquestionably, I hope and expect that 
addressing this issue will be one of the first items we consider when 
Congress reconvenes next year.
  Finally, the bill before us today is silent on an issue of great 
importance to working Americans--the administration's new regulations 
updating overtime eligibility requirements that could deny millions of 
workers the overtime pay protections guaranteed by the Fair Labor 
Standards Act, FLSA. In May, I was one of 52 Senators who voted in 
support of the Harkin amendment to the Senate FSC/ETI bill which would 
clarify that the administration's regulations can result in no worker 
losing their overtime eligibility. In September, both the House of 
Representatives and the Senate Appropriations Committee voted 
decisively to overturn the new overtime regulations.
  At issue is a Department of Labor regulation, which went into effect 
in August, updating the so-called ``white collar exemptions'' to the 
FLSA overtime protection. While DOL asserts that 107,000 middle- and 
upper-income workers will lose their overtime eligibility under the 
proposal, other sources put the number of affected workers as high as 
six million. Whatever the final impact of the DOL's changes on American 
workers, I have serious concerns as to whether this is the right time 
to take steps to jeopardize the right to overtime pay, which provides 
economic security for so many American families. As such, I was 
disappointed that the Harkin amendment was not included in the FSC/ETI 
conference report.
  This bill is a historic achievement and will benefit our economy. 
Many of these changes to the tax code are long overdue. In the end, the 
provisions of this bill will bolster our manufacturing base, increase 
the attractiveness of doing business in the United States and give a 
jumpstart to business, particularly small businesses, to create jobs.
  I urge my colleagues to support this conference report.
  Mr. DURBIN. Mr. President, this legislation began as a modest effort 
to repeal an illegal export subsidy. It has grown to 633 pages with 
nearly $140 billion in corporate tax breaks over the next decade. The 
conference report replaces the $50 billion export subsidy with a $77 
billion manufacturing tax cut--a net tax cut for domestic manufacturing 
of $27 billion after the loss of the subsidy, $43 billion in tax breaks 
on overseas income, and $17 billion in tax breaks for special 
interests.
  The bill does not include FDA regulation of tobacco, a Senate-passed 
provision to block new overtime rules that hurt workers, and a Senate-
passed provision giving a tax break to companies that make up the pay 
gap for activated Reservists and Guardsmen.
  It does include a tobacco buyout that gives most of the benefits not 
to small farmers but to anyone who owns tobacco quotas and will do 
nothing to help farm communities, a huge amount of corporate pork, and 
almost twice as much in new international tax breaks as in domestic 
manufacturing tax breaks, which will encourage companies to move 
operations and assets abroad. It also uses the same accounting tricks 
as the previous Bush tax cuts to make the bill appear revenue neutral 
when it will actually cost billions.
  The Senate approved a tobacco buyout with $2 billion in transition 
assistance to communities that depend on tobacco production. The 
conference report drops this assistance entirely.
  The Senate approved a buyout with limitations on who would be 
eligible. This was an attempt to make sure small farmers got most of 
the benefit. Farmers had to be actively engaged in production in the 
last few years and quota holders had to be in the system since 2002. 
Those restraints were completely dropped in conference. Under this 
bill, 80 to 85 percent of the people who benefit are quota owners who 
don't qualify as growers, according to the Wall Street Journal.
  In Kentucky, Virginia, North Carolina, and Wisconsin, beneficiaries 
include country clubs, churches, colleges, universities and high 
schools that own land in tobacco-growing counties.
  Larry Flynt and his brother Jimmy own land that had a quota to grow 
600 pounds of tobacco in 2003, according to the Environmental Working 
Group. They will benefit from the buyout. The Wall Street Journal 
quoted Jimmy Flynt, president of Hustler Entertainment, on the buyout. 
He said:

       We got out of the tobacco business and into the porn 
     business. We walked away from that blood, sweat and tears.

  The Senate approved a tobacco buyout combined with FDA oversight of 
tobacco by a vote of 78 to 15. The legislation was a hard fought and 
painstakingly crafted balance between public health and struggling farm 
economies. Now it is gone from the bill, but the tobacco buyout 
remains. The conferees dropped FDA regulation even as the tobacco 
industry inflicts terrible damage on people's health. It kills more 
Americans than AIDS, alcohol, car accidents, murders, suicides and 
fires combined 400,000 people a year. Every day, 4,000 children will 
try a cigarette for the first time and 2,000 will become regular 
smokers. Of those 2,000, one third will die prematurely of smoking 
related illnesses.
  We have missed an opportunity to protect children from tobacco 
addiction and save them from premature death. If you think I am 
overstating the case, look at the tobacco industry's latest advertising 
campaigns to attract our children to candy-flavored cigarettes: R.J. 
Reynolds has recently marketed Kauai Kolada cigarettes, with ``Hawaiian 
hints of pineapple and coconut,'' and Twista Lime cigarettes, described 
as ``a citrus tiki taste sensation.''
  Without FDA authority, the tobacco companies will continue to target 
our children with their products. We talk about Leaving No Child Behind 
when it comes to education. We should not leave them behind when it 
comes to tobacco either.
  The Senate version of the bill blocked the Bush administration's new 
rules that stripped the right to overtime pay from six million 
Americans. For workers who receive overtime pay, that overtime 
compensation accounts for 25 percent of their paychecks. So the Bush 
administration's regulations slash the paychecks of hundreds of 
thousands of Americans by 25 percent.
  Both the Senate and House have voted to block the overtime rules. 
This clearly has the support of a majority of both the House and the 
Senate, yet it was stripped in conference. Corporations are getting 
huge tax breaks from this bill, but not one worker will have his or her 
well-earned overtime pay restored.
  This bill is loaded with $17 billion in special interest tax breaks. 
Does anyone outside the Finance Committee really know everything that 
is in this bill? Does anyone inside the room even know? Some of the tax 
breaks it includes are:
  $500 million for railroad companies;
  $494 million for restaurant owners;
  $234 million for beer, wine, and hard liquor producers;
  $101 million for NASCAR track owners;
  $44 million for ceiling fan importers, inserted at the request of 
Home Depot;
  $42 million for Hollywood producers;
  $28 million for cruise ship operators, which greatly benefits 
Carnival Corporation and Royal Caribbean;
  $11 million for makers of tackle boxes, which will benefit Plano 
Molding Corporation, a company

[[Page S11212]]

headquartered in the district of the Speaker of the House, Dennis 
Hastert;
  $9 million for makers of bows and arrows;
  A $9 million break on customs duties for the importation of steam 
generators and nuclear reactor vessel heads, inserted at the request of 
General Electric;
  $4 million for makers of sonar fish finders;
  $4 million for native Alaskan whalers;
  $27 million for foreign gamblers who win at U.S. horse and dog 
tracks.
  Is the intention of this bill to give tax breaks for foreign gamblers 
who win at U.S. horse and dog tracks? I thought the point of this bill 
was to solve the FSC/ETI problem so that U.S. goods would no longer 
face tariffs abroad, and perhaps to promote domestic manufacturing. 
After all, it is called a ``JOBS'' bill by its authors. So now we have 
to entice foreigners to visit the United States and plunk down their 
money at the track, by giving them tax breaks on their winnings, in 
order to create jobs in the United States?
  The conference report does not just include a huge amount of pork. It 
also fails to effectively close corporate tax loopholes. The Senate 
version banned accounting techniques that have no economic purpose 
except to shield corporate income from taxes. This would have saved $15 
billion in lost tax revenue over the next 10 years. The conferees 
refused to include this measure.
  The bill also fails to take a strong stand against companies that 
have moved overseas for tax purposes. The Senate version ended tax 
advantages for companies that relocate to Bermuda or other tax havens 
and would have eliminated $3 billion in lost tax revenues. The 
conferees severely weakened this provision by not making it 
retroactive. They replaced it with a House version that will eliminate 
only $800 million in lost tax revenue.
  The $3 billion saved by the stronger Senate measure would have been 
enough to pay for the tax break for companies that make up the pay gap 
for Reservists and Guardsmen. But this break for our men and women in 
the military was dropped.
  Instead, other companies will benefit. As the Wall Street Journal 
reported on Wednesday, the bill grandfathered in four Houston-based 
companies--Cooper Industries, Weatherford International Limited, Noble 
Corporation, Nabors Industry--that recently relocated to the Cayman 
Islands and Bermuda.
  The bill includes $43 billion international tax breaks that will 
encourage companies to relocate to tax havens like Bermuda and to move 
jobs out of the country. According to an analysis published last month 
by the Tax Policy Center, a joint venture of the Brookings Institution 
and the Urban Institute, these tax breaks increase the already strong 
incentives of U.S. multinational firms to operate abroad and to shift 
profits to low-tax locations. Even corporate executives admit they are 
moving assets and operations overseas. In February of this year, the 
Financial Times quoted one corporate tax official as saying:

       You only have to look at the way we tighten our belts in 
     the United States through layoffs to understand what is 
     happening.

  More than a dozen companies such as Tyco, Foster Wheeler, and 
Ingersoll Rand have relocated their headquarters to foreign tax havens 
in the past decade alone. And jobs are moving abroad as well. Since 
President Bush took office, 2.7 million manufacturing jobs have been 
lost. It is no mystery where these jobs have gone: out of the country 
in search of cheap labor and low tax rates. We should not encourage 
this kind of behavior with new tax breaks on overseas operations.
  Some of the $43 billion in international tax breaks include:
  An $8 billion tax break that makes it easier for companies to use 
taxes on one kind of foreign income to reduce what they owe on foreign 
income of a different type--General Electric pushed hard for this 
provision and got it;
  A $7 billion tax break that allows companies to carry their foreign 
tax credits forward for 10 years, compared to the current law that 
allows only 5 years;
  A $5.6 billion tax break that allows companies to reclassify domestic 
income as foreign income to take advantage of unused foreign tax 
credits;
  A $3.3 billion tax holiday to encourage companies to bring foreign 
profits back to the United States, supposedly for investment here.
  This tax holiday provision is worth looking at more closely. The 
Center on Budget and Policy Priorities calls it the ``Oracle'' tax 
break because the software company Oracle will reap huge benefits. 
Companies leave profits abroad to take advantage of lower tax rates and 
to defer payment of their American taxes. This bill gives them a 
temporary reduction in the tax rate to repatriate these funds. The 
supporters of this tax holiday say the bill requires companies to 
reinvest these repatriated funds to create jobs in the U.S. But 
according to the Tax Policy Center, the conditions on the use of these 
repatriated funds are difficult to enforce and are unlikely to create 
new investment in our country.
  I am not the only one who thinks the tax holiday is a bad idea. Even 
the Bush administration opposes it. Treasury Secretary John Snow sent a 
letter to the conferees that said:

       U.S. companies that do not have foreign operations and have 
     already paid their full and fair share of tax will not be 
     able to benefit from this provision. Moreover, the Council of 
     Economic Advisers' analysis indicates that the repatriation 
     provision would not produce any substantial economic 
     benefits. The Administration believes the $3 billion revenue 
     cost. . . could be better used to reduce the tax burden of 
     job creators in the United States.

