[Congressional Record Volume 152, Number 135 (Friday, December 8, 2006)]
[Senate]
[Pages S11641-S11643]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    TAX-HEALTH-TRADE EXTENDERS BILL

  Mr. BAUCUS. Mr. President, I am pleased to join my friend and 
chairman, Senator Grassley, in bringing this package of needed tax, 
health, and trade matters to the Senate floor.
  This is the last bill that Senator Grassley will manage as chairman 
for at least a couple of years. And I want to take this opportunity to 
recognize his leadership as chairman on the Finance Committee. He and I 
have worked together as partners and we will continue to work together 
as partners in the Congress to come.
  Mr. President, Goethe said: ``To rule is easy, to govern difficult.'' 
Surely, this bill is evidence of that.
  The vast bulk of this bill is simply the business of governing. It 
continues needed tax, health, and trade law. These are things that we 
must do if we are to govern effectively. But certainly this bill has 
been difficult to enact.
  Much of this bill has been more than a year in the making. It 
involved negotiations between several Committees, two Houses, and 
bipartisan leadership teams. It suffered many deaths. And it enjoyed a 
few resurrections. But through hard work and determination we are 
finally able to present today, this bipartisan, bicameral agreement.
  The provisions of this bill are overwhelmingly the business of 
governing. They reinstate tax laws that have been needlessly disrupted. 
They protect health care coverage. And they continue free trade 
arrangements that benefit consumers and the residents of some of the 
world's poorest countries.
  Let me first turn to the tax section of the agreement. The key tax 
provisions of this bill are a host of popular tax incentives that 
expired last December. They have languished all year.
  The Finance Committee and the Senate passed legislation to extend 
these credits on time. The Senate passed them in November of last year 
as part of the tax reconciliation bill. But the conference with the 
House kicked those tax cuts out.
  Folks told us that the tax cuts would travel on the next tax bill, 
the pension conference. But again , the conference committee with the 
House removed them to sweeten other bills. when coupled with other more 
controversial measures, they failed.
  This is an unfortunate history. And it is one that I hope we will not 
repeat. If this Senator has anything to say about it. This is not how 
we will govern, in the next Congress.
  Congress's delay in extending these tax provisions caused 
uncertainty. And the delay until now will have real consequences for 
taxpayers. Just this week, I received a report of the contingency plan 
at the IRS for the 2007 filing season. The IRS identified about 60 tax 
forms and products that will be affected by this delay.
  The Form 1040 has already gone to the printer. That happened back in 
November. More than 120 million taxpayers use that form. The IRS will 
not reprint those forms.
  Consequently, the IRS expects taxpayer confusion. IRS expects more 
phone calls to the IRS with questions. IRS expects delays in filing. 
IRS expects incorrect returns. And IRS expects more amended returns.
  Further, the IRS will need at least 6 weeks to reprogram its systems 
to accommodate the changes. It is simply too late for the IRS to 
implement the 2007 filing season on time. This means delays in starting 
to process and issue refunds. And it means money. It may cost the IRS 
millions in additional costs because of our delay. And the cost to 
taxpayers could be even greater.
  In September, I brought a display of the draft Form 1040 for next 
year. Already, the classroom teachers' deduction and the college 
tuition deduction were gone. Millions of families that normally take 
those deductions, and other popular incentives like the state sales tax 
deduction will wonder why those lines no longer appear on the Form 
1040. And, unless taxpayers are willing to get on the Internet and 
search, they may never know that we extended these incentives in the 
nick of time.
  Governing may be difficult, but we must do better.
  We must do better by our business taxpayers. Twenty thousand 
businesses who hire the hard-to-employ have continued to hire these 
workers with only a hope that we would retroactively extend the Work 
Opportunity Tax Credit. I am pleased to report that the credit is 
retroactive to the beginning of this year and improvements will be 
effective beginning next year.
  For the 16,000 businesses in this country that create high-tech jobs 
for U.S. workers, we have retroactively extended the R&D credit to the 
beginning of this year. We have provided for a new, enhanced credit for 
next year. And, we have also provided a special rule for fiscal year 
taxpayers. That will ensure these businesses can access the credit even 
though their tax year has closed.
  The agreement also provides a one-year extension of certain energy 
tax incentives that were due to expire next year. This package includes 
the popular credit for electricity from alternative energy sources.
  And this agreement extends expired individual tax incentives for 2 
years--2006 and 2007. These incentives include the college tuition 
deduction, the state

