[Congressional Record Volume 153, Number 186 (Thursday, December 6, 2007)]
[Senate]
[Pages S14809-S14814]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          TEMPORARY TAX RELIEF ACT OF 2007--MOTION TO PROCEED

  The ACTING PRESIDENT pro tempore. Under the previous order, there 
will be 1 hour of debate, prior to a vote on the motion to invoke 
cloture on the motion to proceed to H.R. 3996, with the time equally 
divided between the two leaders or their designees, with the 20 minutes 
immediately prior to the vote to be divided 10 minutes each for the 
leaders, with the majority leader controlling the final 10 minutes.
  The Senator from New Hampshire is recognized.
  Mr. GREGG. What is the order of recognition? Is it the Democratic 
side or Republican side?
  The ACTING PRESIDENT pro tempore. There is no order of recognition.
  Mr. GREGG. Does the Senator wish to proceed?
  Mr. BAUCUS. You go ahead.
  Mr. GREGG. I will be happy to allow you.
  Mr. BAUCUS. Mr. President, I yield myself such time as I consume.
  The ACTING PRESIDENT pro tempore. The Senator from Montana is 
recognized.
  Mr. BAUCUS. Mr. President, in the 1931 film classic, 
``Frankenstein,'' the character Dr. Waldman tells Dr. Frankenstein:

       You have created a monster, and it will destroy you.

  That is how the AMT looks to the Tax Code. That is what it looks 
like. It is a monster. It is a thing of dread for many Americans. 
Unless we act, it will destroy the entire tax system. If we don't act 
pretty soon, the AMT tax will be greater than the individual Federal 
income tax. This tax is a problem for taxpayers in all 50 States. I 
must give a few numbers as to what will happen if we don't extend the 
AMT patch.
  Let's take Texas. The number of Texans subject to the alternative 
minimum tax, if we do not act this year, would increase from roughly 
150,000 taxpayers in Texas to 870,000 taxpayers. That is about a 
sixfold increase in 1 year.
  The number of Nevadans subject to AMT would increase from about 
15,000 to about 100,000--again, a little over a sixfold increase.
  The number of South Carolinians would increase from 30,000 to 
190,000, again a large increase, about 6 times.
  That is about average across the country, six times more Americans 
will pay more taxes under the AMT if we don't act, compared to what 
they were otherwise paying.
  Even taxpayers who do not pay the AMT tax are hurt. Why? Because 
taxpayers have to calculate not only the regular tax, but taxpayers 
then have to calculate the alternative minimum tax. That is the law. 
You have to do both.
  First, you have to calculate all your regular taxes. Then you have to 
calculate what taxes you may pay under a whole separate system of AMT. 
So even though you may not pay more under the alternative minimum tax, 
you have still got to go through a second calculation. That is not a 
lot of fun. Then, if the second calculation shows you pay more under 
the alternative minimum tax, guess what. You have to pay more. You 
cannot choose to pay the lesser of the two; you have to pay the greater 
of the two. That is the law.
  Again, the monster created by the Congress years ago, unintended 
consequences, but a monster we can eliminate, if not destroy, if we 
take action today.
  Calculating taxes once is scary enough. Calculating taxes twice is 
almost enough to destroy a person. It may also cause significant 
financial hardship. Why? Because in today's economy, families depend on 
that refund check. It is getting close to Christmas. People are buying 
presents. Sometimes they run up their credit cards a little bit. They 
are depending upon that refund check to pay off their credit card 
balances. A lot of Americans do that. A lot of Americans do that.
  Think of the taxpayers who think they are going to get a refund from 
the Federal Government. But then, if we do not fix this AMT problem, 
what happens? They get the letter in the mail telling them they have to 
