[Congressional Record (Bound Edition), Volume 147 (2001), Part 6]
[Senate]
[Pages 8594-8668]
[From the U.S. Government Publishing Office, www.gpo.gov]



 RESTORING EARNINGS TO LIFT INDIVIDUALS AND EMPOWER FAMILIES (RELIEF) 
                              ACT OF 2002

  The ACTING PRESIDENT pro tempore. Under the previous order, the 
Senate will resume consideration of H.R. 1836 which the clerk will 
report.
  The assistant legislative clerk read as follows:

       A bill, H.R. 1836, to provide reconciliation pursuant to 
     section 104 of the concurrent resolution on the budget for 
     fiscal year 2002.

  Pending:

       Fitzgerald amendment No. 670, to provide that no Federal 
     income tax shall be imposed on amounts received by victims of 
     the Nazi regime or their heirs or estates.
       Gregg amendment No. 656, to provide a temporary reduction 
     in the maximum capital gains rate from 20 percent to 15 
     percent.
       Carnahan/Daschle amendment No. 674, to provide a marginal 
     tax rate reduction for all taxpayers.
       Collins/Warner amendment No. 675, to provide an above-the-
     line deduction for qualified professional development 
     expenses of elementary and secondary school teachers and to 
     allow a credit against income tax to elementary and secondary 
     school teachers who provide classroom materials.
       Rockefeller amendment No. 679, to delay the reduction of 
     the top income tax rate for individuals until a real Medicare 
     prescription drug benefit is enacted.
       Bayh modified amendment No. 685, to preserve and protect 
     the surpluses by providing a trigger to delay tax reductions 
     and mandatory spending increases and limit discretionary 
     spending if certain deficit targets are not met over the next 
     10 years.
       Landrieu amendment No. 686, to expand the adoption credit 
     and adoption assistance programs.
       Graham amendment No. 687, of a perfecting nature.
       Graham amendment No. 688, to provide a reduction in State 
     estate tax revenues in proportion to the reduction in Federal 
     estate tax revenues.


                           Amendment No. 656

  The ACTING PRESIDENT pro tempore. Who seeks time?
  The Senator from Nebraska.
  Mr. HAGEL. Mr. President, I thank the Chair. Good morning.
  I rise this morning to support the Gregg amendment. I am proud to be 
a cosponsor of the Gregg amendment. The Gregg amendment, very simply, 
cuts the capital gains tax rate from 20 to 15 percent over a 2\1/2\-
year period. The cut will sunset on December 31, 2003.
  The Gregg amendment is about one thing; it is about sustaining 
economic growth in this country. I think most Americans understand it 
is investment capital that fuels the engine of economic growth. That 
engine of economic growth is productivity. There is no growth without 
investment and productivity.
  We have been debating over the last few months--and we will continue 
to debate--a fiscal year 2002 budget. That budget calls for 
expenditures by the Federal Government of around $1.9 trillion. That is 
a lot of money. From where does that money come? It comes from tax 
revenues.
  At the same time we are debating the priorities of that $1.9 trillion 
budget, we are looking at expanding Government programs. As we 
prioritize the programs that are important for our people for future 
generations, that is part of our charge. That is part of the 
responsibility we have as policymakers.
  One of the things we have done recently is we have voted to set aside 
$300 billion over the next 10 years for a new prescription drug plan 
for Medicare. It is important. It is relevant. It is needed. We must 
move on it. What that will do is, of course, build onto an already very 
significant amount of uncontrollable budget expenditure, the Medicare 
program, another new very expensive program.
  We prioritize that issue in this country. We have essentially said, 
as did

[[Page 8595]]

President Bush in the campaign last year, Democrats and Republicans in 
Congress, we want that prescription drug plan. So $300 billion has been 
set aside during the next 10 years to add on a new prescription drug 
plan. I suspect most Americans understand it is going to be far more 
than $300 billion over the next 10 years by the time we put it all in 
place. And the hidden cost of that which we do not factor in is the 
outyears after the 10 years when we will saddle all future Americans 
with that additional add-on expense of Medicare.
  When you look at that $1.9 trillion Federal budget today, you will 
find that about two-thirds of that is already locked in. That is 
nondiscretionary. There is nothing we can do about that. We can debate, 
we can pass laws, but unless we want to change Medicare, unless we 
essentially want to do away with parts of Medicare and other 
entitlement programs that we want, that we have prioritized, the fact 
is that two-thirds of our budget is already committed and we are adding 
to that.
  That is a decision we have all come to, as a society. We want that. 
The question comes back to what the Gregg amendment is all about. How 
do we continue to pay for that? How do we pay for that additional 
prescription drug plan that will cost billions, and hundreds of 
billions in the outyears, and all the other programs to which we have 
committed?
  We do that by sustaining our economic growth. Government does not 
produce growth. Government can only do certain things. It is the 
private sector that produces growth because it is the private sector 
that develops the productivity which enhances growth and develops and 
drives growth.
  Some of us believe the way to sustain growth is to free up more of 
that capital so more people in the private sector have that capital in 
their hands so they can save, they can invest, they can put it in new 
venture start-up firms that are the firms that will find the 
technologies and the solutions to the challenges that we have, not just 
today but what we will face tomorrow. When that investment capital 
dries up, you will see the consequences as our technology bogs down in 
every industry, in every discipline--science, health, medicine, 
national security, new energy sources, new technologies. It is capital, 
private capital that drives that.
  So this amendment is about freeing up some of that capital that is 
locked in because of ridiculous tax rates. In fact, the United States 
is one of the very few countries in the world that taxes capital, and 
we have about the highest capital tax rates of any country in the 
world. It make no sense to do this.
  The other thing it does, as we have seen very clearly from the last 
two cuts in the capital gains rates, in 1981 and 1997, it increases 
revenues into our Treasury. We find we are receiving more tax revenues 
as a result of freeing up those locked down assets.
  What does that mean? It means we win all the way around. 
Unfortunately, we take that fact of life, that reality, that more 
revenue comes in when we cut capital gains rates, and we score that as 
a negative. We don't score that as we should, that, in fact, we will 
find a new source of revenue, a bigger source of revenue. That is 
another issue.
  Capital gains taxes no longer affect just the wealthy. A recent U.S. 
Treasury Department study found that roughly three-quarters of all 
families in the United States own capital assets. The study further 
found that about 30 percent of those families whose incomes are less 
than $20,000 held capital assets, as did 50 percent of families with 
incomes between $20,000 and $50,000. So who pays the tax? It is not 
just the so-called wealthy, unless you are in that $20,000 to $50,000 
bracket and you consider yourself wealthy. I don't think you do.
  According to IRS data from 1998, 25 million returns filed that year 
reported capital gains; they reported capital gains on their tax 
return. That represents about one in five returns. Of those, 40 percent 
reporting capital gains had incomes of less than $50,000 and 59 percent 
of those filing those returns with capital gains had incomes of less 
than $75,000.
  It is rather clear, I think, to most of us, that, in fact, capital 
assets are held by a very significant majority of Americans: pension 
plans, IRAs--wherever you invest. Whatever the pension plan is, most 
likely that plan is invested in stocks, in the productivity of this 
country, in the base of this country.
  So as a result of reducing capital gains taxes, the economy will 
continue to grow. We will have sustained growth creating more jobs, 
better jobs, generating more capital, and increasing productivity, the 
engine of growth. All sectors of the economy benefit, increasing more 
tax revenues into the U.S. Treasury.
  Sustaining economic growth is the purpose of the Gregg amendment. I 
encourage all my colleagues to take a serious look at this amendment. 
If they do, I believe they will come to the conclusion that this 
country needs a reduction in its capital gains tax.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Grassley). The Senator from New Hampshire.
  Mr. GREGG. How much time is remaining and how has it been allocated?
  The PRESIDING OFFICER. There are 20 minutes on the time of the 
Senator from New Hampshire; 30 minutes on the other side.
  Mr. GREGG. Is there someone to speak in opposition?
  Mr. BAUCUS. Not yet, not at this point.
  Mr. GRASSLEY. I want to make clear I am in opposition, too, but right 
now I don't have anyone to speak.
  Mr. BAUCUS. Just for the sake of completing the record, I will speak 
in opposition.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. I appreciate the arguments of my good friend from New 
Hampshire. Clearly, as capital gains taxes affect the transfer of 
capital, that is of property, they can affect the degree to which this 
economy prospers. There is no doubt that capital gains tax rates are a 
factor in the acceleration of growth rates.
  I must point out, though, when the President proposed his tax cut 
bill of $1.6 trillion, he did not include any capital gains 
provisions--none whatsoever. I wouldn't want to second guess the 
President, but the point is he himself thought it made more sense to 
lower individual rates and not to lower capital gains rates at this 
time.
  I think, if you look at the bill the Finance Committee has brought to 
the Floor, you will see it is a bill designed to reduce individuals' 
income taxes. Whether it is the marriage penalty provisions, child 
credit rates, the new 10-percent bracket--they are all on the 
individual side. There are no corporate provisions, nor are there any 
affecting capital gains.
  Another problem I must point out about the proposal by my good friend 
from New Hampshire is that it is temporary. We have heard many people 
legitimately voice their concerns about the complexity of the Tax Code, 
and the capital gains provisions are responsible for their fair share 
of that complexity. If we have an on-again, off-again capital gains 
provision, it is not only going to add to the complexity, but it will 
add some uncertainty as well. People will not know what congressional 
policy is with respect to capital gains.
  That is less true with respect to other provisions. Let's take the 
R&D tax credit as an example. It is true that Congress over the years 
has been a bit inconsistent in the number of years for which it extends 
the R&D tax credit. Sometimes it is extended for 1 year, others a few 
years. There was a time a few years ago when it lapsed completely for a 
short period of time. Yet people know Congress will stand by the R&D 
tax credit so they have some ability to count on it when they do their 
planning.
  It is much less clear with respect to capital gains. The capital 
gains provisions have changed dramatically over the years, both in 
structure and in rates. People don't know what to expect with respect 
to how they will be taxed in the future.
  Finally, I must point out that this amendment is not germane to the 
underlying bill, and at the appropriate

[[Page 8596]]

point I will make a point of order to that effect.
  The PRESIDING OFFICER (Mr. Grassley). The Senator from New Hampshire.
  Mr. GREGG. Mr. President, I yield myself such time as I may consume.
  First, I think we have to understand what the capital gains tax cut 
will do. It will generate prosperity. It will generate capital that is 
today locked down in investments that are not productive, take that 
capital, cause people to convert that capital to cash, and reinvest it 
in other economic activity which will create jobs, create prosperity.
  Every time we have reduced the capital gains rate in this country, we 
have seen a flow of revenues into the Federal Treasury also. So not 
only does it create economic activity in the community at large, and 
create more investment activity, and thus create more entrepreneurship, 
and thus create more jobs, it also creates more cash coming into the 
Federal Treasury.
  Why is that, you may ask. How can a tax cut actually generate more 
income? Because, very simply, the income is never realized if the money 
stays locked down. It never occurs unless you create the tax cut. When 
you create the tax cut, people have an incentive to go out and convert 
those capital assets--which today are just sitting there--into cash, 
and as a result they generate revenue, and that revenue is taxed. As a 
result, the Treasury gains more money.
  In fact, we do not have to think of this in theoretical terms 
anymore. We have a series of events which have shown this to have 
actually occurred. The last time it was suggested that we cut capital 
gains rates, it was also suggested those capital gains rates would, 
again, over a period of time, create a loss to the Treasury. In fact, 
just the opposite occurred. The estimates were off by $100 billion the 
last time the capital gains rates were cut. We received $100 billion 
more of income to the Government than we expected as a result of the 
capital gains activity during the period from 1997 through 2000.
  So this year we come forward with a proposal which is a limited 
capital gains cut, the purpose of which is to energize the economy, 
create activity, and, as a side bar, it will generate revenues to the 
Federal Government.
  It has been scored as a positive generator of revenues to the Federal 
Government for the first 3 years by the Joint Tax Committee. 
Unfortunately, when they looked over 10 years, they did not look, I 
guess, at the historical data because, if they had, they would have 
seen that historically there is a factual event which shows it 
continues to generate positive revenues. Instead, they went to some 
sort of model they used at Joint Tax and came up with the estimate that 
in 10 years there might be a loss to the Treasury of $10 billion. 
Remember, this is $10 billion on a $3.5 trillion tax cut. So it is less 
than 1 percent of the entire event. And even that number is suspect.
  So the simple fact is, the argument that this is going to lose money 
for the Treasury cannot be supported, either in the short term, where 
it will generate cashflow, or in the long term, where we have seen 
positive cashflow to the Treasury as a result of the capital gains cut 
that was done in the early 1990s. So that makes no sense.
  This argument on germaneness also makes no sense. In two places in 
this bill capital gains are affected. They are affected on the AMT, and 
they are affected on the estate tax. So clearly capital gains activity 
is a germane event.
  But most importantly, we get back to the original point, which is 
that by cutting capital gains we actually will generate more economic 
activity in the marketplace, we will give people more cash, more 
investment assets. They will go out, take risks, create jobs, and thus 
create prosperity. That should be our goal in the tax cut.
  Mr. President, I ask unanimous consent that Senator Hagel be added as 
a cosponsor of this amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GREGG. As was mentioned so appropriately by the Senator from 
Nebraska, this is no longer a tax issue for the wealthy; this is a tax 
issue for middle America. Middle America is aggressively investing in 
the stock market today through their pension plans and also through 
their individual activity. Reducing the capital gains rate will 
significantly and positively impact middle America, something this tax 
bill does not do in the most effective way, in my opinion.
  More importantly, it will affect them today because it will give them 
the opportunity--starting next month, if this tax bill passes--to take 
advantage of a lower tax rate, which will have an immediate impact on 
their ability to generate profits and gains and take those profits and 
gains and put them into new investments which will generate new jobs, 
which will generate more prosperity.
  It is a win-win situation for us because we generate more prosperity 
as a result of more economic activity and more investment and we 
actually generate more revenues for the Federal Government.
  So I certainly hope, when we get to the point of voting, if there is 
a motion to repeal this amendment on the issue of germaneness, that 
will not be brought forward because I might win, and I would not want 
to undermine the germaneness rules of the Senate by winning that vote. 
I think it might make more sense, if that motion is going to be made, 
that it be made on the issue of the cost estimates of this bill. We 
could waive that motion and, hopefully, be successful.
  Mr. President, how much time do I have remaining?
  The PRESIDING OFFICER. Thirteen minutes.
  Mr. GREGG. I yield 10 minutes to the Senator from Arizona.
  The PRESIDING OFFICER. The Chair recognizes the Senator from Arizona.
  Mr. KYL. Mr. President, I thank the Senator from New Hampshire for 
bringing this amendment forward. If I am not listed as a cosponsor, I 
ask unanimous consent that I be added as a cosponsor of the amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KYL. I note that I offered a similar amendment myself. In fact, I 
know several of us offered similar amendments because this is such a 
good idea.
  I begin by complimenting the Presiding Officer for the extraordinary 
job he has done in putting together a compromise tax bill. It is with 
great hesitancy that I suggest an amendment to this bill, but I know if 
it were not so critical to get a lot of support from disparate groups 
of folks, the Presiding Officer undoubtedly would be supporting an 
amendment of this type as well.
  So I simply agree with the Senator from New Hampshire that the 
primary point here is to both raise revenue and stimulate the economy, 
which is what a capital gains rate reduction will do. That is what our 
prior experience in this country has been. Clearly, that is what would 
happen in this particular case.
  So again, what this amendment does is reduce the long-term top rate 
from 20 to 15 percent for a 2\1/2\-year period, from June 2001 to 
December 31, 2003--a period of 2\1/2\ years. That is the period at 
which the rate will be reduced.
  What would be the impact of that? All investors, it has been pointed 
out--small, medium, and even large investors--would understand there is 
a window of time for 2\1/2\ years, during which they could dispose of 
assets, sometimes assets they have held for a long period of time 
because they have not wanted to have to pay the large capital gains 
rate on them. So they have held on to the asset, thus, in effect, 
making less money available for investment into the newer technologies 
and the more exciting things in the market today. It would provide a 
2\1/2\-year window for all of these people to go ahead and sell those 
older portfolio stocks, those older assets of land or equipment--or 
whatever it might be that they have been hesitant to sell in the past 
because of the huge tax they would have to pay--a 2\1/2\-year window to 
dispose of those assets, take the cash, and reinvest it in something 
that would help the new economy even more.
  That kind of churning effect in the past has been demonstrated to 
provide

[[Page 8597]]

not only stimulus to the economy, as the Senator from New Hampshire 
said, but also more revenues to the Treasury. Indeed, Joint Tax, which 
does not have a reputation of favorably scoring these kinds of things, 
noted that during the first 4 years there would be a net gain in 
revenue to the Treasury from the reduction in the capital gains rate. 
It is only after that that they have estimated a very slight loss that 
would occur thereafter. I disagree with that estimate. But, in any 
event, clearly this is the way to both stimulate the economy and 
increase revenues.
  I think it is unassailable by any standard that the capital gains 
rates in this country are too high. According to a study by the 
American Council for Capital Formation, American taxpayers face capital 
gains tax rates that are 35 percent higher than those paid by the 
average investor in other countries. This is an area where virtually 
every other country on the globe outcompetes the United States because 
they recognize the anchor effect, the drag effect, of a capital gains 
rate on their economy. We need to get in the game, and we can do that 
by reducing our capital gains rates.
  Lowering the rates will be a boost to the economy. The recent 
individual capital gains rate reductions have boosted U.S. economic 
growth. These are facts. Reducing the cost of capital promoted the kind 
of productive business investment that fostered growth in output and in 
high paying jobs. Lowering the capital gains rates aided entrepreneurs 
in their efforts to promote technological advances in products and 
services most people wanted and needed. It has this unlocking effect I 
mentioned earlier.
  Further reductions in the capital gains rates will enhance savings, 
investment, GDP growth, and boost equity values.
  A recent analysis done by Dr. Allen Sinai, President and CEO of 
Decision Economics, concluded that the capital gains reductions that 
were included in the 1999 tax bill, which was vetoed by President 
Clinton, which would have reduced long-term rates from 20 down to 18 
percent, would have had a significant, positive impact on the economy. 
The analysis indicates that if the rate reductions had been enacted, 
real GDP would be $64.6 billion higher, and employment, investment, new 
business formation, and national savings would be greater over the 
period of 2000-2004.
  It is quite likely--I think evident--that our economy would be in 
much better shape today had the previous administration appreciated the 
importance of capital formation growth and the President not vetoed the 
capital gains reduction we passed.
  The recent Federal Reserve Board report indicated that Americans lost 
nearly $2 trillion in wealth in just the last quarter of 2000 as a 
result of the stock market decline. That is approximately a loss of 
$20,000 in wealth and capital for each household in America--think of 
that--the equivalent of $20,000 in loss for each household in America. 
Of course, less household capital means less capital available for 
investment and capital formation.
  Reducing the capital gains tax rate will encourage investors to 
unlock cumulative gains of the past. Capital would be more free to go 
into the entrepreneurial and future-oriented, technology-generating 
enterprises. In particular, venture capital investment, which is vital 
to this new technological innovation and productivity, will benefit as 
a result of the unlocking of this capital.
  Let's not forget about national savings. Reducing capital gains taxes 
means less taxes on Americans who choose to save for their future.
  To conclude, this estimate by Joint Tax indicates a revenue increase 
to the Treasury for the first 4 years. There is not another provision 
in the tax bill the Presiding Officer has so carefully crafted that 
will produce actual increases in revenue during this period of time. 
This is exactly the time when our economy needs the boost. I can't 
think of anything that would be better for inclusion in this tax bill 
than this temporary reduction in the rate of capital gains paid by 
Americans.
  The fact that they declare a slight net loss in the time thereafter 
is simply an indication of the kind of poor estimating they have done 
in the past.
  Again, it is a very small amount of money, and the time we really 
need the boost is right now. That is where Joint Tax indicates there 
would be a revenue increase.
  The amendment to this bill complements many aspects of the 
President's plan. It adds another important addition, immediate relief 
for capital formation and growth. That is what this tax plan is all 
about. That is what the American people are expecting as the result of 
the plan. That is why this idea put forth by several of us, 
encapsulated in the amendment of the Senator from New Hampshire, is 
such a great idea.
  I urge my colleagues, when the time comes, to support this amendment 
as something that will both generate new revenue and foster capital 
formation for the American economy. I thank the Senator from New 
Hampshire for offering the amendment.
  The PRESIDING OFFICER. The Chair recognizes the Senator from Montana.
  Mr. BAUCUS. Mr. President, how much time remains on each side?
  The PRESIDING OFFICER. Twenty-six and a half minutes in opposition.
  Mr. BAUCUS. I yield myself 10 minutes.
  Mr. President, I note with some amusement the last Senator 
criticizing the previous President for not being more sympathetic to 
capital gains reductions. I remind my good friend, the current 
President also does not seem to have much interest in further capital 
gains reductions because he, in his big tax bill, did not include any 
capital gains reduction provisions. Some time down the road he may 
suggest it. But in this big tax bill, which certainly is one of the 
major pieces of legislation the President would like to see enacted, 
this administration does not include any capital gains provisions.
  Mr. KYL. Mr. President, will the Senator yield for a quick comment?
  Mr. BAUCUS. Certainly.
  Mr. KYL. Does the Senator from Montana believe that President Bush, 
however, would veto a capital gains reduction as President Clinton did?
  Mr. BAUCUS. Mr. President, I cannot answer that kind of hypothetical 
because there is no way of knowing what else might be in that bill the 
President may not like, just as there's no way of knowing whether 
President Clinton would have vetoed a capital gains reduction standing 
alone. Presidents don't have the ability to line-item veto, so it is 
very hard to answer that question.
  But my basic point is clear: This bill contains no capital gains 
provisions, and for that reason, the amendment is nongermane.
  As I mentioned earlier, the amendment offered by my good friend from 
New Hampshire adds much greater complexity to the tax bill than already 
exists by making capital gains reductions apply only for a short period 
of time. We have had a difficult enough time as it is in this bill to 
try to fit a more progressive bill into the confines of $1.35 trillion 
over 11 years. We wanted to provide for marriage penalty relief, 
refundability of the child tax credit and expansion of the Earned 
Income Tax Credit, lower marginal rates, increased pension benefits, 
education deductions for college tuition. It has been very hard to fit 
in all those provisions.
  Now the Senator from New Hampshire would add more complexity by 
making this capital gains provision active only for a short period of 
time. I believe a major amendment such as this one needs to be 
thoroughly vetted before we impose a new capital gains structure 
through this bill.
  Many different ideas on how to treat capital gains have been 
proposed. For example, some Senators have suggested capital gains 
exclusions, either in the form of a dollar amount exclusion or as a 
percentage exclusion. This type of capital gains reform actually makes 
the code much more simple. It is easier to administer, and it might 
make more sense for more taxpayers; that is, the first x amount of 
dollars of capital gains could be excluded when computing one's income 
taxes, or one could say the first 50 percent of capital gains could be 
excluded.