  Even the centerpiece domestic manufacturing tax cut has serious 
problems:
  The oil and gas industries were never eligible for the FSC/ETI export 
subsidy, but they will get the manufacturing benefit, even though oil 
prices are at historic highs.
  Corporate farms, but not family farms, will be eligible.
  Engineering firms like Bechtel and Halliburton will be eligible.
  Starbucks secured a provision declaring that coffee roasting is a 
form of manufacturing, so the company will benefit from the tax cut.
  Deceptive figures to make the bill appear revenue neutral.
  The bill's supporters say it is revenue neutral. But since 2001, the 
Republican leadership has repeatedly relied on budgetary gimmicks to 
hide the true cost of their tax cuts. This bill is no different. It 
will increase the deficit at a time when it is at record levels.
  The Congressional Budget office reported last week that we had a $415 
billion deficit in 2004. This is $41 billion higher than last year. It 
is the fourth straight year of increasing deficits. This is the first 
time since World War II that we have had 4 consecutive years of 
increasing deficits.
  Because of the huge deficit, the Washington Post reported on Friday 
that the White House has ordered a draft budget for 2006 that cuts 
Homeland Security, Veterans Affairs, and Education.
  The bill slowly phases in the manufacturing tax cut over 5 years. 
Because of the phase-in, about one-third of the total cost is 
concentrated in the last 2 years. According to the Center on Budget and 
Policy Priorities, the long-run cost of the measure would likely be 
significantly higher than the $77 billion estimated for the first 10 
years.
  The bill also has tax breaks that expire before the end of the 10-
year period. There are nearly a dozen provisions in the bill that 
sunset between 2005 and 2008. According to Citizens for Tax Justice, 
the cost of the legislation could balloon to $230 billion over 10 years 
if those tax breaks are extended. This far exceeds the $140 billion in 
revenue offsets.
  The expiring provisions and their supposed cost and true cost if 
extended are:
  Small Business Expensing $1 billion True cost: $33 billion';
  State and Local Tax Deduction $5 billion True cost: $30 billion;
  15-year Straight Line Cost Recovery $2 billion True cost: $11 
billion;
  Other Expiring Cuts $1 billion True cost: $4 billion.
  These cuts supposedly cost only $7 billion over 10 years, but in 
reality they will cost $80 billion if extended. And as we have 
repeatedly seen, the Republican leadership is more than willing to 
extend ``temporary'' tax cuts again and again without any concern about 
the effect on the budget, despite the record deficits we face. I have 
no doubt this will happen again with these cuts.

[[Page S11213]]

  The conference report has many flaws, but it also includes an 
historic ethanol program that I have worked for many years to pass. The 
ethanol tax credits in the bill are important to Illinois and the 
Nation's energy policy, and I would like nothing better than to vote to 
pass these measures.
  The bill enacts the Volumetric Ethanol Excise Tax Credit, which 
changes the administration of tax incentives for renewable fuels to 
avoid a reduction in highway funding. It extends the ethanol tax 
incentive through 2010. It also allows small ethanol producer 
cooperatives to pass credits through to cooperative members.
  Ethanol has been an important issue for me throughout my 20 plus 
years in Congress. In 1987 I was the first member of Congress to 
propose that Congress require the gasoline supply to include 5 billion 
gallons of ethanol.
  I am greatly disappointed to have to vote against this bill, despite 
the ethanol provisions, because of the outrageous and unacceptable way 
that it deals with the central issue of replacing the export subsidy.
  (At the request of Mr. Daschle, the following statement was ordered 
to be printed in the Record.)
 Mr. LEAHY. Mr. President, the tax bill conference report that 
will overwhelmingly pass the Senate today is an opportunity lost. This 
bill is a fiscally irresponsible giveaway full of hundreds of special 
interest provisions that will ultimately cost the taxpayers billions of 
dollars.
  I voted in favor of the Senate version of this important legislation 
when it passed by an overwhelming vote of 92-5 back in May. What began 
as a legislative fix to bring our Tax Code into compliance with 
international trade laws has turned into a deficit busting give away to 
special interests. This conference report lacks the balance and 
restraint that was critical to passage of the Senate bill.
  The math on how this bill adds to the deficit is simple. Repeal of 
the so-called FSC ETI tax breaks for U.S. multinational companies will 
increase revenue by $50 billion. Incredibly, the conferees could not 
help themselves but take the opportunity to not only spend that $50 
billion but also spend another $100 billion with almost no comparable 
spending offsets--adding straight to the ballooning Federal budget 
deficit.
  The conference report is being sold as a godsend for American 
manufacturing workers, yet Senate provisions to tie corporate tax 
breaks to actual job creation have been stripped. I have to chuckle 
when I hear the White House referring to this as the ``JOBS'' 
conference report.
  I am also disappointed that the conferees chose to drop the Senate 
provision sponsored by Senator Landrieu to provide tax credits to 
employers who make up the pay that employees lose when they are called 
up for National Guard or Reserve duty. Senator Landrieu has eloquently 
and forcefully highlighted to the Senate over the past couple of days 
why this provision should not have been dropped from the final 
conference report. I agree with her outrage that the conferees included 
many special interest tax provisions--one even for ceiling fan 
manufacturers--but could not include a provision that helps the men and 
women who are serving their country.
  Mr. BUNNING. Mr. President, I rise today to bring attention to 
section 852 of the conference report of H.R. 4520 before us today. 
First, I thank the managers of the conference report for accepting my 
amendment which added this provision to the conference report. The 
amendment codifies current Treasury proposed regulations defining off-
highway vehicle. My intention in proposing this amendment was to 
confirm that Congress feels it is proper that vehicles which do not 
make use of, or make only very limited use of, the public highways 
should not be considered a ``highway vehicle'' for purposes of various 
excise tax sections, including, but not limited to, sections 4053, 
4072, 4082, 4483, 6421, and 7701, of the Internal Revenue Code.
  When used on public highways, heavy trucks put a greater stress on 
our roadways than average vehicles. In the past, Congress has passed 
laws to impose various excise taxes for large vehicles to use our 
national highway system. For example, there is a 12-percent retail 
sales tax for large on-highway vehicles, special taxes on tires 
weighing more than 40 pounds, additional large vehicle gasoline taxes, 
and there is even an annual use tax imposed on these heavier vehicles. 
The overwhelming majority of the revenue generated from these 
provisions is placed in the highway trust fund to rebuild our Nation's 
infrastructure.
  This issue of off-highway vehicles and their tax status is of grave 
importance to my state of Kentucky. Many companies use heavy machinery 
and oversize vehicles. In Kentucky, they are used most often at coal 
mines. Some of these large vehicles are used only internally on the 
mine lands while others are used to haul materials over our Nation's 
public roads.
  However, the Internal Revenue Code itself has not defined what 
constitutes a ``highway vehicle.'' The legislative intent of past 
Congresses seems clear--to impose excise taxes on vehicles that 
disproportionately stress our highways. It is important that we clarify 
who should pay these taxes through the legislative process. Current 
Treasury regulations contain a number of exclusions from the definition 
of highway vehicle and therefore provide exclusions from the imposition 
of a number of excise taxes which are dependent upon this definition. 
One of these exclusions exempts certain vehicles specially designed for 
off-highway transportation for which the special design substantially 
limits or impairs the use of such vehicle to transport loads over the 
highway.
  I proposed the amendment to codify this off-highway vehicle 
exception--an amendment which became section 852 of this conference 
report--because I believe that these excise taxes should not be imposed 
on vehicles which make little or no use of the public highways. Under 
the definition of off-highway vehicle which is provided in this 
conference report, a vehicle is not treated as a highway vehicle if it 
is specially designed for the primary function of transporting a 
particular type of load other than over the public highway and because 
of this special design its capability to transport a load over the 
public highway is substantially limited or impaired. In determining 
whether substantial limitation or impairment exists, account may be 
taken of factors such as the size of the vehicle, whether it is subject 
to the licensing, safety, and other requirements applicable to highway 
vehicles, and whether it can transport a load at a sustained speed.
  The Statement of Managers accompanying this conference report states 
that, when determining whether a vehicle qualifies for the off-highway 
exception, the fact that its considerable physical characteristics for 
transporting its load other than over the public highway, when compared 
with its physical characteristics for transporting the load over the 
public highway, establish that it is specially designed for the primary 
function of transporting its load other than over the public highway. 
These types of vehicles should not be defined as a highway vehicle and 
should not be subject to the excise taxes at issue.
  We often have situation in the mining area of my state where large 
trucks are used to haul coal in off-highway operations. When these 
trucks are designed and built, many thousands of dollars are spent to 
modify standard truck chassises before bed installation. Generally, 
heavier axles, transmissions and other drive train components, as well 
as other modifications needed to allow the vehicles to operate at lower 
operating speeds carrying loads significantly heavier than those 
legally allowed on the highways, must be added to the trucks. The 
trucks generally have beds which, along with the truck itself, cause 
the vehicle's width to exceed that which is allowed to be operated on 
the public highways of any state. Often these trucks do not need to be 
licensed like on-highway vehicles in Kentucky and neighboring coal 
states because the trucks are an off-highway vehicles by state 
standards. These trucks are actually so large that it is not even legal 
to drive them on highways, except in very limited circumstance usually 
involving special trip permits. In fact, very substantial modifications 
would need to be made to the vehicles to cause them to be legal for 
highway use. Insurance agents, State licensing agents, State sales tax 
officials, and even our own transportation laws all recognize these 
vehicle as ``off-highway.'' It is clear