pay more taxes because of the AMT. Talk about your horror story.
  Here is an example of how AMT hits working families. Let us take a 
married couple, four young children. What is their household income? A 
whopping $75,000 a year. Their regular income taxes should be about 
$1,800. That is probably what they pay. This is after the standard 
deduction and after the child tax credit.
  Again, a family with a $75,000 income, family of four, pays about 
almost $2,000. Not quite, because they are able to take a standard 
deduction for the child tax credit.
  Well, let's see what happens when we calculate the alternative 
minimum tax. Same family. Same income. The amount more than doubles 
this family's tax liability. It raises their tax from $1,800 to $3,800. 
More than twice. More than twice.
  That is a family earning $75,000. Not a huge, big-income family. That 
is a $75,000 family. The AMT hits this family not because they are 
rich, because they are not. Why? Because they have four kids. That is 
kind of how it works. It is perverse. If you have more children, you 
pay more taxes. That is kind of nutty, but that is what it is today.
  The AMT will cost taxpayers because it costs the Federal Government. 
A delay will create delayed tax return filings, and last minute 
legislation will delay the issuance of Federal refunds. With each extra 
day we delay, the greater the cost. The greater the cost to taxpayers, 
the greater the cost to the IRS. The cost mounts up.
  Let's look at some of the costs of delay. If the IRS has to postpone 
accepting returns to the early part of the filing season, say January 
28, this would delay the receipt of more than 6.5 million returns, 
delay the issuing of more than 5.5 million refunds, totaling more than 
$17 billion, delay about $17 billion worth.
  A delay in fixing the alternative minimum tax affects States. We are 
not just talking about the Federal income tax, we are talking also 
about State taxes. Why? Because most State taxes are tied to the 
Federal tax system.
  A delay in the Senate will mean not only a delay in the Federal tax 
receipts but also a delay in the State tax refunds, Federal and State.
  A delay will also mean States that are already financially strapped 
could have a cash crunch. Think of the States' coffers. Their normal 
flow of tax revenues will not be coming in. Many States are very 
tightly budgeted. I know that is true in the State represented by the 
officer in the chair. I hear many times about the tight fiscal 
situation in that State.
  That is true for most States. If tax agencies cannot reprogram their 
computer systems in time, States and the IRS are concerned taxpayers 
will turn back to paper returns. What is the consequence of paper 
returns? It leads to an increase in processing times and costs as well 
as more errors.
  Let's take the State of Montana. In Montana, it costs $2 to process 
an electronic return, $2. But it costs $9 to process a paper return. I 
daresay that disparity is probably true in most States.
  At a time when families are experiencing hardship, I must say the 
other side of the aisle is playing politics. They are not letting us 
fix this problem. They, in effect, consequently want to increase taxes. 
They are increasing taxes. How? By causing the alternative minimum tax 
to be imposed upon Americans, by not letting us fix the alternative 
minimum tax.
  You watch that vote that is coming up. We are not going to get 60 
votes. You watch how, when the leader is going to request we take up 
the House-passed bill, and the substitute measure where we fix the AMT 
patch, unpaid for, they will object to that. They do not want to fix 
this problem. They say they do, but their actions are louder than the 
rhetoric. They are raising taxes. They are raising taxes by not 
allowing us to fix the alternative minimum tax patch for 2007.
  In the 1945 B movie ``House of Dracula,'' the character, Dr. Edelman, 
says of Frankenstein's monster:

       He's indestructible. Frankenstein's creation is man's 
     challenge to the laws of life and death.

  Let's prevent that from being said about the AMT. Let's prove the AMT 
is

[[Page S14810]]

not indestructible. Let's move to proceed to the House bill and stop 
this tax monster.
  We are going to do this. Let's do it now. We know we are going to fix 
this one way or another. So I say: Stop playing politics. I say that to 
the other side of the aisle because they are going to block this next 
cloture vote. They are going to object to the motion asking consent to 
pass the alternative minimum tax, unpaid for.
  I say: Stop the games. Let's get on with it. Let's help do something 
for the American people. Let's move to proceed to the House bill, stop 
this tax monster.
  The ACTING PRESIDENT pro tempore. The Senator from New Hampshire.
  Mr. GREGG. Mr. President, I appreciate the chairman of the Finance 
Committee outlining the problems with the AMT. I agree 100 percent with 
his statement relative to the problems with the AMT. He is absolutely 
accurate. It was a concept passed with the consequences being--with the 
known consequences being--to make sure people who had high incomes 
would pay a fair share of taxes.
  It turns out it was drafted poorly, it was not indexed for inflation. 
As a result, we have literally millions of people who are paying this 
tax who should not have to pay this tax, and therefore it should be 
repealed. Actually, it should be repealed permanently. There is no 
reason for us to even go 1 year. We should do the whole thing, get it 
done.
  But this bill which is being brought forward on which cloture is 
being filed in order to proceed to it is a very bad approach. Because 
basically what this bill is saying is a tax which was never intended to 
be in place, people who were never supposed to pay this tax and, 
therefore, to correct it is not giving them a tax cut, it is simply 
saying: You are going to be taxed the way we expected you to be taxed. 
Or to put it another way: If the alternative minimum tax goes forward, 
people are going to pay a tax they should not have to pay because it 
was never perceived they would have to pay it.
  A bill which should accomplish that, which should give those people 
relief, is being coupled with tax increases on people who should not 
have to pay new taxes to correct the alternative minimum tax problem.
  It is also being coupled with a bill which has some bad policy in it. 
For example, this bill will stop, stop the IRS from proceeding with 
investigations and action, potential action, against people who are 
using the Virgin Islands as a tax shelter. There are 279 investigations 
going forward right now relative to Americans who have basically 
created a shell lifestyle in the Virgin Islands so they can avoid taxes 
in the United States, which they probably owe.
  It is estimated there may be as much as $370 million of taxes owed to 
the United States by those high-income individuals. What does this bill 
do that came to us from the House? It says: We are going to stop that. 
We can no longer investigate those people. The IRS can no longer 
continue to proceed with an action against those people who are 
basically trying to escape American tax law.
  It also, this bill, includes in it a tax deduction for State 
legislators during periods when they are not in session. How about a 
little gift to our friends in the State legislature maybe in New York. 
So that if the New York legislator does not even go to Albany, they are 
still able to deduct their per-diem expense.
  That is called porkbarrel tax policy, I suspect. Those are terrible 
policies. But the larger policy which is bad, which is in the bill 
before us, is we are essentially going to hit partnerships and 
individuals with something called a carried interest tax, the practical 
effect of which will be that people who are involved in the financial 
business of this world--in the United States, not the world, people who 
are involved in the financial business in this country--and I know 
there is not a lot of sympathy for those folks because they make a lot 
of money. We would all like to make a lot of money like that. But these 
folks are essentially the engine of a large part of our economy. They 
are the ones who are creating the capital which is then invested in the 
businesses. They are the entrepreneurs who then create jobs. Jobs do 
not appear from thin air. They do not. They appear because someone out 
there is a creative individual who says: I have an idea. I am going to 
start this little company. I am going to start this little restaurant. 
I am going to start this little business.
  They build it, and then they get to a certain point where they need 
more money in order to expand it to create more jobs. Where do they get 
the more money? It does not appear from thin air. It appears from the 
fact that we have financial markets, the most viable capital markets in 
the world where people can raise money. They go into the market, and 
they say to the people who are the professionals: We need X amount of 
dollars in order to expand our business so we can create more jobs in 
New Jersey or in New Hampshire or in Montana or in Texas. We are coming 
to you to help us raise capital.
  Those folks go out and they raise the capital. They invest it in 
those businesses and those businesses create jobs, those entrepreneurs 
create jobs. What this bill says is: Those people who are in those 
financial markets will receive a brandnew tax on what they consider to 
be the way they raise money and create wealth for Americans by creating 
jobs, in what they consider to be a fair way to do it, which under the 
tax law today they are not taxed for it. It is a brandnew tax. What is 
the practical implication of putting this new tax in place in order to 
pay for the elimination of a 1-year kicking down the road of the 
alternative minimum tax expansion? Which should be done.