[[Page 8598]]

  Years ago, we did have a percentage exclusion, and it made sense. And 
it represented another way of providing lower capital gains taxes, in 
the form of an exclusion as opposed to a straight lowering of the 
rates.
  A lot of Americans who are holders of mutual funds are concerned 
about capital gains today because, while the value of their mutual 
funds declined last year, in many cases they nevertheless paid capital 
gains taxes on stocks the portfolio manager traded in order to maximize 
the value of the fund. So even though the shareholder's value declined, 
he is still paying capital gains taxes in many cases. This doesn't seem 
to make a lot of sense, but the taxpayer gets to deduct those losses at 
a later date when he sells the shares.
  It has been suggested that we should try to help these taxpayers too, 
perhaps by allowing them to defer the gains that the portfolio manager 
provided to the shareholder by trading securities in the portfolio. 
That would be a way to deal with the capital gains taxes millions of 
Americans in that situation are facing, even though the shares of their 
mutual funds are declining. Providing this type of deferral would tend 
to help middle-income taxpayers a lot more than the amendment offered 
by the Senator from New Hampshire, which will tend to help wealthier 
taxpayers.
  There are other ways to deal with capital gains taxes too, which have 
been proposed but not considered this year by the Finance Committee. 
This is a major modification to the Tax Code designed to stimulate the 
transfer of assets, yet it hasn't been considered by the Committee of 
jurisdiction to determine whether this particular approach is the best 
one to take. I don't think it is good public policy to write such a 
major provision on the Senate Floor without the Finance Committee's 
participation.
  I think it would be much wiser for us to defer this until later this 
year, or maybe next year, when there is an opportunity to debate it 
more fully. The Joint Tax Committee has produced a study on the 
simplification of the Tax Code, and I will point out again that some of 
the greatest complexities in the code are the result of our capital 
gains provisions. In part, this complexity results because of the 
differential between capital gains rates and ordinary income rates.
  The greater that differential, the more taxpayers try very creative 
ways to move their assets so they are not taxed at ordinary income 
rates, but rather capital gains rates. And this effort to re-
characterize income can stretch the meaning of normal tax concepts. 
This amendment would exacerbate these efforts because the gap between 
rates would be greater and people would have more incentive to try to 
manipulate the characterization of their income in order to improperly 
minimize their taxes.
  My main point is that this is an attractive idea on its face. 
Clearly, lowering capital gains rates would stimulate the transfer of 
assets and may accelerate growth, at least in the short term. But this 
is not the time and place for this amendment.
  As for the revenue issues, the Senator has touched on the issue of 
dynamic scoring versus static scoring methodologies. This brings up an 
age-old problem we deal with in Congress--that is, how to determine 
what the revenue impact will be when we change the Tax Code. Those who 
support dynamic scoring claim that tax cuts, whether in capital gains 
rates or otherwise, actually raise revenue rather than losing it 
because of the interactive effect of economic growth. The Joint Tax 
Committee, in what is almost an art more than a science, generally does 
a good job of taking into consideration those taxpayer behaviors that 
are the most reliable when they attempt to estimate the impact of a 
provision.
  I think we have to trust the Joint Tax Committee, which is the agency 
we all depend upon to determine scoring, which says that the provision 
actually loses revenue in the context of this bill.
  I appreciate the effort of my friend from New Hampshire, but I truly 
believe this time this is not the time and place for this amendment. I 
will raise a point of order at the appropriate time.
  I reserve the remainder of my time.
  Mr. LIEBERMAN. Mr. President, I rise to explain my vote in favor of 
amendment No. 656 to the tax bill that we are debating today. The 
record clearly shows my strong support for fiscal discipline and 
responsible tax reduction. It also shows my strong opposition to the 
underlying tax cut because it is too large and too careless. However, I 
am voting in favor of this amendment even though it contains no offsets 
and could potentially raise the overall cost of the tax cut. I vote for 
this amendment because I believe it is imperative that this tax bill 
should contain some provisions directed to business and industry and 
supportive of economic growth. By voting in favor of this amendment, 
one of the few that will directly influence investment and economic 
growth, it is my intent to get it before the Conference Committee where 
it will be a part of the discussion of what will be the final version 
of this tax bill. It is my hope that in Conference, our colleagues will 
recognize that capital formation is a key to economic growth and 
prosperity. In addition, history has proven that a cut in the capital 
gains tax not only stimulates the economy, but also raises revenue for 
the federal government. In fact, one of the reasons I am voting in 
favor of this temporary reduction in the capital gains tax rate, is 
that the Joint Tax Committee score does show it raising revenue this 
year and through 2004 before losing revenue in out years. I am voting 
for this amendment because I am confident that its cost is justified 
when compared to its economic benefits and because it is my hope that 
the Conference Committee will add it to the tax bill without raising 
the bill's overall cost.
  The PRESIDING OFFICER (Mr. Cochran). Who yields time? The Senator 
from New Hampshire.
  Mr. GREGG. How much time is remaining?
  The PRESIDING OFFICER. The Senator from New Hampshire has 5 minutes. 
The Senator from Montana has 18 minutes.
  Mr. GREGG. I ask that any time used during a quorum call be charged 
against the time of the Senator from Montana.
  The PRESIDING OFFICER. Is there objection.
  Mr. BAUCUS. What is the request?
  Mr. GREGG. The Senator from Montana has 18 minutes. If we are going 
to go into a quorum call, I ask that the time be charged to the time of 
the Senator from Montana.
  Mr. BAUCUS. I object. That is not the way we do business around here.
  The PRESIDING OFFICER. Objection is heard. If no one yields time, 
time will be charged equally against both sides.
  Who yields time?
  Mr. GREGG. Mr. President, I am going to speak, then the Senator from 
Montana will speak, and then we will yield on this amendment.
  Mr. President, I want to make a couple points in response. The 
scoring on this that I am referring to is not dynamic; it is 
historical. The fact is that the last time we cut the capital gains 
tax, it was said by Joint Tax that we would lose revenue over an 
extended period of time. In fact, it turned out that we gained revenue 
over the extended period of time. In fact, we exceeded the revenues by 
over $100 billion over the time period of 5 years.
  Today the amendment I have offered generates positive revenue over 
the first 3 years, which is the period--2\1/2\ years--when the capital 
gains cut is in place. And then it has been projected that in the 
balance of the 10 years, it will lose $10 billion total. Mr. President, 
$10 billion on a $1.3 trillion bill is a manageable number.
  The economic benefit that will be generated by cutting the capital 
gains tax starting June 1 will be huge. It will far exceed any $10 
billion that is lost--assuming it were ever lost--because it will mean 
that there will be a massive infusion of cash into the economy that is 
today locked down--a massive infusion of investment into the economy 
that is today locked down.
  That investment will generate jobs, create entrepreneurship, and 
generate

[[Page 8599]]

prosperity. It will benefit, disproportionately, middle-income 
Americans, who are today heavily invested through their pension funds 
and through personal activity in the stock market. It will, therefore, 
be a significant win for the American people and for the Federal 
Government because we will generate more revenues for the prosperity of 
our Nation.
  That is why I think it is a good idea to do it and do it now, and it 
is certainly not an expensive exercise.
  I yield back the remainder of my time.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, I appreciate the Senator from New 
Hampshire for agreeing to shorten debate on this amendment. I will 
again outline why I must respectfully oppose the amendment. One, this 
is not part of the President's package, and we have resisted including 
provisions in this bill that are not part of the President's agenda 
except in very limited circumstances. Frankly, because there are no 
capital gains provisions in the underlying bill, this amendment is 
subject to a point of order. It is not germane.
  Second, the provision is temporary, and that adds complexity to a 
code that is complex enough.
  Third, there are many ways to deal with capital gains reductions. 
This amendment only represents one: to lower the rates for a certain 
period of time. Another would be to provide for an exclusion of some 
portion of capital gains income from taxes completely, either as a 
dollar exclusion or as a percentage exclusion. This particular form, 
that is, the exclusion from income, will tend to help middle-income 
taxpayers even more than the provision offered by my friend from New 
Hampshire, which will tend to benefit the wealthiest taxpayers who deal 
in stocks.
  Those Americans who pay capital gains on assets held in their mutual 
funds, even though the value is declining, are not going to be helped 
that much by this amendment. There are other ways to help them.
  In conclusion, I don't believe this provision represents sound tax 
policy.
  I urge Senators to not support this amendment so we can keep this 
bill intact, go to conference, and come back with a bill that is 
virtually identical, if not identical, to the Senate-passed bill. I 
yield back the remainder of my time.
  The PRESIDING OFFICER. The Senator yields back the remainder of his 
time.
  Under the previous order, the Senator from Minnesota, Mr. Wellstone, 
is recognized to offer an amendment.


         Amendment No. 692--Motion to Commit with Instructions

  Mr. WELLSTONE. Mr. President, I send a motion to the desk.
  The PRESIDING OFFICER. The clerk will report the amendment.
  The assistant legislative clerk read as follows:

       The Senator from Minnesota [Mr. Wellstone] proposes an 
     amendment numbered 692.

  Mr. WELLSTONE. Mr. President, I ask unanimous consent that the 
reading of the motion be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       Mr. Wellstone moves to commit the bill H.R. 1836, as 
     amended, to the Committee on Finance with instructions to 
     report the same back to the Senate not later than that date 
     that is 3 days after the date on which this motion is adopted 
     with the following amendments:
       (1) Establish a reserve account for purposes of providing 
     funds for Federal education programs.
       (2) Strike the reductions to the highest rate of tax under 
     section 1 of the Internal Revenue Code of 1986 contained in 
     section 101.
       (3) Provide for the deposit in the reserve account 
     described in paragraph (1) in each of fiscal years 2002 
     through 2011 of an amount equal to the amount that would 
     result from striking the reductions described in paragraph 
     (2) (as determined by the Joint Committee on Taxation).
       (4) Make available amounts in the reserve account described 
     in paragraph (1) in each of fiscal years 2002 through 2011 
     for purposes of funding Federal education programs, which 
     amounts shall be in addition to any other amounts available 
     for funding such programs during each such fiscal year.

  Mr. WELLSTONE. Mr. President, I will take a little time because I 
want to hear from my colleagues on the other side.
  In the budget resolution on the Senate side there was an amendment 
that Senator Harkin offered. I was an original cosponsor with Senator 
Harkin. This was an amendment on which Senators Murray and Kennedy 
joined. I think this amendment was adopted with 52 votes.
  We called for $250 billion over the next 10 years to go into 
education. There were altogether 52 Senators who voted in support.
  But, when the conference committee got its hands on the Harkin 
amendment, this commitment to education disappeared. This motion 
commits the reconciliation bill to the Senate Finance Committee and 
directs the committee to send the bill back to the Senate with a 
reserve fund of $120 billion; in other words, just half of what the 
Harkin amendment included.
  Where does the $120 billion for education come from over the next 10 
years? The motion eliminates the cuts in the 39.6-percent tax bracket.
  My colleagues might ask: What happens to the 0.7 percent of Americans 
who pay taxes at this rate? That is all we are talking about, 0.7 
percent of taxpayers. Do they not get a tax cut under this amendment? 
Absolutely they do, and they get a big one. In fact, the 0.7 percent of 
families who pay at least some tax at this rate--a married couple, for 
example, would have to earn over $297,000 a year to do so--will still 
get about a $8,400 cut in their taxes under this motion. That is a big 
cut. More importantly, 99.3 percent of American taxpayers will not have 
their tax cut affected by this motion at all.
  By slightly reducing the tax cut for 0.7 percent of the richest 
Americans, we can invest in what is 100 percent of our future, which is 
our children. That is what this amendment is all about.
  What does this mean? It means we can do better with afterschool 
programs.
  What does this mean? It means we can do better with more reading 
assistance for these children.
  What does this mean? It means we will not have as great a disparity 
in who can afford higher education.
  What does this mean? It means people who are laid off on the Iron 
Range will have job training and job education opportunities to find 
other work and do well.
  While too many of us are taking photos with children and talking 
about education, we have a system in the low-income communities where 
there are 50,000 unprepared teachers hired every year. How interesting 
it is. We are going to be doing all of this testing, which I will get 
back to when we get back to the education bill, but at the same time we 
are going to have a Federal mandate to test every child, we will not 
have a Federal mandate that will call for the same opportunity for 
every one of these children to learn and do well.
  How in the world do we think these children are going to do that if 
they do not have good teachers?
  How do we think they are going to do it in classes that are 50 in 
size?
  How do we think they are going to do it when the schools are so 
decrepit?
  How do we think they are going to do it when they do not have the 
additional help they need?
  While we are talking, about 25 percent of prekindergarten child care 
is considered to be good or excellent. Most of it is average to 
dangerous.
  While we are talking, over half of Minnesota's 10- to 12-year-olds 
have no care after school. That means children whose parents are 
working hard have no place to go but home alone.
  While we are talking, the Pell grant has declined in value to only 86 
percent of what it was worth in 1980.
  This is a clear question of values. I urge my colleagues to support 
this motion. It leaves unaffected the tax cuts in this bill for 99.3 
percent of American taxpayers. It takes some, but not all, of the 
surplus funds that would go to tax cuts for the wealthiest 0.7 percent 
of taxpayers, and it sets that money aside--$120 billion over 10 
years--for education.
  The wealthiest 0.7 percent will still see their taxes cut by $8,400. 
The bill

[[Page 8600]]

proposes to lock in $1.35 trillion in tax cuts over the next 10 years. 
If this motion is adopted, we will still have $1.23 trillion of tax 
cuts, but we will also be locking in $120 billion for education.
  Here is the simple proposition: Should the Senate set aside $120 
billion of the surplus over the next 10 years for education, an amount 
equal to one-tenth of the tax cuts that are proposed? I propose $10 in 
tax cuts but $1 for every $10 in new money for education.
  That should be an easy tradeoff for colleagues. I hope it is easy, 
and I hope they vote yes.
  I reserve the remainder of my time.
  The PRESIDING OFFICER. Who yields time?
  Mr. GRASSLEY. Mr. President, I yield myself such time as I may 
consume.
  The PRESIDING OFFICER. The Senator from Iowa is recognized.
  Mr. GRASSLEY. Mr. President, I rise in opposition to the amendment of 
the Senator from Minnesota. I know he is one of the most sincere 
individuals in the Senate when it comes to the issue of education. We 
have had a chance to hear him speak on these issues many times in the 
last few weeks as we have been considering the Elementary and Secondary 
Education Act amendments.
  As sincere as the Senator from Minnesota is in pursuing his goals for 
education, doing it on this bill is beyond the scope of the Finance 
Committee's jurisdiction in the way that he would set up a reserve fund 
to do that.
  A commitment of this bill back to committee to set up a reserve fund 
would not be within the jurisdiction of our committee. It would direct 
us to set up a reserve account that would lead us to what he refers to 
as full funding of education programs.
  It would also strike any reduction in the tax burden for those at the 
39.6-percent tax rate. There is no revenue estimate for this amendment. 
That is another issue with which we have to deal within the realities 
of the budget resolution.
  Our bill contains many excellent educational provisions that are 
within the scope and the jurisdiction of our Senate Finance Committee. 
These are tax provisions. They are tax provisions that consequently 
would improve the day-to-day lives of ordinary Americans.
  The Senate has passed these education amendments--twice last year 
and, I think, the year before. Also, these are provisions which, even 
though they are in this bill, they are on the calendar as a separate 
bill that was voted out of our committee by a vote of 20-0. So we know 
these have almost unanimous support in the Senate, as the Senate 
Finance Committee is a microcosm of the entire Senate.
  This motion to commit ought to be seen by our colleagues as a motion 
to delay the passage of this tax bill and the tax relief for working 
men and women that will result from this legislation.
  In addition, while the motion to commit may be in order, what it 
directs the committee to do is to fund education spending programs. 
Therefore, it is my belief--and we may raise this point later on--it 
would not be germane to the bill. I appreciate Senator Wellstone's 
sincerity. However, I urge my colleagues to reject it.
  On a larger note, I am going to take this opportunity to ask the 
Senator from Minnesota to consider a point of view that I expressed 
last week in regard to the wealthy of America. I do not deny what he 
says about the people who pay the 39.6-percent tax rates, that they are 
very high income people and, maybe more so than other people, can 
afford to pay that rate. I think too often the Senator from Minnesota 
as well as a lot of other Senators--maybe even some on our side of the 
aisle--take the view that when we apply the 39.6-percent tax rate, we 
are applying it to a group of people who have always been rich and will 
forever be rich. But that is not the true picture of America.
  I want to address that thought and ask the Senator to consider that 
point of view as I ask him to focus upon what he is doing on the tax 
portions of his amendment.
  We hear so much in this debate about taxing those getting a good 
paycheck--obviously, a very good paycheck in terms of the amendment of 
the Senator and those people who are going to be taxed at 39.6 percent. 
But speeches such as this would make you think the people being taxed 
must have been getting a good paycheck their entire life--born rich, 
stay rich, and die rich. But that is not true of most of the people who 
are in the highest tax brackets. I think people who make these claims 
provide a distorted picture of America. They present a picture of 
America where a family who is struggling will always struggle and 
consequently be at the low income tax rate level or maybe not pay any 
income tax at all. That is on the one hand. On the other hand, we have 
an America where people can buy sirloin instead of chuck round, that 
they have always been able to do this and will always be able to do it. 
In other words, the poor are always poor and the rich are always rich.
  But as we all know, real life provides a more complicated picture. 
The reality is that the vast majority of our poorest Americans, with a 
bad spell here and there, spend their lives moving up the economic 
ladder until retirement.
  Yes, there is an extremely small group of people, estimated at 
approximately 1 percent, for whom the enormous hardship of poverty is a 
lifelong constant; that is, they are poor and will remain poor 
throughout most of their life. For these unfortunates, obviously, our 
society hopefully is a loving society and provides a safety net, a 
safety net that is expanded by the provisions of this bill, in addition 
to a lot of appropriated accounts in which we try to help this group of 
people.
  But beyond that 1 percent, or fewer, who are going to be poor 
throughout their entire life, for most Americans who study, work hard, 
and play by the rules, their tomorrow is a brighter tomorrow.
  I do not come to this conclusion by myself. Every one of us can have 
the benefit of a detailed study by the University of Michigan that 
about a third of those at the bottom fifth income bracket--the bottom 
20 percent economically of our society--will move up to a higher income 
bracket even next year; in other words, into the second or third 
quintile.
  Over the past 16 years of study by the University of Michigan, 
approximately 80 percent of those who were the poorest of Americans had 
moved into the middle class. And incredibly--but it tells you something 
about the greatness of America and our economic system and our social 
dynamics--about 30 percent of those at the bottom were among the 
richest top fifth during the 16-year study period.
  This notion that the people's wages are not constant, that a man 
probably will not be paid the same amount when he is 25 as compared to 
when he is 55, is not news to me nor millions of other Americans who 
understand that there is opportunity to move ahead and up in our 
society.
  But from the way others talk, this must be incredible news to those 
in the Washington elite who have never had a callus on their hands--
that somehow the poor are always poor and the rich did not work to get 
there, but they have.
  What a shock to them it must be to learn that over 60 percent--again, 
60 percent--of all families found themselves in the top 20 percent for 
1 or more years over a 16-year period in an analysis provided by the 
Federal Reserve.
  This is who is now labeled the wealthy by those fighting tooth and 
nail against this tax cut--over 60 percent of all American families. 
And I would like to tell you the real story for many of these families 
who have finally received the reward of a good paying job after a 
lifetime of hard work. It is at that time that these families are often 
the most financially pressed. In other words, people who have married, 
gotten a job, had families, over a period of 30 years have moved up and 
maybe became high-income people, but these are also people who might be 
hit by a 39.6-percent tax bracket who are also financially pressed 
because in modern-day America these are the families struggling to pay 
for their kids' college, helping

[[Page 8601]]

their kids with the cost of daycare, trying to put away something for 
savings for their retirement.
  Also, this generation, the first generation in American history that, 
besides taking care of their own kids, worrying about their own 
retirement, may be taking care of their mom and dad who are in a 
nursing home or need some financial assistance, these people are 
labeled the rich, the wealthy, and in some instances facing marginal 
tax rates of up to 50 percent of Federal and State income taxes.
  My colleagues should know, too, that for most Americans a good 
paycheck is fleeting because, as I said, the rich in America are not 
always rich. Most of them were not born rich. They worked hard to get 
there. And they do not stay there either because fully one-half of the 
top 1 percent at the beginning of the decade dropped out of the top 1 
percent at the end of the decade, and not only were they not in the top 
1 percent, they were not even in the top quintile, the top fifth income 
bracket, by the end of the decade.
  That said, we still all know that the American dream is alive. Sixty 
percent of all American families will reach the top fifth income 
bracket during their lifetime. Eighty percent of those on the bottom 
rungs will reach the middle class or higher.
  These high tax rates are really hitting the hard-working middle class 
who finally get into the top brackets for a few years as a reward for 
30 years of hard work and may be even leading a miserly life to some 
extent thinking about the future. I want you to know those are some of 
the people who are hurt so much by the high tax brackets--middle-class 
people who finally make it to the promised land for a few years. I 
would be sympathetic to people in this body who want to preserve that 
high tax rate if they wanted to apply it to the people who, for a 
lifetime, you might refer to as filthy rich. But for people who are 
from time to time in that high tax bracket, we ought to recognize the 
fact that it is punitive for people who have worked hard throughout 
their lifetime.
  If you want to tax the other group of people who were born rich, stay 
rich, and die rich, then figure out some way of taxing them at a high 
bracket over a 5-year average or something so you do not hook these 
people who reach the high bracket for a few years of their life and 
steal the American dream from them.
  I am proud this bipartisan tax bill helps reduce the tax bites of 
these hard-working, middle-income Americans. I encourage my colleagues 
to remember that when they offer amendment after amendment, it limits 
marginal tax cuts. It is these millions of hard-working American 
families who have borne the brunt of hard work, been productive, 
raising their family, and providing for their own future. Let's not 
take it away from them.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Minnesota.
  Mr. WELLSTONE. Mr. President, how much time do I have left?
  The PRESIDING OFFICER. The Senator has 25 minutes--24 minutes 25 
seconds.
  Mr. WELLSTONE. Mr. President, I wish to respond directly to my 
colleague from Iowa. I am going to start out the same way he did 
because it has been a friendship. It is not like I dislike Senators, 
but I always say very positive things about him because I think he is 
one of the best people in the Senate. I think probably the other 98 
Senators feel the same way.
  I am going to get back to education, but on this whole question of 
the elitist Washington viewpoint and people being able to work hard 
and, if you will, attain the American success or American dream--I know 
all about it. I don't want to get corny, but I think my father was 56 
when my parents finally had enough money to buy a home. We thought we 
had died and gone to heaven. It was a little box, it was a teeny place, 
but for them, Jewish immigrants, it was a big deal. I understand full 
well what that is about.
  But I will tell you something and this is an honest to God 
disagreement we have. You mentioned the whole issue of nursing homes. 
First of all, both had Parkinson's disease. My parents are no longer 
alive, but other people's parents and grandparents, they are not going 
to get a break when it comes to being able to afford prescription 
drugs. That is why I support the Rockefeller amendment.
  I say to my colleague from Iowa, as a matter of fact, the Finance 
Committee is spending a lot of money on these tax cuts so that is not 
revenue that is there. If, in fact, you want to make sure senior 
citizens--then we will get to education--can afford prescription drugs, 
which means you cannot have too high a deductible or copay, which means 
you can't means-test it at $20,000 and then say because individuals 
have an income of $21,000 they don't get any break, which means you 
have to cover the catastrophic expenses--you cannot do it on the cheap. 
We are not going to have the money for it.
  You talk about nursing homes. My colleague from Iowa has done some of 
the best work, being there for consumers, going after some of the 
nursing home industry that do not live up to good standards. I agree 
with him. But the truth is, whether it is enabling people in Iowa and 
Minnesota to stay home as long as possible and to live with dignity--
that is what my mom or dad wanted--or go to a nursing home, from where 
do you think the money is going to come? Do you think that is going to 
be done on a $3,000 tax credit? It costs a lot more than that. Where is 
the commitment of resources going to be? We are not going to have it. 
It is all going to be crowded out by this legislation.
  I am saying to colleagues that for a couple with an income of 
$300,000 a year, their tax cut--they are going to get a tax cut. But 
their tax cut will be $8,400 a year. I think the majority of 
Minnesotans and couples in the United States of America who make 
$300,000 a year will say, if the tradeoff is we will be limited to a 
$8,400 tax cut but there will be more for children and for education, 
including our children, we are for it.
  Let's get real about this. This is all a debate about values and 
priorities.
  Mr. President, 52 Senators voted for the Harkin amendment. I was the 
first original cosponsor of that amendment. That was $250 billion, and 
in the budget resolution you said you were going to take it out of tax 
cuts. Mr. President, 52 Senators voted for that.
  I am now taking half of that $250 billion, $120 billion, and I am 
saying we take it out of the top 0.7 percent of the population, who 
still get a tax cut but not as much.
  You have voted in this ESEA authorization bill, as far as I can 
calculate, for $212 billion for the period of 2002 to 2008. Are we 
engaged in symbolic politics or is this for real? I heard some of my 
colleagues come to the floor and say we have to do more than talk the 
talk; we have to walk the walk. If you have voted to authorize $212 
billion, from where do you think it is going to come? From where do you 
think it is going to come? My colleague from Iowa, and for all I know 
Democrats as well, are going to come out here and they are going to say 
that this motion violates the Budget Act and, because of the Senate's 
arcane rules, would require 60 votes.
  That is true. But, unfortunately, I have to bring this motion to the 
floor right now because you members of the Senate Finance Committee, 
you are the ones who are spending all this money. You are spending the 
money through the tax cuts. It is going to be $2 trillion over the next 
10 years when all is said and done, and then in the following 10 years 
when the chickens come home to roost and we have more and more people 
who are 65 and 70 and 75 and 80, you are going to erode the revenue 
base by $4 trillion.
  Where is the money going to be for Medicare? Where is the money going 
to be for Social Security? It is fiscally irresponsible. Honest to God, 
this Senate Finance Committee--and I love you all individually--you are 
making me a fiscal conservative. I never thought I would ever say that 
on the floor of the Senate. I cannot believe what you are doing, in 
terms of the future projections. I want to announce for the people of 
Minnesota today: Not only am I

[[Page 8602]]

a Senator for education and children, that is what I am trying to do 
here right now, but the Senate Finance Committee, the Republicans and 
too many Democrats, all of whom I love individually, have now made me a 
fiscal conservative. I cannot believe what we are doing. I cannot 
believe it.
  So now I would say to my colleagues: This is your choice. Can I 
repeat it one more time? We set aside only $120 billion of real money--
not authorizations. I don't want you to vote for authorization and go 
back home and say I voted for all this money for title I and I voted 
for all this money for everything else, when it is not real money, it 
is fiction. It is fiction and the Presiding Officer knows it. You set 
aside $120 billion, that is one-tenth of the tax cuts. So it is an easy 
choice, $1 for children and education for every $10 in tax cuts, and 
you set it aside by saying to people, couples with incomes of almost 
$300,000 a year: You get a tax cut of at least $8,400. What could be 
more reasonable?
  I want to make two other points, one about this overall tax cut that 
is before us and the other about education. My colleague from Iowa 
talks about the poor and helping the poor. I give credit where credit 
is due for a partial refundable tax credit, child credit. But can I ask 
this question, and I may have an amendment on this later on today: If 
the choice is between not covering any low-income children versus 
covering some low-income children, versus covering all low-income 
children, why aren't we covering all low-income children? Why is it 
that the poorest of poor children--the 10 million children who come 
from families with incomes under $10,000 a year--their families do not 
get a break at all? What in the world is going on here?
  My colleague comes out on the floor and says--and so will others--
``You are violating the Budget Act.''
  Why don't you tell that to my daughter Marcia who is a Spanish 
teacher who will have 50 students in her class next year?
  Why don't you tell that to my son Mark who has been teaching at an 
inner city school, Arlington High, in St. Paul, where so many of those 
students never had a break and need the additional help but they are 
not going to have the resources?
  Why don't you tell that to these children who are 7 and 8 years old 
and in a given year, especially in your inner city schools, they will 
have two or three or four teachers, and, in addition, quite often they 
do not have qualified teachers, and, in addition, the schools are 
overcrowded, and, in addition, quite often the bathrooms don't work, 
the plumbing doesn't work, the heating isn't adequate, the schools are 
too hot, and, in addition, they don't have the technology and the 
resources?
  Why don't you tell it to these children that this--because of the 
Senate's arcane rules--violates the Budget Act? Tell it to the 
children. Do you want to know something? We can do a lot of things in 
this Chamber of the Senate and they are reversible later on. When you 
rob a child of his or her childhood, it is irreversible. We are going 
to fully fund the title I program for children who come from low-income 
families 10 years from now, maybe? These 7-year-olds will be 17. It 
will be too late for them. You don't want to take $120 billion of real 
money for education? Instead, you want these Robin-Hood-in-reverse tax 
cuts?
  I am embarrassed that the Democratic Party has not fought back 
harder. This will be the first of many amendments I will have on this 
tax cut, win or lose.
  Mr. President, I reserve the remainder of my time.
  The PRESIDING OFFICER. Who yields time?
  The Senator from Montana.
  Mr. BAUCUS. Mr. President, might I inquire, how much time is 
remaining on this amendment?
  The PRESIDING OFFICER. Senator Wellstone has 13 minutes 33 seconds, 
and the opponents of the amendment have 15 minutes 4 seconds.
  Mr. BAUCUS. Mr. President, I do not see anyone in the Chamber who 
wishes to speak against this amendment.
  Mr. WELLSTONE. May I ask my colleague, that must mean I have 98 votes 
for it?
  Mr. BAUCUS. I don't know what it means, I say to my good friend from 
Minnesota. All I know is that at this point no one wishes to speak 
against the amendment. I urge my friend, if he wants to continue 
speaking on the amendment, to do so. I wish I could help the Senator by 
dredging up opposition to this amendment, but I cannot find any.
  Mr. WELLSTONE. I say to my colleague from Montana, I certainly 
appreciate it. I certainly would like to debate Senators on this 
priority. I certainly would like to. I think this gets right to the 
point of values. I think this is a spiritual debate we are having.
  I want to know when we are going to match our rhetoric about children 
and education with real resources. But I do not see Senators in this 
Chamber, so I am assuming that this will be a win for children and 
education.
  But, for the moment, I say to my colleague, I guess what happens is 
we go into a quorum call and time is charged equally against both 
sides?
  Mr. BAUCUS. That is correct.
  Mr. REID. If the Senator would yield, or the Senator could yield back 
his time, someone else could offer an amendment.
  Mr. WELLSTONE. Mr. President, I think I will speak a little longer 
about my amendment.
  Mr. BAUCUS. Fine.
  The PRESIDING OFFICER. The Senator from Minnesota is recognized.
  Mr. WELLSTONE. I thank the Chair.
  Let me summarize, in a very quiet way, for a moment, what this is 
about. Then let me just challenge Senators. All I am saying is, it is 
kind of like walking our talk. There should be 52 votes for this 
motion. Fifty-two Senators voted for a Harkin amendment to take $250 
billion out of tax cuts. I take half of that for education. I take it 
by eliminating the cuts in the 39.6-percent tax bracket. That is .07 
per percent of Americans; that is a couple with an income of $300,000 a 
year, and they still get an $8,400 tax cut.
  But I am saying, by not making that additional cut, you then would 
have $120 billion you would put aside for education. That is $1 for 
education and children for every $10 in tax cuts. I am saying to 
Senators, if you voted for the Harkin amendment, this is half that 
amount. I hope you will support this motion.
  I am saying to you, Senators, that unfortunately it is 10:55 and I 
cannot get anybody to debate me. But the truth of the matter is, this 
is historic. What we are doing in the Senate is breathtaking.
  The Presiding Officer, he can disagree with me. He is another one of 
these Senators--I feel as if I am passing out compliments--who is civil 
and decent and good. And people can have different viewpoints.
  For my own part, I think that we are doing two things.
  We are, A, passing a tax cut that is still ``Robin Hood in reverse,'' 
with still over 30 percent of the benefits going to the top 1 percent 
of the population. I remind my colleagues one more time, I give you 
credit for improving this bill in the Finance Committee over what the 
President had, but when over 30 percent of the benefits are going to 
the top 1 percent, and still 10 million of the poorest children in 
America and their families are not benefiting from a child credit, I 
wonder about our priorities.
  And B, and even more importantly--and I am sorry; in fact, I am 
embarrassed--the Democrats do not seem to grasp this. This will so 
erode our revenue base. We are talking really more about $2 trillion 
over the next 10 years and that there will not be the resources to 
invest in education and children, or the resources to invest in 
affordable prescription drugs, or the resources to expand health care 
coverage. And the list goes on and on.
  If you believe that when it comes to these pressing issues of 
people's lives there is nothing the Government can or should do, then 
this is one big, good, ideological victory for you. But if you believe: 
I came to Washington believing we could do things that would lead to 
the positive improvement of people's lives, and you believe there is a 
positive role for Government, then what we are about to do is shut it 
down.