[[Page S11642]]

sales tax deduction, and classroom teachers' deduction, among others.
  This bill also has a substantial health component. The main 
attraction is an adjustment to the Medicare physician payment rate. 
This will stave off a cut of more than 5 percent in what Medicare pays 
doctors in 2007.
  And we are going to reward doctors for reporting on their 
performance. This will help move us toward paying for quality in the 
Medicare program. The information collected when doctors report on 
quality measures will be the foundation for paying for performance. We 
will move toward rewarding outcomes rather than simply the number of 
procedures.
  This bill also extends important provisions from the 2003 Medicare 
Modernization Act that are scheduled to expire at the end of this 
month. These provisions will help rural clinical laboratories, physical 
and occupational therapy patient, and pathologists.
  The bill will ensure continued access to dialysis services for 
patients with kidney failure. And it will correct how vaccines are 
reimbursed under the new Medicare prescription drug benefit. This will 
make vaccines even easier for seniors to get.
  Fighting health care fraud and abuse is another important part of 
this bill. A special fund, known as the Health Care Fraud and Abuse 
Control fund, was established years ago to help the Department of 
Justice work together to identify, deter, and prosecute health care 
fraud. Unfortunately, Congress has frozen the program's resources since 
fiscal year 2003. This bill would increase funding for the program each 
year for the next 4 years to keep up with inflation.
  We also provide the administration with another tool in fighting 
erroneous payments in Medicare. It would expand a demonstration program 
that was included in the 2003 Medicare law to use recovery audit 
contractors to identify and collect overpayments in Medicare.
  In the Medicaid program, this bill codifies the maximum rate at which 
States can tax health care providers under their Medicaid plans.
  Another provision extends transitional medical assistance, or TMA, 
for up to a year. TMA makes sure that low-income families do not lose 
their Medicaid health insurance when they move from welfare to work.
  This bill has real benefits for real people. In my home state of 
Montana alone, the physician payment adjustment will make a difference 
of between $10 million and $13 million to Montana doctors in 2007. The 
clinical laboratories extension provision will mean an additional 
$900,000 for clinical laboratories in Montana. The therapy caps 
exception will mean an additional 1,700 Montanans will have access to 
physical and occupational therapy services in 2007. And the Medicaid 
provider tax provision means that Montana Medicaid nursing homes will 
get $112 million in additional revenues over the next 5 years, while 
the State will have $36 million.
  The provisions in this bill are good for beneficiaries. These are 
good policies and they will help Medicare and Medicaid continue to 
provide Americans with the kind of quality health care they deserve.
  This legislation also ensures that two important trade programs, the 
Generalized System of Preferences and the Andean Trade Preferences Act, 
will not expire at the end of this year. Thousands of people's jobs 
depend on these programs, both here and abroad.
  The Generalized System of Preferences has been a part of American 
trade policy for more than 3 decades. It has encouraged development in 
poor countries by granting duty-free access to the world's largest 
market.
  But developing countries are not the only beneficiaries.American 
businesses benefit from the program. It allows them to source inputs 
and components duty-free. They can pass these benefits on to their 
customers in the form of lower prices and greater product variety.
  Critics of the Generalized System of Preferences rightly point out 
that the largest beneficiaries are middle income countries with strong 
export sectors that may not need these preferences.
  With this in mind, we have given the President authority to scale 
back benefits under the program if he determines that a country has 
become a competitive exporter. The President can examine the 
circumstances unique to each beneficiary country and weigh them against 
foreign and economic policy priorities.
  This bill will extend benefits under the Andean Trade Preferences Act 
for another 6 months, and would make a beneficiary country eligible for 
benefits for 6 more months if the United States and that country both 
complete their legislative processes to implement a free trade 
agreement.
  This extension means that the Andean countries' current preferences 
will not disappear abruptly at the end of this year. That would throw 
thousands of people out of work in the Andean region, and possibly 
drive thousands more to coca cultivation and trafficking.
  I continue to believe that a simple 1-year extension for both the 
Generalized System of Preferences and the Andean Trade Preferences 
Act--without changes--is the best policy. A 1-year extension would 
allow us to maintain the status quo. That would give us breathing space 
to evaluate all our preference programs next year and determine whether 
and how they mesh with out trade and competitiveness goals.
  That is not what this bill contains. but what this bill does contain 
on these important programs is far preferable to the disruption that 
expiration would engender for the thousands of people both here and 
abroad whose jobs rely upon these programs.
  In the next Congress, I intend to examine our trade preference 
programs, to explore whether and how they might be changed to address 
the valid criticisms some of my colleagues have made. We should 
understand the effect these programs have on the U.S. image around the 
world, our diplomatic efforts, and our trade priorities in the Doha 
Round and elsewhere.
  And we should give those in the United States who rely upon our trade 
preference programs an opportunity to suggest how those programs might 
be improved, and to explain how their interests might be affected by 
some of the changes that have been proposed.
  This bill also establishes a crucial 5-year trade preference program 
for a country much closer to home--Haiti. Haiti, just 600 miles from 
our shores, is the poorest country in our hemisphere.
  This program could help the people of Haiti to get back on a path to 
prosperity, opportunity, and long-term political stability. I commend 
the tireless efforts of Senators Bill Nelson and Mike DeWine, former 
Senator Bob Graham, and incoming House Ways and Means Committee 
Chairman Charlie Rangel to ensure that this Congress would extend this 
vital assistance.
  This legislation also extends expiring third-country fabric 
provisions for the least-developed African countries under the African 
Growth and Opportunity Act. That Act has contributed to the creation of 
thousands of jobs and investment in Sub-Saharan Africa. It has been 
credited with nearly tripling African apparel exports to the United 
States. These exports, around $1.4 billion in 2005, are just a fraction 
of the U.S. apparel market. But they are very significant to the 
companies and workers supplying them.
  This bill extends the third-country fabric provisions until 2012. I 
believe that if we give this program more time, more opportunities for 
investment and development will take root in southern Africa.
  The bill before the Senate today will also deliver some much-needed 
help for American manufacturers who import products they can't buy in 
the United States. This bill temporarily suspends duties charged on 
imported manufacturing inputs provided that no domestic company 
produces those goods.
  These duty suspensions mean jobs for American workers. They mean that 
Simms Fishing in Bozeman, MT can save money on the production of their 
world-class fishing waders. And Sun Mountain Sports in Missoula, MT, 
will get a break on the cost of manufacturing its high quality golf 
bags. While each duty suspension is worth less than $500,000, that 
money can mean a lot to small businesses around the country like Simms 
and Sun Mountain. The money they save can be reinvested in more jobs 
and further development right here at home.
  Today the Senate also stands poised to accomplish a goal that has 
eluded the United States for nearly 200 years--