  The practical implication of doing it by raising taxes in this way is 
that, first, people who should have not paid taxes under the AMT will 
not have to pay their taxes. That is good. We should not have counted 
that revenue anyway.
  But, second, you are going to put in place a new tax system which 
would drive those people who create that financial incentive, which 
creates jobs, which gives business people and small entrepreneurs in 
this country the revenue and capital they need to create jobs, you will 
drive them overseas. We will be exporting jobs again because we are in 
global competition in the area of capital.
  One of our biggest problems in this country today is a lot of the 
capital that is being formed in this world today, which used to be done 
in New York, where if you wanted to raise capital in this world, you 
used to come to New York. Unfortunately, it is a world competition, and 
now places such as London are competing with us, and they are being 
very effective in their competition.
  One of the reasons they are able to compete with us effectively is we 
have put a lot of restrictions on our people which have been maybe a 
little bit over the top and, more importantly, we have a tax policy 
which has not been constructive, which has not encouraged people to 
stay here. It encourages them to go overseas.
  The effect of this proposal will be to even aggravate that further. 
We will be exporting more jobs. More importantly, not only will we be 
exporting the job of the person in the financial market, we will be 
exporting the creation of the capital. That is serious. Because that 
capital is the feed corn for the expansion of our economy.
  You should not be raising taxes at this time. That is another point 
that should be made--this alternative minimum tax proposal which comes 
to us from the House raises taxes. That is pure and simple. We are 
headed into potentially an economic slowdown. That is the way it looks. 
Because of the subprime crisis, because of the capital market crisis, 
we are heading into some sort of a slowdown. Hopefully, it will not be 
severe, but it could be difficult. There is no question about that.
  To raise taxes in the face of that type of a slowdown is the absolute 
opposite of what any reasonable person who has experienced any economic 
slowdown would do. In fact, recently I was interested to read what 
Robert Reich, who was Secretary of Labor under the Clinton 
administration and who is readily acknowledged as being a liberal 
economist, and a very talented one by the way, he went to Dartmouth, so 
I know he is talented.
  Robert Reich said: A tax increase at this time would be foolish. What 
we should be talking about is a tax cut.

[[Page S14811]]

Actually, what we should be talking about, and what we on our side 
would like to do, quite honestly, is put in place an alternative 
minimum tax fix which is permanent. That has been proposed by a number 
of us on our side.
  Let's correct this problem so we do not have to deal with it this 
year, next year, or the year after. That is the first thing we should 
do. Short of that, we should put one in that is a little bit longer, at 
least, so there is some predictability in the tax law.
  But under no circumstances should we put in place an AMT fix which is 
coupled with a tax increase or which is coupled with terrible policies 
such as this Virgin Island loophole and this State legislator loophole 
that was put in this bill. That is why we resist this approach.