[[Page 8603]]

  I cannot even begin to express my indignation about what we are doing 
with education. We are all for the children, and we are all for 
education, and we all love them, but we are not digging into our 
pockets and making the investment.
  We are going to get back to a bill really soon where the Federal 
Government--I am amazed conservatives are considering this--is going to 
tell every school district, every school, every State: You are going to 
test children every year, age 8, 9, 10, 11, 12, and 13, and at the same 
time we are not interested in also having a Federal mandate backed by 
resources to guarantee that every one of those children will have the 
same opportunity to succeed. We fund the title I program at the 30-
percent level. We have children--most children, many children--coming 
to kindergarten way behind, and yet we are not making the investment in 
the resources.
  There never was a deal before we went to this education bill that 
there would be the money. There still isn't any understanding. And now, 
Democrats, wake up and smell the coffee. We are not going to have the 
resources.
  This is a massive reversal in social policy. I am heartbroken by what 
we are doing, but I certainly think that at the very minimum Senators 
would be willing to vote for this motion. It is simple.
  We should not separate our lives as legislators from the words we 
speak. We have spoken great words about education and children. I have 
heard so many speeches, I have heard enough speeches to deafen all the 
gods. I want to know whether we are willing to invest the real money.
  My colleagues are going to say this is a violation of the Budget Act. 
Tell that to the good teachers who are trying to teach the children; 
tell that to the children. Tell that to kids whose childhood is 
precious and wonderful, and, in all too many ways, we are robbing them 
of that childhood.
  How much time do I have remaining?
  The PRESIDING OFFICER (Mr. Jeffords). Six minutes.
  Mr. WELLSTONE. Is it too much to ask Senators, is it too much to ask 
for the sake of better teachers, more teachers--by the way, there are a 
lot of great teachers--for the sake of having more qualified teachers, 
for the sake of making sure these kids get more help with reading, 
making sure there is more title I money for kids who come from low-
income backgrounds, making sure we have the additional help for the 
children, especially the little children, is it too much to ask the 
wealthiest 0.7 percent to still get tax breaks, at least the $8,400 a 
year, but we would not eliminate cuts in the 39.6-percent tax bracket 
and instead make the investment in children and education?
  I grant you, the children I am talking about probably do not have the 
same lobbying coalitions as those who want to cut the highest tax rate. 
I grant you the children I am talking about and their families probably 
do not have the same access, probably they are not the big givers, 
probably they are not the investors. But one would think out of some 
sense of values we could at least provide the support.
  This whole issue of class warfare is a bogus argument. I maintain 
that the vast majority of people in Minnesota who have incomes around 
$300,000 a year would be pleased to have some tax cut, at lease $8,000 
or thereabouts, but then would say, fine, we don't need any more, and 
if you are going to put that money into children and education, God 
bless you, do it. We are proud of you, Senate.
  I hope you will vote for the amendment.
  How much time do I have remaining?
  The PRESIDING OFFICER. The Senator has 4 minutes.
  Mr. BAUCUS. Mr. President, how much time is there in opposition to 
the amendment?
  The PRESIDING OFFICER. Fourteen minutes.
  Mr. BAUCUS. Mr. President, I will take 4 minutes.
  It is with deep regret that I must tell my good friend from 
Minnesota, in good faith and conscience, I cannot support his 
amendment, certainly not at this time.
  I agree with him that this tax bill is too big. In fact, I argued to 
the President that he ought to propose a much smaller bill for the 
first 5 years and then, if the budget surpluses materialize, we can 
look at another tax cut. That way, if the surpluses don't materialize, 
this country is protected. We certainly don't know with a great degree 
of certainty what the budget surplus is going to be 10 years out.
  The President did not agree with my suggestion, but it is a position 
that makes a lot more sense and is better public policy, if we were to 
pursue that direction. Unfortunately, we are not in that position 
today, as the Senator well knows.
  The main argument the Senator makes--one that has a lot of merit to 
it--is an argument that he and others made on the budget resolution. 
But that argument was not successful, and the budget resolution has 
passed with $1.35 trillion in tax cuts locked in. That is where we are 
today.
  I agree with him that this is still too large a tax cut, though at 
least it is smaller than the President's earlier proposal of $1.6 
trillion, so that is some progress.
  There are other provisions in the budget resolution that do protect 
social needs. One is the $300 billion over 10 years for prescription 
drugs, an amount that was locked in during the budget debate. 
Agriculture is provided $74 billion over 10 years, though that is not 
likely to be enough. There is always the likelihood of disasters and 
other emergencies that will require us to re-evaluate that amount. As 
for the contingency fund of $500 billion that is in this bill, we all 
know that there are more claims to that $500 billion than there are 
dollars. That is a problem. Nevertheless, the contingency fund is also 
locked in by the budget resolution.
  It is important to remind ourselves that this tax bill will sunset 
after 10 years; that is, under the rules we provided for ourselves, 
unless this tax bill passes by 60 votes or more, then these revenue 
bills are terminated after 10 years. This means that, while it is 
legitimate to be concerned about the second 10 years, we necessarily 
review all of these provisions before that time because of the 
termination.
  It may not be the best tax policy to have tax laws that terminate in 
10 years, but nevertheless those are the rules we have provided for 
ourselves to ensure that there is strong bi-partisan support for these 
measures.
  It is also important to recall that future Congresses are also going 
to make changes. Congress will meet again tomorrow. Congress will also 
meet next week, next month, and next year, and according to the 
conditions of the time, I am quite confident that Members of future 
Congresses will make changes to what we consider here today. There will 
be different Presidents during the 10 years of this bill, and they will 
have different priorities and a different agenda.
  Although it is not a lot of fun to raise taxes, Congress has raised 
taxes when Congress felt it was necessary, even under Republican 
Presidents--many times in the 1980s.
  This is a very dynamic country. The United States of America is 
probably the most dynamic country in the history of civilization. We 
are a big country, and we have a history of adjusting to difficulties. 
We are going to find ways to help education more than we have in the 
past, just as the Senator from Minnesota very correctly points out.
  It is important to remember that in our country, 93 percent of the 
dollars for elementary and secondary education are raised at the State 
and local level. Only 7 percent of elementary and secondary education 
dollars are Federal dollars. That is starting to change because the 
States are so strapped. We in Congress should accelerate that change, 
and this bill does so. There are deductions for college tuition, for 
example, and other education provisions in the bill that total some $30 
billion. That is a start, and it includes a big, new initiative in the 
college tuition deduction, which is sure to be expanded in future 
years.
  To conclude, I must tell my good friend from Minnesota with a great

[[Page 8604]]

deal of regret, it is not even in the jurisdiction of the Finance 
Committee to set up this fund. He is fighting the right battle for the 
right cause, but not in the right place. We will be more successful in 
future days and weeks and months to get more money for education, I am 
quite confident, and I will help him do so. Regrettably, we can't do it 
right here.
  The PRESIDING OFFICER. Who yields time?
  Mr. GRASSLEY. Mr. President, I rise to make a unanimous consent 
request.
  Mr. President, I ask unanimous consent that a vote relative to the 
motion to waive with respect to the Gregg amendment occur at 6:08 
today, with 5 minutes under the control of Senator Gregg and 3 minutes 
under the control of Senator Baucus for final debate prior to the vote, 
and that there be no second-degree amendment in order prior to the 
vote, and further, following that vote, the Senate proceed to a vote in 
relationship to the Carnahan amendment as under the order.
  Mr. REID. Mr. President, reserving the right to object, I say to my 
friend, the manager of the bill, the reason we are going to agree to 
this is the fact that Senator Gregg has been over here for several 
days. I think he deserves this extra time.
  With the many, many votes we have later today, there will be no other 
agreements such as this. The reason there has been a rearrangement of 
the order of voting is that this will allow Members to hear this debate 
prior to the first vote, and then after that the votes will sequence. 
Senator Gregg's vote was supposed to be second. We would have one vote 
and have this in between.
  I hope the majority leader enforces the 10-minute rule this evening. 
We have so many votes. I hope he will do that. If people have to step 
out of the Chamber for other business, I hope it will be at the peril 
of their missing these votes. In the past several months, we have held 
up votes for so long that it has made it inconvenient for everyone.
  Having said that, I withdraw my objection.
  Mr. GRASSLEY. Mr. President, I appreciate what the Senator from 
Nevada has said. I hope, too, that we will be able to expedite each of 
these many rollcalls that we will have this evening.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Who yields time?
  Mr. WELLSTONE. How much time do I have?
  The PRESIDING OFFICER. The Senator has 4 minutes.
  Mr. WELLSTONE. Mr. President, I was listening to the Senator from 
Montana. I have to say to him, with all due respect, he was talking 
about how we locked this in for agriculture, and this for prescription 
drugs--although I will tell you something, it is fiction, what has been 
locked in for prescription drugs to make it affordable.
  If we can lock it in for other areas, why can't we lock it in for 
children and education? The only thing I have gotten from the Senator 
from Montana is this vague commitment--oh, well, you know, sometime, 
someplace, later on we will get this done.
  We have an opportunity right now to lock this in for children and 
education. We can lock it in right now--$120 billion over 10 years, 
half of what we voted for in the budget resolution, coming out of the 
tax cut, coming out of the very highest 39.6 percent--although the very 
highest income people, couples with $297,000, still will get a break of 
$8,400. In exchange for not cutting it any further, we will have $120 
billion for children and education.
  I mean, vague commitments about the future--why don't we lock it in 
now? This is real money. That is what this is all about. There is a 
zero-sum game between how much you do by way of tax cuts and how much 
you erode the revenue base and what we will be able to do for children 
and education.
  I say especially to my Democratic colleagues, if we can't step up to 
the plate and vote for children and education, we don't have a 
politics. We don't have a politics. No wonder people wonder what in the 
world is going on. You have these Robin-Hood-in-reverse tax cuts still 
mainly going to the top 1 percent. You erode the revenue base and you 
are unwilling to lock in a commitment right now to children and 
education, albeit a very modest commitment.
  Senators, in the words of Rabbi Hillel: If you can't make the 
commitment to children and education now, whenever will you? If you 
don't speak for children in education now, whenever will you? If we are 
not for children and education, who in the world are we for? Who do we 
think we represent? It is time to step up to the plate now. This is 
real money. Let's not play symbolic politics any longer.
  How much time do I have left?
  The PRESIDING OFFICER. The Senator has 1 minute.
  Mr. WELLSTONE. I am pleased to respond.
  Mr. BAUCUS. Mr. President, very briefly, I voted to lock in more 
money for education when we were on the budget resolution, by voting 
for the Harkin amendment. I wish that amendment would have passed, but 
unfortunately it didn't. As the Senator well knows, the place to lock 
in big amounts for programs such as education is during the budget 
debate. The budget resolution was the place we were successful in 
locking in $300 billion for prescription drugs.
  But this is not the budget we are debating here. This is the tax 
bill. And unfortunately, the amount of the tax cut was locked in during 
the budget debate, and that is what we must be comply with now.
  Mr. President, I yield back the remainder of my time.
  Mr. WELLSTONE. Mr. President, I say to my colleague from Montana, 60 
Senators can make this the proper time and place. That is what this 
debate is all about. Sixty Senators can make this the proper time and 
place to make a modest commitment to children and education. We can do 
it right now, or tonight when we vote on this motion.
  With all due respect, I will tell you, people in the trenches working 
with children in schools around the country look at these arcane rules 
and say, hey, if 60 of you can step to the plate and be there for 
children and education, please do so. We are waiting for you to act on 
what you say you believe in.
  So I hope we get 60 votes, and then it will be the time and place. I 
yield the remainder of my time.
  The PRESIDING OFFICER. Under the previous order, the Senator from 
Utah, Mr. Hatch, is recognized to offer an amendment.


                           Amendment No. 697

  Mr. HATCH. Mr. President, on behalf of myself, Senators Allen, Craig, 
Gordon Smith, and Harry Reid, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Utah [Mr. HATCH], for himself, Mr. Allen, 
     Mr. Craig, Mr. Smith of Oregon, and Mr. Reid, proposes an 
     amendment numbered 697.

  Mr. HATCH. Mr. President, I ask unanimous consent that further 
reading of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

  (Purpose: To amend the Internal Revenue Code of 1986 to permanently 
extend the research credit and to increase the rates of the alternative 
                          incremental credit)

       At the end of subtitle A of title VIII insert the 
     following:

     SEC. __. RESEARCH CREDIT.

       (a) Permanent Extension of Research Credit.--
       (1) In general.--Section 41 (relating to credit for 
     increasing research activities) is amended by striking 
     subsection (h).
       (2) Conforming Amendment.--Paragraph (1) of section 45C(b) 
     is amended by striking subparagraph (D).
       (3) Effective Date.--The amendments made by this subsection 
     shall apply to amounts paid or incurred after the date of the 
     enactment of this Act.
       (b) Increases in Rates of Alternative Incremental Credit.--
       (1) In General.--Subparagraph (A) of section 41(c)(4) 
     (relating to election of alternative incremental credit) is 
     amended--
       (A) by striking ``2.65 percent'' and inserting ``3 
     percent'',

[[Page 8605]]

       (B) by striking ``3.2 percent'' and inserting ``4 
     percent'', and
       (C) by striking ``3.75 percent'' and inserting ``5 
     percent''.
       (2) Effective Date.--The amendments made by this subsection 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

  Mr. HATCH. Mr. President, the amendment I offer is simple and 
straightforward. It would extend permanently the credit for increasing 
research activities, commonly known as the research credit, or the R&D 
credit. This provision has been an important contributor to our robust 
economic growth in the past decade. I have to admit I am working with 
the managers of the bill on trying to find an acceptable offset for 
this particular amendment. Even if we don't find an offset, this 
amendment is very important, and should be adopted.
  Let me explain why this amendment is necessary. In July 1999, the 
Senate voted to make the research credit permanent. Unfortunately, the 
House version of the 1999 tax bill included only a 5-year extension of 
the credit. The 5-year extension prevailed in conference. As we all 
know, that bill was vetoed by President Clinton.
  However, in November of 1999, Congress passed and President Clinton 
signed the Ticket to Work and Work Incentives Improvement Act, which 
included the 5-year extension of the research credit. Therefore, the 
credit was extended to June 30, 2004.
  Last summer, the Senate again had the opportunity to vote on a 
permanent extension of the research credit. While we were debating last 
year's version of the death tax repeal bill, Senator Baucus and I 
offered an amendment to again make the research credit permanent. The 
Senate passed the amendment with a vote of 98-1. Once again, President 
Clinton vetoed the underlying tax bill.
  Thus, as it stands under present law, the research credit is 
scheduled to expire on June 30, 2004. This is most unfortunate, Mr. 
President, because in 2004, the Congress and, more importantly, 
America's business community, will once again have to go through the 
rigmarole of on-again, off-again uncertainty of an important tax 
provision that means so much to our country.
  The ultimate loser in this game is not the Congress, nor even the 
companies that engage in research, but each American. This is because 
every one of us is the direct beneficiary of the research investments 
made by the businesses of America. Each one of us benefits from the 
higher economic growth, the increased productivity, and from the higher 
degree of global competitiveness that increased research brings.
  The research credit has been in the Internal Revenue Code for 20 
years, in one form or another. It has expired and been extended ten 
times. Ten times, Mr. President. Those extensions have been as short as 
6 months and as long as 5 years. There have even been periods when the 
credit was allowed to expire, and then retroactively reestablished. On 
one occasion, the credit expired and was re-enacted prospectively, 
leaving a gap period when the credit was not available. The one thing 
the credit has never been is permanent.
  This is significant because, as effective as the credit has been in 
providing a strong incentive to companies to increase their research 
activities, it has been inherently limited in its effectiveness because 
business leaders have never been able to count on the credit being 
there on a long-term basis.
  Anyone who has been in business for more than 10 minutes knows that 
planning and budgeting--unlike what we do in Congress--is a multiyear 
process. And, anyone who has been involved in research knows that the 
scientific enterprise does not fit neatly into calendar or fiscal 
years.
  Our history of dealing with the research credit--that is, allowing it 
to run to the brink of expiration and reviving it at the 11th hour, the 
12th hour, or even bringing it back from the dead with retroactive 
extensions--results in not only very poor tax policy, but is also 
detrimental to our research-intensive business entities and indeed the 
whole country.
  It is time to get serious about our commitment to a tax credit that 
is widely viewed by economists and business leaders as a very effective 
provision in creating economic growth and keeping this country on the 
leading edge of high technology in the world. A 1998 study by Coopers 
and Lybrand dramatically illustrated the significant economic benefits 
that have been provided by the research credit. According to the study, 
making the credit permanent would stimulate substantial amounts of 
additional research and development in the U.S., increase national 
productivity and economic growth almost immediately, and provide U.S. 
workers with higher wages. That is hard to beat. In fact, it cannot be 
beat.
  The vast majority of the members of this body are on record in 
support of a permanent research credit. As I mentioned, last summer, 98 
Senators voted in favor of permanence. Moreover, making the research 
credit permanent was practically the only business provision that 
President Bush included in his tax proposal. And, just in case some 
have forgotten, former Vice President Al Gore also included a permanent 
research credit in the tax plan on which he campaigned last year. The 
point here is that making the credit permanent is probably the most 
bipartisan tax cut provision that has been before the Congress in 
recent years.
  While practically everyone says they support a permanent research 
credit, it has become too easy for Congress to fall into its two-
decade-long practice of merely extending the credit for a year or two, 
or even 5 years, and then not worrying about it until it is time to 
extend it again.
  These short-term extensions have occurred ten times since 1981. Ten 
short-term extensions for a tax credit that most Members of this body 
strongly support. I am not sure we realize how the lack of permanence 
of the credit damages its effectiveness. I am telling you it does, and 
so do the experts.
  Research and development projects cannot be turned on and off like a 
light switch. They typically take a number of years and may even last 
longer than a decade. As our business leaders plan these projects, they 
need to look years ahead in making the projections and estimating the 
potential return on their investment. Because the research credit is 
not permanent, and its extension is not assured, the availability of 
the credit over the life of these projects is uncertain and is thus 
often not included in the numbers. As a result, the projected return on 
the investment is lower and some promising research projects are simply 
not funded.
  With a permanent credit, these business planners would take the 
benefits of the credit into account, knowing they would be there for 
all years in which the research is to be performed. The result would be 
a lower projected cost, leading to more research projects being funded, 
which in turn would lead to more benefits to the economy, to our 
productivity, and to each consumer. In fact, making the credit 
permanent would start these benefits now and actually give an immediate 
boost to the amount of research performed, even before the current 
credit expires in 2004.
  There is little doubt that a significant amount of the incentive 
effect of the research credit has been lost over the past 20 years 
because of the constant uncertainty about its continuing availability. 
This uncertainty has undermined the very purpose of the credit. For the 
Government and the American people to maximize the return on their 
investment in U.S.-based research and development, this credit must be 
made permanent. And now is the time to do so.
  Each time that Congress has extended the research credit for only a 
short period, rather than permanently, the ostensible reason has been a 
lack of revenue. We tell our constituents that we simply did not have 
the money to extend the credit permanently.
  Is this the excuse we are going to give the next time we meet with 
the high-tech workers and entrepreneurs in our States? Are we going to 
tell them that out of a tax cut bill totaling $1.35 trillion, we could 
not find the revenue to pay for the permanent extension of this credit?

[[Page 8606]]

  I admit that the revenue cost of extending the research credit 
permanently is not inconsequential. The estimate I have from the Joint 
Committee on Taxation says that its extension would cost around $47 
billion over 10 years. But this is only 3.5 percent of the total cost 
of the bill. It seems to me that 3.5 percent is a small price to pay 
for a provision that will help ensure continued productivity increases, 
economic growth, and job creation.
  Ironically, it costs at least as much in terms of lost revenue to 
enact short-term extensions as it does to extend it permanently. So 
saying we cannot afford to make the research credit permanent is a 
notion of false economy forced on us by the budget rules. I believe 
there is simply no valid reason that the credit should not be extended 
on a permanent basis. The provision was in the President's proposal, 
and it should be in the bill before us today, and was in Al Gore's plan 
as well.
  I believe a permanent research credit is one of the most important 
elements of President Bush's tax plan because it is so tied in with the 
issues of economic growth and our future prosperity.
  According to Chairman Greenspan, the Nation's high productivity 
growth, which has played an instrumental role in our economic growth of 
the past few years and also in creating our projected budget surplus, 
would likely not have been possible without the innovations of recent 
decades, especially those in information technologies. The research 
credit is a key factor in keeping these innovations coming into our 
lives. But a temporary credit is inherently limited in its ability to 
do this.
  As I mentioned earlier, I am afraid too many of us are stuck in a 
mindset that says that since the research credit can just be taken care 
of later this year in a tax extenders package, or when it gets closer 
to its 2004 expiration date, why bother about it now?
  I want to emphasize that another temporary extension is not the issue 
here. We can and probably will always extend the credit when the time 
for its expiration comes. It will likely be on the less effective basis 
we have always done it, perhaps only for a few months, or it may be on 
a retroactive basis, and there may be a gap created, but we will 
probably keep extending it. The issue is whether or not we should 
magnify the power of this credit by making it permanent. It is just 
common sense to do so.
  The conditions for a permanent extension now are better than they 
have ever been, and are likely to be again, and we should not let this 
bill go by without doing this.
  This amendment is about long-term growth, it is about fostering 
innovation and keeping the innovation pipeline filled, and this is 
about sustaining the productivity gains that have brought us where we 
are today and that can help us stay prosperous in the future as we deal 
with the entitlement challenges ahead.
  In conclusion, if we decide not to make the research credit 
permanent, are we not limiting the potential growth of our economy? How 
can we expect the American economy to hold the lead in the global 
economic race if we allow other countries, some of which provide huge 
government direct subsidies, to offer stronger incentives than we do?
  Making the credit permanent will keep American business ahead of the 
pack. It will speed economic growth. Innovations resulting from 
American research and development will continue to improve the standard 
of living for every person in the U.S. and also worldwide.
  This provision should be in this bill. It deserves to be on the table 
in conference with the House. We should not overlook the importance of 
making the credit permanent now.
  I urge my colleagues to support this amendment.


                 Amendment No. 701 to Amendment No. 697

  Mr. HATCH. Mr. President, on behalf of Senator Kerry and myself, I 
send a perfecting amendment to the desk and ask for its immediate 
consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Utah [Mr. Hatch], for Mr. Kerry, for 
     himself and Mr. Hatch, proposes an amendment numbered 701 to 
     amendment No. 697.

  Mr. HATCH. Mr. President, I ask unanimous consent that the reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

(Purpose: To allow a credit against income tax for research related to 
            developing vaccines against widespread diseases)

       At the end of the matter proposed to be inserted, add the 
     following:

     SEC. __. CREDIT FOR MEDICAL RESEARCH RELATED TO DEVELOPING 
                   VACCINES AGAINST WIDESPREAD DISEASES.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 (relating to business related credits), as amended 
     by section 620, is amended by adding at the end the following 
     new section:

     ``SEC. 45G. CREDIT FOR MEDICAL RESEARCH RELATED TO DEVELOPING 
                   VACCINES AGAINST WIDESPREAD DISEASES.