[[Page S11214]]

that, by reason of special design, the use of such vehicles to 
transport loads over the public highways is substantially limited or 
substantially impaired.
  I am concerned about the interpretation of these rules by the 
administration. Make no mistake about it, as a member of the Senate 
Finance Committee, I will be watching this issue closely to ensure that 
the intent of Congress is being followed with regard to the imposition 
of taxes on highway vehicles and the exception of nonhighway vehicles 
from these taxes. I will not hesitate to urge the Congress to address 
this issue again if necessary to ensure that congressional intent is 
being properly implemented.
  Mr. ROCKEFELLER. Mr. President, on behalf of all hard working West 
Virginians who are worried about keeping their jobs, I must oppose the 
corporate tax bill the Senate is considering today. For more than a 
year, I have been working with my colleagues to craft legislation that 
would address the needs of our manufacturing industry, and I was proud 
to vote for a Senate bill earlier this year that promised real relief 
for our economy. However, the legislation before us bears only a faint 
resemblance to the bipartisan Senate bill, and I believe it would do 
more harm than good. I urge my colleagues to reject this legislation. 
We can do better than this, and we owe it to American workers.
  Last September, I introduced legislation that would offer help to our 
struggling manufacturing sector. My bill would repeal the Foreign Sales 
Corporation/Extraterritorial Income tax provisions to ensure that 
European tariffs against American exports are lifted. It would create a 
new tax deduction for domestic manufacturers to essentially lower their 
corporate income taxes by 3 percent. In addition, my legislation calls 
for a tax credit to make health care for older workers more affordable. 
Finally, my legislation would strengthen our trade protections.
  On May 11, 2004, the Senate voted 92 to 5 to support the Jumpstart 
Our Business Strengths, JOBS, Act, which contained the core 
manufacturing deduction I support. This Senate bill was the product of 
constructive, bipartisan negotiations. While I did not like every last 
provision in the bill, it represented a balanced set of tax incentives 
that would help our factories compete globally.
  Having worked so hard to craft the good legislation produced by the 
Senate, I am extremely disappointed to be faced with such a bad 
conference report. This conference report is riddled with problematic 
provisions. But the most fundamental flaw is that this bill actually 
does more to reward companies for moving jobs overseas than it does to 
help companies who are struggling to keep their American factories 
open.
  Right now workers in my state are worried about being laid off. 
Nationwide, we have lost almost 3 million manufacturing jobs in four 
years. American companies are struggling to succeed in a tough global 
marketplace. Yet, this Congress is considering legislation that 
provides tens of billions of dollars in tax breaks for American 
companies with factories abroad, but includes very little for American 
factories that are struggling to stay open at home. Many factories are 
simply not profitable enough to benefit from the deduction provided in 
this bill.
  I supported two key provisions in the Senate-passed version of this 
bill that would provide relief to struggling companies. The net 
operating loss carry-back provision would allow unprofitable companies 
to reclaim some of the taxes they had paid on previous earnings. And a 
provision to allow companies to use alternative minimum tax credits in 
lieu of favorable depreciation rules would have provided a real 
incentive for factories to invest in America. But both of these 
provisions have been excluded from the final bill. By contrast, this 
bill does include a new 30 percent tax break for companies that moved 
factories overseas and then kept the profits offshore to avoid paying 
their fair share of taxes.
  Rewarding companies for offshoring is just one of the ways that this 
bill makes American workers less secure. In spite of Senate support for 
a provision to prevent the federal government from outsourcing its 
contracts to foreign workers, this legislation includes no such 
restriction. The conference committee also dropped a provision to 
protect the overtime pay of millions of workers across the country.
  Instead of protecting workers, this legislation is rife with 
giveaways to corporate interests. For just one example, the legislation 
repeals a 4.3-cent excise tax on railroads diesel fuel. By providing no 
corresponding relief to captive shippers, the bill ensures that 
consumers will have to pay more for many goods shipped on the Nation's 
railways.
  In another effort to appease corporate interests, the conference 
committee actually protected many abusive tax shelters. To ensure that 
every company and individual pays a fair share of taxes, and to 
mitigate this bill's effect on our spiraling national debt, the Senate 
supported a number of strict provisions to close tax loopholes. 
Unfortunately, $40 billion worth of tax shelters will remain available 
even if this legislation passes. I will put my colleagues on notice 
right now that I intend to continue the fight to shut down those 
abusive tax schemes.
  Among the corporate interests that are best protected by this bill 
are tobacco companies that peddle their deadly products to our Nation's 
children. The House of Representatives ignored a bipartisan Senate 
compromise to link a buyout for tobacco farmers with regulation of 
tobacco products by the Food and Drug Administration. As a result, more 
children will take up the awful habit of smoking.
  And while I am on the subject of America's young people, let me 
mention the bill they can expect from the legislation we are 
considering today. The Senate insisted that the legislation be revenue 
neutral, that is, it must not add to the debt. However, as we have seen 
time and time again from this Congress, this goal was met using 
gimmicks. Many of the tax breaks in this bill are either phased in 
slowly or sunset after a few years. If expiring provisions are 
extended, as there will certainly be great pressure to do, the net cost 
of the bill over the next 10 years would be almost $100 billion.
  Regrettably, as we are accumulating more debt for our children to pay 
off, we are not building the technological infrastructure that will be 
necessary to make America's economy competitive in years to come. The 
United States has now slipped to 11th in the world for broadband 
penetration, with rural areas lagging behind considerably. The Senate 
JOBS Act included a provision I have championed to provide tax 
incentives for the deployment of broadband. I am extremely disappointed 
that this provision, like so many others, was dropped from the final 
bill.
  I have just gone through a laundry list of important reasons to 
oppose this bill, but in the end, my judgment about this legislation 
came down to a very simple test: Is this in the best interest of 
working West Virginians? I cannot support this bill because the fact 
is, it is not in the best interest of working West Virginians. I urge 
my colleagues to reject this bill and work with me to pass legislation 
that will truly benefit American workers.
  Mr. REED. Mr. President, this week, a conference committee filed its 
report on legislation that was originally designed to repeal provisions 
in the tax code that have been found by the World Trade Organization to 
be illegal export subsidies. Months ago the European Union began 
imposing retaliatory tariffs on select American exports, including such 
important Rhode Island exports as machinery and jewelry. The targeting 
of the jewelry industry is especially troubling because Rhode Island is 
among the three biggest jewelry-producing States, and this sector 
accounts for 36 percent of the total trade targeted by the retaliatory 
duties. Without congressional action to repeal these export tax 
provisions, these tariffs would grow progressively until reacing 17 
percent by March of 2005.
  Unfortunately, I have serious concerns that the conference agreement 
before us today would not even provide immediate relief to our jewelers 
and other businesses targeted by these tariffs. The Senate-passed JOBS 
Act included a carefully crafted transitional benefit for those firms 
currently receiving FSC/ETI assistance. However, the bill before us 
includes transitional relief that is still export-contingent and could 
be challenged by the EU as still not being WTO-compliant. In fact,

[[Page S11215]]

according to an article yesterday in the Washington Post, EU spokesman 
Anthony Gooch suggested that this legislation would not accomplish its 
central goal of lifting European sanctions due to the transitional 
assistance. This is the reason we have this legislation in the first 
place, and I am disappointed that the House conferees have potentially 
set up a repeat of tariffs on our Nation's domestic manufacturers and 
exporters.
  That brings me to the other compelling reasons for the original JOBS 
Act: the bill, as passed by the Senate, replaced the Foreign Sales 
Corporation and Extraterritorial Income regimes with a more robust set 
of incentives for domestic manufacturing. At a time when domestic 
manufacturing, long the backbone of the American economy, is bleeding 
prized jobs to foreign countries, it is incumbent on Congress to put 
forward a responsible economic plan and provide important assistance to 
manufacturers that keep their operations here in the United States.
  While the conference agreement does include a tax deduction to 
provide assistance to a broad-based group of manufacturers, unlike the 
Senate-passed legislation, it does not make a distinction between 
manufacturing domestically or abroad. It removed the so-called 
``haircut'' that would have provided an incentive for companies to do 
their manufacturing here at home instead of shipping it abroad. Yet 
again, we see that House Republicans are unwilling to stand up for 
those manufacturers, small and large, that have kept their operations 
here in the United States.
  In fact, if we look at the bill as a whole, we see that of the broad-
based tax incentives, a larger net amount of money would be dedicated 
to international provisions than those targeted at production here at 
home. It is difficult to reconcile the very real challenges facing 
domestic manufacturers with the inclusion of huge tax breaks for 
multinational corporations. Ultimately, providing tax breaks to 
multinationals means that manufacturing jobs are going overseas.
  The corporate repatriation provisions in H.R. 4520 are responsible 
for a significant amount of these costs, but there is little evidence 
that they will ultimately help to create jobs. Even Secretary Snow, 
speaking for the Administration, seemed to understand this inequity. He 
wrote in a letter to Chairman Grassley, and I quote:

       [T]he Administration also has concerns regarding the 
     fairness of the repatriation provision included in both 
     bills. This provision would offer international 
     corporations a partial ``tax holiday'' for repatriating 
     foreign income that is currently held overseas. U.S. 
     companies that do not have foreign operations and have 
     already paid their full and fair share of tax will not be 
     able to benefit from this provision. Moreover, the Council 
     of Economic Advisers' analysis indicates that the 
     repatriation provision would not produce any substantial 
     economic benefits. The Administration believes the $3 
     billion revenue cost of this provision could be better 
     used to reduce the tax burden of job creators in the 
     United States.