[[Page S11643]]

normal economic relations with Vietnam.
  In April 1975, trade between America and Vietnam stopped. After the 
fall of Saigon, America imposed an economic embargo on the newly 
unified Vietnam. After years of painstaking diplomacy beginning with 
the first President Bush, relations between the United States and 
Vietnam improved. Trade between the two countries took off after the 
two sides began to implement a bilateral trade agreement in December 
2001. Trade was just $1.4 billion in 2001. Four years later, trade 
flows were 5 times as large, hitting $7.7 billion in 2005. Vietnam's 
imminent accession to the World Trade Organization as its 150th member 
will accelerate this trend.
  Economically, Vietnam has become a critical market for the United 
States. Out of the rubble of a war that killed roughly a million of its 
citizens, Vietnam has re-emerged as a country with more than 83 million 
smart, energetic, hard-working men and women.
  The terms of Vietnam's WTO accession are first rate. Farmers and 
ranchers in Montana and across America will benefit from deep 
reductions in Vietnam's agricultural tariffs. Vietnam also committed to 
cut industrial tariffs to 15 percent or less for nearly all U.S. 
exports.
  And Vietnam has further opened its market to our most competitive 
sector--the services industry--which employs 3 out of 4 Americans.
  But to benefit from these and the rest of Vietnam's WTO accession 
commitments, the United States must grant Vietnam permanent normal 
trading relations. That is the small price that we have to pay: 
granting Vietnam, on a permanent basis, the normal trade relations that 
we already provide Vietnam on a renewable basis. Senator Smith and I 
introduced a bill to do so in June--with Senators McCain, Kerry, Lugar, 
Hagel, Murkowski, and Carper.
  If we do not grant Vietnam PNTR, then America will be shut out of 
Vietnam's market-opening commitments. If we do not, then the benefits 
of those commitments would instead flow to exporters in China, the 
European Union, Japan, and elsewhere.
  But Vietnam PNTR is not just about economics. As important, it makes 
history. It completes the process of normalization and reconciliation 
between two formerly bitter enemies.
  Let us make history today and pass this bill to grant Vietnam PNTR.
  Let us provide taxpayers with the tax relief they have been waiting 
for all year. Let us ensure that harsh cuts do not drive doctors away 
from seeing Medicare patients. And let us take some small steps to 
foster free trade.
  This year, governing has been difficult. But let us conclude this 
effort. Let us do this work that needs to be done. And let us conclude 
the work of this session of Congress so we can get on with next year.
  The PRESIDING OFFICER. The Senator from Alaska.
  Mr. STEVENS. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. STEVENS. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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