       ``(a) General Rule.--For purposes of section 38, the 
     vaccine research credit determined under this section for the 
     taxable year is an amount equal to 30 percent of the 
     qualified vaccine research expenses for the taxable year.
       ``(b) Qualified Vaccine Research Expenses.--For purposes of 
     this section--
       ``(1) Qualified vaccine research expenses.--
       ``(A) In general.--Except as otherwise provided in this 
     paragraph, the term `qualified vaccine research expenses' 
     means the amounts which are paid or incurred by the taxpayer 
     during the taxable year which would be described in 
     subsection (b) of section 41 if such subsection were applied 
     with the modifications set forth in subparagraph (B).
       ``(B) Modifications; increased incentive for contract 
     research payments.--For purposes of subparagraph (A), 
     subsection (b) of section 41 shall be applied--
       ``(i) by substituting `vaccine research' for `qualified 
     research' each place it appears in paragraphs (2) and (3) of 
     such subsection, and
       ``(ii) by substituting `100 percent' for `65 percent' in 
     paragraph (3)(A) of such subsection.
       ``(C) Exclusion for amounts funded by grants, etc.--The 
     term `qualified vaccine research expenses' shall not include 
     any amount to the extent such amount is funded by any grant, 
     contract, or otherwise by another person (or any governmental 
     entity).
       ``(2) Vaccine research.--The term `vaccine research' means 
     research to develop vaccines and microbicides for--
       ``(A) malaria,
       ``(B) tuberculosis,
       ``(C) HIV, or
       ``(D) any infectious disease (of a single etiology) which, 
     according to the World Health Organization, causes over 
     1,000,000 human deaths annually.
       ``(c) Coordination With Credit for Increasing Research 
     Expenditures.--
       ``(1) In general.--Except as provided in paragraph (2), any 
     qualified vaccine research expenses for a taxable year to 
     which an election under this section applies shall not be 
     taken into account for purposes of determining the credit 
     allowable under section 41 for such taxable year.
       ``(2) Expenses included in determining base period research 
     expenses.--Any qualified vaccine research expenses for any 
     taxable year which are qualified research expenses (within 
     the meaning of section 41(b)) shall be taken into account in 
     determining base period research expenses for purposes of 
     applying section 41 to subsequent taxable years.
       ``(d) Special Rules.--
       ``(1) Limitations on foreign testing.--No credit shall be 
     allowed under this section with respect to any vaccine 
     research (other than human clinical testing) conducted 
     outside the United States.
       ``(2) Pre-clinical research.--No credit shall be allowed 
     under this section for pre-clinical research unless such 
     research is pursuant to a research plan an abstract of which 
     has been filed with the Secretary before the beginning of 
     such year. The Secretary, in consultation with the Secretary 
     of Health and Human Services, shall prescribe regulations 
     specifying the requirements for such plans and procedures for 
     filing under this paragraph.
       ``(3) Certain rules made applicable.--Rules similar to the 
     rules of paragraphs (1) and (2) of section 41(f) shall apply 
     for purposes of this section.
       ``(4) Election.--This section (other than subsection (e)) 
     shall apply to any taxpayer for any taxable year only if such 
     taxpayer elects to have this section apply for such taxable 
     year.
       ``(e) Credit To Be Refundable for Certain Taxpayers.--
       ``(1) In general.--In the case of an electing qualified 
     taxpayer--
       ``(A) the credit under this section shall be determined 
     without regard to section 38(c), and
       ``(B) the credit so determined shall be allowed as a credit 
     under subpart C.

[[Page 8607]]

       ``(2) Electing qualified taxpayer.--For purposes of this 
     subsection, the term `electing qualified taxpayer' means, 
     with respect to any taxable year, any domestic C corporation 
     if--
       ``(A) the aggregate gross assets of such corporation at any 
     time during such taxable year are $500,000,000 or less,
       ``(B) the net income tax (as defined in section 38(c)) of 
     such corporation is zero for such taxable year and the 2 
     preceding taxable years,
       ``(C) as of the close of the taxable year, the corporation 
     is not under the jurisdiction of a court in a title 11 or 
     similar case (within the meaning of section 368(a)(3)(A)),
       ``(D) the corporation provides such assurances as the 
     Secretary requires that, not later than 2 taxable years after 
     the taxable year in which the taxpayer receives any refund of 
     a credit under this subsection, the taxpayer will make an 
     amount of qualified vaccine research expenses equal to the 
     amount of such refund, and
       ``(E) the corporation elects the application of this 
     subsection for such taxable year.
       ``(3) Aggregate gross assets.--Aggregate gross assets shall 
     be determined in the same manner as such assets are 
     determined under section 1202(d).
       ``(4) Controlled groups.--A corporation shall be treated as 
     meeting the requirement of paragraph (2)(B) only if each 
     person who is treated with such corporation as a single 
     employer under subsections (a) and (b) of section 52 also 
     meets such requirement.
       ``(5) Special rules.--
       ``(A) Recapture of credit.--The Secretary shall promulgate 
     such regulations as necessary and appropriate to provide for 
     the recapture of any credit allowed under this subsection in 
     cases where the taxpayer fails to make the expenditures 
     described in paragraph (2)(D).
       ``(B) Exclusion of certain qualified vaccine research 
     expenses.--For purposes of determining the credit under this 
     section for a taxable year, the qualified vaccine research 
     expenses taken into account for such taxable year shall not 
     include an amount paid or incurred during such taxable year 
     equal to the amount described in paragraph (2)(D) (and not 
     already taken into account under this subparagraph for a 
     previous taxable year).''.
       (b) Inclusion in General Business Credit.--
       (1) In general.--Section 38(b), as amended by section 620, 
     is amended by striking ``plus'' at the end of paragraph (14), 
     by striking the period at the end of paragraph (15) and 
     inserting ``, plus'', and by adding at the end the following 
     new paragraph:
       ``(16) the vaccine research credit determined under section 
     45G.''.
       (2) Transition rule.--Section 39(d), as amended by section 
     620, is amended by adding at the end the following new 
     paragraph:
       ``(12) No carryback of section 45g credit before 
     enactment.--No portion of the unused business credit for any 
     taxable year which is attributable to the vaccine research 
     credit determined under section 45G may be carried back to a 
     taxable year ending before the date of the enactment of 
     section 45G.''.
       (c) Denial of Double Benefit.--Section 280C is amended by 
     adding at the end the following new subsection:
       ``(d) Credit for Qualified Vaccine Research Expenses.--
       ``(1) In general.--No deduction shall be allowed for that 
     portion of the qualified vaccine research expenses (as 
     defined in section 45G(b)) otherwise allowable as a deduction 
     for the taxable year which is equal to the amount of the 
     credit determined for such taxable year under section 45G(a).
       ``(2) Certain rules to apply.--Rules similar to the rules 
     of paragraphs (2), (3), and (4) of subsection (c) shall apply 
     for purposes of this subsection.''.
       (d) Deduction for Unused Portion of Credit.--Section 196(c) 
     (defining qualified business credits) is amended by striking 
     ``and'' at the end of paragraph (8), by striking the period 
     at the end of paragraph (9) and inserting ``, and'', and by 
     adding at the end the following new paragraph:
       ``(10) the vaccine research credit determined under section 
     45G(a) (other than such credit determined under the rules of 
     section 280C(d)(2)).''.
       (e) Technical Amendments.--
       (1) Section 1324(b)(2) of title 31, United States Code, is 
     amended by inserting ``or from section 45G(e) of such Code,'' 
     after ``1978,''.
       (2) The table of sections for subpart D of part IV of 
     subchapter A of chapter 1, as amended by section 620, is 
     amended by adding at the end the following new item:

``Sec. 45G. Credit for medical research related to developing vaccines 
              against widespread diseases.''.

       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

  Mr. HATCH. Mr. President, I will just take a few minutes to speak to 
Senator Kerry's amendment.
  This amendment provides a 30 percent tax credit on qualified research 
expenses to develop microbicides for HIV and vaccines for malaria, TB, 
HIV, and other diseases that kill 1 million people or more annually. 
This is an expansion of the existing 20 percent research and 
development tax credit.
  It mandates that a company file a research plan with the Secretary of 
the Treasury on these priority vaccines or microbicides before claiming 
the tax credit.
  It allows the tax credit to be applied to the costs of clinical 
trials outside of the United States, because of the prevalence of 
malaria, TB, and HIV in developing countries. However, pre-clinical 
research must be conducted in the United States in order to claim the 
tax credit.
  This amendment also provides a refundable tax credit to small biotech 
companies based on the amount of qualified research that a company does 
in a given year. This credit is designed to stimulate increased 
research among firms that often do the most innovative research.
  It mandates that any firm receiving this credit put an equivalent 
amount of funds into research and development within 2 years of having 
received the credit. Such expenditures cannot be claimed under the tax 
credit for qualified vaccine research and development. It requires the 
Secretary of the Treasury to promulgate regulations to recapture the 
credit if a company fails to make these expenditures.
  The amendment allows 100 percent of the expenditures on contracts and 
other arrangements for research and development on these priority 
vaccines and microbicides to be counted toward the baseline for the R&D 
tax credit. Currently only 65 percent can be counted. This increase is 
designed as an incentive for larger firms to contract with smaller 
vaccine research companies.
  So, Mr. President, I have filed this on behalf of Senator Kerry and 
myself. I hope the Senate will give great consideration to this.
  I yield the floor and reserve the remainder of my time.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, I yield myself 1 minute. I appreciate 
the commitment of the Senator from Utah to extending the research and 
experimentation credit. There is no question the issue of research and 
experimentation has no greater supporter than the Senator from Utah and 
all the people involved with it ought to appreciate his interest in it.
  I know the R&D credit has strong bipartisan support and that it was 
included in the President's request.
  I ask the Senator give us the time to work with him on the amendment 
today and see what we can do to make sure it becomes something we can 
work with and deal with in conference.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, I join the chairman of the committee in 
telling the Senator from Utah he has a good amendment. The R&D tax 
credit should be a permanent part of our law for a couple of basic 
reasons. One, we know jobs in the future depend upon research today. 
The more research today, the more technology will be enhanced, 
productivity enhanced, and more jobs in the market. That is pretty 
clear.
  Second, we want research in the United States more than other 
countries. It is fine to conduct research overseas if American 
companies conduct research overseas but we also want them to conduct 
research here. Other countries give far more lucrative benefits in 
credits and other incentives to companies in their countries for 
research and development than do we in America. We all know it is a 
fiercely competitive world; our economy is so globalized. If we are 
going to, A, stay ahead and, B, make sure those jobs are here in the 
United States, it makes good sense to have a credit for Research and 
Development as a permanent part of our law.
  I am a cosponsor with the Senator from Utah of his bill to make R&D 
tax credit permanent. I will work with the Senator to try to find a way 
to work this out so we can make it permanent.
  The PRESIDING OFFICER. The Senator from Utah.

[[Page 8608]]


  Mr. HATCH. I thank my colleagues for their graciousness and 
willingness to work with me to see how we can make this part of the 
overall tax bill, and I sure hope our colleagues on both sides will 
support whatever offset they come up with, and that they can support 
this amendment.
  We are making a diligent effort to try to resolve the offset 
problems. I am willing to yield my time, but I notice the Senator from 
Nevada has risen. I will be happy to yield to the Senator from Nevada.
  Mr. REID. Mr. President, I am a cosponsor of this amendment. It is 
very good legislation. We have had continual battles in the Senate over 
what we should do with renewables. We can do nothing with renewables 
until we get a permanent tax credit.
  An example is, we have a wind farm we are putting in at the Nevada 
Test Site. We are trying to develop new uses for that test site which 
has been in effect for some 50 years, after setting off nuclear devices 
there.
  The people there know it will produce huge amounts of electricity, 
but they cannot borrow the money because no one will loan them the 
money because the tax credit is for a limited period of time.
  The amendment of the Senator from Utah, of which I am a proud 
cosponsor, is the way we have to go. If we are going to change our 
heavy dependence on fossil fuels, we have to have a tax credit that is 
permanent on renewables. This does that, among other things. I totally 
support the amendment of the Senator from Utah.
  Mr. HATCH. I thank my colleague and I am prepared to yield the 
remainder of my time if the floor managers are prepared to yield the 
remainder of their time?
  The PRESIDING OFFICER. All time is yielded back.
  Under the order, the pending amendments are laid aside and the 
Senator from West Virginia is recognized to offer an amendment.


                           Amendment No. 703

  Mr. BYRD. Mr. President, I thank the Chair.
  Mr. President, I am going to offer an amendment. But, before I do, I 
feel compelled to express my appreciation to the two managers of this 
bill for the work they have given to the task, for the time they have 
given to the task. I know it is not easy. I know they have had 
pressures from colleagues on both sides. I know each has had his own 
pressures from his own colleagues on his own side. I do not envy you.
  I am going to offer an amendment which the managers may not accept. 
But that will not lessen my appreciation and respect for them. We can't 
all agree on everything.
  When I was majority leader I, from time to time, had colleagues on my 
own side who did not support me. But those who did not support me today 
might be those who would support me tomorrow.
  So like the waves of the sea, the tide comes in, the tide goes out; 
it comes back again. I just want to express my appreciation, first of 
all, to the two managers of the bill.
  Mr. President, I am going to send an amendment to the desk, as I 
said. But, before I send it to the desk, let me say to Senators what 
the amendment would do. The purpose of the amendment is as follows: I 
shall read it, then I will send the amendment to the desk.

       Purpose: To strike all marginal rate tax cuts except for 
     the establishment of the 10 percent rate and strike all 
     estate and gift tax provisions taking effect after 2006 in 
     order to provide funds to strengthen social security--

  Here is your chance, my friends, to strengthen Social Security--

     extend the solvency of the Social Security Trust Funds, 
     maintain progressivity in the social security benefit 
     system--

  A great Roman said: Friends, Romans, countrymen, lend me your ears.
  My colleagues, listen. This amendment would:

     maintain progressivity in the social security benefit system, 
     continue to lift more seniors out of poverty, extend the 
     solvency of the Medicare Trust Funds, and provide 
     prescription drug benefits.

  ``provide prescription drug benefits.''
  Mr. President, I send an amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The senior assistant bill clerk read as follows:

       The Senator from West Virginia [Mr. Byrd] proposes an 
     amendment numbered 703.

  Mr. BYRD. Now, Mr. President, I ask unanimous consent that further 
reading of the amendment be waived.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

     (Purpose: To strike all marginal rate tax cuts except for the 
establishment of the 10 percent rate and strike all estate and gift tax 
   provisions taking effect after 2006 in order to provide funds to 
strengthen social security, extend the solvency of the Social Security 
  Trust Funds, maintain progressivity in the social security benefit 
   system, continue to lift more seniors out of poverty, extend the 
  solvency of the Medicare Trust Funds, and provide prescription drug 
                               benefits)

       At the appropriate place, insert the following:

     SEC. __. ENSURING FUNDING FOR SOCIAL SECURITY AND MEDICARE 
                   SOLVENCY, PRESCRIPTION DRUGS, AND LONG-TERM 
                   DEBT REDUCTION.

       (a) In General.--Notwithstanding any other provision of 
     this Act--
       (1) except for section 1(i)(1) of the Internal Revenue Code 
     of 1986, as added by section 101 of this Act, and any 
     necessary conforming amendments, title I of this Act shall 
     not take effect; and
       (2) any provision of title V of this Act that takes effect 
     after 2006 shall not take effect.
       (b) Strategic Reserve Fund for Long-Term Debt and Needs.--
     Subtitle B of title II of H. Con. Res. 83 (107th Congress) is 
     amended by inserting at the end the following:

     ``SEC. 219. STRATEGIC RESERVE FUND FOR SOCIAL SECURITY 
                   REFORM, MEDICARE REFORM, AND PRESCRIPTION DRUG 
                   BENEFITS.

       If legislation is reported by the Committee on Finance of 
     the Senate or the Committee on Energy and Commerce or the 
     Committee on Ways and Means of the House of Representatives, 
     or an amendment thereto is offered or a conference report 
     thereon is submitted, that would strengthen social security, 
     extend the solvency of the Social Security Trust Funds, 
     maintain progressivity in the social security benefit system, 
     continue to lift more seniors out of poverty, extend the 
     solvency of the Medicare Trust Funds or provide prescription 
     drug benefits, the chairman of the appropriate Committee on 
     the Budget shall, upon the approval of the appropriate 
     Committee on the Budget, revise the aggregates, functional 
     totals, allocations, and other appropriate levels and limits 
     in this resolution for that measure by not to exceed 
     $450,000,000,000 for the total of fiscal years 2002 through 
     2011, as long as that measure will not, when taken together 
     with all other previously enacted legislation, reduce the on-
     budget surplus below the level of the Medicare Hospital 
     Insurance Trust Fund surplus in any fiscal year provided in 
     this resolution.''.

  Mr. BYRD. Mr. President, last week as the Senate began debate on the 
fiscal year 2002 budget reconciliation tax cut bill, the President was 
in Minnesota unveiling his energy strategy.
  Over the weekend the American people read about the content of the 
President's plan. Essentially, the administration is promoting a 
national energy strategy heavy on increased production to respond to a 
number of current and near-term energy shortages that have manifested 
themselves through rolling blackouts in California and rising gasoline 
prices across the country.
  No one is pretending that the planned construction of new power 
plants or distribution lines will provide immediate relief to 
consumers. Instead, the President argues that the only short-term 
relief for energy-starved, price-gouged consumers is a tax break.
  Somehow I think that is not quite sufficient comfort to victims of 
rolling blackouts--those men and women who have been stuck in 
elevators, or involved in automobile accidents when the power suddenly 
cut off. It won't shed light for those families who have had to walk 
around in the dark, feeling their way along the walls, and tripping 
over things that they can't see right in front of them.
  What amuses me, Mr. President, is that this administration, in using 
blackouts to promote both its energy and tax cut plans, has seemingly 
forgotten about the fiscal blackouts of the 1980s. I remember them, 
when the Congress found itself wandering around in the dark and the 
economy had tripped over the 1981 Reagan tax cut plan.
  In 1981, the Reagan administration promised that massive tax cuts 
would reinvigorate the economy. Instead, the

[[Page 8609]]

American economy nearly collapsed. In 1982 and 1983, the annual 
unemployment rate increased to 9.7 percent and 9.6 percent, 
respectively--the highest rates recorded since 1950. In 1985, while 
America's wealthy were reaping the largest share of the national income 
since World War II, businesses and banks were failing at a record 
breaking pace. Our savings rate was the lowest in 4 decades, and our 
national trade deficit had reached a record high.
  The Congress had no choice but to pass, and Presidents Reagan, Bush, 
and Clinton had no choice but to sign, eight in all--numerous bills 
three of them were not as significant as the five that I will mention. 
The five that I shall mention are TEFRA, DeFRA--sounds like twins but, 
wait, they are quintuplets--TEFRA, DeFRA, OBRA of 1987, OBRA of 1990, 
and OBRA of 1993--to correct our mistake. Why were these all passed? 
Why were these tax bills passed? To correct our mistakes and the 
mistakes of the then administration, and increase taxes in hopes of 
stemming the unprecedented tide of red ink.
  The protracted deficits during the 12 years of Presidents Reagan and 
Bush resulted in higher interest rates for the American taxpayer. This 
forced the average American to pay more for his mortgage, to pay more 
for his car, to pay more for his child's education, because of our 
rush--our mad rush--to enact a huge tax cut--the benefits of which 
went--in that instance, as will be the case in this instance--the 
benefits of which went mainly to the wealthiest taxpayers.
  Mr. President, this administration, the Bush administration, the Bush 
No. 2 administration, has tried to juxtapose tax cuts and the threat of 
a recession in the minds of the American people, even though the most 
recent economic data suggests that a recession only exists in the 
rhetoric--in the rhetoric--of the administration.
  There is where the recession exists, in the rhetoric of the current 
administration. And now, of course, the administration has offered tax 
cuts as a solution to this Nation's energy crisis; the idea being, I 
suppose, that Californians would be able to purchase more candles and 
flashlights to deal with the rolling blackouts.
  E.J. Dionne pointed out in a recent Washington Post editorial that--
and I quote--``there's absolutely nothing the president won't say in 
support of his tax cut. When times were good he told us we needed a tax 
cut to keep the good times going. When times threatened to go bad, he 
said we needed a tax cut to get the economy [rolling]. Now that times 
look a bit better, he says we need a tax cut to pay the gas bills. 
Someday soon, he'll tell us tax cuts will solve the problems of crime, 
drug abuse, teen pregnancy, traffic jams and static cling.'' And that 
if you do not have hair, it will make your hair grow, and make your 
fingernails longer. And if your hair is black, it will make it turn 
white over night or vice versa.
  I would only add, Mr. President, that we may soon hear from the 
administration that tax cuts can provide whiter teeth, fresher breath, 
and may even cure the common cold.
  But, how much are the American taxpayers willing to shell out for 
this miracle tonic, this tax cut?
  Are the American people ready to spend the money that they invested 
into the Social Security and Medicare programs? In 2025, the number of 
people age 65 and older is projected to grow by 73 percent--in 2025. In 
contrast, the number of workers supporting the Social Security system 
would grow by 13 percent. The Social Security and Medicare Board of 
Trustees project that the Social Security's taxes will be inadequate to 
pay full Social Security benefits by 2016. This $1.35 trillion tax cut 
package spends vital resources that could otherwise be used to ensure 
that Social Security benefits will be paid to future retirees.
  The Medicare program faces a similar fate. Medicare's projected costs 
for hospital expenses will grow 60 percent faster than its income over 
the next 75 years. By 2075, Medicare's costs will be more than two 
times larger than its income. Again, this $1.35 trillion tax cut spends 
resources that could otherwise be used to ensure that hospital 
insurance benefits will be paid to Medicare beneficiaries.
  Now, what about our domestic investments in highways, bridges, 
agriculture, health care, education, and a host of other areas? Are the 
American people willing to trade these away for a tax cut?
  This tax cut package starves the domestic discretionary side of the 
budget, resulting in a spending level that is $5.5 billion below what 
is necessary to maintain domestic investments in FY 2002, and an 
incredible $62 billion cut below what the Congressional Budget Office 
says is necessary to maintain current services over the next 10 years. 
That means cuts--cuts, cuts--veterans programs, crime prevention, 
highway construction and maintenance, and a host of other areas, other 
categories, in order to provide for these tax benefits.
  Now what about the national debt? Well, we are just going to dump 
that on these youngsters here, the pages, and on people such as my 
grandchildren, my great grandchildren, and yours, yours out there. Are 
the American people ready to trade away this historic opportunity to 
retire the national debt for a tax cut?
  Our current gross debt is $5.7 trillion. How much is a trillion 
dollars? At $1 per second, how long would it take to count $1 trillion? 
At the rate of $1 per second, how long? It would take 32,000 years. 
That is big money. We are not used to having that kind of money in my 
State of West Virginia.
  When we talk about $1 trillion, our current gross debt is $5.7 
trillion. That amounts to $929 for every man, woman, boy, and girl in 
the world--that is some debt, isn't it?--$929 for every man, woman, 
boy, and girl in the world. That is not just pocket change. It 
represents $20,062 per man, woman, and child in the United States.
  Are we to disregard these financial obligations? Are we? Or should we 
look at our grandchildren and just wash our hands? We can wash our 
hands, I say to Senators, we can wash our hands of this debt and just 
leave to it our grandchildren. This the sacrifice that average 
Americans are being asked to make.
  I am almost 84; 83\1/2\ yesterday. I could just walk away from the 
debt and let you folks pick up this obligation. We can enjoy a tax cut 
for ourselves--just vote for this bill and enjoy the tax cut, but leave 
this heavy debt burden to the folks who are going to come after us. We 
won't be around, so what does it matter to us? Let's vote for the Bush 
tax cut. I am a little selfish, perhaps a little self-centered, so I 
would like to have this tax cut. Let's vote for the Bush tax cut and 
let future generations worry about paying off the national debt.
  Even if you happen to be lucky enough to be one of the privileged few 
who would receive any real tax relief under this proposal, you most 
likely wouldn't receive those tax benefits for another 5 to 10 years. 
Under this proposal, most of the tax cuts--estate tax repeal, increased 
IRA contribution limits, expanded child credit, marginal rate 
reductions--wouldn't be fully in place until sometime between 2007 and 
2011. Marriage penalty relief wouldn't even begin to phase in until 
2006. How about that, 2006? Let me say that again. Marriage penalty 
relief wouldn't even begin to phase in until 2006.
  I am going to be a little late in reaping the benefits therefrom. A 
week from tomorrow we will have been married 64 years, my wife and I. 
Yet, the marriage penalty relief won't even begin to phase in until 
2006. That is 5 years away. This bill would put these tax cuts into 
effect when the surplus projections are most unreliable and least 
likely to accurately project our ability to pay for them.
  There are so many accounting gimmicks in this proposal to hide the 
true cost of the bill that the only reasonable, accurate measure of its 
cost would be in the second 10 years, which the Center on Budget and 
Policy Priorities projects would be $4.1 trillion.
  What kind of a balanced tax cut proposal pushes the real costs into 
the future at the exact moment that money is needed to finance the 
retirement of Social Security and Medicare beneficiaries? Where is the 
balance? Where

[[Page 8610]]

is the balance in a proposal that delays marriage penalty relief for 
lower and middle income taxpayers so that the top marginal rates can be 
reduced more quickly? Where is the balance?
  Where is the balance in a proposal that provides one-third of its 
benefits to those taxpayers with annual income over $373,000 by cutting 
those programs that benefit lower and middle income families?
  Well, Mr. President, I submit that the day that this tax cut is 
enacted and signed into law will be remembered as a black day in our 
national history. So I propose that we limit the size of this tax cut 
until we are more certain of whether we can afford it, and that any 
savings be put aside in a reserve fund for Social Security, Medicare 
reform, and a prescription drug benefit.
  My amendment would eliminate the marginal rate reductions that would 
benefit the wealthiest taxpayers in the Nation and leave in place the 
10-percent bracket reduction that would benefit all taxpayers--lower, 
middle, and higher income. Under my amendment, those funds that would 
be allocated to repealing the estate tax for the wealthiest 1 percent 
of taxpayers would be redirected to ensuring the solvency of those 
retirement programs from which lower and middle-income taxpayers would 
benefit much more.
  Not only would this amendment put back those funds that should have 
been set aside for Social Security and Medicare reform in the first 
place, but it would also provide for a substantial tax cut that would 
be more evenly distributed amongst the American taxpayers. This 
amendment would avoid the fiscal disasters that would certainly occur 
if these tax cuts were allowed to take effect under this bill, if the 
wild projections of 5 and 10 years out don't materialize. This 
amendment would ensure that Social Security and Medicare benefits are 
available for future retirees and that the national debt is being 
retired.
  Mr. President, last week, at the Senate Finance Committee markup, the 
Democratic leader stated that he found it ``difficult to accept, 
impossible to explain'' that Congress was about to repeat the same 
mistake it made in 1981 by passing another massive tax cut that the 
Nation was not equipped to afford.
  As I view these comments, and as I view this Bush tax cut, which had 
its genesis in the snows and cold winds of New Hampshire last year 
during the campaign, it reminds me of a story about Benjamin Franklin, 
a great American statesman, philosopher, and revolutionary of the 18th 
century.
  As Franklin recalled later in his life:

       When I was a child of seven years old, my friends on a 
     holiday filled my pocket with half-pence. I went directly to 
     a shop where they sold toys for children, and being charmed 
     with the sound of a whistle that I met by the way, in the 
     hands of another boy, I voluntarily offered and gave all my 
     money for it. When I came home, whistling all over the house, 
     much pleased with my whistle, but disturbing all the family, 
     my brothers, sisters, and cousins, understanding the bargain 
     I had made, told me I had given four times as much for it as 
     it was worth, put me in mind of what good things I might have 
     bought with the rest of the money, and laughed at me so much 
     for my folly that I cried with vexation; and the reflection 
     gave me more chagrin than the whistle gave me pleasure.