  This is not the only place where this bill failed to live up to its 
full potential to help domestic manufacturers. I am deeply disappointed 
several months ago that last-minute lobbying by multinational 
corporations were effective in removing from the Senate bill a 
commonsense provision to help reduce offshore outsourcing termed 
contract manufacturing.
  Similarly, House Republicans voted to leave out the Dodd offshoring 
amendment, which would have prevented Federal taxpayers' dollars from 
being used to support outsourcing in future government contracts. This 
is a commonsense measure to make sure that the Government does not 
actively contribute to outsourcing, and its rejection by the conferees 
is a sign of their strong disregard of the practice of ``buying 
American.''
  This brings me to the subject of corporate tax shelters. We have been 
fighting to close these loopholes benefiting large companies for a 
decade. A recent study commissioned by the IRS estimated that abusive 
corporate tax shelters cost honest Americans as much as $18 billion 
annually, or $180 billion over 10 years. Put another way, every month 
that the majority and the administration obstruct efforts to shut down 
corporate shelters, it costs honest taxpayers over $1.5 billion. It has 
been several years now since the Enron debacle, and yet the majority 
has still not sent to the President a tax bill to shut down these 
shelters. While the Senate has taken actions over and over again to 
target shelters, they have been blocked by the majority party.
  For example, in June 2002, the Senate passed tax shelter legislation 
as a stand alone bill and as part of the CARE Act. The other chamber 
did not. The Senate passed it again in April 2003 as part of the CARE 
Act; and the other body rejected it. The Senate passed shelter 
legislation as part of the energy bill in July 2003, and the other 
chamber rejected it. The Senate passed shelter legislation as part of 
the Jobs and Growth stimulus bill in May 2003, and it was stripped out 
in conference.
  So I was pleasantly surprised to hear that tax shelter provisions 
were included in the conference agreement. Then I had a chance to look 
a little more closely. The conference bill is a shadow of the Senate-
passed version, raising $40 billion less by closing corporate tax 
loopholes than the Senate-passed version. $15 billion of this lost 
opportunity to make the Tax Code fairer for all Americans would have 
eliminated phony transactions that have no economic substance and have 
been used by companies like Enron to avoid taxes. Another measure 
modified by the majority conferees would continue to allow those 
individuals who promote tax shelters to make profits while doing so. In 
contrast, the Senate would have levied a 100 percent penalty to prevent 
them from making any such profit at the expense of taxpaying Americans.
  Sadly, while the underlying core components of the bill are flawed at 
best, much of the rest of the bill is deeply defective. I am perhaps 
most disheartened over the section on tobacco--and the notable absence 
of language authorizing the FDA to regulate it. This might just be the 
largest children's health issue facing Congress. The tobacco industry 
spent more last year than ever before on advertising--over $11.5 
billion--and children continue to become hooked on smoking while they 
are young and unable to understand the health ramifications of smoking. 
It is now believed that smokers could lose on average 10 years off 
their lifespan--an entire decade. At a time when we are talking about 
soaring health care costs, it is vital that we regulate a substance 
that causes 440,000 deaths each year and results in more than $75 
billion in direct medical costs annually--much of which is paid for by 
taxpayer-financed health care programs.

  The Supreme Court has acknowledged that tobacco is ``perhaps the 
single most significant threat to public health in the United States'' 
and has effectively reaffirmed that the FDA is the most appropriate 
agency to regulate tobacco products, given the general scope of its 
authority and its emphasis on protecting the public health. It is now 
that Congress must act to clearly give the FDA the long overdue 
authority it requires to protect Americans, and particularly our 
children.
  I was willing to accept the inclusion of a tobacco buyout under the 
clear understanding that it would remain linked to giving the FDA 
regulatory authority over tobacco. Americans want us to take this 
important step, and but this report falls short. We all know that 
tobacco is a substance that reduces the quality of life and results in 
untimely death with lifelong use. We had a unique opportunity with this 
bill to make a real difference in helping to protect our nation's 
children and the majority conferees killed this bipartisan effort that 
Senators Kennedy and DeWine spearheaded.
  The conference agreement left out other very important and widely 
supported worker protections that would have prevented President Bush's 
regulations that will deny overtime protections to 6 million hard-
working men and women, including registered nurses, cooks, clerical 
workers, nursery school teachers, and many others from taking effect.
  The Senate has voted against the Bush overtime rule three times, and 
the other Chamber twice. The Senate FSC bill included two amendments 
that preserve workers' overtime--the Harkin amendment that would block 
only the parts of the overtime rule that strip workers of overtime 
rights, and the Gregg amendment that passed 99 to 0, which would 
preserve overtime

[[Page S11216]]

for 55 job categories. Majority conferees, at the behest of the White 
House, stripped the overtime protections from the report. Even after 
the Senate conferees voted yet again to retain the Harkin amendment, it 
was stripped out.
  The Fair Labor Standards Act was enacted in the 1930's to create a 
40-hour workweek, and it requires workers to be paid fairly for any 
extra hours. American workers work more hours than any others in the 
world--1,900 hours per year. Yet, still, they need more to get by and 
make ends meet. With 8 million Americans out of work, and with so many 
other families struggling to make ends meet, cutbacks on overtime are 
an unfair burden that America's workers should not have to bear. 
Especially in times like these, it's an incentive for job creation, 
because it encourages employers to hire more workers, instead of 
forcing current employees to work longer hours.
  I am amazed that the majority has again stripped this provision which 
has overwhelmingly passed both the House and the Senate on 5 separate 
occasions. This is a clear example of how the majority and this 
administration continue to turn their backs on working families.
  Now, in addition to leaving out a number of the important provisions 
that I've just enumerated, it also contains many costly and extraneous 
ones; $101 million for NASCAR by changing the tax treatment of 
grandstand facilities; $44 million for importers of Chinese made 
ceiling fans; $28 million for cruise ship operators; $231 million in 
taxpayer funds to finance bonds for four so-called ``Green Bond'' mall 
developments; $247 million in bonus depreciation of some jets and 
planes; $5 billion over only two years for a new deduction for state 
and local sales taxes in a select few states; and $27 million for horse 
and dog gamblers. This one is especially interesting because it exempts 
foreign gamblers from paying taxes up front on their winnings at horse 
and dog tracks.

  My question is: Where's the special tax break that will help 
struggling working families in my state? How does it help American 
workers by giving tax breaks for Chinese fans to be imported tax free 
to the United States? The Administration seems to agree, and Secretary 
Snow also wrote in his letter to Chairman Grassley that:

       Both the House and Senate-passed bills include a myriad of 
     special interest tax provisions that benefit few taxpayers 
     and increase the complexity of the tax code. Legislation 
     taking up more than 1000 pages of statutory language (or even 
     400 pages) goes far beyond the bill's core objective of 
     replacing the FSC/ETI tax provisions with broad-based tax 
     relief that is WTO-compliant.

  At the same time, the majority party voted to strip the legislation 
of an amendment offered by Senator Landrieu that would provide a tax 
break to companies for paying the salaries of activated National 
Guardsmen and Reservists.
  Lastly, it continues to employ the same budget gimmickry as previous 
tax bills put forward by the majority party and the administration over 
the past 3 years. For example, a dozen of the tax cuts in this report 
will expire between 2005 and 2008. Assuming that these provisions are 
extended, the cost to the Treasury will increase by an estimated $80 
billion!
  This bill could have been an ideal vehicle for bipartisan efforts to 
shape a comprehensive economic policy for our nation's manufacturing 
sector. Unfortunately, it proved to be too alluring for the special 
interests who just could not restrain themselves. At a time of a record 
Federal budget deficits--most recently pegged at $422 billion for 
Fiscal Year 2004--this bill contains too many giveaways to corporations 
and not enough to help domestic manufacturers and working families. 
Most regrettably, its passage does not seem to guarantee that the EU 
will lift its harmful sanctions against numerous United States 
products. Companies in our home states are hurting from EU retaliatory 
tariffs, like jewelry manufacturers in Rhode Island, and the conferees 
should have taken the responsible path in assisting those who are 
struggling. But they did not.
 Mr. McCAIN. Mr. President, I voted against cloture on this 
measure yesterday because it is loaded with corporate pork and special 
interest tax provisions. This conference report, at 633 pages and $148 
billion, serves as a sad example of the way business is done around 
here. The special interests continue to rule at the expense of the 
hardworking American taxpayer.
  The original intent of this legislation was laudable. Earlier this 
year, we missed a golden opportunity to pass a good, clean bill that 
would have brought us back into compliance with World Trade 
Organization, WTO, agreements and stop the burdensome tariffs now 
imposed on our manufacturers. Simply repealing the extraterritorial 
income, ETI, exemption tax benefit for exports would have saved $50 
billion. Instead, because this was known to be a ``must pass'' piece of 
legislation, it was loaded up with billions and billions of dollars in 
tax breaks for big corporations and special interests of all types. I 
recognize the need to pass legislation to bring the United States back 
into compliance with the WTO, and I am more than willing to support a 
bill that accomplishes that goal. Unfortunately this legislation's 
worthy purpose has taken a back seat to a host of special interest tax 
provision add-ons and a big buyout for tobacco farmers.
  In an editorial on the issue, The Washington Times, noted that ``the 
ideal solution would have been a quick, simple repeal of FSC-ETI, which 
is bad economic policy in any case. The $50 billion in savings could 
then have been used to streamline and simplify the corporate tax 
code.'' I couldn't agree more. The Tax Code is far too complex and is 
in dire need of reform. While campaigning in recent months, the 
President has stated, with tremendous approval from every audience, 
that reforming and simplifying the Tax Code would be one of the main 
objectives of his second term. I will support him in that effort, and I 
encourage him to take the first step in that reform by vetoing this 
bill.
   We have a deficit that is quickly approaching $500 billion--that is 
half of a trillion dollars. The proponents of this bill say that it's 
``revenue neutral.'' Well, I doubt that, and I am not alone in my 
skepticism. The Center for Budget and Policy Priorities has figured 
that the bill would actually cost $80 billion if the temporary tax cuts 
are extended for the full 10 years. Sadly, I have no doubt that those 
extensions will happen--because we simply don't say no to anyone 
anymore. We are told that this bill is offset by closing tax loopholes, 
and I will be the first person to say that I support closing those 
loopholes, but can anyone explain to me the rationale behind closing 
loopholes in order to raise revenues to open more loopholes? It is 
remarkable. It makes no sense.
  As I have said many times in the past, we need to start making some 
very tough decisions around here about our fiscal future. We need to be 
thinking about the future of America and the future generations who are 
going to be paying the tab for our continued spending. It is simply not 
fiscally responsible for us to continue to load up bills with good 
deals for special interests and their lobbyists. We have had ample 
opportunities to tighten our belts in this town in recent years, and we 
have taken a pass each and every time. We can't put off the inevitable 
any longer.
  Here is the stark reality of our fiscal situation. According to the 
General Accounting Office, the unfunded Federal financial burden, such 
as public debt, future Social Security, Medicare, and Medicaid 
payments, totals more than $40 trillion or $140,000 per man, woman and 
child. To put this in perspective, the average mortgage, which is often 
a family's largest liability, is only $124,000--and that is often borne 
by the family breadwinners, not the children too. Instead of fixing the 
problem, and fixing it will not be easy, we only succeeded in making it 
bigger, more unstable, more complicated, and much, much more expensive.
  The Committee for Economic Development, the Concord Coalition, and 
the Center on Budget and Policy Priorities jointly stated that, 
``without a change in current (fiscal) policies, the federal government 
can expect to run a cumulative deficit of $5 trillion over the next 10 
years.'' They also stated that, ``after the baby boom generation starts 
to retire in 2008, the combination of demographic pressures and rising 
health care costs will result in the costs of Medicare, Medicaid and 
Social Security growing faster than the economy. We project that by the 
time today's