  The Republican leader came to the floor a couple days ago and 
suggested three or four different avenues where we could correct this 
problem. They were all fairly reasonable. I don't know why they were 
rejected by the other side of the aisle. My sense is that we should be 
able to work this out because I honestly believe, when I listen to the 
chairman of the committee, that there is not that much difference 
between where he wants to go and where our side would like to end up, 
which is let's straighten out the AMT. Let's put all this additional 
tax policy and these tax increases which have come from the House 
aside. Let's say: The House got off on the wrong track. Let's just take 
this approach of doing AMT and do AMT and fix that, and then, if the 
House wants to come back with a tax increase bill, we will fight that 
out on a separate agenda.
  We can't on our side support a bill and vote for cloture on a bill 
which would mean we would be shut off from a lot of our amendments, 
vote in a way which would basically put us in a position which would 
potentially lead to a tax increase in order to correct what is an 
underlying important problem. Obviously, this is a motion to proceed, 
so we might not be shut off from amendments, but I suspect the motion 
to proceed will be followed very closely by the filing of cloture on 
the underlying bill.
  I am not too concerned about the fact that we would not be allowed 
our approach. If the position of the other side of the aisle is, we are 
willing to give you your votes, let's set that up right now. Let's take 
the Republican leader's position, set up three or four votes in tandem, 
make them all 60-vote hurdles, if that is what it requires--and that is 
what it will require because pay-go is going to get waived on every one 
of them--and vote on them--bang, bang, bang, bang, bang. Let's not go 
through this exercise on cloture. We want to correct the AMT problem. 
We think it should be corrected. We don't think the way to correct it 
is to raise taxes on the productive side of the American agenda and 
potentially throw us into a further slowdown of the economy or force 
people to go overseas in order to raise capital or, alternatively, put 
in place policies which basically make the Virgin Islands a safe haven 
for people who want to avoid American taxes or give State legislators 
the opportunity to claim a per diem deduction when they are not even 
going to work.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Brown). The Senator from Montana.
  Mr. BAUCUS. Mr. President, I listened carefully to the Senator from 
New Hampshire. I say to my friend, frankly, I would not have written 
the House bill in the way it was written. I don't agree with everything 
in the House bill. In fact, I think there are some measures there that 
probably should be addressed and amended. I also think, though, that we 
need to get to the House-passed bill so we can fix the AMT. We can't 
fix the AMT until we get to that bill. Once we get to that bill, any 
Senator, irrespective of whether cloture has been filed, can always 
file a motion to strike. So if there are measures in the House bill 
that the Senator does not like or the Senator from Texas doesn't like 
or anybody doesn't like, that motion to strike is available.
  If we get to the House bill, I am going to offer a compromise which I 
think the vast majority of the Members of this body will accept. We 
need to get to the bill. We need to vote cloture and get to the bill so 
we can cure this AMT problem, offer amendments that Senators might find 
objectionable to the House bill. At the same time, I am going to offer 
a compromise proposal which I believe will dispose of it. I urge my 
friends on the other side to let us get on the bill. Then we can vote 
to strike. We can vote on this compromise proposal I will offer.
  I mentioned that there are various versions we could vote on. One is 
just straight AMT unpaid for, period. That is an option. To get there, 
we need to get to the bill.
  The PRESIDING OFFICER. The Senator from New Hampshire is recognized.
  Mr. GREGG. Mr. President, because I don't think this is inconsistent 
with what the Senator from Montana, chairman of the Finance Committee, 
has asked for, I renew the Republican leader's request from yesterday.
  I ask unanimous consent that at a time determined by the majority 
leader, after consultation with the Republican leader, the Senate 
proceed to consideration of H.R. 3996, the House-passed AMT bill, and 
it be considered under the following limitations: there be 1 hour of 
debate on the bill equally divided between the two leaders or their 
designees, followed by a vote on the motion to invoke cloture on the 
bill; provided further that if cloture is not invoked, then the only 
amendments in order to the bill be the following offered in the 
following order: a substitute amendment to be offered by Senator 
McConnell or his designee which is to be an offset AMT extension and an 
unoffset extenders package, a Baucus or designee first-degree amendment 
to the McConnell substitute which is to be a set of offsets for the 
extender package, a Sessions amendment related to AMT and exemptions, 
an Ensign amendment which is an AMT repeal and extends other expiring 
provisions, and a DeMint amendment which relates to the AMT and flat 
tax; provided further that there be an additional 2 hours of debate on 
the bill equally divided between the two leaders or their designees; 
that there be a time limitation of 2 hours for debate on each amendment 
equally divided in the usual form; provided that each amendment require 
60 votes in the affirmative for adoption and that each amendment that 
does not receive 60 votes then be withdrawn.
  I further ask that notwithstanding the adoption of any substitute 
amendment, the other amendments be in order; and finally, that 
following consideration of the above amendments, 60 votes be required 
for passage of the bill, as amended, if amended.
  This outlines a procedure to accomplish what I believe the Senator 
from Montana requested because it does have his first degree. There are 
three other amendments in there, but they are all subject to 60 votes--
the Sessions, Ensign, and DeMint. If they fail, they fail. One presumes 
that, depending on the position of the Senator from Montana, since he 
controls more than 40 votes on his side, that would happen and that we 
would then proceed in this way.
  The PRESIDING OFFICER. Is there objection?
  Mr. BAUCUS. Reserving the right to object, I remind all of us, we are 
here to solve a very imminent problem; that is, the alternative minimum 
tax. The IRS is having fits, frankly, because they are unable to send 
out the right returns, programs, and so forth, to help the American 
public avoid this AMT for 2007. The other provisions listed in that 
consent have nothing to do with the alternative minimum tax. One is the 
Bush tax cuts. They don't expire until 2010. We are talking about 2007, 
right now, this month. Then there is the flat tax. That has nothing to 
do with the alternative minimum tax. That is a whole other issue that 
has nothing to do with what we are trying to accomplish today. I urge 
Senators to keep their eye on the ball. Let's get the AMT patch passed. 
That is what we are talking about.
  I must, on behalf of the majority leader, object. I can't agree to a 
procedure on the floor without the presence of the majority leader. I 
just point out the pitfalls of that request which prevent us from 
getting to a real problem, and that is solving the AMT for the tax year 
2007.
  The PRESIDING OFFICER. Objection is heard.
  Mr. GREGG. Mr. President, I appreciate the objection of the Senator 
from