  With the wisdom of age, Franklin added:

       As I came into the world, and observed the action of men, I 
     thought I met many who gave too much for the whistle.

  Mr. President, the Congress paid too much for its whistle in 1981, 
and it almost wrecked the economy. Insight will come after the fact 
when we realize again that we sacrificed too much for this tax cut.
  I urge my colleagues to oppose the unsound fiscal policy in this 
bill. I urge my colleagues not to pay too much for the whistle. I urge 
my colleagues to vote for my amendment.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  The distinguished Senator from Iowa is recognized.
  Mr. GRASSLEY. Mr. President, I yield myself such as I might consume.
  I appreciate the concern of the Senator from West Virginia about 
Social Security. The budget resolution provides for protection for 
Social Security and Medicare. The relief act, in my opinion, does not 
jeopardize these programs. Rather, I suggest the relief act strengthens 
these critical programs because we have a strong, growing economy that 
is going to result from making sure that we keep resources with the 
taxpayers for them to invest and spend; thus, doing much more good than 
if the Government keeps those resources. A growing economy is the best 
guarantee for Social Security and Medicare's long-term solvency.
  I will talk briefly about the fact that we have had concern expressed 
in the media about some of these very same things that the Senator from 
West Virginia has visited about--the long-term needs of all programs, 
including Social Security and Medicare. I think the editorial writers, 
as I have read them, just over the weekend, and as late as this 
morning, are in a frenzy about this tax cut that they need not be in. 
But they can't seem to make up their minds. One day we are criticized 
because the $1,000 child credit is not indexed for inflation. Then the 
next day we are attacked because the tax cut is too expensive in the 
outyears.
  Maybe what is really happening is the media is just against reduction 
of taxes. This is kind of like Goldilocks, I would say, when they first 
say it is too hot and then it is too cold. But I fear that, unlike 
Goldilocks, there is no tax cut that is just right for the elite of our 
media because they want no tax cuts whatsoever. They honestly believe 
the Federal Government creates wealth, that it is better for a 
political determination of more money of how the resources are divided 
rather than letting the marketplace do it.
  Somehow, I think they feel ignored as we debate this tax bill. It is 
like the media crying about Social Security and Medicare. When all else 
fails, I think it is their goal to raise so many questions that senior 
citizens so ponder the situation of the budget, whether or not there is 
security there, long-term security for Social Security and Medicare, it 
ends up scaring them needlessly.
  In the process of our debate, obviously, when you look ahead 10 
years--and I said this last week during the debate, so I am not saying 
it just because the Senator from West Virginia brought it up--in 
1regard to the long-term projections of the fiscal condition of the 
Federal Government, meaning how much money is going to come in and how 
much we are going to spend on existing programs over the next 10 years, 
it is legitimate to be cautious.
  On the other hand, we are making judgments based on 10-year 
forecasts. We recently heard about the Reagan tax cuts in 1981, 20 
years ago. At that particular time, we were only looking ahead 5 years. 
I do not think it has entered into this debate, but I know as a fact in 
1963, when President Kennedy had tax cuts, they only looked ahead 1 
year. Looking ahead 1 year in 1963, looking ahead 5 years in 1981, or 
looking ahead 10 years in the year 2001, as imprecise as it is to look 
ahead, although I have to say the people who work on this are getting 
better at it than they were during the 1980s--but looking ahead 10 
years has to be considered more fiscally responsible in our spending 
and taxing policies than looking ahead just 5 years 20 years ago or 
looking ahead just 1 year in 1963.
  People might wonder why I am talking about 1963, 1981, and 2001. 
These are the three biggest tax relief measures passed by Congress in 
the last 50 years.
  All I am saying is, nobody knows what the future holds, but we are 
making a tax relief decision for working men and women based upon these 
10-year projections. We ought to give some credit to the people who 
work so hard to make those projections so that we in Congress can be 
more--I do not know whether the word ``certain'' is correct--so we can 
at least attempt to be more precise as we make policy for the long 
term. That is all we are doing.
  I ask people to consider that in the historical approach as we try to 
do a better job of making public policy decisions.
  I yield the floor.

[[Page 8611]]

  The PRESIDING OFFICER. The distinguished Senator from Montana is 
recognized.
  Mr. BAUCUS. Mr. President, I do not know any Member of the Senate who 
has more respect and regard for the Senator from West Virginia than 
myself. He is a Senator's Senator. He knows more about and defends this 
institution far more than any other Senator. He really lives for his 
people in West Virginia, for this institution, and for the country. I 
wish more people knew how hard the Senator from West Virginia fights 
for all those causes and all those beliefs in such a dignified way. I 
have the highest respect for the Senator.
  I understand his concerns about this bill. I share some of those 
concerns. I think most Members of the Senate privately share some of 
the concerns that perhaps this tax cut is a little too large because it 
is hard to predict what the budget surplus is going to be in the 
future. But we have provided for this amount in the budget resolution. 
It did pass the Senate. I know the Senator from West Virginia believes 
that budget was inappropriate and did not vote for it. As the Senator 
knows, more than any other Senator here, we still have that budget 
resolution that passed through the conference and we are in this 
Chamber with a tax bill that passed the Senate Finance Committee.
  There are a lot of provisions in this bill that are major 
improvements over the President's proposal and/or measures passed by 
the House. Most significantly, it provides a much better distribution 
of tax cuts so middle-income Americans receive a greater share of the 
benefit as opposed to wealthier people compared with the House-passed 
bills and that suggested by the President.
  We also make specific improvements to the Tax Code. One is the 
creation of a new 10-percent bracket. This is large. It is the single 
biggest piece of the bill. It provides for $438 billion of tax relief 
over 10 years to those persons who would be in the 10-percent bracket. 
Of course, those lower and middle-income Americans and, obviously, even 
the most wealthy receive some benefit because a new lower bracket rate 
affects everybody all the way up regardless of the amount of income.
  Seventy-five percent of the benefits in this bill go to people who 
earn less than $75,000. Seventy-five percent of the tax reductions in 
this bill go to Americans who earn $75,000 or less. There is an upfront 
stimulus by making a 10-percent provision retroactive to the first of 
this year.
  In addition, there is a significant increase in the child tax credit 
from $500 to $1,000. Friday, when I was heading home to Montana, 
somebody stopped me as I was getting off the airplane. I had to change 
planes at Salt Lake City to get to Montana. He said: Senator, I hope 
you get a tax credit in there. My wife is about to have a child.
  I said: We are going to increase that child tax credit over time to 
$1,000.
  He said: Boy, Senator, I really like that. I really appreciate that. 
Thanks for doing that.
  There are people who do benefit from this legislation. In fact, 16 
million children receive benefits under this legislation, children who 
otherwise would not receive benefits under the other legislation.
  We also create incentives for education. One can deduct $5,000 from 
his or her income to pay for college tuition, which, clearly, is a help 
because higher education is getting so much more expensive.
  The pension provisions, IRA provisions, new stimulus for more 
savings, the marriage penalty, it is true, do not take effect, as my 
very good friend from West Virginia notes, until 2006. I have no doubt 
the Senator from West Virginia is going to fully utilize that provision 
in the code for many years, even after it takes effect in the year 
2006. Of that I have no doubt.
  In addition, there are other provisions in the bill that are very 
helpful to Americans who really need a break. They revolve around the 
provisions that make the child tax credit refundable. There is $109 
billion in this bill--most of it is new money--for parents, for single 
parents, single moms, single fathers who do not have a lot of income 
but are struggling to make ends meet. That is going to go a long way in 
keeping them off welfare rolls because it is tied in with the EITC, the 
earned-income tax credit. It is going to help a lot of Americans. That 
is all in this bill.
  To sum up, this is a good bill. It is not perfect, but it certainly 
will put a lot of dollars into people's pockets in tax reductions. It 
is more fair to Americans all across the board compared with the 
President's proposal and those measures passed by the House. It is good 
legislation.
  We are a very dynamic Nation. I have concerns about the size of the 
cut, for the reasons mentioned by my friend from West Virginia, and 
have some sympathy for the amendment he is offering for those reasons. 
I would like to give more stimulus to education, to make sure the 
Social Security trust fund is even better protected, the Medicare trust 
fund is even better protected.
  We are a very dynamic Nation. We are a very resourceful Nation. We 
will find ways to do what we know we should do, and that includes 
protecting Social Security, protecting the Medicare trust fund, and 
making sure, too, we do all we possibly can to help our children get 
the very best education possible. Of that I have no doubt.
  I remind Senators, if we do not pass this bill, which has been worked 
on thoroughly by the Senate Finance Committee, my guess is we will be 
faced with another tax bill which will be much less to the liking of 
about half the Members of this body, particularly on the Democratic 
side.
  It would be much closer to the measure proposed by the President. It 
would have a distribution that is much more weighted toward upper 
income Americans. It would be a bill much to the dislike particularly 
of the Senator from West Virginia.
  Life has choices. We are presented with choices, presented with 
alternatives. We have to make choices and choose the alternatives which 
make the most sense. I personally believe that given the choice between 
this legislation or some other legislation which would be closer to the 
desire of the President, if Democrats did not try to work to make this 
legislation better, this is a better choice; that is, this bill as 
opposed to essentially the President's bill. It is roughly $1.35 
trillion--less than the President suggested but still a very 
significant tax cut.
  Although I think this is a better choice compared to the 
alternative--I deeply respect the Senator's views and I have the 
highest regard for him--I disagree with this amendment for the reasons 
I have stated. With the utmost respect, I must tell my good friend I do 
not support this amendment.
  Mr. BYRD. Do I have time remaining, Mr. President?
  The PRESIDING OFFICER. The Senator has 5 minutes remaining.
  Mr. BYRD. Mr. President, I thank both of the managers again. I 
respect their reasons for opposing my amendment. I hope the Senate will 
adopt my amendment later.
  Reference has been made to President Reagan's 5-year deficit/surplus 
estimates. Those projected surpluses in that instance were as follows: 
In 1982, the projected deficit was $45 billion; the actual deficit was 
$128 billion. The projected surplus for 1985 was $5.9 billion--that was 
the projected surplus under the Reagan administration tax cut--whereas 
instead of a $5.9 billion surplus, the actual deficit was $212 billion. 
In other words, for the 5 years projected under the Reagan tax cut, the 
difference between the projected deficit and the actual deficit was 
$921 billion. That experience should teach us to be cautious.
  I close by referring to Joseph in the Bible. We will recall that 
Pharoah had a dream in which he saw seven fat cattle come up out of the 
river to feed in a meadow. They are referred to as ``kine'' in the 
Scriptures. They were followed by seven lean cattle who ate up the 
seven fat cattle. Pharoah turned to his soothsayers, his wise men, for 
interpretation of this dream, but they could not interpret the dream. 
Someone spoke of Joseph as one who could interpret dreams, so Pharoah 
asked

[[Page 8612]]

that Joseph, be brought forth from the dungeon where he was being held. 
Joseph interpreted the dream to mean that there would first be 7 years 
of plenty, represented by the fat cattle in Pharoah's dream--7 years of 
plenty. The 7 years of plenty would be followed by 7 years of famine. 
Joseph recommended that in the time of plenty they should save, put the 
grain into the warehouses and prepare for the 7 lean years that were 
sure to come in Egypt.
  We have had in this country some very good years. We have had 
projected surpluses. I think we ought to return to history, realizing 
that in some form or another it does repeat itself. We have this golden 
opportunity to use these years of plenty and the fruits therefrom to 
apply to the problems that confront the Nation, the problems that will 
come with Social Security, and Medicare, for example. Now is the time 
to deal with Social Security and Medicare.
  The President has said he doesn't want to leave any child behind. The 
President's budget, which was referred to by my friend from Montana, 
leaves the old folks behind. I can call them old folks because I am one 
of them. The old folks, the senior citizens are being left behind. But 
no millionaire is being left behind.
  I urge again that the Senators vote for my amendment later in this 
day. I thank all Senators for listening. I particularly thank the Chair 
for his courtesy and kindness.
  The PRESIDING OFFICER. Does the Senator from Iowa yield back his 
time?
  Mr. GRASSLEY. We yield back our time.
  The PRESIDING OFFICER. Time is yielded back.


                           Amendment No. 707

  Mr. JEFFORDS. Mr. President, I send an amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Vermont [Mr. Jeffords], for himself, Mr. 
     Dodd, Mr. Kennedy, Mr. Rockefeller, and Mr. Levin, proposes 
     an amendment numbered 707.

  Mr. JEFFORDS. Mr. President, I ask unanimous consent reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

  (Purpose: To amend the Internal Revenue Code of 1986 to expand the 
                         dependent care credit)

       At the end of subtitle A of title II insert the following:

     SEC. __. DEPENDENT CARE CREDIT.

       (a) Increase in Dollar Limit.--Subsection (c) of section 21 
     (relating to expenses for household and dependent care 
     services necessary for gainful employment) is amended--
       (1) by striking ``$2,400'' in paragraph (1) and inserting 
     ``$3,000'',
       (2) by striking ``$4,800'' in paragraph (2) and inserting 
     ``$6,000'', and
       (3) by adding at the end the following new paragraph:
       ``(3) Inflation adjustment.--In the case of any taxable 
     year beginning after 2002, any dollar amount contained in 
     paragraph (1) or (2) shall be increased by an amount equal 
     to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section (1)(f)(3) for the calendar year in which the taxable 
     year begins, by substituting ``calendar year 2001'' for 
     ``calendar year 1992.''.
       (b) Increase in Applicable Percentage.--Section 21(a)(2) 
     (defining applicable percentage) is amended--
       (1) by striking ``30 percent'' and inserting ``50 
     percent'', and
       (2) by striking ``$10,000'' and inserting ``$30,000''.
       (c) Revenue Offset.--The Secretary of the Treasury shall 
     adjust the highest rate of tax under section 1 of the 
     Internal Revenue Code of 1986 (as amended by section 101 of 
     this Act) to the extent necessary to offset in each fiscal 
     year beginning before October 1, 2011, the decrease in 
     revenues to the Treasury for that fiscal year resulting from 
     the amendments made by this section.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

  Mr. JEFFORDS. Mr. President, the United States has entered into a 
time of unprecedented budget surplus. Over $1 trillion is the amount we 
are discussing. What to do with it, and trillions that are expected 
into the future.
  For years we have struggled to balance the budget, forgoing spending 
for programs necessary to maintain our human infrastructure. We have 
not devoted enough to supporting our families and educating our 
children, but times have changed. There is enough money in the surplus 
to cut taxes, eliminate the death tax, and reduce the marriage penalty. 
I believe we must increase our investments in our children and 
families. To my colleagues I must ask, if not now, when?
  I commend Senator Grassley and Senator Baucus for their leadership. 
They have carefully crafted this legislation so it brings the benefits 
of tax relief of all Americans. They have included balanced rate 
reductions, a careful phaseout of the estate tax, and a refundable 
child tax credit. Especially important to me, they have fixed the 
marriage penalty for all taxpayers, including those who receive the 
earned-income tax credit.
  There is, however, one crucial area not sufficiently enhanced to meet 
our national education goals. The issue not addressed in this 
legislation is the great need for our Nation to improve childcare, 
particularly the early learning and developmental aspect of that care. 
America lags far behind all other industrialized nations in caring for 
and educating our preschool-age children. We have the opportunity to 
make improvements. We need to act now.
  If we want to get to the core of our most serious problems in 
education, we have to improve the care and education of our preschool 
children. This is something every other industrialized nation in this 
world does except the United States. And every industrialized nation in 
the world pays for that through Government funds.
  I rise to offer an amendment to increase the dependent care tax 
credit. The current law allows taxpayers to claim a small credit for 
childcare expenses.
  Right now, the maximum credit allowed is $720 for one child, and 
twice that amount for two children. Unfortunately, no families qualify 
to receive the maximum. My amendment would raise the maximum credit to 
$1,500, for one child, and $3,000, for two or more children. It would 
allow families with adjusted gross incomes of $30,000 or less to 
qualify for the maximum credit. And the credit amounts would be indexed 
for inflation still far from what we need but a major step forward.
  This increase in the dependent care tax credit is to be paid for by 
slowing the reduction of the top income tax rate.
  We know that from the time of birth, the human brain is making the 
connections that are vital to future learning. We know that what we do 
as parents, care providers, educators, and as a society can either 
promote or inhibit a child's healthy development---the acquisition of 
the cognitive, social, behavioral, and physical skills necessary for 
success in school and life.
  Far too many of America's children enter school without the requisite 
skills and maturity, and continue to lag behind for their entire 
academic career.
  Billions of dollars are spent on remediation efforts to get these 
children ``up to speed.'' But I believe that ``an ounce of prevention 
is worth a pound of cure,'' and if we are ever to achieve the first 
national education goal, we must improve the quality of child care and 
make it more affordable and available for working parents.
  We have known for years that high-quality preschool programs produce 
cognitive gains, improved school performance, decreased grade 
retention, and higher achievement in math and reading. The research has 
been around since the mid-1980s.
  The Perry Pre-school Project, the Carolina Abecedarian Project, and 
the recent Chicago Child-Parent Center study are just a few of the 
research studies that clearly show the benefits of high-quality early 
care and education to future academic success. Unlike the rest of the 
world, America has done little to ensure that our children have access 
to these kinds of programs.
  Quality early education is the bedrock upon which a child's future 
academic success is built. By giving every child a strong foundation 
for success in school we set the stage for that child to become a 
productive worker and a

[[Page 8613]]

contributing member of society. A strong educational foundation for 
each child is the key to our national economic, military, and political 
future.
  Let me show the most dramatic evidence of what I am telling you. My 
first chart is the results of the so-called TIMS examination. These 
TIMS studies indicate how we compare to the rest of the world with 
respect to our 13-year-olds in mathematics. As you can see from this 
chart, where are we? We are 16th; at the bottom of the heap. That means 
that 55 percent fewer American students give correct answers on the 
exam. Who is at the top? That is China.
  There are a couple of reasons why I have this presentation. One is 
because it includes China. After we included China that time, someone 
decided not to do that again. It gives you evidence relative to the 
largest country with which we compete. If you take a look at the 
countries doing pretty well on this side of the chart--Switzerland, 
France, Italy--all industrialized nations that have early education and 
child care, these are for their 3- and 4-year-olds.
  More recent TIMS studies have shown no significant change for the 
United States, and the most recent report was even worse.
  Yet in international contests of the best math students, students 
from the United States are often the best in the world. So it is not 
the students, its the educational system that bears most of the 
responsibility for this failure.
  What does this mean for our children? It means that in the global 
economy in which we live, our children will not be prepared to compete 
for the high-tech jobs that rely on math skills. In a world of global 
finance and integrated information systems, it will be very easy for 
children from other countries to line up for the best, high paying 
jobs.
  Will this have a large impact on the U.S. economy?
  I am afraid so. The Information Technology Association of America has 
recently issued a report that states that at present there are 425,000 
IT jobs nationwide that are unfilled because the American workforce 
lacks the skills to do the job. And these are high paying jobs, with an 
average income of $50,000 a year. To date, the United States has 
allowed almost 1 million H-1-B foreign students to take these jobs.
  I suggest to my colleagues that a child care tax credit that sets the 
stage for improved math performance by American students is a direct 
investment in the strength and health of our economy. John Glenn's 
Commission issued a report entitled ``Before It's Too Late,'' which 
emphasizes this need.
  The overall health of our society depends on our children coming to 
school ready to learn and ready to read. Our democracy itself; our 
leadership in the world, is dependent upon literate citizens.
  I want to now to refer to another National Center for Education study 
entitled ``The Nation's Report Card, 4th Grade Reading 2000.''
  Forty percent of American fourth graders are reading below grade 
level, and 68 percent are not reading at a level that demonstrates 
solid academic performance. What this says to me is that more than half 
of our young students have not learned to read very well.
  And if you haven't learned to read you cannot read to learn. And I 
have to wonder if it is a coincidence that 40 percent of our Nation's 
3- and 4-year-olds are not enrolled in preschool programs--40 percent, 
again.
  From first through third grades our children are supposed to learn to 
read so that they can go on to academic success. Without excellent 
reading skills and a love of reading and learning we are doomed to a 
spiral of ignorance in our society. We will lose the cultural and 
historical richness that informs us as a democracy. How can we 
rightfully retain our place as leader in the democratic world, if many 
of our students emerge from our public education system functionally 
illiterate?
  We must invest in our children from the moment they are born so that 
they are fully prepared to be excellent and early readers. This is an 
investment we must make.
  Today, two-thirds of our 3- to 5-year-olds are in some type of care 
outside the home. For some, that care is part-day or part-year. But 
many spend 35 hours or more in the care of someone other than their 
parents.
  A recent nationwide study found that 40 percent of the child care 
provided to infants in child care centers was potentially injurious--
not that it was beneficial but that it was injurious.
  Fifteen percent of center-based child care for all preschoolers is so 
bad that a child's health and safety are threatened.
  Seventy percent of center-based child care is rated mediocre--they 
are not hurting, but neither are they helping children.
  Only fifteen percent, I repeat, 15 percent actively promote a child's 
healthy development.
  We know that high quality, preschool education and care improves 
school readiness and school performance, leads to better socialization, 
and results in cognitive gains for our children.
  Mr. President, how much time do I have remaining?
  The PRESIDING OFFICER. The Senator has approximately 17 minutes 
remaining.
  Mr. JEFFORDS. While there are benefits for all children, low-income 
children benefit even more than children from more economically 
advantaged families. And we see those benefits regardless of the 
setting in which the early education and care takes place--as long as 
it is a quality program.
  So I ask my colleagues, how can we, as a nation, continue to 
shortchange these programs?
  Why do we not view early care and education as an integral part of 
our educational system?
  How can we as a nation continue to view it as a private matter among 
families, rather than a social imperative?
  Every one of our industrial competitor countries do. Every one--and 
the government pays for it. We are leaving children behind.
  Our children are not entering school ready-to-learn. Our children are 
lagging behind most other industrialized nations in math and science.
  We know that the best predictor of quality early education and care 
and positive outcomes for children is a trained, competent teacher. So 
why do we have a child care workforce that has little education and 
training beyond a high school diploma?
  The majority of the providers in center-based child care receive less 
training and job specific education than child care workers in urban 
areas of Nigeria.
  We know that this surplus should be used to address the greatest 
needs in our nation today. So why don't we begin to take care of the 
most critical problem, the early education and care of our children?
  Spending for child care over the past few years by governments--
local, State and federal--has increased.
  Yet, less than 15 percent of the families eligible under Federal law 
to receive child care subsidies are receiving any assistance.
  The Head Start Program is only serving about 40 percent of the 
children eligible for the program. The educational component of that 
program is in the process of being expanded and strengthened.
  The Dependent Care Tax Credit helps offset a small portion of the 
costs of a family's child care expenses.
  American parents are the main source of funding for early care and 
education. They pay it right from their pocket.
  All of our competitors in the international marketplace, have 
government paying most of the costs of care.
  Of the total funds spent on early care and education, government pays 
for 39 percent, private sources--1 percent, and parents--60 percent. 
This is the reverse of the cost-sharing between parents and government 
in other industrialized nations.
  In all of the other industrialized nations, the costs of early care 
and education for 3- and 4-year-olds rests with government, employers, 
or a combination of both. Parents are responsible for a small 
percentage of the costs,