[[Page S11217]]

newborns reach 40 years of age, the cost of these three programs as a 
percentage of the economy will more than double--from 8.5 percent of 
the GDP to over 17 percent.''
  Additionally, the Congressional Budget Office has issued warnings 
about the dangers that lie ahead if we continue to spend in this 
manner. In a report issued at the beginning of the year, CBO stated 
that, because of rising health care costs and an aging population, 
``spending on entitlement programs--especially Medicare, Medicaid and 
Social Security--will claim a sharply increasing share of the nation's 
economic output over the coming decades.'' The report went on to say 
that, ``unless taxation reaches levels that are unprecedented in the 
United States, current spending policies will probably be financially 
unsustainable over the next 50 years. An ever-growing burden of federal 
debt held by the public would have a corrosive . . . effect on the 
economy.''
  So what do we do when we are faced with these problems? We pass a tax 
bill that is loaded with corporate pork.
  This conference report is called the JOBS Act, but I think we should 
call it what it truly is: ``the corporate tax haven act.'' I doubt it 
will create any new jobs but it will certainly allow a few lucky folks, 
who have extremely well paying jobs, to make even more at the expense 
of the taxpayers. I'm sure the energy corporations are pleased that 
they won't have to wait for the energy bill to add to their over-
flowing coffers.
  Yesterday we passed a bill to address the issue of FDA regulation of 
tobacco products. Essentially, the consideration of a free standing 
bill to address this issue at this stage means nothing. We're supposed 
to be appreciative that the FDA bill was taken up and passed quickly--
we all know that passing a controversial Senate bill on a Sunday at the 
end of the session is meaningless. The House will not move the bill, 
and, even if by some miracle they did, there certainly would be no 
conference held. This is a sham--plain and simple. The Senate 
had already addressed the issue of FDA regulation of tobacco. Sadly, 
the conferees on the FSC/ETI bill stripped that provision from this 
conference report.

  What the conferees did was unconscionable. They turned their backs on 
the health of our nation's youth and opted to strike the DeWine-Kennedy 
amendment that would have granted authority to the Food and Drug 
Administration, FDA, to regulate tobacco products. It is a very sad day 
for public health. They have used the FDA tobacco authority language as 
a linchpin to effectuate the passage of the underlying tax bill. It was 
nothing more than a sweetener to them and now that it is no longer of 
use, the conferees have discarded the language, and with it, who knows 
how many lives.
  In striking this historically important provision, the conferees 
ignored the public and medical health community, child health 
advocates, and registered voters who in a recent poll overwhelmingly, 
69 percent favor FDA authority over tobacco. Even in the six leading 
tobacco growing states, support for FDA authority is above 65 percent.
  Without FDA authority over tobacco, there will be no regulation of 
tobacco marketing, no information disclosure such as nicotine and 
carcinogenic content, no requirement that can force the tobacco 
industry to remove harmful components from their products, and no pre-
market approval of ``new products'' marketed as ``safer cigarettes.''
  Tobacco-related illnesses and deaths in this country have reached 
epidemic proportions, but according to the Surgeon General, tobacco use 
is ``the single most preventable cause of death and disease in our 
society.'' The Surgeon General estimated 400,000 U.S. citizens lose 
their lives each year as a result of a smoking-related illness. This 
figure translates into approximately 1,200 smoking-related deaths per 
day. This loss of life has a significant economic impact accounting for 
an estimated $75 billion per year in health care expenses. Most 
tragically, however, the Surgeon General estimates that approximately 
2,000 kids start smoking every single day, and that one third of them 
will die from a smoking-related illness.
  I thank Senators DeWine and Kennedy for their commitment to our 
Nation's youth, and I am certain that they will continue to fight for 
FDA authority over tobacco because it is simply too important not to 
continue to fight. We must protect the public health and hold the 
tobacco industry accountable for the production and marketing of its 
products, particularly as their business practices affect children, but 
I fear we have lost yet another opportunity.
  Not only have the conferees jeopardized the health of our Nation's 
youth by striking the FDA authority provisions of this bill, they left 
provisions that would eliminate the quota system and channel $10 
billion--into the pockets of tobacco farmers--many of whom no longer 
even farm tobacco--and disguised the money as a buyout to encourage 
such ``farmers'' to shift their crops to something other than tobacco. 
According to the Wall Street Journal, among these ``tobacco farmers'' 
who would benefit from a tobacco buyout are Larry Flynt and his 
brother, who admittedly abandoned the ``blood, sweat, and tears'' of 
the tobacco business to pursue pornography.
  I fear that the conferees have failed to realize that, by not setting 
domestic production restrictions, and not restricting new market 
entrants from farming tobacco, they may be creating new opportunities 
for more tobacco farming. In doing so, they create the possibility that 
a greater supply of tobacco will result in reduced prices thereby 
making tobacco products more accessible to kids. Studies have shown 
that increases in the cost of cigarettes directly correlate to reduced 
youth smoking rates. Greater youth accessibility to tobacco products 
coupled with a lack of FDA authority over the marketing and information 
disclosure of these cheaper products is the most invidious combination 
possible. By turning their backs on FDA tobacco authority while 
simultaneously making it easier to grow and sell tobacco, the conferees 
may be exposing kids--not to mention adults--to an even greater health 
risk than they are today.
  As if the lack of FDA language wasn't bad enough, let me go through 
some of the other ridiculous items contained in this conference report.
  Many provisions in this bill remind me of the golden oldies we saw in 
the energy bill. One of the more generous tax breaks in this bill is a 
creative provision that allows energy companies to reclassify energy 
production as a manufactured good in order to qualify for potentially 
tens of billions of dollars in new tax deductions. The manufacturing 
tax deduction is currently available only to traditional manufacturing 
industries as an incentive for job creation. While this change in the 
tax code may not create manufacturing jobs, it does create a tax 
balloon, which increases to a maximum of 9 percent of a company's 
production income after 2009. The total estimated cost of this golden 
parachute is $76.5 billion. Other industries that will now be 
considered to be ``manufacturers'' are movie studios, real estate 
development, and construction companies. But the greatest share of this 
tax break will go to the oil and gas industry and electric utility 
companies.
  Fear not, not all of the largess goes to oil and gas companies. There 
are equal opportunities for other corporate and special interests to 
make profits at the expense of the taxpayers. An article in the Wall 
Street Journal on October 6, refers to the legislation as ``a trove of 
obscure breaks and perks'' and identifies four companies in Houston 
that were singled out for special treatment. These companies recently 
changed their addresses to the Cayman Islands and Bermuda when the 
Senate proposed a retroactive crackdown on businesses that incorporate 
offshore to shave their U.S. tax bills. Fortunately for them, the 
provision in this bill is no longer retroactive. Not only does the bill 
allow these companies to slip comfortably away, but others 
contemplating such actions will be heartened by the fact that the bill 
doesn't include a provision that would have supported Federal judges 
and the IRS in bringing companies that indulge in these improper tax 
shelters to justice.
  This bill also contains a tax credit totaling more than $2 billion 
over 9 years for industries generating electricity from alternative 
fuel sources. Let me be clear that I support clean renewable energy 
technologies as a

[[Page S11218]]

means to reduce greenhouse gas emissions and increase energy 
independence, but most of these subsidized technologies aren't clean. 
No matter how you look at it, chicken droppings simply are not a clean 
alternative fuel. Just how, exactly, does the public benefit from the 
subsidies provided for the burning of municipal trash and poultry 
waste, both which create significant air pollution?
  The most outrageous provision in this section could be easily missed. 
It defines ``refined'' coal as a qualifying renewable resource. 
According to the Tax Code, refined coal is just another name for 
synthetic fuel. I would be greatly relieved if my colleagues could 
document that this is not the case, but it appears to me that the 
synthetic fuel credit has been snuck in here along with so-called 
renewable sources of electricity.
  I have spoken before about the synthetic fuel tax credit scam that 
was revealed by Time reporters in October 2003. It is shameful for 
Congress to perpetuate this expensive hoax, which has cost taxpayers $4 
billion since 1999. The IRS followed up the Time report with a November 
2003 bulletin stating, ``The Service believes that the processes 
approved under its long standing ruling (that a synthetic fuel must 
differ significantly in chemical composition from the substance used to 
produce it) do not produce the level of chemical change required.'' 
Incredibly, it goes on to say, ``Nevertheless, the Service continues to 
recognize that many taxpayers and their investors have relied on its 
long-standing ruling to make investments.'' So, basically, we should 
just ignore the fact that chemical change isn't occurring. They should 
have just said that if Congress wants to continue this shameful scam, 
then the IRS will let it pass.
  The original intent of the synthetic fuels tax credit was not sheer 
folly. It is just that, for a variety of reasons, a synthetic fuel 
industry never materialized in the United States. Canada invested 
heavily in synthetic fuel production over the past decades and sells 
millions of barrels of synthetic crude oil to the United States 
annually. The only evidence of a U.S. synthetic fuel industry is this 
gigantic tax shelter. One doesn't need to be in the oil or gas business 
to strike it rich with synthetic fuels either--one of the greatest 
beneficiaries of this tax shelter--and that is all that it is--a tax 
shelter, is a very profitable hotel chain, Marriott. This is an equal 
opportunity bill for wealthy corporate interests.
  Wait, we can't forget ethanol! $77 million from this bill will go to 
ethanol manufacturers. No tax break bill would be complete without 
subsidies for this synthetic fuel, ethanol gasohol, created and 
perpetuated by Congress. And it all starts with corn. Ten percent of 
the corn grown in this country is used to produce ethanol. Of course, 
corn producers, like producers of other major crops, receive farm 
income and price supports. In the 107th Congress, this body passed the 
Farm bill which appropriated more than $26 billion in direct assistance 
to corn-growers over 6 years. That is an average of $4.3 billion in 
direct subsidies each year just to corn-growers!
  In addition to the subsidies going primarily to agribusiness 
corporations, the public pays for ethanol in other ways as well. More 
energy is used in the production of ethanol than it provides to 
consumers, it increases the per gallon cost of gasoline, and it results 
in environmental degradation. Finally, to add to all these insults, 
ethanol subsidies increase the public's grocery costs. Subsidized corn 
results in higher prices for meat, milk, and eggs. This happens because 
about 70 percent of corn grain is fed to livestock and poultry in the 
U.S. Increasing ethanol production further inflates corn prices and 
subsequently food prices.
  So the American public provides billions to create this artificial 
market for ethanol, and then pays more for their groceries and what do 
they get in return? I will tell you what they get in return--absolutely 
nothing. No reduction in petroleum fuel use. No reduction in air 
pollution. There is one reduction, however, consumers are rewarded 
with--reduced fuel economy. More gasohol must be used to go the same 
distance as conventional fuel. So no one can honestly claim that 
subsidizing ethanol is in the public interest or an element of sound 
national energy policy.