[[Page S14812]]

Montana. I understand he believes the suggestion he is proposing is the 
right way to proceed. I would note that this subjects everything to a 
time limit. Yes, the flat tax is going to be debated for 2 hours, and, 
no, it is not going to get 60 votes, so it will not be in the final 
package. Yes, the Ensign proposal, which is essentially a repeal of the 
AMT and also extends the cap gains dividend rates--I believe that is 
the proposal--would be brought forward. It would be debated for 2 
hours, and then we would move on. I actually hope that one might pass.
  In any event, this sets out a pretty tight timeframe. If you take all 
the factors here, we could finish this by sometime around 7 o'clock 
tonight, assuming everybody wants to talk for 2 hours, which they 
probably wouldn't, and be done. We would get it done, get the AMT 
straightened out, and have done some good work around here. I suspect--
though I won't guarantee this--the final resolution of this proposal, 
which Senator McConnell made yesterday, would be closer to what the 
Senator from Montana wants than the bill he is suggesting we vote 
cloture on relative to proceeding.
  The PRESIDING OFFICER. The Senator from Texas is recognized.
  Mr. CORNYN. Mr. President, may I inquire of the Chair how much time 
remains on this side of the aisle?
  The PRESIDING OFFICER. Four minutes 25 seconds, and for Senator 
Baucus, 8 minutes 12 seconds.
  Mr. CORNYN. Mr. President, I ask unanimous consent for 2 minutes for 
myself and then the remainder of our time to the Senator from Utah, Mr. 
Hatch.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Texas is recognized.
  Mr. CORNYN. Mr. President, I am not without sympathy for the position 
argued by the distinguished chairman of the Finance Committee. I think 
the list of horribles he has recounted by the fact that the AMT is not 
indexed and will cover up to roughly, I believe the figure is now, 23 
million taxpayers unless we act--I am not without sympathy for what he 
is trying to do here. But the problem is, we are not going to agree on 
this side to raise taxes against the American people in order to pay 
for a tax cut for others. It is simply that clear. We are not going to 
agree to raising taxes, particularly at a fragile time for the economy, 
by what some have estimated would be $80 billion a year.
  I believe three simple principles will help us find a solution. One 
is that we ought to protect the middle class from the rise of the AMT 
which President Clinton vetoed a full repeal of in 1999. I wish he had 
not done that then. That would have protected us from where we are 
today. We ought to pass the expiring tax provisions, the so-called tax 
extenders for capital gains and dividend rates and other tax relief 
which have contributed to 50 months of continuous and uninterrupted job 
growth since tax extenders relief was passed in 2003. We ought to do 
both without raising taxes on the American people.
  Unfortunately, we know a tax increase is like throwing a wet blanket 
on the American economy. The AMT, if we don't act, will hit about 
870,000 of my constituents, up from 150,000 now. It sounds to me as if 
the distinguished chairman of the Finance Committee is sympathetic to 
the direction we would like to move that this bill, unfortunately, does 
not represent. But as long as we are presented with a choice of cutting 
the AMT by raising taxes, I don't believe we are going to see any 
progress.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, the AMT was initially designed to catch 
about 155 people who were not paying taxes but were immensely wealthy 
and getting all kinds of income every year. Today, there are 4 million 
people who are paying the AMT. If we don't do something about it, there 
will be 25 million tomorrow. To be honest with you, because we have 
delayed so long, we are going to be in a bind as far as even getting 
the software done, the paperwork done, the IRS work done to be able to 
give people their refunds this next year because of the delay we have 
had. I respect the distinguished chairman of the committee. It has been 
a very difficult committee to manage, and he has done as well as 
anybody I can imagine.
  We need to fix the alternative minimum tax, the AMT. There is no 
argument in this chamber about that. If we fail to act, 25 million 
Americans might have to write checks to Uncle Sam for thousands of 
dollars.
  So we agree on fixing the AMT.
  But the devil is in the details, and I cannot support a plan that 
prevents a tax increase on millions of Americans by raising taxes on 
others.
  Congress never anticipated having anywhere near this level of AMT 
revenues to begin with, so we should not be raising taxes permanently 
to make up for that phantom lost revenue.
  We are well past time for serious action on the AMT.
  Almost 3 weeks ago, I came to the floor to discuss the financial and 
political ramifications of Congress' failure to fix the AMT.
  We had a crisis then.
  It is worsening by the day.
  Even if we were to patch the AMT today, the American people will 
suffer from our inaction.
  We have known that the AMT train was coming down the tracks all year.
  This failure to act is setting new standards for ineptitude.
  Three weeks ago, the failure to patch the AMT was merely creating 
uncertainty for millions of Americans who would be subject to it if we 
dropped the ball.
  Three weeks later, these poor folks are barely the half of it.
  Now billions of dollars in tax refunds risk being delayed because of 
inaction.
  On November 26--11 days ago the chairman of the IRS Oversight Board 
sent a letter to the chairman and ranking member of the Senate Finance 
Committee.
  His grim assessment of the situation is worth our review.
  The filing season is expected to start on January 14, but that date 
is now in jeopardy.
  IRS computer programs are set to process tax returns under current 
law.
  The IRS cannot flip a switch and process millions of tax returns in 
January, when Congress changes the law on Christmas Eve.
  According to the IRS Oversight Board, the IRS would be able to start 
processing tax returns within 7 weeks of the enactment of an AMT patch.
  So if we were to enact an AMT patch today, tax filing season would 
start almost 2 weeks late.
  That delay would lead to 6.7 million delayed tax returns and $17 
billion in delayed refunds.
  What if we delayed the start of tax season 1 more week?
  Then we are looking at 15.5 million delayed tax returns and $39 
billion in delayed refunds.
  Push it back another 2 weeks--37.7 million delayed tax returns and 
$87 billion in refunds delayed.
  Many Americans actually look forward to getting their W-2 in the 
mail. Their employer withholds too much money from their paycheck every 
year, and the W-2 allows them to file a return and get that money back.
  And now with electronic filing, Americans are able to get those 
refunds even more quickly.
  Utahns depend on their refunds.
  They count on their refunds.
  Undermining that confidence is much worse than a lump of coal in a 
stocking.
  We are now in the Christmas season.
  I am sure that the movie ``Christmas Vacation'' will be on television 
soon.
  That movie contains a lesson that we should all heed.
  In that movie, Clark Griswold, assumes he is going to get his annual 
Christmas bonus.
  That Christmas bonus is as reliable as a weekly paycheck.
  And when that bonus did not come, he--flat--out--went--nuts.
  The political philosophy of Clark Griswold is one that I would 
commend to my colleagues.
  It is one shared by the American people. If you mess with my family's 
financial security, you better watch out.
  The Senate's failure to patch the AMT in a timely fashion is going to 
delay millions of tax refunds, and we should not be surprised when the 
American people--like Clark Griswold--go nuts.
  Right now, Americans are likely making decisions about the Christmas