[[Page 8614]]

generally in the ten to twenty percent range. In comparison, some low-
income working families in the U.S. have to pay 10, 20, sometimes 30 
percent of their household income just for the co-payments required to 
receive a Federal child care subsidy.
  In addition, much of the early care and education in America is of 
poor to adequate quality. High-quality care is expensive, and few 
families can afford to pay any more.
  In every State, except one--Vermont, the cost of 1 year of child care 
for a 3- or 4-year-old is more than the yearly cost of tuition at a 
public four-year university in that state. And Vermont's distinction is 
due to the high cost public higher education, rather than a lower cost 
of child care.
  We know how to improve the quality of early care and education.
  We need better trained and educated teachers. We need to pay those 
teachers more.
  We need to quit viewing child care and early education differently--
and recognize the critical importance of early education.
  We need to integrate quality early learning and healthy development 
into all care giving.
  We need to make quality early learning programs more affordable and 
available to all children--particularly 3- and 4-year-olds.
  We need to give providers funds to recruit and retain quality 
teachers, to upgrade facilities and equipment, and to provide staff 
training on a regular basis.
  We need to help states increase not only the number of low-income 
working parents receiving child care subsidies, but make sure those 
subsidies are high enough to allow families to afford quality care for 
their children.
  Middle and lower-middle income working families receive the least 
amount of help in covering the costs of child care, and spend a 
disproportionately high amount of their household budget on child care. 
We have to focus more government assistance in their direction.
  We need to increase the number of quality programs by improving 
existing care and starting new programs.
  We need to encourage businesses to provide more on- and near-site 
child care for employees and more resources to support the child care 
arrangements of their employees. Federal tax credits and incentives 
need to be increased to help these businesses.
  And we must make those improvements without increasing the costs to 
parents.
  In other industrialized nations, early education and care for 3- and 
4-year-olds is universal, voluntary and free to parents, regardless of 
their income. Early education and care is viewed as good for children 
and an important part of the public education system.
  American families struggle to pay $4,000, $6,000, and sometimes over 
$10,000 a year for child care for their young children.
  Our own Senate employees, many using federally subsidized child care 
centers, pay $6,000 to $7,000 a year for one child--out of their own 
pockets with little financial help.
  A few local and State governments have already accepted this view of 
pre-school and have devised a variety of ways to finance their efforts.
  Some counties in Florida increased property taxes to pay for pre-
school and child care services.
  Voters in Aspen, CO, approved a dedicated sales tax for child care.
  Maine has created tax increment finance districts and identified 
child care as an approved development program cost.
  Missouri dedicates a portion of the funds received from the state 
lottery to the Early Childhood Development, Education, and Care Fund.
  North Carolina has done a remarkable job in subsidizing child care 
wages and benefits in exchange for completing professional development 
activities.
  Rhode Island has extended health care benefits for child care 
providers through the State's publicly funded health insurance program.
  Connecticut makes long-term, low-interest loans for the construction 
and renovation of child care centers available as tax-exempt bond 
funding. It has started a school-readiness program to make sure low-
income children have access to high quality early learning experiences.
  New York has a generous, refundable child care tax credit against 
state personal income taxes that are owed.
  And last, but never least, Vermont gives increased subsidy rates for 
accredited care, and provides cash bonuses to child care providers that 
get accredited or complete academic degrees.
  Other States have created voluntary income tax check-offs, car 
license plates, motor vehicle registration accounts, and other 
innovative means of financing high-quality pre-school programs. Even 
with these creative approaches, quality pre-school programs are still 
out of the reach of many parents.
  Several States have started programs and tax incentives to get the 
business community to assume more of the costs of child care for their 
employees. Some companies, such as IBM, AT&T, and Bank of America, have 
clearly stepped up to the plate. But too many others have not.
  It is particularly hard for small business owners. Unfortunately, 
many of these programs and incentives have met little success. 
Participation levels are very low, even among businesses that provide 
child care assistance for employees. We must work with the business 
community to create incentives that work for employers and employees 
alike.
  Government, businesses, or parents cannot do this alone. Providing 
quality early care and education must be a partnership. There must be 
joint responsibility and cost-sharing.
  Government needs to view early education and care as an integral part 
of the education system. It needs to provide additional funding to 
improve quality and decrease the costs for parents.
  The business community needs to view early education and care as 
necessary for recruiting and maintaining today's employees. It needs to 
see it as an investment in tomorrow's workforce.
  Parents are already paying most of the costs of care, and find few 
choices that provide high quality care at a price they can afford. They 
must have more choices so their children can grow up healthy and ready 
to succeed.
  We must improve the quality and financing mechanisms for early care 
and education, particularly for our Nation's 3- and 4-year-olds. This 
is an investment in the real ``infrastructure'' of our country--our 
children and families. It is one that we cannot afford to ignore any 
longer.
  Isabelle Sawhill of the Brookings Institute has estimated that a 
high-quality, 2-year program in the United States would cost about 
$8,000 annually per child. This translates to about $30 billion a year 
to serve all families with incomes under $30,000 a year. This amendment 
represents a down payment on that investment.
  In March, the HELP Committee held a hearing to compare the United 
States early care and education, with the rest of the world. At that 
hearing, a child care provider from Vermont testified. At the 
conclusion of her testimony, she said: ``Why do so many children get 
left behind?''
  One, there simply is not enough capacity to meet the needs--it's that 
simple. Two, few parents can afford high quality care. We are talking 
about young families at the lowest point in their income earning years 
paying up to fifty-eight percent of their income on child care.
  These young parents absorb 87 percent of the cost of care, as opposed 
to their later years and incomes are higher and they bear only 47 
percent of the cost of a year in college. We ask families to pay more 
at a time they can least afford it.
  I always tell my staff, don't come to me with a problem unless you 
have at least three potential solutions. Here are my suggestions for 
easing the child care crisis:
  Bring business on board as partners.
  Forgiveness of student loans, access to higher wages, and health care 
for

[[Page 8615]]

providers will help attract and retain our child care workforce.
  Quality incentives work, whether we are talking about guaranteed 
bonuses for extended education or training, or accreditation.
  Tax cuts are great, but only after the true needs of a nation have 
been meet. You have a difficult choice: save a little now by not 
funding a comprehensive early care and education initiative or pay a 
lot later. Studies show that for every dollar we spend on early care 
and education, we save seven dollars in other government programs down 
the road.
  We can no longer afford to be a nation where only the poor or rich 
have access to high quality early care and education. You need to 
commit precious resources to our most precious resource, young 
children.
  Let me show you just some other documentation. I want to bring to 
your attention a study that all of my colleagues ought to read. This is 
done by the French-American Foundation. The study compares the French 
system with American childcare. They point out how well the French do 
in comparison. I urge Members to look at this study. We have copies of 
this study available. It demonstrates how beneficial the French system 
is. We should use it as a model. There are other systems also that we 
should look at for possible solutions to our early care and education 
crisis.
  Mr. President, at this time I yield to my friend from Connecticut 10 
minutes.
  The PRESIDING OFFICER. The Senator from Connecticut is recognized for 
10 minutes.
  Mr. DODD. First of all, I commend my colleague from Vermont for 
offering this amendment. I am delighted to be his principal cosponsor. 
This is an issue we have worked on together for as many years as we 
have been in the Senate. My colleague from Utah, Senator Hatch, and 
many others have helped us develop the Child Care and Development Block 
Grant program.
  I note that the Presiding Officer has more than a passing awareness 
and knowledge of the subject matter of this amendment and has been 
involved in the question himself when he was in the other body as well 
as support here.
  What we are changing with this amendment are three things that 
pertain to the Dependent Care Tax Credit or, DCTC under current law. We 
have not changed, in 20 years, the amount of annual eligible expenses 
for child care against which the dependent care tax credit is based. 
That is what we are talking about in this amendment.
  Under current law, eligible expenses for child care are capped at 
$2,400 for families with one child and $4,800 for families with two 
children each year. We want to raise the cap on these expenses from the 
present level of $2,400 for a single child up to $3,000. For families 
with more than one child, the cap on annual child care expenses would 
be increased from $4,800 to $6,000. That would be for two children. So 
we are increasing the amount of child care expenses that would be used 
as the base against which the dependent care tax credit is calculated 
from $2,400 to $3,000 for families with one child; and $4,800 to $6,000 
for families with two children.
  But then we do something else. Under current law, a family can only 
take a percentage of eligible expenses capped by law as their dependent 
care tax credit. We have talked already about the amount of eligible 
expenses that we would be increasing under this amendment. But, also in 
this amendment, we would increase the percentage that is applied to the 
capped amount of eligible expenses to calculate the credit.
  Under current law, the lowest income families can only take 30 
percent of $2,400 in eligible expenses for one child or 30 percent of 
$4,800 for two children. That's the maximum credit allowed under the 
DCTC. The amount of expenses as well as the percentage of eligible 
expenses have not been changed in 20 years. What our amendment does is 
increase the percentage of eligible costs for the lowest income 
families from 30 percent to 50 percent. If you make from $10,000 to 
$30,000, you get a maximum of a 50-percent credit. If you make in 
excess of $30,000, that percentage declines as income rises until it 
reaches 20 percent. Even the most affluent family in the country can 
claim 20 percent of allowable eligible expenses for child care under 
the dependent care tax credit.
  Then, lastly, we index to inflation the child care expense 
thresholds, the annual child care expenses against which the credit is 
based, because over the last 20 years there have been no increases at 
all. Obviously, the cost goes up for child care and related expenses, 
so we will be back at this again. So why not index it, as we have in so 
many other areas of the Tax Code? That is all this amendment does.
  There is no refundability in this amendment. I regret that, but we 
did not include refundability.
  So very briefly, again, what we do is we increase the amount of 
eligible expenses under the dependent care credit that a family can 
take into consideration in calculating their dependent care tax credit. 
In the case of a single child, the child care expense threshold would 
increase from $2,400 to $3,000; in the case of two children, the child 
care expense threshold would increase from $4,800 to $6,000.
  You can talk to any family in the country, and they will tell you 
about the cost of child care. Today it is not uncommon to have child 
care costs reach $10,000 a year per child. On average, child care 
expenses both in urban and rural areas are between $6,000 and $10,000 a 
year. That has gone up considerably in 20 years. Twenty years ago, the 
cost of child care hovered around $1,500 to $2,000, in some cases 
$3,000 or more. In 20 years, those costs have just gone up through the 
ceiling.
  Today, in some of the poorer areas, good child care can cost as much 
as $10,000 or more a year. Needless to say, if you are a family, say, 
making $40,000, $50,000, $60,000, with two kids, obviously, when you 
are spending as much as $6,000 to $20,000 for child care for those two 
children--before you pay rent, before you pay a mortgage, before you 
put food on the table, clothes and the rest--obviously, that is an 
extraordinary amount of expense.
  So by raising the child care annual expense threshold from $2,400 to 
$3,000 in the case of one child, and $4,800 to $6,000 in the case of 
two children, and then increasing the percentage applied to the child 
care expense base from 30 percent to 50 percent--in the case of the 
poorest people--with a sliding scale that drops to 20 percent for the 
most affluent Americans, we think we are going to provide some needed 
assistance to people who are burdened by high child care costs. For 
everyone, just like under current law, the amount of allowable expenses 
would be the same. But, for those families who are low income and 
moderate income earners, they would be able to take a larger credit 
than current law--because, both the amount of allowable eligible 
expenses and the percentage applied to that base would be increased.
  How do we pay for it? We drop the top income tax rate by whatever 
number it needs, maybe 1 point, maybe even less than 1 point to pick 
this cost up. So we are still providing a tax break for the most 
affluent Americans. But one of the most significant costs that 
Americans face is for dependent care, and they need this help.
  The Senator from Vermont has laid out--I am, again, preaching to the 
choir when I speak to the Presiding Officer and the chairman of the 
committee. They know in the case of Iowa, and in the case of Kansas, 
there are a lot of hard working folks out there, single parents raising 
kids. This is not a choice. This is not a case where someone is sitting 
there and saying they think they will go to work or won't go to work. 
This is a case where people actually have no other choice. So we are 
providing some real relief.
  I say, with all due respect to the managing members of this bill, the 
chairman of the committee, we have done something clearly in this bill 
on the per child tax credit, and I appreciate that. But the dependent 
care tax credit has not changed. There has been no change in 20 years. 
It may be 20 years again. It has been nearly 20 years since the last 
time we dealt comprehensively with the Tax Code. It

[[Page 8616]]

could be another 20 years before we have a chance to fix it.
  So what we are suggesting in this proposal--as the chairman of the 
HELP Committee pointed out, is that millions of families struggle with 
child care costs every week. The need for child care assistance is 
great. Some 65 percent of mothers with children under the age of 6, and 
78 percent of mothers with children between the ages of 6 and 13, are 
working today. Nearly 60 percent of mothers with infants are working. 
This is not a question of whether or not a need exists. The need is 
clearly there.
  If you do the math on this, a single parent earning $30,000, who has 
a 1-year-old child and a 3-year-old child, would be spending as much as 
half of her gross income on dependent child care expenses. The present 
dependent care tax credit helps, but it is no real match for the 
reality of the child care market.
  Under current law, the maximum credit a family can claim is $720 for 
one child for 1 year--30 percent of $2,400, and $1,400 for two--30 
percent of $4,800. That is not insignificant, but it is not enough to 
make a family's $8,000 child care bill more affordable.
  Our amendment would also index the thresholds for child care expenses 
for inflation. That is just common sense. Over the years, most of the 
basic tax provisions affecting tax liability have been indexed for 
inflation. The personal exemption, the standard deduction, tax brackets 
for low-income families, the earned-income tax credit, all have been 
indexed. By indexing the child care expense thresholds under the 
dependent care tax credit, we would ensure that the credit keeps up 
with market realities. Within the context of the overall provisions of 
this tax cut proposal, we can afford it.
  We have not increased the child care expense thresholds themselves a 
dime, let alone indexed them for inflation, over the past 20 years. So 
again, by raising the child care expense thresholds, and then raising 
the percentage of eligible expenses a family can take in calculating 
its dependent care tax credit, we will provide some real relief for 
families with high day care costs. For example, the maximum credit for 
a family with one child would increase from 30 percent of $2,400 or 
$720 to 50 percent of $3,000 or $1,500. The maximum credit for a family 
with two children would increase from 30 percent of $4,800 or $1,440 to 
50 percent of $6,000 or $3,000. These changes will really help low and 
moderate income families where every dollar counts.
  In view of the costs of child care expenses, we think this is an 
affordable amendment, one that makes sense and provides real relief for 
working people.
  There are no income eligibility caps on the dependent care tax 
credit, so even the most affluent families can claim as much as 20 
percent of allowable dependent care costs.
  For these reasons, we urge our colleagues to support this very modest 
amendment--it is not that expensive--and to reduce the top rate just a 
fraction to pick up this cost. We think this is something that would 
make this tax bill a far better proposal.
  With that, Mr. President, I yield back whatever time I may not have 
consumed to the distinguished Senator from Vermont.
  Mr. JEFFORDS. Mr. President, I thank my colleague for his very 
helpful statement. I praise him for the work he has done in this area.
  To close up, I would like to follow up on my colleague's statement 
with a chart. This is the source of funds for child care in early 
learning in the U.S.: 60 percent by the parents, 1 percent by the 
private sector, and 39 percent by the Government. In the other 
countries, it is just the opposite. It is 60 percent by the Federal 
Government, about 30 percent by the parents, and about 1 percent by the 
private sector. That is just to emphasize what the Senator has pointed 
out.
  That was excellent testimony that dramatically pointed out to me the 
serious problems we have.
  I ask unanimous consent that Ms. Apgar's statement be printed in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

Statement of Kathi J. Apgar, Executive Director, Bristol Family Center, 
 Bristol, Vermont, President, Vermont Association for the Education of 
   Young Children, Before the Senate Committee on Health, Education, 
                  Labor, and Pensions, March 27, 2001

       I would like to thank Senator Jeffords and the H.E.L.P. 
     Committee for inviting me to share some of the experiences of 
     operating a non-profit, early care and education facility. 
     Most of today's panelists have related statistical 
     information pointing to the crisis in early care and 
     education in our country and the solutions developed by other 
     nations.
       I am here to add a personal face to the harsh realities of 
     maintaining a quality program under some dire economic 
     circumstances and add a passionate plea to add new federal 
     dollars to early care and education. We are not talking about 
     ``redirecting'' federal dollars here, let me be explicitly 
     clear: I am a master of robbing from Peter to pay Paul so I 
     can tell you ``redirecting'' is simply another word for non-
     commitment. We in the early care and education field are 
     talking, real, new federal dollars infused into an inadequate 
     system where children and the future of a nation are at 
     stake.
       I have been at the Bristol Family Center for almost eight 
     years. Most of my 11-person staff has been with me that 
     long--a virtually unheard of retention rate in an industry 
     which boasts a 30% turnover in employees each year. That 
     would be the equivalent of your sixth grader suffering 
     through three new teachers each year . . . this would not be 
     acceptable in the public school setting and it simply is not 
     in the earliest, most critical years of a child's life. My 
     staff started with me at or just above minimum wage with no 
     benefits except federal holidays and three paid sick days per 
     year. It has taken me eight years to raise their salaries to 
     between $8.65 and $13.00 per hour. . . . Still no benefits. 
     This means no health, no dental, no retirement, no long or 
     short term disability . . . We simply cannot afford it.
       As we expand our program this year to include infants and 
     toddlers (there is a waiting list of 50 children for every 
     available slot in this age range) I do not know where my 
     staff will come from. Few teachers are readily prepared for 
     an early education setting like mine where English is a 
     second language: abuse is their first communication. Can you 
     blame most available teachers for seeking public school 
     positions with guaranteed salaries and benefits when we 
     cannot afford to compete with that security?
       Why can't you afford it you ask?
       53 percent of my enrollment is subsidized by the State of 
     Vermont Child Care Services Division (to you, that's Child 
     Care Block Grant dollars, that's TANF dollars).
       The State reimburses us $94.60 per week (55 hours of care 
     at roughly $1.72/hr.).
       It costs me $209.79 per week to provide high quality care 
     for these eligible children.
       It doesn't take the Congressional Budget Office to tell me 
     that is a $115.00 per child, per week deficit or $5,980 per 
     year, per child for which I must beg the American Legion, VFW 
     and private philanthropic trusts for program support dollars.
       People look at my budget and say ``Just cut staff and your 
     bottom line will be fine.'' But think about this for one 
     moment:
       In higher education, the quality and quantity of faculty 
     and staff determine the success of a Student's experience.
       The same thing is true in early care and education--if I 
     cut staff, the success of a child's first experience 
     plummets.
       If you want children to enter kindergarten ready to learn--
     then ``early literacy'' doesn't mean exposure to books 
     distributed at healthy child visits or flash cards at the 
     high chair, it means:
       Honest to goodness human contact with highly trained 
     providers who are readily available through a low child-to-
     teacher ratio.
       It means always having a lap to snuggle on when a book 
     piques the child's interest and discussing what may happen 
     next in the story or creating a song from surrounding the 
     characters.
       Early literacy means having someone across the lunch table 
     from a 3- or 4-year-old sharing silly, giggling rhymes and 
     tongue twisters.
       Early learning happens when there is someone around to 
     record the child's words to accompany a treasured drawing so 
     they begin to see how letters are the symbols through which 
     feelings and thoughts are communicated.
       Kids must feel safe and respected if they are to thrive and 
     be ready for the challenges of a formal school setting not 
     always ready for them.
       I cannot provide these quality opportunities for children 
     on the recommended 10:1 ration--I maintain a ratio of roughly 
     five children to one teacher. This may not help my budget--
     but my true bottom line is the success of a child's 
     experience.
       We must never try to supplant the important role parents 
     play as the child's first, and in most cases, best teacher. 
     As modeled by other countries, this is not an us vs. them 
     rationale--we want parents to have the ability to stay home 
     with their young children

[[Page 8617]]

     but the economic viability of this option is not a reality in 
     most American homes.
       In Vermont, 87 percent of children under the age of six 
     live with working parents. This creates a tremendous burden 
     on a system whose capacity has not significantly expanded in 
     10 years or more. We have 35,000 children in regulated care 
     not necessarily quality care. I am a NAEYC (National 
     Association for the Education of Young Children) validator 
     meaning I review programs as they strive to meet the high 
     standards of national accreditation--so I know what quality 
     should look like and we simply do not have enough quality or 
     quantity in the U.S.
       Another 25,000 of Vermont's children birth through age 
     eight are in unregulated care--believe me, in many instances 
     you don't want to know what that means. Right now, we are 
     only providing subsidized care for low income and/or at-risk 
     children. Increases in Head Start dollars target the same 
     population--frequently only offering part-time care, not the 
     full day, full week, full year programming working families 
     need--especially those moving back into the workforce thanks 
     to the ``Welfare-to-Work'' initiative.
       Why do so many children get left behind?
       (1) There simply is not enough capacity to meet the needs--
     it's that simple.
       (2) Few parents can afford high quality care. We are 
     talking about young families at the lowest point in their 
     income earning years paying up to 58% of their income (with 
     an infant and 4-year-old) in child care. These young parents 
     absorb 87% of the cost of child care as opposed to their 
     later years when incomes are higher and they bear only 47% of 
     the cost of a year in college. We ask families to pay most at 
     a time when they can least afford it and pay less when they 
     are better equipped for these expenditures.
       I always tell my staff, don't come to me with a problem 
     unless you have at least three potential solutions. Likewise, 
     I have some suggestions for easing the child care crisis:
       Bring business on board as partners--the ultimate economic 
     gain is having a stronger workforce whose potential is not 
     wasted because they are worrying about the safety and well-
     being of their young children. I'll be happy to elaborate on 
     our model collaboration with Middlebury College to create a 
     new infant/toddler center thanks to business participation.
       Forgiveness of student loans, access to higher wages and 
     healthcare for providers help us attract and retain 
     employees. Each of these options is already being done in 
     other professions such as border patrol and rural medicine. 
     Let's work together to bring these options to early care and 
     education.
       Quality incentives work whether we are talking about 
     guaranteed bonuses for extended personal credentialing or 
     program based bonuses tied to national accreditation 
     standards--it works and children benefit directly from these 
     upward movements.
       Tax cuts are great but only after the true needs of a 
     nation have been met. It's nice to hear the slogan ``No child 
     will be left behind'' but as an early educator, parent, 
     taxpayer and lifelong Republican--I'm here to tell you under 
     the current budget--children will be left behind in droves. 
     You have a difficult choice: save a little now by not funding 
     a comprehensive early care and education initiative or pay a 
     lot later. We know that for every dollar spent in early care 
     and education we save over $7.00 in corrections costs. 
     Quality early intervention works in every country, every 
     time.
       We can no longer afford to be a nation where only the poor 
     or rich have access to high quality early care and education. 
     You need to commit precious resources to our most precious 
     resource, young children. You can do it, you have proven it 
     on our military bases around the world. We know you can do it 
     and now we expect that you will do it. Thank you.

  Mr. JEFFORDS. Mr. President, I urge my colleagues to vote to waive 
the Budget Act, pass this amendment, and help our families who are 
struggling with the higher cost of child care.
  The research demonstrates so vividly that we have to do more now. Let 
me again reflect on the chart I displayed earlier. Nearly 40 percent of 
America's fourth graders are reading below grade level; 68 percent of 
fourth graders cannot read at a level that demonstrates solid academic 
performance. That, compared to the rest of the world, is abominable. 
Again, in mathematics, this is so critical for the Nation's workforce. 
We have hundreds of thousands of jobs and we find that American 
students are not qualified to take those jobs. We are at the very 
bottom of the heap. That is why we have nearly 1 million H-1-B foreign-
born students, people from other countries coming in and taking those 
jobs which our young people could have--if they were qualified,
  I yield to the Senator from Connecticut.
  Mr. DODD. Mr. President, the Senator from Vermont has laid this out 
very clearly. I hope our colleagues will find the wisdom to support 
this. I know the Senator from Iowa and the Senator from Montana 
wrestled very hard. They have been good supporters on many of these 
issues over the years. Here is something where just a modest change in 
the rates can make a huge difference to people. I am not talking about 
the poorest people, although some of them are, but people who are 
earning about $40,000, $50,000, or $60,000 a year. You have two 
children, and it is costing them $17,000 or $18,000 a year for child 
care. That is a huge whack out of gross income.
  To provide some increase to defray these costs is a great advantage 
and a great help to these people. We urge our colleagues on both sides 
of the aisle to be supportive of this very fair, thoughtful, modest 
amendment. I thank my colleague for offering it.
  Mr. JEFFORDS. I thank the Senator from Connecticut.
  I am not alone in examining these issues. Here is, for instance, a 
report from California, ``Challenges for Higher Education,'' indicating 
how important it is for our young people to have the expertise, ready 
to enter the workforce; from Business Week, ``How to Fix America's 
Schools,'' because we are not providing the right type of trained 
workforce; and another one, ``Helping Students to be First in the 
World,'' recommending action in early care and education by the Council 
of Chiefs of State school officers. There are many reports and studies. 
This is one I mentioned earlier, demonstrating how wonderful the French 
system is and how terrible our child care is. And there are more.
  I will conclude by asking the question I did at the beginning: If not 
now, when? If we have trillions of dollars of surpluses, and we have 
billions of dollars of need, why can't we solve it? I see no reason. 
Now, we have an opportunity to take an important but small step 
forward.
  I yield back the remainder of my time.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, I yield myself such time as I may 
consume. I won't speak long because I know the Senator from Connecticut 
is waiting to offer his amendment.
  I rise mainly not to comment on the amendment of the Senator from 
Vermont but to take some time to speak about his contributions to the 
legislation that is before us. We heard earlier this morning a 
statistic that Senator Baucus gave about 75 percent of the benefits of 
this legislation go to families making under $75,000 a year. The 
Senator from Vermont, through several provisions on which he has worked 
with me on this bill, deserves a great deal of credit for this 
legislation being well balanced.
  I listened to what the Senator from Vermont said about the amendment 
he now lays before the Senate. I appreciate his speaking on that 
subject. He should be very proud of his work on the Senate Finance 
Committee, as he has every right to be proud of the work that has come 
from his own Senate committee that deals with the issue of education 
and many other items. It is fair to say that no Senator has had a 
greater influence on the relief act that is before us than Senator 
Jeffords. His fingerprints are on the expansion of the earned-income 
credit for married families, the child credit being extended for 
working families who do not pay income tax, and the inclusion of the 
pension bill, and many of the education provisions in the bill.
  A married family with two children making $15,000 will receive an 
additional benefit of over $1,000 next year under the bill before us. 
That is thanks in no small part to the efforts of Senator Jeffords. I 
realize the bill before us, as is obvious from the introduction of the 
amendment, does not do all the Senator from Vermont hopes for in the 
way of dependent care. I think it is a strong step toward his goals. 
The changes I have mentioned already to the relief act are estimated to 
cost tens of billions of dollars. The Senator's amendment falls in the 
area of an additional $25 to $30 billion, a figure over 10 years. That 
would be in addition.
  It is unfortunate that we can't, for a lot of good amendments that 
are being

[[Page 8618]]

offered, including the amendment by the Senator from Vermont, do all 
the things given the tight constraints with which we are faced. But the 
Senator is always blazing a trail for the work of the Congress, and 
most of his attention rightfully is given to the needs of families with 
children and preparing people to do well in school.
  I don't know what we can do on this particular amendment. But I have 
heard what the Senator from Vermont said. I pledge myself to work with 
him.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Dayton). The Senator from Vermont.
  Mr. JEFFORDS. Mr. President, I ask for the yeas and nays on my 
amendment.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. Does the Senator yield back his time?
  Mr. JEFFORDS. I yield back the remainder of my time.
  Mr. GRASSLEY. Mr. President, I yield back the remainder of my time.
  The PRESIDING OFFICER. The Senator from Connecticut is recognized.
  Mr. DODD. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DODD. I ask unanimous consent that the order for the quorum call 
be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 695

  Mr. DODD. Mr. President, I send my amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Connecticut [Mr. Dodd] proposes an 
     amendment numbered 695.

  Mr. DODD. Mr. President, I ask unanimous consent that further reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

   (Purpose: To limit the reduction in the 39.6% rate to 38% and to 
replace the estate tax repeal with increases in the unified credit and 
the family-owned business exclusion so that the savings may be used for 
        Federal debt reduction and improvements to the Nation's 
                   nontransportation infrastructure)

       On page 9, in the matter between lines 11 and 12, strike 
     ``37.6%'' in the item relating to 2005 and 2006 and insert 
     ``38%'' and strike ``36%'' in the item relating to 2007 and 
     thereafter and insert ``38%''.
       Strike title V and insert:

                  TITLE V--ESTATE AND GIFT TAX RELIEF

     SEC. 501. INCREASE IN AMOUNT OF UNIFIED CREDIT AGAINST ESTATE 
                   AND GIFT TAXES.

       (a) In General.--The table contained in section 2010(c) 
     (relating to applicable credit amount) is amended to read as 
     follows:

``In the case of estates of decedentThe applicable exclusion amount is:
      2002, 2003, 2004, 2005, and 2006......................$1,000,000 
      2007 and 2008.........................................$1,125,000 
      2009..................................................$1,500,000 
      2010 or thereafter.................................$2,000,000.''.

       (b) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2001.