  Another objectionable provision is the ``green'' bond program. The 
original form of this provision prompted the ``hooters'' part of my 
``hooters and polluters'' reference to the energy bill. Well, the 
hooters is gone, but this program is still top-heavy with tax breaks--
$231 million for the real estate corporations that are going to develop 
these projects. With or without a hooters, I don't see how it's in the 
public's interest to pay for enormous commercial facilities in three or 
four States. These projects all sound like enterprises that can stand 
or fall on their own--they don't need the taxpayers throughout the 
country giving them a big boost.
  Let me give you a sense of the ``public works'' that benefit from 
this provision:

       Destiny USA in Syracuse, NY is an entertainment and retail 
     development touted as an economic stimulus for upstate New 
     York. The primary developer has committed to 3.2 million 
     square feet of space with a price of close to $700 per square 
     foot. They estimated these green bonds would save them close 
     to $100 million.
       Belmar in Lakewood, CO is a $500 million redevelopment of a 
     mall, which will include many restaurants, clothing stores, 
     shops, and office space.
       Atlantic Station in Atlanta GA is a 138-acre redevelopment 
     of a former steel mill which will include 12 million square 
     feet of retail, office, hotel space, and parks.
       Riverwalk Development in Shreveport, LA, minus the Hooters, 
     this $150 million project will feature stores, restaurants, 
     movie theaters, hotels, and entertainment spots.

  These all sound like grand, money-making ventures to me--they don't 
need taxpayer support. Pork called ``green bonds'' is still pork.
  Some of the other notable giveaways in this grab bag of corporate tax 
delights are:

       The ``hummer in every home'' provision is still intact. It 
     is just not quite as expensive as it has been the past. This 
     provision extends the existing $100,000 tax deduction for the 
     purchase of vehicles weighing over 6,000 pounds. The original 
     intent of this deduction was to benefit farmers and other 
     business owners in need of heavy-duty vehicles. 
     Unfortunately, some individuals unscrupulously seized on this 
     loophole in order to purchase Hummers, Escalades and other 
     expensive, gas guzzling SUVs. Thankfully, due to the 
     insistence of Senator Nickles, those purchasing luxury sport 
     utility vehicles can no longer take advantage of the $100,000 
     deduction. However, they can still take a deduction of up to 
     $25,000. This could cost our Treasury $350 million for every 
     100,000 taxpayers who take advantage of this loophole. Again, 
     it is not as bad as it used to be, but it is still too 
     expensive and should be eliminated. The cost of foreign 
     oil is about $53 a barrel. Shouldn't we, as a practical 
     matter, be encouraging the use of smaller, more fuel 
     efficient vehicles?
       There is a tax break for ``small refiners'' of oil to 
     improve clean air standards. Unfortunately, ``small'' is 
     defined as those with refining capacity below 205,000 barrels 
     per day, so some of the large oil companies can get in on 
     this one too.
       Three of the world's richest energy companies--BP, Exxon 
     Mobil, and Conoco Phillips--stand to be the primary 
     recipients of two tax breaks, totaling $445 million, for 
     building an Alaskan natural gas pipeline and for processing 
     natural gas for the project. Considering that these three 
     companies have enjoyed after-tax profits of $95 billion since 
     2001, the wealthy shareholders of these companies--not 
     taxpayers--should foot this bill. In addition, these three 
     companies are allowed to depreciate their natural gas 
     pipeline over seven years, costing taxpayers another $150 
     million.
       There is $27 million for dog and horse race tracks to help 
     lure more foreigners to gamble at U.S. horse and dog racing 
     facilities; $995 million for the treatment of aircraft 
     leasing and shipping income. This provision would provide a 
     tax exemption on income derived from an aircraft or vessel 
     leasing business.
       There is $28 million for a cruise ship tax break. This 
     provision would allow the cruise industry to delay paying 
     taxes on airplane tickets, hotels, and other excursions it 
     sells in the United States. The delay would save the Carnival 
     Corp. $15 million, and Royal Carribean would save anywhere 
     from $8 million to $10 million.
       There is $9 million for a tax break on archery products; 
     $11 million for a provision that would reduce the excise tax 
     on fishing tackle boxes; $44 million for the importers of 
     Chinese ceiling fans; $4 million to repeal the excise tax on 
     sonar devices that are used for finding fish; $247 million 
     for a provision that is designed to help the producers of 
     small jets and planes, 60% of which are built in Kansas. Lear 
     Jet and Cessna benefit greatly from this provision; $27 
     million for providing tax-free treatment if farmers replace 
     livestock because of weather related conditions; $101 million 
     for NASCAR track owners; $57 million for a tax break for 
     shipping companies; $501 million for a tax credit for the 
     maintenance of railway tracks; $336 million for a tax break 
     for Hollywood studios; $234 million for a tax break for the 
     producers and

[[Page S11219]]

     marketers of alcoholic beverages; and $495 million for Naval 
     shipbuilders.

  Where is it going to end? We have to face the facts, and one fact is 
that we can't continue to cater to wealthy corporate special interests 
any longer. The American people won't stand for it, and they 
shouldn't--they deserve better treatment from us. I strongly encourage 
my colleagues to vote against this conference report.
  The PRESIDING OFFICER. Who yields time?
  Mr. BAUCUS. I yield 1 minute to the Senator from Louisiana.
  The PRESIDING OFFICER. The Senator from Louisiana now has 6 minutes.
  Ms. LANDRIEU. I intend to use 2 minutes and yield back the remainder 
of my time to the leadership.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Ms. LANDRIEU. Mr. President, while the leaders are in the Senate with 
their final remarks, I take the opportunity again to thank them for 
their work--Senator Baucus and Senator Grassley as the leaders of the 
Finance Committee--as we work toward a very significant victory and a 
conclusion on the issue of a tax credit for the Guard and Reserve. The 
Senate is going on record again this morning, as we did several weeks 
ago when this bill left the Senate, to include them in a tax provision. 
They will not technically be included in this bill, but there will be a 
bill sent back over to the House, as we said. That would not have 
happened without the help of Senator Baucus from Montana and Senator 
Grassley from Iowa. I personally thank them along with thanking Senator 
Durbin and Senator Boxer for their help on this original amendment.
  We have explained it as well as we can, the arguments as to why our 
Guard and Reserve deserve our focus and attention to provide help to 
their families while they are serving for all Americans on the front 
line. I am so pleased we could come together as Members of the Senate 
to provide that help for them.
  Now it is in the hands of the House of Representatives. As we return 
from this break, however long or short it is, we will then take up this 
issue as they decide over in the House how they would like to handle 
it. I hope they will take the bill as we have sent it, pass it, and 
then it will go to the President's desk for immediate signature because 
we all want to give them the help and support they most certainly are 
giving us at this special time.
  I yield back the remainder of my time.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. I yield myself such time as I consume.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BAUCUS. Mr. President, I first thank the chairman of our 
committee, Chuck Grassley, for the tremendous job he has done. I am 
blessed. We are all blessed to have him as chairman of our committee. 
He is very smart. He is very perceptive. He has terrific common sense 
and is wonderful to work with. He is as straight as they come. His word 
is his bond. If he tells you something, that is it. At the same time, 
when we work with him, it is very cooperative. In fact, he goes 
overboard. It reminds me of ``To Kill a Mockingbird'' when the 
protagonist, the lawyer, says: You walk around in his shoes to see that 
person's point of view. Chuck Grassley has the uncanny trait that he 
does not have to take the effort to walk around in another person's 
shoes because he already knows. He has walked around in so many shoes 
around Iowa. He has common sense that is rooted in the ground. He is a 
wonderful person. We are all very grateful to have him as chairman. I 
can say this having worked with him as the senior Democrat on the 
Finance Committee.
  Second, I deeply thank all of our staff who helped with this 
legislation. They have been wonderful. I ask unanimous consent to have 
their names printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

       This legislation would not have been possible without the 
     help of many.
       I appreciate the cooperation we received from the 
     Republican staff, especially Kolan Davis, Mark Prater, Ed 
     McClellan, Elizabeth Paris, Dean Zerbe, Christy Mistr, John 
     O'Neill, Everett Eissenstat and Stephen Schaefer, and Adam 
     Freed.
       I thank the staff of the Joint Committee on Taxation and 
     Senate Legislative Counsel for their service.
       I also thank my staff for their tireless effort and 
     dedication, including Russ Sullivan, Patrick Heck, Bill 
     Dauster, Matt Genasci, Matt Jones, Matt Stokes, Jon Selib, 
     Anita Horn Rizek, Judy Miller, Melissa Mueller, Liz 
     Liebschutz, Lara Birkes, Ryan Abraham, Wendy Carey, Tim Punke 
     and Brian Pomper. I also thank our dedicated fellows, Rhonda 
     Sinkfield, Scott Landes, Justin Bonzey, Jodi George, and 
     Cuong Huynh--and our dedicated law clerk Jeremy Sylestine.
       Finally, I thank our hardworking interns: Mary Tuckerman, 
     Kelsie Eggensperger, Paige Lester, Priya Mahanti, Brittney 
     McClary, and Audrey Schultz.