[[Page S14813]]

gifts they are going to buy, at least partially, based on their tax 
refund.
  They assume they are getting that tax refund.
  And they assume they are getting it on time.
  Further delay is no longer acceptable.
  Yesterday on the floor, Republicans were blamed for holding up 
passage of an AMT patch.
  That is funny.
  When Republicans were in the majority, we managed to pass an AMT 
patch early in the year, no later than May 11.
  We did it without permanent tax hikes to pay for 1-year AMT fixes.
  We did it without including special interest giveaways, and we did it 
without delaying tax refunds.
  Democrats did tell us yesterday on the floor that they are the party 
of change.
  On the AMT at least, they seem to be succeeding.
  To fix the AMT they propose raising taxes.
  To pass important tax extenders they are raising taxes.
  And their efforts have now jeopardized the tax filing season and 
refunds for the hard working Americans who depend on them.
  When times change, they sure do change.
  We are about to have a vote on the AMT.
  I support AMT relief. I support AMT repeal.
  But I will not support this fake tax relief.
  I am not the only one. The Democrats' plan to fix the AMT with 
permanent tax increases ought to fail.
  And for good reason.
  We should not be paying for temporary tax cuts with permanent tax 
increases, nor should we be putting the economy at risk by passing 
unnecessary tax hikes.
  When this episode is over, we need to get down to the real business 
of fixing this AMT so we can get Americans the tax refunds they expect 
and the tax relief they deserve.
  The PRESIDING OFFICER. The senior Senator from Montana is recognized.
  Mr. BAUCUS. Mr. President, I just want to make the fundamental point 
that if we don't act, we will be raising taxes on 19 million Americans. 
We have to act to prevent a tax increase from going into place. We on 
our side ask to vote for cloture so as to get to the bill which 
accomplishes that result of preventing 19 million Americans from paying 
greater income taxes. We have to get to the bill so we can pass that 
legislation. It can always be amended by any Senator who has a problem 
with other provisions that might be in this bill. I respect that. In 
fact, I would agree with some of those amendments, I am quite certain, 
and motions to strike are always available.
  We need to get to the bill so we can prevent a tax increase on 19 
million Americans, called the alternative minimum tax, from going into 
effect. To the degree to which the other side prevents us from getting 
to the bill, that indicates to me they want to increase taxes on those 
19 million Americans. I hope that is not true, but their actions 
indicate that it is true. Unless they totally change and say, yes, we 
should get to the bill to fix this AMT problem, I have to conclude they 
want to increase taxes on those 19 million Americans.
  I see no other Senators who wish to speak, so I note the absence of a 
quorum, and I ask unanimous consent that the time be equally divided on 
both sides.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. McCONNELL. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. McCONNELL. Mr. President, before we cast our votes this morning, 
Americans should know exactly what we are voting on. This is not a vote 
on fixing the AMT; this is a vote to raise taxes. Every year for the 
last 4 years, Republicans in Congress have found a way, usually by May 
of the year in question, to correct a glitch in the Tax Code that 
threatens to affect more and more families each year.
  This is a middle-class tax that was never meant to be. It was created 
to make sure 155 super-rich individuals couldn't avoid paying taxes. 
But because the people who wrote it didn't account for inflation, it 
now threatens 25 million middle-class families.
  Republicans have always found a way to deal with this problem with 
the tax laws, and we did it without raising taxes. But the majority 
that now controls Congress has a different view. They don't want to 
protect the 25 million Americans who get hit by this glitch over the 
next few months, unless Republicans agree to raise taxes on other 
Americans in the process.
  Let me say that again. What we are talking about here is extending 
current tax law, which normally we have done, and adding a new 
condition to that, saying we are only going to extend this tax break if 
we raise taxes on a whole lot of other Americans. Now, Republicans will 
respond to this proposal in the same way we have responded to it 
publicly and privately all year: No deal. No tax hike.
  Democrats thought they could force us into accepting this proposal by 
waiting until the last days of the session to call a vote, but they 
were wrong. What they have forced instead is a crisis. Unless they fix 
this glitch, millions of Americans--including more than 3 million in 
New York, 98,000 in Nevada, and 819,000 in Illinois--will get a big 
surprise when they sit down to do their taxes over the next few months. 
Millions more will face delays in getting the tax refund checks they 
count on every year.
  The majority needs to find a way to fix this problem before it gets 
even worse. We have been warning them about it all year long. The 
senior Republican on the Finance Committee reminded us yesterday that 
he has spoken on the Senate floor on this issue no fewer than 12 times 
since last January. Senator Grassley has spoken on this issue no fewer 
than 12 times since last January. The Treasury Secretary sent us urgent 
letters. The IRS sent us urgent letters. There is really no excuse for 
the delay.
  This is a problem we can solve. We have shown the Democrats how. We 
don't need the majority leader to do a backflip off the Secretary's 
chair, as he suggested yesterday. We want him to give us a fix that 
does not raise taxes, that is fair, that is simple. This will work, and 
this will not put the majority leader or anyone else at risk of any 
physical harm.
  So far, the majority has refused our offer. So here we are, about to 
vote on a massive tax hike that we know would not pass the Senate--and 
which we know the President wouldn't even sign if it did pass the 
Senate--instead of doing our job and fixing this middle-class tax hike.
  With all due respect, this is no way to legislate. Let me be very 
clear to my colleagues across the aisle: Republicans will not raise 
taxes--will not raise taxes--in exchange for blocking a tax that was 
never meant to be. Our position has never been a secret. The Democrats 
have known it all year.
  I will vote against this massive tax hike, and I urge all of our 
colleagues to do the same.
  I yield the floor.
  The PRESIDING OFFICER. The majority leader is recognized.
  Mr. REID. Mr. President, during the Clinton years we did some good 
things for this country, and when the history books are written, one of 
the things that will be paramount in those accounts will be what 
President Clinton did, with his allies in Congress, to turn the country 
around economically. During the Clinton years, we were paying down the 
debt by half a trillion dollars. We were spending less money than we 
were taking in. We can all look back to those days when Alan Greenspan 
told us in committees assembled that we should cut back. We were paying 
down the debt too quickly.
  When President Bush took office, there was a $7 trillion surplus over 
10 years. With all of the things that he has done to bankrupt this 
country, we are now in debt of some $10 trillion.
  The bill we have before us is a bill that says this tax needs to be 
patched, but it should be paid for.
  That is what we did in the Clinton years. That is what we did in our 
budget that we passed here. Mr. President, we passed the first budget 
in this Senate in 3 years--our modest majority--by one vote, because 
Tim Johnson was