     SEC. 502. INCREASE IN QUALIFIED FAMILY-OWNED BUSINESS 
                   INTEREST DEDUCTION AMOUNT.

       (a) In General.--Paragraph (2) of section 2057(a) (relating 
     to family-owned business interests) is amended to read as 
     follows:
       ``(2) Maximum deduction.--
       ``(A) In general.--The deduction allowed by this section 
     shall not exceed the sum of--
       ``(i) the applicable deduction amount, plus
       ``(ii) in the case of a decedent described in subparagraph 
     (C), the applicable unused spousal deduction amount.
       ``(B) Applicable deduction amount.--For purposes of this 
     subparagraph (A)(i), the applicable deduction amount is 
     determined in accordance with the following table:

``In the case of estates of decedentThe applicable deduction amount is:
      2002, 2003, 2004, 2005, and 2006.......................$1,375,000
      2007 and 2008..........................................$1,625,000
      2009...................................................$2,375,000
      2010 or thereafter....................................$3,375,000.

       ``(C) Applicable unused spousal deduction amount.--If an 
     immediately predeceased spouse of a decedent died after 
     December 31, 2001, and the estate of such immediately 
     predeceased spouse met the requirements of subsection (b)(1), 
     the applicable unused spousal deduction amount for such 
     decedent is equal to the excess of--
       ``(i) the applicable deduction amount allowable under this 
     section to the estate of such immediately predeceased spouse, 
     over
       ``(ii) the sum of--

       ``(I) the applicable deduction amount allowed under this 
     section to the estate of such immediately predeceased spouse, 
     plus
       ``(II) the amount of any increase in such estate's unified 
     credit under paragraph (3)(B) which was allowed to such 
     estate.''.

       (b) Conforming Amendments.--Section 2057(a)(3)(B) is 
     amended--
       (1) by striking ``$675,000'' both places it appears and 
     inserting ``the applicable deduction amount'', and
       (2) by striking ``$675,000'' in the heading and inserting 
     ``applicable deduction amount''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2001.

  Mr. DODD. Mr. President, let me quickly get to the heart of what this 
amendment does, and I will give some explanation of the specifics of 
it.
  This amendment is designed to reduce the amount of the tax cut at the 
top rate by a relatively small amount--about 1.6 percent--using those 
resources to do two things and, in addition to that, also modifying the 
repeal of the estate tax. By doing those two things, reducing the top 
rate by less of an amount, by 1.6 percent rather than the 3 points, and 
by having a modification of the estate tax, we take those resources and 
apply them to paying down more of the national debt. Fifty percent goes 
to that, and 50 percent goes to nontransportation infrastructure--the 
water systems, sewage systems, the electrical, and all the things that 
go on every day that are necessary for our cities, communities, and 
States to work.
  We have done very little about investing in the physical 
infrastructure of America. You cannot go back to your respective States 
and talk to a mayor or a Governor and they won't tell you that one of 
their major problems is dealing with the nontransportation 
infrastructure needs. Almost on a daily basis, when you pick up any 
paper in America, you will read where another gas main, water main, 
sewage main has burst or broken, hasn't been replaced in years, schools 
are literally falling apart--kids go off to school every day to schools 
built decades ago. Obviously, there are transportation needs. Those are 
dealt with in other places. This is nontransportation infrastructure 
and debt reduction. That is what I want to do with this modest change 
in the tax bill that is in front of us. There are two things that I 
think are absolutely critical if we are going to succeed in the coming 
years economically.
  Presently, we pay between $220 billion and $225 billion a year in 
interest payments. Let me repeat that--between $220 billion and $225 
billion a year in interest payments. An interest payment doesn't build 
anything, doesn't make anyone healthier, doesn't provide a Pell grant 
to go on to higher education, doesn't build a school, a road--it does 
nothing. All it is is interest payments on the national debt that we 
have accumulated, the bulk of which was accumulated in the 1980s and 
early 1990s--in excess of $3 trillion or $4 trillion. Mr. President, 
$200 billion a year--even with the surplus--is going in that direction.
  Certainly, we all ought to agree as Americans that one of our major 
goals ought to be to bring that debt down. I understand there is a good 
argument for not eliminating it altogether, and I will accept that. But 
nobody can convince me that paying $220 billion a year out of taxpayer 
money to go to interest payments at the expense of other things we need 
makes much sense.
  I think we ought to modify the tax cut for the most affluent 
Americans by 1.6 percentage points--that is all, 1.6. You still get a 
good tax cut here. But by a 1.6 point cut, and using those resources to 
help pay down that debt, and then by modifying the repeal of the estate 
tax, which only affects 49,000 Americans--modifying that to help 
rebuild or try to contribute to the infrastructure needs of our 
country.
  How bad are the infrastructure needs? Interest costs on the debt, by 
the way, are $220 billion a year. Over

[[Page 8619]]

the next 10 years, that is $1.5 trillion, if we do nothing, if we just 
accept the present level of debt. Let's assume the economy runs pretty 
smoothly out here, with no new increases but no real debt. That is $1.5 
trillion in debt, according to the Congressional Research Service, if 
we do nothing to increase our indebtedness.
  In 2001, interest payments on the debt were 11.2 percent of the 
budget and 2.1 percent of the GDP. According to the Society of Civil 
Engineers, the condition of America's infrastructure receives a failing 
grade of D plus. They go down the list in terms of roads, bridges, 
transit, aviation, schools, drinking water, wastewater, dams, solid 
waste, hazardous waste, navigable waterways, energy--all the way down 
are Ds, flunking. They estimate that over the next 5 years, just to put 
it in working condition--not replace--would be $1.3 trillion to bring 
the Nation's infrastructure into a C or C+ condition. We are doing 
almost nothing about it.
  As we are talking about a tax cut--and I think there is room for it--
can we not modify this tax cut by a modest amount to help reduce the 
debt and invest in the infrastructure needs of America? That is not a 
complicated question--just modify it, not eliminate it. I am not 
talking about taking the tax cut off the table, but instead of reducing 
the top rate from 39 percent to 36 percent, how about just bringing it 
down 1.6 points?
  By the way, I come from the most affluent State in the country on a 
per capita income basis--Connecticut. If you repeal the Federal estate 
tax, it affects about 980 people in my State of 3.5 million people. 
That is 980 people in my State, and 49,000 nationally. So just 
modifying the estate tax and reducing the size of the tax cut for the 
most affluent Americans, I can make a huge dent in the national debt of 
this country and I can invest in the infrastructure needs that we are 
told, by every objective analysis, are in desperate need of repair. 
That is what this amendment is designed to do, very simply--bring down 
that debt, reduce those interest payments, and invest in the 
infrastructure.
  Are we asking so much? In fact, I suggest that if we asked the most 
affluent Americans whether or not they would be willing to take a more 
modest tax cut--not to eliminate the tax cut, but a more modest tax 
cut--in order to bring down the national debt and to invest in the 
infrastructure, water systems, and sewage systems that are falling 
apart in our country, they would say you ought to do that.
  I don't know why it is we think that the most affluent people would 
be opposed to doing some of these things. Yet to hear some of the 
speeches on the floor of this Chamber, that even a modest reduction in 
the size of the tax cut for the top 1 percent of income earners, people 
making $300,000 or $400,000 a year, a slight reduction in their tax cut 
is absolutely unacceptable, even when it means cutting into that $220 
billion a year that goes for interest payments. When I think of what I 
can do with $220 billion for schools, roads, and other things that our 
country needs.
  I have a great fear, of course, that we are going to see this 
proposal in front of us cause an increase in the national debt. If that 
happens, of course, then interest rates on cars, homes, and other 
consumer goods will go up, and that is an awful tax increase. When 
interest payments on those consumer goods rise, that is a tax increase.
  We have seen that happen in the past. We are not unfamiliar with 
rising interest rate costs and what they can do to people's ability to 
provide for their families, for businesses to grow and expand and hire 
more people to compete in the global marketplace.
  I have great concern that because of what we are doing with this tax 
cut proposal--crowding out our ability to do these other things, such 
as paying down the debt and investing in the infrastructure needs of 
our country--that we are going to look back and rue the day.
  I am 1 of 10 people who was in this Chamber 20 years ago when a 
similar tax cut proposal was being made, a more modest one. Ten of us 
said: We are fearful that if we adopt this tax cut proposal, this 
country is going to witness an increase in its indebtedness, it is 
going to see interest rates climb, and hard-working people are going to 
see the cost of everything they need go up.
  There are only 3 of us left today in this Chamber who were part of 
that group of 10 who voted against that tax cut in 1981-1982. I do not 
know of many people who would not like to have that vote back, if they 
could.
  I do not need to spell out what happened during the mid-1980s and 
early 1990s. Our national debt went from under $1 trillion to in excess 
of $3 trillion, almost $4 trillion. Interest rates went up to the 
ceiling, the economy went dead, flat in the water, and it was not until 
1990 and 1993 that we began to come out of it, we began to see our 
economy grow and expand again as a result of some very courageous votes 
taken in this Chamber and the other Chamber.
  I do not want to see us go back to recreate the mistake we did 20 
years ago. I have a great fear that is about what we are going to do in 
the next 12 hours or less. I do not fault the managing Members for the 
job they have had to do in the Finance Committee, but this is being 
done awfully quickly.
  It is only the middle of May, and we are jamming through this tax cut 
proposal even before we are being told what the defense numbers are 
going to be. We have an energy crisis looming on the horizon. Thomas 
Friedman of the New York Times called it the ``perfect storm.''
  We have this tax cut proposal, as much as a $150 billion to $200 
billion increase in defense spending, and an energy crisis looming and 
we are charging ahead unmindful of the implications of these proposals 
and what they could do to the economy of this country and the 
pocketbooks of average Americans.
  This amendment does not correct all of that, but it does moderate it 
to some degree. It says that paying down the national debt ought to be 
a priority; if not paying all of it down, pay some of it down. This 
should not be a Democratic idea or a Republican idea to reduce $220 
billion in interest payments each year.
  Can anyone tell me when an economy has grown in this country when its 
infrastructure was collapsing? We cannot point to a single period in 
our history when our basic infrastructure was falling apart and our 
economy grew.
  There is a relationship between interest payments on the debt and 
infrastructure. The reason I am combining these two in this amendment 
is because both are absolutely critical to economic growth. If debt is 
too big, either personally or nationally, then we will not be able to 
afford the things we need for our families or as a nation. If our 
infrastructure is collapsing and falling apart, our economy does not 
grow.
  By reducing the tax cut for the most affluent Americans by a small 
amount, I do not eliminate the national debt, and I do not provide for 
all the infrastructure needs, but we do some of the things.
  If my colleagues do not think this amendment has value, they can call 
their Governor, Democrat or Republican, and ask them whether or not 
they think infrastructure costs are serious in their respective States.
  I am looking at some numbers from my State of Connecticut. 
Infrastructure facts: 58 percent of Connecticut schools have at least 
one inadequate building feature, 68 percent of the schools have at 
least one unsatisfactory environmental feature. Connecticut's drinking 
water infrastructure needs $1.35 billion over the next 20 years.
  Connecticut is a small State. There are 11 State-determined deficient 
dams in the State of Connecticut. Again, my colleagues can call their 
home States, and I am sure they will get similar numbers across the 
country about what is happening to the basic infrastructure of our 
Nation and our inability, as a result of what we are about to do with 
this tax cut, to pay for these costs.
  By the way, when fully implemented, this tax cut is not $1.35 
trillion. It will cost $4 trillion. I draw the attention of my 
colleagues to the lead editorial in

[[Page 8620]]

the New York Times over the weekend about the cost of this tax bill we 
are about to adopt, and those exploding costs will kick in just as the 
baby boomers retire, and just as Social Security and Medicare will be 
placed under extraordinary new strains.
  This amendment makes a commitment to debt reduction, and while I 
believe it is modest, it also seeks a commitment to that other 
important priority: our national infrastructure.
  It is a well-known fact that our country's schools, our water, and 
wastewater systems, our telecommunications connections are in dire need 
of attention. Let me give some examples.
  Nearly three-quarters of our schools are over 30 years old. The 
average age of our schools is 42 years. That means schools go back 
almost to the mid part of the last century. Fourteen million children 
attend school every day in buildings that are unsafe. Fourteen million 
kids go to unsafe schools every day.
  The American Society of Civil Engineers issued a report card on our 
Nation's school infrastructure and gave it a failing grade. Our water 
and wastewater systems need nearly $23 billion more each year. Water 
and wastewater alone need $23 billion a year for the next 20 years--
there is nothing here for that; nothing--in order to replace aging and 
failing pipes and to meet the environmental and public health standards 
in the Clean Water and Safe Drinking Water Acts.
  Federal contributions have dropped 75 percent in real terms since 
1980. We used to be a better partner with our States and communities in 
picking up these costs. We have now left the scene, pretty much 
departed entirely. So while providing a tax cut on one level, who do we 
think is going to pick up the cost of these items at the local level 
since we do not contribute much anymore? Local property tax, local 
sales tax, and local income tax will go up. We will provide Americans 
with a few bucks here, but we will take the money out of another pocket 
at the State and local level because the Governors and mayors are going 
to have to pick up these costs because we are not doing it.
  The Federal Government represents only about 10 percent of the total 
capital outlays for water and wastewater infrastructure. That is how 
much in 20 years we have declined in our participation. The architects 
of this bill would prefer we not pay anything. That is what they want. 
Clean water, obviously, affects the environment, public health, and the 
economy. Clean water supports a $50 billion recreational industry, $300 
billion in coastal tourism, $45 billion in annual commercial fishing, 
and a shellfishing industry.
  And we all know the Internet has dramatically altered how we live, 
work, gathering information, and we are all aware of the increasing 
importance of being digitally connected. While access has increased for 
all groups, there still exists a gap, or digital divide, between those 
Americans with access to technology and those without. Race, income, 
education, age, and location are all factors related to the level of 
Internet connectivity.
  As to the means to deploy this technology, once again, however, the 
infrastructure needed to extend access is lagging, desperately lagging 
in certain areas and among certain groups in this country.
  By reducing this tax cut, decreasing modestly for the most affluent, 
we can make a difference on closing the digital divide to see to it 
that every child in America will have the opportunity to access this 
modern technology that they will need to be productive citizens.
  Wastewater and telecommunications, are these not priorities issues as 
well? Don't they deserve the attention of this body? As we are about to 
give a tax cut of this magnitude, can we not modify it even slightly to 
make a difference for the people who would benefit as a result of 
improved water, wastewater, telecommunications, and schools? Does that 
not make America richer and wealthier, more solid as a nation in the 
years to come?
  Why crowd out everything here so that instead of the 75 percent we 
used to contribute to our local communities, we are down to 10, 9, 8, 
5, and down to 1 percent?
  Rural communities fall behind cities' and urban areas' broadband 
penetration, at only 7.3 percent for rural parts of America. This is 
not just cities we are talking about; rural communities suffer 
terribly.
  Large gaps in Internet access still remain among ethnic groups. The 
Internet has become a necessity. It will become even more so in the 
years ahead. If we don't make investments in the basic infrastructure, 
we will rue the day, in my view.
  The importance of our commitment to our Nation's infrastructure is 
highlighted by a recent visit I had with mayors from 60 of my cities. 
One mayor said it best when he said a cut in Federal taxes equals an 
increase in local taxes. Municipal governments are straining to find 
the resources for water treatment and school repairs. He asked, are we 
going to ignore what is happening in our communities for a huge tax cut 
for those who can afford it the most?
  In the tax bill before the Senate, everyone gets tax relief. I am not 
changing that. I especially appreciate what the most affluent have done 
since 1993 in contributing to reducing our Nation's debt. They should 
get tax relief. I don't join those who say there ought to be no tax 
relief for affluent Americans. They contribute. I suspect were they 
here in this Chamber and asked the question of whether or not to reduce 
the national debt and invest in the infrastructure of America by taking 
a modest tax cut, most affluent Americans would say: Do it, do it.
  The reason the wealthiest 1 percent of Americans pay more in taxes 
relative to other income groups is not that tax rates have increased, 
but rather that their before-tax incomes have increased by nearly 50 
percent between 1992 and 1998 as a result of wise decisions we made to 
reduce debt and to increase opportunity in this country. At the same 
time their incomes have risen dramatically, the overall Federal tax 
burden has dropped substantially.
  The bipartisan 1997 tax bill cut taxes on capital gains from 
investments, a major source of income for wealthy Americans. So the top 
1 percent have seen a drop in their average overall tax rates. The top 
400 wealthiest taxpayers, for instance, have seen a decrease in the 
average tax rates from 29 percent in 1993 to 22 percent in 1998--again, 
primarily as a result of the cut in the capital gains tax rates.
  I reject the argument, further, that the affluent are ready to riot 
over their taxes. I think the affluent are responsible citizens. I 
think they will be the first to say they live in the most wonderful 
nation on the face of this planet. Many came from poor families and 
created their wealth through hard work and sweat, ingenuity, and 
smarts. They tell you what they hope more for this country than 
anything else is to see to it that others have a similar opportunity. I 
don't think they are about to riot. They want to see the country well 
managed, well run. They want to see its economic policies reflect the 
kind of society that gives people that opportunity. When schools are 
falling apart, with 42 percent of schools being built more than 30 or 
40 years ago, when our water and wastewater systems are falling apart, 
when we have to write a check each year for $220 billion in interest 
payments, affluent, responsible Americans would say, bring down that 
national debt and invest in the infrastructure of America. Yes, they 
will give you a tax cut, as well, in addition to what is being received 
in the cuts of the capital gains taxes.
  I hope to adopt this amendment.
  I mentioned earlier the estate tax. I don't disagree we need estate 
tax relief. But to eliminate it entirely? What that costs over 10 years 
of this bill is $660 billion a year, for 49,000 Americans. That is who 
gets saved by this--the 49,000 most affluent Americans. The difference 
over 10 years is $660 billion. Can we not just modify the estate tax, 
reduce the size of the tax cut by a very small amount, and make a huge 
difference in the national debt of the country and the infrastructure 
needs?
  Mr. President, 49,000 Americans, 980 in my State alone--that is it--
out of 3.5

[[Page 8621]]

million people who will benefit with the complete repeal of the estate 
tax. And we can't find the resources, we can't modify that to make the 
difference? In Connecticut, 980 people resulted in estate tax liability 
out of 3.5 million. I hope my colleagues will consider this amendment 
as a modest change in the proposal.
  I add my friend and colleague from Nevada, Senator Reid, as a 
cosponsor of this amendment.
  This is modest change in the amount of tax rates for the most 
affluent, through modifying the estate tax repeal and investing those 
resources in bringing down that national debt and investing in the 
nontransportation infrastructure needs of America, is what this is 
about. We will not have the economy grow if the national debt goes 
climbing up again and if the infrastructure is falling apart. That is 
why I put these two issues together. In the absence of both of these, 
good infrastructure and reducing debt, both personally as well as 
nationally, it is hard to imagine how this economy will see a brighter 
day if we adopt this bill without these provisions added to it.
  I withhold the remainder of my time.
  The PRESIDING OFFICER. Without objection, the Senator is added as a 
cosponsor.
  Mr. GRASSLEY. I yield myself such time as I consume.
  Looking at the amendment being introduced, the purpose of it is to 
make changes in the bill to reflect changes in the rate of taxation, 
and particularly heavy emphasis upon change in the estate tax 
provisions, so that savings can be realized to be used for Federal debt 
reduction and improvement to the Nation's transportation 
infrastructure.
  I know what the Senator's intent is: to save money so it can be used 
for the Nation's nontransportation infrastructure. But there is nothing 
in his amendment that directs the money in that direction. So when it 
is finally said and done as far as public policy is concerned, this 
amendment is just to change very dramatically the higher rate reduction 
that we have in the bill and to more or less decimate the estate tax 
provisions of our bill.
  I have to confess I do not know what it is to be born rich and live 
rich. There seems to be a compulsion on the part of people in this 
body, for those who are born rich, live rich, and die rich, to want 
them to contribute more to the Federal Treasury than other people who 
do not fit into that category. There is an effort to nick those rich 
people for more money when they die.
  I confess not to understand what it is to be born rich and live rich. 
So I do not come from the perspective that there is all this money out 
there that people are just willing to contribute to the Federal 
Treasury when they die. I do not understand the people who get a big 
joy out of taxing those people. But if they get a big joy out of it, 
OK. If they want to establish a category of people who are forever 
filthy rich and go after them, that might be all right.
  But most of the people I think about when I talk about doing away 
with the death tax are people who have lived very moderately throughout 
their lives and come to a point, probably because they are involved in 
farms and small businesses and you are just forced to reinvest so much, 
put all of your earnings back into the business so you can grow and 
just be competitive. That is particularly true in farming.
  If you started farming years ago with 80 acres and you are only 
farming 80 acres today, you aren't going to be successful unless you 
have a job in town. So you have to keep investing in machinery, be more 
productive, buy more land, et cetera. That is the sort of person I 
think of, one who has lived moderately and maybe dies fairly well off. 
The point is, when they live that way, they want to leave that 
business, those resources, to their kids. They do not want to be hit 
with a death tax after they have paid taxes all their lives.
  I gave the example once before. And I am raising the issue of 
fairness of a death tax versus those who do not pay it. You have two 
people who can make exactly the same amount of money throughout their 
lifetimes. Both of them obviously are going to pay income tax when they 
make it. But this person over here is going to live very moderately and 
miserly and maybe leave an estate of $5 million. Then when he dies, his 
estate, because he lived in so miserly a manner, is going to pay a big 
reward to the Federal Treasury.
  You have the other person over here living it up throughout his life, 
womanizing, drinking it up--you know, all the things that are dealt 
with in the material world--who does not leave a penny. This person 
gets taxed once when he makes it and spends it tomorrow. This person 
gets taxed when he makes it, saves it, and invests it in a business and 
wants to leave it to his kids, and then he is taxed again when he dies. 
What is fair about that?
  Those are the people I am worried about. I am not worried about the 
filthy rich who are born rich, live rich, and die rich. So I have been 
a long-time advocate that no American family should be forced to pay up 
to 60 percent of their savings, their business, or their family farm in 
taxes when they die. No taxpayer should be visited by the undertaker 
and the tax collector at the same time.
  We have now before us an opportunity to do something about that, to 
help those families that are being crushed under the expensive 
responsibilities of estate tax planning and estate taxes.
  Let me suggest probably the money that is wasted in this country on 
estate tax planning is the biggest waste of the productive resources in 
this country that you can have. They are even worse than the estate 
tax, I believe. People who have worked hard, who are faced with the 
estate tax, who want to leave some money to their kids, just spend 
wasteful amounts of money on estate planning in order to legally avoid 
paying estate tax. Wouldn't it be better if those estate planners, 
those insurance salesmen, those lawyers, were doing something 
productive, contributing something to the economy as opposed to this 
nonproductive effort of estate planning?
  When we do away with the estate tax, these folks will be able to do 
something productive.
  There are those in the Senate who want you to believe we are spending 
$145 billion for the benefit of just 45,000 people; that it is just 
45,000 people paying estate tax. I want to tell the Senator from 
Connecticut I do not believe that is true. There may have been 45,000 
estate tax returns that had checks attached. But that is no way to 
measure the impact on the American taxpayer.
  In preparation for the RELIEF Act I had the opportunity to review 
1999 Internal Revenue statistics regarding estate tax returns. Those 
statistics, frankly, were outrageous. In the Federal Government's 
attempt to enforce its version of social responsibility by this huge 
tax rate of 55 to 60 percent on the estate tax, taken from the family's 
net wealth on the death of a loved one, it has cast a net. There is a 
net cast by that one involuntary action of death into thousands of 
homes in its attempt to capture a few so-called rich families.
  In 1999, there were only 577 people who died in the United States 
with gross estates greater than $20 million in value. But 104,000 
families were affected by the estate tax requirements.
  Let's get this straight: 577 people died with estates over $20 
million, but 104,000 families were affected by these estate tax 
requirements. In search of this supposed social justice, to take 55 
percent of a family's lifetime efforts to contribute to the Treasury's 
general fund, we have upset lives in over 100,000 families. Is that 
truly a ratio with which we are willing to live? Is that fair? I cannot 
imagine supporting this amendment. Thousands of American taxpayers who 
deserve immediate estate tax reform are being cast aside by this 
amendment.
  On the backs of the American taxpayers, the Senator from Connecticut 
has proposed funding nontransportation infrastructure. That is an 
interesting thought--nontransportation infrastructure. In order to 
achieve that goal, he is willing to wait until the year 2010 to 
increase the unified credit to just $2 million.
  That is 30 years from the last time it was increased, 1981. That $2 
million, 30

[[Page 8622]]

years later, would not even be worth what the unified credit was in 
1981. That means for the first time, American taxpayers who are good 
Americans, who saved and invested in savings accounts and stocks and 
bonds, will be treated equally with all other taxpayers.
  It means that for the first time American farm families and the 
owners of small businesses will not have to jump through hoops, hold 
their breath, and pray that they planned their estate just right, 
subject to audit, in order to get the full use of their unified credit.
  In addition, Senator Dodd gives no estate tax rate relief. The 
bipartisan RELIEF Act before us does. We immediately drop the top rate 
to 50 percent. In the year 2007, we reduce the top rate to 45 percent.
  After all is said and done, people are going to be hit with the death 
tax at a higher rate of taxation than when they were living, which the 
top rate today is 39.8 percent.
  So for the first time in history, an American family can exempt $8 
million from the death tax--that is in the bill before us--by the year 
2007.
  In this bipartisan RELIEF Act, we have chosen to treat all American 
taxpayers equally, and give a unified credit that everyone can use, 
unlike the proposed amendment by the Senator from Connecticut. In 
addition to stealing the American taxpayers' increase in the unified 
credit, offered in this amendment is a paltry increase in the complex 
qualified family-owned business deduction. That would be increased by a 
mere $75,000. And that would not happen until the year 2006.
  I think all this flies in the face of the American taxpayer. This is 
an overwhelmingly complex additional deduction of $75 which, quite 
frankly, turns out to be meaningless--in fact, so meaningless that I am 
ashamed I had a hand in writing this about 2 or 3 years ago when it was 
written. I would have to suggest to the Senator from Connecticut that 
if he would read again, as I have been forced to read, the Internal 
Revenue Code on these provisions, he would find that when you get 
through these complex provisions, if typed in its entirety, it is over 
20 pages long, and it is full of requirements, restrictions, cross-
references that boggle the minds of accountants and the legal 
profession and the American taxpayers.