  Mr. BAUCUS. Finally, my greatest thanks are to the people of the 
State of Montana. I express my gratitude and thanks to the people of 
Montana for sending me here as their representative. I will never 
forget the people I work for. They are my bosses. They are my employers 
and the best anyone could ever have. I know each Member feels that way 
about his or her State. I am blessed to be able to represent Montana.
  Frankly, it is for that reason that, preparing for this bill last 
year, my staff and I spent a lot of time in Montana meeting with 
workers and owners of businesses all across our State. We visited over 
140 companies, 8 accounting firms and law firms, 11 economic 
development organizations in Montana. We spoke with about 60 companies 
over the phone, asking them what they thought about this legislation. 
How are Montana companies and interests affected by this bill? I simply 
wanted to know the biggest problems facing Montana businesses, I wanted 
to know what is working for them and what is not working for them, and 
I wanted to make sure that the manufacturing deduction in this bill 
will work for Montanans. Obviously, they had a lot of concerns.
  People in my State, as in many States, are worried about job 
security, health security, and economic security. Will they have jobs 
tomorrow? Will their jobs be cut because business is slow? What about 
health insurance coverage with health care costs going up? Will their 
businesses be able to grow and compete with foreign competition?
  We learned that any bill targeted to just corporations--that is, the 
standard corporation called C corporations--leave out most Montana 
businesses. That is because in Montana most businesses do not operate 
as conventional corporations. They work as partnerships or other 
enterprises that report their income not on a corporate basis but an 
individual income tax basis.
  We needed a broader definition of manufacturing to ensure that 
Montana farmers and ranchers got some tax relief. That is what we are 
enacting in the bill.
  I thank the hard-working men and women of Montana. Carlyle once said: 
All work is noble.
  I thank the hard-working men and women of Montana for their help in 
formulating this legislation. I thank them for supporting me as we 
advanced this bill. And I thank them for their hard work in the 
businesses they run. So it is to them today we dedicate this bill.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. GRASSLEY. Mr. President, I yield the Senator from Kentucky, our 
whip, 5 minutes.
  The PRESIDING OFFICER. The majority whip.
  Mr. McCONNELL. Mr. President, today is a truly historic day for my 
State, the Commonwealth of Kentucky. Burley tobacco production has been 
a part of our way of life going back to 1792 when Kentucky joined the 
Union. Tobacco itself--there are tobacco leafs painted in various 
places here in the U.S. Capitol--was the most important export product 
from the Colonies, predating the formation of our country.
  Over the last 40 years, we have come to understand that the use of 
tobacco products is certainly not good for our health. More Americans, 
correctly, are choosing not to use tobacco products. Consumption has, 
therefore, declined, as, frankly, it should.
  Back in the 1930s, when tobacco was still at its peak but we were in 
a national Depression, during the New Deal

[[Page S11220]]

a Federal tobacco program was created. After that program was enacted 
into law by President Roosevelt, employees from the U.S. Department of 
Agriculture went around and surveyed the farms in Kentucky and 
Tennessee and Virginia and the Carolinas and Georgia to find out what 
their historical production had been and assigned those what we now 
call quotas to the land.
  That quota was like an asset. It could be sold. It could be leased. 
It was an asset attached to the land. And that quota had in some early 
years grown but, of course, over the last few years it dramatically 
contracted. That asset was on its way to becoming worthless, many 
people felt, in my State.
  To give you a sense of how pervasive tobacco has been in the 
Commonwealth of Kentucky, when I came to the Senate some 20 years ago, 
we grew it in 119 of our 120 counties. We had 100,000 producers. The 
average base then was about three-quarters of an acre. So you had a lot 
of people in our State who got some income off burley tobacco. It 
provided for many families a significant portion of their income. For a 
whole lot of other families, because of the auction warehouse system 
under which it was sold in the fall, it provided Christmas money for 
the family, a second income, an opportunity for some extras. For a lot 
of other Kentuckians, it was very much a basic part of their income.
  Well, all this is in the process of changing. Six years ago, I 
advocated a buyout. At that time that was controversial in my State. In 
fact, I think a majority of the tobacco farmers thought I was in the 
wrong position. That certainly was the view of the Kentucky Farm Bureau 
and the burley council and the burley co-op, all of whom thought I was 
in the wrong position.
  A few years later, I noticed I was then being treated as a visionary 
who was ahead of my time and had sensed that this thing was heading in 
the wrong direction and we better try to figure out some way to achieve 
a buyout or we would never get an opportunity.
  A lot of people have contributed to this day. This buyout that is in 
this bill is not paid for by the taxpayers. And it is, indeed, a 
buyout. It terminates the program. The program is entirely terminated 
and off the books. People who vote for this bill will be able to say, 
among other things, that they ended the Federal tobacco program.
  It is paid for by a manufacturer's fee, which will no doubt be passed 
along to the consumers. And as public health advocates will tell you, 
the higher the cost of tobacco products, the fewer the number of people 
who will use them. So it even has a public health aspect to it.
  That is the version of the buyout, $10.1 billion over 10 years. That 
is in this underlying bill.
  Mr. President, as I say, today is a historic day for Kentucky and 
other tobacco producing States that have suffered for far too long 
under a Government program that destroyed their assets, sapped their 
competitiveness, and destabilized their communities.
  The tobacco buyout included in this legislation is culmination of 
many years of hard work and difficult sacrifice.
  Kentucky has long been known for its three ``B''s: Bourbon, 
basketball, and burley tobacco. Burley tobacco has been the lynchpin of 
Kentucky's agricultural economy since Kentucky first became a State in 
1792.
  Since the early years of the Commonwealth, burley tobacco provided a 
steady and reliable income for farmers with small patches of land 
unsuitable for the production of other crops. There are virtually no 
other crops that can provide the return per acre that tobacco 
production does, and it has a unique place in the economy and the 
culture of Kentucky.
  However, in recent years, increased foreign competition combined with 
decreased consumption, increased taxation, and a broken Federal tobacco 
program created a perfect storm that had the potential to bring about 
an economic disaster of epic proportions for Kentucky.
  The passage of this buyout will end the Federal tobacco program and 
end the suffering caused by this outdated program. The buyout will pay 
owners of quota for what remains of their disappearing asset, and it 
will provide assistance to growers to help them move into other forms 
of agricultural production.
  Those that choose to continue to produce tobacco will do so without 
the price supports or Federal programs that support other crops. They 
will have to compete on the free market. However, without this buyout, 
they would not have been able to compete at all.
  This is indeed a great day for the Commonwealth of Kentucky. But, no 
project of this magnitude is undertaken alone, and there are many 
people to whom I am grateful.
  Many people deserve thanks for bringing us to the day we experience 
today. I thank Chairman Grassley. I know he, as indicated, was not in 
favor of this, but this was part of the compromise worked out in the 
conference.
  I particularly thank Chairman Bill Thomas over in the House, who did 
support it and aggressively advocated it, helped work with us to craft 
a final version.
  I particularly thank Richard Burr from North Carolina, who was on the 
conference and a particularly significant player in this whole process.
  Here in the Senate, I thank Senator Elizabeth Dole, whose tireless 
effort on behalf of farmers in North Carolina is truly inspirational. I 
thank her staffer David Rouzer, who also worked for Senator Helms, for 
being a critical part of all of this. Senator Helms, of course, was so 
much associated with tobacco over the years.
  I also thank Senator Bunning and Congressman Lewis of my State. I 
thank my own staff, former staffers Mason Wiggins and Hunter Bates, who 
in the early days were extremely important in this. I thank my chief of 
staff Billy Piper, Scott Raab, and Michael Zehr, my agriculture aid. 
They were all indispensable.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, before I yield to my friend from 
Louisiana, I would like to say how much I personally deeply appreciate 
and will miss the Senator from Louisiana. I don't know any Senator who 
works harder on a bipartisan basis to get things done than the Senator 
from Louisiana. He is amazing. He has so many talents.
  Now, maybe he is partly Cajun, I don't know, but it is that Louisiana 
stuff that enables him to see more, do more, be more creative, think of 
more ideas than the rest of us mortals in the Senate. He is amazing. He 
is always thinking, always working. Many times in the Finance Committee 
I look over to the Senator from Louisiana and he is there working. He 
is reading reams of briefing materials. He has his magic marker out and 
he is underlining and learning this stuff. And he knows it so well.
  There are many areas he does know so well. One is health care. He 
knows health care intricacies probably better than anybody else in this 
body. He has worked with it on several commissions. He cares 
passionately about reforming our health care system.
  Tax policy, Social Security, you name it, if it is before the 
jurisdiction of the Finance Committee, he is very knowledgeable about 
it. He also, frankly, wants solutions. It is not just that he has 
knowledge and is very smart, but he is looking to try to find 
solutions, looking for compromises, looking for ways to get things 
done.
  We are going to sorely miss him; I mean sorely. I do not know what we 
are going to do without him because he is a catalyst, not the only 
catalyst but one of the major catalysts, here to get agreements, to get 
solutions. We all know how partisan this place is. He is one of those 
who is cutting against the grain to try to do what is right, do what is 
right for Louisiana, do what is right for the country, getting a 
practical solution: Come on, let's get something done here that makes 
sense. You may not like it totally, you may not like it completely, 
but, heck, you all know this is more than half a loaf, it is three-
quarters, seven-eighths of a loaf, so it is certainly better than no 
loaf. So come on, let's get something done here.

  He is wonderful. I want him to know how much I am personally going to 
miss him.
  Ms. LANDRIEU. Will the Senator yield for 30 seconds?
  Mr. BAUCUS. I yield to the Senator.
  The PRESIDING OFFICER. The junior Senator from Louisiana.

[[Page S11221]]