[[Page S14814]]

sick. We passed again, following the Clinton example, a balanced budget 
where we said we believed if we are going to have new programs, they 
should be paid for. It is called pay-go. We said if there are going to 
be cuts in taxes, they should be paid for.
  The Speaker followed this, and we now have a bill from the House that 
takes care of the patch, but it pays for it. Isn't that what the 
American people want? Isn't that the example we should set for them--
that if we spend some money, we have to make provisions to pay for it? 
If you have a home and you suddenly decide you need something, such as 
a new refrigerator, and your credit card is at its maximum, then you 
cannot buy that refrigerator. There has to be some ability in this 
Congress to treat this body just as a family treats its own budget.
  The wailing and crying we are hearing here is that they ``find it 
offensive''--those were the words of my distinguished Republican 
colleague, Senator McConnell, yesterday--to have to pay for these tax 
cuts. Well, I hope everyone understands that we are trying to do what 
is right, that we are trying to have the Government of the United 
States not be one that is buried in red ink all of the time.
  This is a $50 billion patch. Should it not be paid for? The answer 
is, obviously, yes. I hope everybody votes for cloture on this most 
important piece of legislation.


                             cloture motion

  The PRESIDING OFFICER. Under the previous order, pursuant to rule 
XXII, the clerk will report the motion to invoke cloture.
  The legislative clerk read as follows:

                             Cloture Motion

       We, the undersigned Senators, in accordance with the 
     provisions of rule XXII of the Standing Rules of the Senate, 
     do hereby move to bring to a close debate on the motion to 
     proceed to Calendar No. 487, H.R. 3996, the AMT tax bill.
         Harry Reid, Dick Durbin, Patty Murray, Max Baucus, Jay 
           Rockefeller, Patrick Leahy, Daniel K. Inouye, Herb 
           Kohl, Benjamin L. Cardin, Jeff Bingaman, Ted Kennedy, 
           Carl Levin, B.A. Mikulski, Barbara Boxer, Debbie 
           Stabenow, Maria Cantwell, Bill Nelson.

  The PRESIDING OFFICER. By unanimous consent, the mandatory quorum 
call is waived.
  The question is, Is it the sense of the Senate that debate on the 
motion to proceed to H.R. 3996, a bill to amend the Internal Revenue 
Code of 1986 to extend certain expiring provisions, and for other 
purposes, shall be brought to a close?
  The yeas and nays are mandatory under the rule.
  The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. DURBIN. I announce that the Senator from Delaware (Mr. Biden), 
the Senator from New York (Mrs. Clinton), the Senator from Connecticut 
(Mr. Dodd), and the Senator from Illinois (Mr. Obama) are necessarily 
absent.
  I further announce that if present and voting, the Senator from 
Delaware (Mr. Biden) would vote ``yea.''
  Mr. LOTT. The following Senators are necessarily absent: the Senator 
from Arizona (Mr. McCain) and the Senator from Ohio (Mr. Voinovich).
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 46, nays 48, as follows:

                      [Rollcall Vote No. 414 Leg.]

                                YEAS--46

     Akaka
     Baucus
     Bayh
     Bingaman
     Boxer
     Brown
     Byrd
     Cantwell
     Cardin
     Carper
     Casey
     Conrad
     Dorgan
     Durbin
     Feingold
     Feinstein
     Harkin
     Inouye
     Johnson
     Kennedy
     Kerry
     Klobuchar
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     McCaskill
     Menendez
     Mikulski
     Murray
     Nelson (FL)
     Nelson (NE)
     Pryor
     Reed
     Rockefeller
     Salazar
     Sanders
     Schumer
     Stabenow
     Tester
     Webb
     Whitehouse
     Wyden

                                NAYS--48

     Alexander
     Allard
     Barrasso
     Bennett
     Bond
     Brownback
     Bunning
     Burr
     Chambliss
     Coburn
     Cochran
     Coleman
     Collins
     Corker
     Cornyn
     Craig
     Crapo
     DeMint
     Dole
     Domenici
     Ensign
     Enzi
     Graham
     Grassley
     Gregg
     Hagel
     Hatch
     Hutchison
     Inhofe
     Isakson
     Kyl
     Lott
     Lugar
     Martinez
     McConnell
     Murkowski
     Reid
     Roberts
     Sessions
     Shelby
     Smith
     Snowe
     Specter
     Stevens
     Sununu
     Thune
     Vitter
     Warner

                             NOT VOTING--6

     Biden
     Clinton
     Dodd
     McCain
     Obama
     Voinovich
  The PRESIDING OFFICER (Mr. Cardin). On this vote, the yeas are 46, 
the nays are 48. Three-fifths of the Senators duly chosen and sworn not 
having voted in the affirmative, the motion is rejected.
  Mr. REID. Mr. President, I enter a motion to reconsider the cloture 
vote.
  The PRESIDING OFFICER. The motion to reconsider is entered.

                          ____________________