  Ms. LANDRIEU. Mr. President, I see the senior Senator from Louisiana 
on the floor. I know he will want to respond in a moment. I so 
appreciate the comments from the Senator. But I would like to add, very 
briefly, that as you have spoken about the senior Senator from 
Louisiana, the great consensus builder that he is, and helping us to 
move very important pieces of legislation, always with the greatest 
sense of dignity and principle, I want to say, as his partner in the 
Senate, I could not have a better partner. He is a person who works in 
such a complementary way with me. We work well together, and it is 
because of the great spirit he brings to his work. I think because of 
his spirit, we have been a better team together than we are 
individually for our State. I learned that from him. I want to give him 
so many compliments this morning and thank him for his great service.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, before I yield to the Senator, one final 
point. I know he had a hard time deciding whether to retire, a very 
hard time. I spoke with him several times. I did not want to prejudice 
him or bias him: Is there some way I can help John make this decision? 
And I mean that in the best sense of the term because, of course, I 
want him to stay.
  On the other hand, I didn't want to influence his decision. I wanted 
him to do what is best for him. Because it was such a hard decision, 
that to me is very strong evidence again of the deep public service 
spirit and desire he has. He loves public service, serving the public 
as well as Louisiana but specifically the country generally.
  He decided there are other things in life besides the Senate. I will 
not get into that subject. I don't think that is a subject on which 
very many of us want to tread. But we deeply appreciate the friendship, 
the legislative talents of the Senator from Louisiana.
  The PRESIDING OFFICER. The senior Senator from Louisiana.
  Mr. BREAUX. I was going to talk about the tax bill, but after the 
kind words of both the distinguished ranking member and my colleague 
from Louisiana, just let me say a very sincere thank you to both for 
their very generous comments. I will remember and cherish them always.
  Russell Long told me one time, when I asked him about a tax bill they 
were working on over in the Senate--at the time, I was a relatively 
very young Member of the House--I said: Russell, that thing doesn't 
look very pretty. He said: It is not supposed to look pretty; it is 
supposed to be effective, and that is not necessarily pretty.
  This bill probably represents that. It is not everything everybody 
would like to have, but it is effective tax policy. The chairman, the 
Senator from Iowa, Mr. Grassley, and Senator Baucus have worked very 
hard under very difficult circumstances to bring this measure to the 
Senate. It was not an easy task. A lot of compromises had to be made. 
The House, led by Chairman Bill Thomas, was very strong in its 
positions and opinions. The fact that we have a final product goes a 
long way to the good work of both the chairman and the ranking member.
  To my colleague from Louisiana, I was not here over the weekend, but 
she was handling the floor very well and was insisting on her point, as 
she always does, very eloquently. Hopefully, ultimately she will get 
what she deservedly should get as a result of her efforts with regard 
to protecting the National Guard. This fight is far from over. I will 
have more, perhaps in a lameduck, to say about what I think about this 
body and how much I have loved it, how much I will always remember it 
during our period of time in our lameduck session. But to Senator 
Baucus and my colleague, Senator Landrieu, I thank them very much. They 
have both been a guide for me in learning the Senate Finance Committee, 
which has been a wonderful place to serve.
  I yield back my time.
  The PRESIDING OFFICER. Who yields time?
  Mr. BAUCUS. Mr. President, I yield back the remainder of my time.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, today is a historic day in the world of 
tax policy. We are about to pass the most significant reform of 
American business taxation since 1986. I am not talking about large 
corporate reforms. This bill contains some of the most important small 
business reforms in years. This bill represents the most comprehensive 
agricultural, small business, rural community tax incentive package 
ever written by Congress. The bill contains far-reaching measures to 
revive the manufacturing base in America by cutting taxes and creating 
incentives to invest and create jobs in the United States. This 
manufacturing tax goes to large and small corporations, family-held S 
corporations, partnerships, sole proprietorships, farmers, and co-ops.
  This is the football season. With apologies to the Senate's chart 
expert, my colleague from North Dakota, Mr. Conrad, I am going to use 
one last chart for this bill. This chart behind me is about the 
football. It is a chart that I used about 7 months ago. During that 
time, spring drills were about the only football activity. The chart 
shows several sets of goalposts. As this important bill has wound its 
way through the legislative process, at each stage the goalposts were 
moved and moved and moved. Sometimes we had to call timeout. But at 
each stage we held on to the ball. We had an overtime regulation 
goalpost. We had a trade adjustment assistance goalpost. We had an 
unemployment insurance goalpost. Those were Senate floor goalposts. We 
passed each goalpost. Then we got to conference. In conference we ran 
into the Food and Drug Administration tobacco buyout goalpost.
  We have passed the final goalpost now. In this bill we had to go 
straight over the tackle, and we did, just like good old-fashioned Big 
Ten football. I will see the Senator from Minnesota the last Saturday 
of November. We are finally now in the end zone.
  Now I would like to thank the team that got us over the goal line. 
The first is Senator Baucus. I am certain that we would not be here 
without his good work and cooperation. In addition, I thank all other 
members of the Senate Finance Committee for their time and energy in 
making this bill a reality.
  I would like to point out a special thanks to a couple senior members 
of the Senate Finance Committee, Senator Nickles and Senator John 
Breaux.
  Senator Nickles has been a Finance Committee member since 1995. He 
has left a big impact on trade, tax, health care issues that have come 
before the committee. He and I have not always seen eye to eye on all 
issues, but he is a hard-working, tenacious Member of the Senate. He 
takes the work of the committee seriously.
  Senator Breaux has been on the Senate Finance Committee since 1990. 
He succeeded Senator Long in the Senate. Senator Long was a legendary 
member of the Finance Committee, the longest serving chairman it has 
ever had, a major architect of much tax legislation. Senator Long left 
a legacy on the Finance Committee. Senator Breaux followed up on the 
legacy of Senator Long, taking the practical, constructive, and 
creative approach of Senator Long. Senator Breaux has blazed his own 
trail on the Senate Finance Committee.
  In many cases, the Senate is paralyzed by partisan politics. I am 
proud that the Finance Committee is still a workshop of bipartisan 
problem-solving. Senator Breaux has been a key element at that 
continuing bipartisan tradition. Hopefully, the Democratic caucus, 
which has been steadily moving to the left over the years, will replace 
him with a like-kind pragmatist. The country will be better off for it.

  Over the last couple of years, the States of Oklahoma and Louisiana 
have been well represented on the Finance Committee. Unfortunately, 
there will be a bit of a vacuum with the departure of Senators Nickles 
and Breaux. I am pleased that this bill contains many priorities of 
these two Senators. For Senator Nickles, there was the depreciation 
change that he has fought for over the years. For Senator Breaux, 
important priorities for his State of Louisiana included significant 
changes in the tax treatment of key Louisiana interests such as 
agriculture, aquaculture, energy production, shipbuilding, forestry, 
and shipping. It is a fitting tribute to these two members of the 
Finance Committee.
  We are also saying goodbye to Senator Bob Graham of Florida. Senator

[[Page S11222]]

Graham has been on the Finance Committee since 1995. In the 1990s, 
Senator Graham was also a bipartisan bridge builder on tax and trade 
issues. Senator Graham faithfully attended to Florida's interests 
during his service on the committee.
  I thank also Senator Frist for backing me all the way on this bill. 
He took months to get it to the Senate floor. At times many of our 
Republican caucus questioned whether it was worth the price of 
unrelated controversial amendments that were thrown our way. Our leader 
stayed the course. I appreciate that very much.
  I would like to thank my staff on the Senate Finance Committee as 
well: Kolan Davis, our staff director; Mark Prater, chief tax counsel, 
and the other tax counsels--Ed McClellan, Elizabeth Paris, Dean Zerbe, 
Christy Mistr, and John O'Neill, as well as John's predecessor, Diann 
Howland. These individuals, along with Adam Freed, the staff assistant 
for the tax team, have been the workhorses for the committee--keeping 
the lights burning long into the night to make this bill possible.
  Finally, thanks go to the hard-working interns and law clerks. I 
refer to Casey August, Grant Menke, and Peter Jordan. Grant took the 
summer off to call balls and strikes as an umpire in the New York-Penn 
league. Grant helped us with this bill in the spring and returned in 
time for the conference.
  Let me extend my thanks also to George Yin and the staff of the Joint 
Committee on Taxation for providing guidance in this effort. I want to 
particularly point out the good work of Ray Beeman, David Noren, and 
Gray Fontenot. The Finance Committee tax staff refers to this trio of 
specialists as the ``three amigos.'' The three amigos helped us find a 
lot of gold out there in corporate loophole land. Brian Meighan 
recently left the three amigos for the private sector.
  I would like to thank the leadership staff for all their assistance. 
From Senator Frist's staff, I thank Lee Rawls, Eric Ueland, Ronit 
Kumar, and Libby Jarvis. I also thank our Senate leadership team and 
their staffs, especially our able whip, Senator McConnell.
  Finally my thanks to go Jim Fransen, Mark Mathiesen, Mark McGunable 
and their capable staff at legislative counsel for taking on our ideas 
and drafting them into statutory language. These talented lawyers are 
the true wizards of the legislative process. They handle enormous 
pressure with professionalism and amazing dexterity.
  I invite everybody to relax a bit today. After the vote tonight, 
everyone should go home and get a good night's sleep. As for me, now we 
are getting ready to wrap up. I am looking forward to going home to 
Iowa. It is harvesttime in the fields. I have some work to do on the 
farm. We also have a bit of an election coming up. God willing, the 
good folks of Iowa will send me back here to continue to do the 
people's business.
  I yield the floor.
  The PRESIDING OFFICER. All time has expired.
  The question is on agreeing to the conference report to accompany 
H.R. 4520.
  Mr. GRASSLEY. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. McCONNELL. The following Senators were necessarily absent from 
today's vote--the Senator from Colorado (Mr. Campbell), the Senator 
from Georgia (Mr. Chambliss), the Senator from Arizona (Mr. McCain), 
the Senator from Pennsylvania (Mr. Specter), and the Senator from New 
Hampshire (Mr. Sununu).
  Mr. REID. I announce that the Senator from North Dakota (Mr. Dorgan), 
the Senator from North Carolina (Mr. Edwards), the Senator from Florida 
(Mr. Graham), the Senator from South Carolina (Mr. Hollings), the 
Senator from Massachusetts (Mr. Kerry), the Senator from New Jersey 
(Mr. Lautenberg), the Senator from Vermont (Mr. Leahy), and the Senator 
from Georgia (Mr. Miller) are necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 69, nays 17, as follows:

                      [Rollcall Vote No. 211 Leg.]

                                YEAS--69

     Alexander
     Allard
     Allen
     Baucus
     Bayh
     Bennett
     Bingaman
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Cantwell
     Chafee
     Clinton
     Cochran
     Coleman
     Conrad
     Cornyn
     Craig
     Crapo
     Daschle
     Dayton
     Dole
     Domenici
     Ensign
     Enzi
     Feingold
     Fitzgerald
     Frist
     Graham (SC)
     Grassley
     Hagel
     Harkin
     Hatch
     Hutchison
     Inhofe
     Inouye
     Jeffords
     Johnson
     Kyl
     Landrieu
     Lieberman
     Lincoln
     Lott
     Lugar
     McConnell
     Mikulski
     Murkowski
     Murray
     Nelson (FL)
     Nelson (NE)
     Nickles
     Pryor
     Reid
     Roberts
     Santorum
     Schumer
     Sessions
     Shelby
     Smith
     Snowe
     Stabenow
     Stevens
     Talent
     Thomas
     Voinovich
     Warner
     Wyden

                                NAYS--17

     Akaka
     Biden
     Boxer
     Byrd
     Carper
     Collins
     Corzine
     DeWine
     Dodd
     Durbin
     Feinstein
     Gregg
     Kennedy
     Levin
     Reed
     Rockefeller
     Sarbanes

                        ANSWERED ``PRESENT''--1

       
     Kohl
       

                             NOT VOTING--13

     Campbell
     Chambliss
     Dorgan
     Edwards
     Graham (FL)
     Hollings
     Kerry
     Lautenberg
     Leahy
     McCain
     Miller
     Specter
     Sununu
  The conference report was agreed to.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. DODD. Mr. President, there are a few of us who would like to be 
heard on different subject matters. Maybe we could work out some 
arrangement so we don't have to wait around. I have about 20 minutes to 
speak on the bill that was just agreed to. I know other colleagues will 
also request time on various matters.
  I will ask unanimous consent that once matters of business are 
finished, I be recognized for 15 minutes in morning business.

                          ____________________