  I think we need to be honest with the American public and give them a 
true death tax break that everyone can use. This amendment will detract 
from that tremendously. I think our bill does a pretty good job of it, 
not as good of a job as I would like but within the context of a 
bipartisan compromise and within the context of the budget restrictions 
we are operating under, this is the best we can do.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. BAUCUS. I yield myself about 5 minutes.
  The PRESIDING OFFICER. The Senator is recognized.
  Mr. BAUCUS. Mr. President, I would like to address two arguments that 
have been made against the distributional benefits of this bill.
  First, opponents of the bill have made the argument that it does 
little to alleviate the payroll tax burden, which is the largest tax 
burden for many middle- and low-income Americans. It is true that about 
80 percent of Americans pay more in payroll taxes than they do in 
income taxes. It is also true that for about 20 percent of Americans 
their sole Federal tax liability burden is the payroll tax; it is not 
income tax.
  The argument that is made is that this bill does nothing for those 
people whose principal Federal tax is the payroll tax. That argument is 
simply incorrect. In fact, the bill before us makes three important 
changes that directly offset the impact of payroll taxes so there are 
three measures in this bill which reduce payroll taxes for a 
significant number of Americans.
  First, we amend the child credit to make it significantly more 
refundable; that is, after you have used up your child credit against 
your income taxes, if there is still more child credit available, we 
say: Americans, if you are in that situation, you get a check from 
Uncle Sam.
  We also reduce the marriage penalty under the earned-income credit. 
It is a very important provision which makes the so-called marriage 
penalty much less of a burden for low-income families. The Earned 
Income Tax Credit allows people with insufficient income tax liability 
to still get the benefit of a tax cut by allowing a credit against 
their payroll taxes.
  Third, we simplify the earned-income tax credit. That is no small 
matter. Some people might argue that simplification does not have much 
effect. But I strongly disagree. This bill contains major 
simplifications to definitions and other provisions which will be a 
very significant aid to lower income people, allowing them to better 
utilize the earned-income tax credit. This means they will have more 
ability, again, to offset against payroll taxes.
  Put all these together and the bill before us includes about $109 
billion in outlays over the 10-year period of this bill. In other 
words, about $109 billion is directed exclusively for offsetting 
payroll taxes.
  The second argument against this bill's distributional effects is 
also incorrect. This argument is that the tax cuts in the bill are 
regressive because they give a relatively larger cut to those at the 
very highest income levels. Specifically, it is argued that the bill 
gives the top 1 percent highest income taxpayers a whopping 33.5 
percent of the tax cuts.
  Let's look more closely at that argument and deal with all the cards 
on the table. The above conclusion can only be reached if you include 
the distributional effects of the estate tax provisions.
  But there are two problems with that analysis. First, there is an 
ongoing dispute on how to distribute the impact of the estate taxes 
across income classes. This is because the estate tax is based on the 
size of the estate of the decedent there is no way to calculate the 
wealth of those who inherit the assets. In fact, the Joint Tax 
Committee does not do estate tax distributional tables for that exact 
reason.
  There are organizations in this city and in this country that do make 
those calculations. I have no objection to their trying, but we must 
remember that these calculations are based on assumptions that are hard 
to pin down. They are doing as good a job as they can, but they are 
trying to calculate something that our official scorekeepers refuse to 
estimate. But even assuming that the downtown organizations that make 
that analysis are correct, let's think a little more about it.
  Virtually all Senators in this body support either ``reform'' or 
repeal of the Federal estate tax. I believe it is almost impossible to 
support reform or repeal of the estate tax and then attack the 
distribution of tax benefits in the bill as regressive.
  Why do I say that? Because if you set aside the estate tax 
provisions--just take them off the table and deal with everything else 
in this bill--if you look only at the income and payroll tax effects, 
this bill is quite progressive compared with current law--not 
regressive, but progressive.
  Let's take a look at the numbers. If we set aside the estate tax 
provisions what do we find? Let's look at the top 1 percent of 
taxpayers; that is, those with an annual income of $373,000 or more.
  This covers the top 1 percent of taxpayers in America. Under current 
law, those Americans pay 26 percent of all Federal taxes. That doesn't 
just cover income taxes, it includes all Federal taxes, including 
payroll taxes, excise taxes, and even estate taxes. But if you set 
aside the estate tax provisions in this bill, these taxpayers do not 
get 33.5 percent of the tax cuts, as alleged. Instead, they get 19 
percent, only 19 percent of the benefits, even though they pay 26 
percent of all Federal taxes. People with lower incomes get much more 
under this bill than they do compared to current law.
  Let's take another look. According to the Joint Tax Committee, 
taxpayers with an income of $200,000 or more, that is the top 4 or 5 
percent of all taxpayers today, pay about 32 percent of all Federal 
taxes. Under our bill, these

[[Page 8623]]

taxpayers get about 22.5 percent of the tax cuts, again, a smaller 
share of tax cuts than the share of taxes they pay under current law.
  What is the point of all this? Basically I am saying that if you look 
at the whole bill, then this bill is very progressive with the 
exception of the estate tax provisions. That is, higher income people 
get a smaller proportion of the tax benefits when compared with current 
law and everybody below roughly $100,000 will get a greater proportion 
of tax benefits when compared with current law.
  As for the estate tax provisions, unfortunately, a number of my 
colleagues have been trying to have it both ways. They claim the bill 
is regressive, when its most regressive features are the estate tax 
provisions, but at the same time they push to have the unified credit 
go up to higher and higher numbers.
  I have heard Senators on the floor who roundly criticized this bill 
privately say: Gee, Max, can we raise the unified credit up to $6, $7, 
even $10 million?
  I don't think you can have it both ways.
  Mr. DORGAN. Will the Senator from Montana yield for a question?
  Mr. BAUCUS. Certainly.
  Mr. DORGAN. Does the Senator from Montana support complete repeal of 
the estate tax?
  Mr. BAUCUS. No, he does not.
  Mr. DORGAN. The only point I make is, talking about this bill as 
progressive, by saying if you don't consider the estate tax, it is a 
progressive bill.
  Mr. BAUCUS. If I may respond, by far most of the cost of the estate 
tax provisions in the bill, in the current 10 years which the bill 
covers, results from raising the unified credit. Only a very small 
portion results from repeal of the estate tax. It is also important to 
recall this whole bill is sunsetted after 10 years. And so the claims 
of $600, $900 billion in the second 10 years are interesting, if you 
project current law out that far, but not particularly relevant since 
the bill terminates at the end of 2011 and all of its provisions will 
need to be reinstated.
  Mr. DORGAN. If I might further inquire, I admit certain changes have 
occurred that have made this bill better for lower and middle-income 
groups more recently. But my guess is the Senator from Montana is not 
saying repeal of the estate tax is not in this bill, even though he 
says it is sunsetted. This bill repeals the estate tax in the last 
year; is that correct?
  Mr. BAUCUS. The Senator is absolutely correct. Personally, I do not 
support full repeal of the estate tax. I support reforming the tax so 
it protects our family farms, ranches and other businesses. I 
understand the Senator is going to offer an amendment later today that 
will eliminate full repeal, while addressing the concerns of family 
businesses. I intend to support that amendment.
  Mr. DORGAN. Further inquiring, I do intend to offer an amendment 
following the amendment offered by Senator Kyl today. I might say that, 
while I support reform and have long supported reform of the estate 
tax, I do not support total repeal of the estate tax for reasons which 
I will describe later.
  Mr. BAUCUS. Mr. President, because my time is limited I would like to 
get back to the point I was making originally about the distribution of 
this bill.
  As this chart behind me shows, for taxpayers with incomes of $25,000 
or less, $50,000 or less, $75,000 or less, or $100,000 or less, this 
bill, which is the red, shows that a greater proportion of tax 
reductions apply to those taxpayers. For those taxpayers with incomes 
of $100,000 to $200,000 or taxpayers with incomes above $200,000, 
again, the red shows they receive less in tax benefits compared with 
the administration's plan--again showing that this bill is progressive. 
That is, compared with current law and compared with the Bush plan, 
this bill does give more tax reductions percentage-wise to people with 
incomes under $100,000, and those at $100,000 or more will get less in 
tax reductions than the Bush plan or current law. It does show that 
this is a progressive bill.
  I yield the floor.
  Mr. DODD. Mr. President, may I inquire how much time remains?
  The PRESIDING OFFICER. The Senator from Connecticut has 3 minutes 25 
seconds remaining; the managers, 1 minute 41 seconds.
  Mr. DODD. In the 3 minutes, I want to make a couple of corrections to 
some of the statements made about the estate tax.
  First, I will tell the Senate exactly how many people paid the estate 
tax liability: 49,870 people had, in 1999, Federal estate tax 
liability. That is 2 percent of the adult deaths in the country. When 
it comes to family farms, the New York Times recently reported that an 
Iowa State University economist had not been able to find a single 
documented example, not a single documented example of a family farm 
lost to the estate tax. Nor could the American Farm Bureau Federation 
find one example, not one. So when I hear these nostalgic, mythical 
arguments about the family farm losing out to the estate tax, that is 
what it is. It is mythology, unless you are the King Ranch in Texas 
maybe.
  The idea that small family farms lose is just not borne out by the 
statistics or facts. The fact is, there is a significant revenue loss. 
My colleagues may not want to talk about it, but this bill also 
backloads the estate tax. It doesn't become fully effective until 2011. 
This hides the true cost of estate tax repeal.
  If you want to vote for $662 billion in tax breaks for 49,000 people, 
then vote against the amendment. But then you explain that the next 
time we try to fix the water system or a sewer system or repair a 
school or reduce the national debt. The family farmer suffered? Name 
one. The Farm Bureau couldn't name one. The New York Times couldn't 
find one. Iowa State University couldn't find one.
  This is a joke that is going on here. It is ridiculous. Listen to 
some of the most affluent Americans. Listen to George Soros, who talked 
about the estate tax and how ridiculous this is. Listen to Warren 
Buffett, Bill Gates, John Kluge, they will tell you this is a myth, 
that it is ridiculous talking about death taxes, $662 billion over 10 
years. That is real money. That is money that could make a difference 
in paying down the debt, in investing in the infrastructure of America.
  By taking the top rate down, instead of to 36 percent but to 38 
percent, is that really an outrageous request to make for a modest 
investment in a downpayment on reducing the national debt and investing 
in the nontransportation infrastructure of America? I don't think so, 
Bill Gates doesn't think so, George Soros doesn't think so, Warren 
Buffett doesn't think so, John Kluge doesn't think so.
  I hope the amendment will be adopted. Maybe we will have a little 
more balance in this bill. But repealing the estate tax to affect a 
fraction of the population in this country, some of the most affluent 
people in the land--to their credit, some of the most affluent people 
think this is wrong.
  Mr. President, I ask for the yeas and nays on the amendment.
  The PRESIDING OFFICER. Is there a sufficient second?
  At the moment, there is not a sufficient second.
  The Senator from Arizona.
  Mr. KYL. Might I, on behalf of the Republican majority, pose a 
question to the Chair?
  The PRESIDING OFFICER. The Senator will state it.
  Mr. KYL. Mr. President, how much time does the chairman of the 
committee, the Senator from Iowa, have remaining on the Republican 
side?
  The PRESIDING OFFICER. A minute and a half.
  Mr. KYL. Might I be recognized to take that time in response to the 
Senator from Connecticut?
  The PRESIDING OFFICER. The Senator from Arizona is recognized.
  Mr. KYL. Then I will be happy to have a rollcall at that point.
  This is a very deceptive amendment. There is absolutely nothing in 
this amendment that calls for any money to be spent on paying down the 
national debt or applying any money to

[[Page 8624]]

the infrastructure of the United States. Only in the title does the 
amendment say that the purpose is to allow money to be spent for this. 
It says ``may be used'' for Federal debt reduction and improvements to 
the Nation's infrastructure. What it does is repeal almost all of the 
benefits in this bill relating to the repeal and reform of the estate 
tax and takes away all but 1 percent of the top marginal rate reduction 
called for in the bill.
  When the Senator from Connecticut claims that the repeal of the 
estate tax in this bill is going to cost $662 billion, he is 
absolutely, totally wrong. According to Joint Tax, the cost of the 
estate tax repeal and reform measures in this bill is $145 billion, 
period, not $662 billion. Moreover, it is a fallacy to say that few 
will benefit. While it is true that relatively few estates pay the tax, 
hundreds of thousands of people will benefit by the reforms in the 
estate tax that are included in this legislation: The rate reductions; 
the increase in the amount of unified credit; and, in the 10th year, 
the repeal of the tax.
  Mr. DODD. Will my colleague yield?
  The PRESIDING OFFICER. All time on the amendment has expired.
  Mr. DODD. I ask unanimous consent for 30 seconds.
  The PRESIDING OFFICER. Is there objection?
  Mr. KYL. Mr. President, I will be happy to take 30 seconds when he is 
done, and I will not object.
  Mr. DODD. Mr. President, the Joint Committee on Taxation estimated 
that the House version, H.R. 8, would cost $186 billion between 2002 
and 2011, less than one-third of the 10-year cost they estimated for 
immediate repeal, $662 billion--the Joint Committee on Taxation.
  Mr. KYL. That is right. The immediate repeal--that was my original 
bill--would cost $662 billion. But we are not immediately repealing. 
The Senator should consult the bill. The estate tax is not eliminated 
until the 10th and final year. That elimination is $30 billion of the 
$145 billion of the total cost of reforming and finally repealing the 
estate tax. It is not repealed in the first year, not until the 10th 
year.
  The PRESIDING OFFICER. All time has expired.
  Mr. DODD. I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The Senator from Arizona.


                           Amendment No. 691

  Mr. KYL. Mr. President, I send amendment No. 691 to the desk. It is 
the tuition scholarship tax credit.
  The PRESIDING OFFICER. The clerk will report.
  The senior assistant bill clerk read as follows:

       The Senator from Arizona [Mr. Kyl] proposes an amendment 
     numbered 691.

  Mr. KYL. Mr. President, I ask unanimous consent that further reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

(Purpose: To amend the Internal Revenue Code of 1986 to allow a credit 
against income tax for contributions to charitable organizations which 
 provide scholarships for children to attend elementary and secondary 
                                schools)

       At the end of subtitle D of title IV, add the following:

     SEC. __. CREDIT FOR CONTRIBUTIONS TO CHARITABLE ORGANIZATIONS 
                   WHICH PROVIDE SCHOLARSHIPS FOR STUDENTS 
                   ATTENDING ELEMENTARY AND SECONDARY SCHOOLS.

       (a) In General.--Subpart B of part IV of subchapter A of 
     chapter 1 is amended by adding at the end the following new 
     section:

     ``SEC. 30B. CREDIT FOR CONTRIBUTIONS TO CHARITABLE 
                   ORGANIZATIONS WHICH PROVIDE SCHOLARSHIPS FOR 
                   STUDENTS ATTENDING ELEMENTARY AND SECONDARY 
                   SCHOOLS.

       ``(a) Allowance of Credit.--There shall be allowed as a 
     credit against the tax imposed by this chapter for the 
     taxable year an amount equal to the qualified charitable 
     contributions of the taxpayer for the taxable year.
       ``(b) Maximum Credit.--The credit allowed by subsection (a) 
     for any taxable year shall not exceed $250 ($500, in the case 
     of a joint return).
       ``(c) Qualified Charitable Contribution.--For purposes of 
     this section--
       ``(1) In general.--The term `qualified charitable 
     contribution' means, with respect to any taxable year, the 
     amount allowable as a deduction under section 170 (determined 
     without regard to subsection (d)(1)) for cash contributions 
     to a school tuition organization.
       ``(2) School tuition organization.--
       ``(A) In general.--The term `school tuition organization' 
     means any organization described in section 170(c)(2) if the 
     annual disbursements of the organization for elementary and 
     secondary school scholarships are normally not less than 90 
     percent of the sum of such organization's annual gross income 
     and contributions and gifts.
       ``(B) Elementary and secondary school scholarship.--The 
     term `elementary and secondary school scholarship' means any 
     scholarship excludable from gross income under section 117 
     for expenses related to education at or below the 12th grade.
       ``(d) Special Rules.--
       ``(1) Denial of double benefit.--No deduction shall be 
     allowed under this chapter for any contribution for which 
     credit is allowed under this section.
       ``(2) Application with other credits.--The credit allowable 
     under subsection (a) for any taxable year shall not exceed 
     the excess (if any) of--
       ``(A) the regular tax for the taxable year, reduced by the 
     sum of the credits allowable under subpart A and the 
     preceding sections of this subpart, over
       ``(B) the tentative minimum tax for the taxable year.
       ``(3) Controlled groups.--All persons who are treated as 
     one employer under subsection (a) or (b) of section 52 shall 
     be treated as 1 taxpayer for purposes of this section.
       ``(e) Election To Have Credit Not Apply.--A taxpayer may 
     elect to have this section not apply for any taxable year.''.
       (b) Clerical Amendment.--The table of sections for subpart 
     B of part IV of subchapter A of chapter 1 is amended by 
     adding at the end the following new item:

``Sec. 30B. Credit for contributions to charitable organizations which 
              provide scholarships for students attending elementary 
              and secondary schools.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

  Mr. KYL. Mr. President, I am offering this amendment because I 
believe our Tax Code must and can be reformed to address the urgent 
need to improve elementary and secondary education in our country.
  This tax bill takes a very important first step by allowing the 
Coverdell education IRAs to be used not only to facilitate savings for 
college education but for grades K through 12 as well.
  Many of us since 1997 have worked very hard to secure this reform. I 
am gratified that it will finally be accomplished. For that, by the 
way, special credit is due to my late colleague, Senator Paul 
Coverdell, as well as Senators Torricelli and Hutchinson of Arkansas, 
whom I am pleased to have as cosponsors of this amendment.
  While the administration of our schools is and should remain a local 
responsibility, we have a compelling national interest in improving the 
quality of K through 12 education. There are ways to do it without 
adding to the bureaucracy in Washington and without adding new 
mandates. It is a fact that America is currently not educating the 
workforce it needs for the economy of the 21st century. Raising overall 
achievement will enhance America's competitiveness.
  Congress has been compelled to authorize the issuance of hundreds of 
thousands of new visas for highly skilled temporary workers because it 
is a fact that not enough qualified American workers were available to 
fill new economy jobs. Unless we take action, this situation is 
unlikely to change. It is a fact that international tests reveal that 
American high school seniors rank 19th out of 21 industrialized nations 
in mathematics achievement and 16th out of 21 nations in science 
achievement.
  Ironically, this threat to our competitiveness is the result of our 
failure to apply the very principles undergirding our economy's success 
in the area of education. Our Nation has thrived because our leading 
industries and institutions have been challenged by constant pressure 
to improve and to innovate. The source of that pressure is vigorous 
competition among producers of a service or a good for the allegiance 
of their potential customers or consumers. So why not promote 
innovation by producers and choice for consumers in the field of 
education?

[[Page 8625]]

  The quasi-monopoly of public education today discourages this 
innovation, and the fact that funding is through tax dollars diminishes 
the choice option for all but the most wealthy. They have to go to 
schools where they are told. They can't direct their tax dollars to the 
school where they want to send their children.
  We must find a way to promote innovation and opportunity through 
greater choice for parents. Those are the concepts that have built this 
country through our great free market economic system, and it is the 
same concept that can improve our educational system for the 
competition that I spoke of earlier.
  Another problem with our education system is that too many of our 
children are literally being left behind. Thirty-seven percent of 
American fourth graders' tests show that they are essentially unable to 
read. For Hispanic fourth graders, the proportion is 58 percent, and 
for African-American fourth graders, it is 63 percent. That is 
intolerable.
  Since 1983, over 10 million Americans have reached the 12th grade 
without having to learn how to read at a basic level. Over 20 million 
have reached their senior year unable to do basic mathematics.
  As President Bush has repeatedly noted, far too many of America's 
most disadvantaged youngsters pass through public schools without 
receiving an adequate education. It is intolerable that millions of 
children are trapped in unsafe and failing schools.
  Parents should have a right in the United States of America to get 
the best education possible for their children as they see it, and the 
amendment I offer today will help secure that right.
  My amendment would provide a $250 tax credit, $500 for joint filers, 
to partially offset the cost of donations to tuition scholarship 
organizations. What are those? They are organizations that in the past 
have been primarily founded by business leaders that provide partial 
tuition scholarships to enable needy youngsters to attend a school of 
their family's choosing.
  The idea first came to light about a decade ago when the first one 
was founded in Indianapolis. Now there are more than 80 such programs 
serving more than 50,000 students nationwide.
  For families who benefit, these programs are a godsend. A study that 
was just released by the Kennedy School of Government found that 68 
percent of parents awarded scholarships are very satisfied with 
academics at their child's school compared with only 23 percent of 
parents not awarded scholarships.
  The problem is that demand for scholarships far outstrips supply, 
even though families must agree to contribute a significant portion of 
the total cost of tuition. The interesting thing is, that is especially 
the case at the lower end of the economic ladder.
  For example, in 1997, 1,000 partial tuition scholarships were offered 
to families in the District of Columbia. Nearly 8,000 applications were 
received, many of them from very low income families.
  Another example: In 1999, 1.5 million people applied for 40,000 
scholarships in a national lottery. Clearly, there is a huge unmet 
demand for this kind of assistance.
  In 1997, Arizona implemented an innovative plan to meet that demand 
in our State: A $500 tax credit to offset donations to organizations 
that provide tuition scholarships to elementary and secondary students. 
The results: Upwards of $40 million in donations to tuition scholarship 
organizations.
  The number of school tuition organizations operating in my State of 
Arizona is up from 2 to 33, and the organizations have a very wide 
range of emphasis and orientations. For example, they range from the 
Jewish Community Day School Scholarship Fund to the Fund for Native 
Scholarship Enrichment and Resources to the Foundation for Montessori 
Scholarships.
  Nearly 15,000 Arizona students, nearly all of them from disadvantaged 
backgrounds, have received this scholarship assistance.
  The interesting thing is while some have charged that the law was 
unconstitutional, particularly given the explicit prohibition on direct 
aid to parochial schools in Arizona's constitution, our State supreme 
court recognized that allowing taxpayers to use their own money to 
support education is a different matter and upheld the program. And 
consistent with previous holdings on the subject, the U.S. Supreme 
Court declined to review the decision.
  We have the answer to those who fear that Federal dollars going to 
vouchers which students would then take to the school of their choice 
could possibly be unconstitutional, though I do not think that is the 
case. But we have an answer to that concern.
  Here you do not have Federal dollars being given to students in the 
form of vouchers which are then taken to the school of their choice. 
Instead, what we provide is that if people want to contribute money to 
a duly qualifying scholarship fund, that scholarship fund can then give 
that scholarship to needy students and those students can take that 
scholarship to whatever school in which they want to be educated.
  The people who originally donate to the scholarship fund will be 
granted a tax credit by the U.S. Government. That is constitutional. It 
does not violate any notion of separation of church and state, and yet 
it permits people to help those who need the help the most to have the 
flexibility that only the most wealthy in our society have today: the 
ability to take their kids to the school of their choice.
  It is a much better way to resolve this problem of choice and 
innovation than, frankly, anybody has come up with to date because it 
meets the constitutional challenges; it involves the private sector; it 
involves personal donations; it does not have the Federal Government 
having to fund a large voucher program. Yet it gets the benefits to the 
students who need it the most, who are willing to contribute part of 
their own income to match that scholarship and pay the tuition at the 
school of their choice, be it a public school, a public charter school, 
a private school, a parochial school--it does not matter.
  In many cases, this money could even be used to pay the public school 
when one is able to transfer from one public school to another. It is 
neutral in this regard, as to whether it is used at public or nonpublic 
schools, and, as I said, it could even be used to offset tuition costs 
both at private schools and to help enroll a child in a school across a 
district boundary. This, in effect, creates a Federal credit comparable 
to those upheld in Arizona and to recently enacted provisions in other 
States, such as Pennsylvania and Florida, of which I am aware.
  It is interesting; the Joint Committee on Taxation has estimated this 
credit could cost the Federal Treasury $43.4 billion over a 10-year 
period. Think what a magnitude of difference that money would make in 
the lives of our children: $43 billion would finance 12.4 million 
$3,500 scholarships. Think of the opportunity provided to those 12.4 
million students with a $3,500 scholarship to take them out of the 
condition of education they are in now, out of the failing school, out 
of the unsafe school, and to a school where they can achieve, where 
they can learn, where they can be competitive, where they can learn 
their full potential.
  I close with this point. I have said many times that if we can get 
education right, almost everything else in this country will follow. 
Probably all of my 99 colleagues would agree with that general 
proposition. If we can get education in this country right, everything 
else follows. By ``we,'' I do not just mean the Federal Government. In 
fact, I mean primarily the parents and local school folks.
  First, it will help people realize their full potential.
  Second, it will make them more qualified to compete for the kinds of 
jobs that are going to exist in the future.
  Third, it will help our Nation compete. We are going to need to 
compete in a world environment.
  Fourth, it is going to make us more secure because we are going to 
have the kind of young students who can invent the things that are 
going to help

[[Page 8626]]

us keep our technological edge when it comes to national security.
  Fifth, it is going to make us better citizens.
  I have been somewhat appalled at what some of our schools do not 
teach about the history of this great country of ours, about the 
foundation for the self-governance we have, about the need for people, 
especially young people, to participate in our democratic Republic. I 
fear that generations of Americans are growing up not being taught the 
fundamentals of our society, our Government, and our free-market system 
that we were taught, and I think fairly well. People such as the 
Presiding Officer have helped to create wealth to create jobs, to help 
turn this country into the great economic engine it is. People in 
public life have also helped Americans realize the stake they have in 
self-governing.
  If we go a couple generations without teaching our children 
accurately and adequately in subjects from math and reading to history 
to government to economics and all the other subjects that students in 
this complex world have to master, then we are not going to progress as 
a nation and be the leading superpower and the leader of the world we 
are today, not just in economic terms but in terms of human rights, 
democratic principles, and other societal values, as well as the 
technological values I spoke of earlier.
  If we get education right, we can flourish in all of these areas, and 
if we stay 19 out of 21 on these tests, then Americans are not going to 
be as well educated and we will be overtaken by other nations.
  Is it all bad we would be ``overtaken''? Not necessarily, if other 
nations are putting their productive capabilities into the same things 
the United States has, but we have never won a war without turning over 
to the vanquished the territory we took.
  We have led the world in foreign aid and assistance. We have led the 
world in our insistence on human rights. In other words, America stands 
for what is good on this Earth, and for us to continue to be the leader 
of the world to promote these values requires an educated citizenry, a 
citizenry that will be educated and committed to these ideals, to these 
propositions.
  We cannot sustain that kind of education with the system we have 
today. The scholarship tuition credits I am proposing with this 
amendment will enable parents to allow their children to be educated in 
the very best schools for those students and to enable them to escape 
the kind of system we have today to one where each child can grow to 
their full potential. We must demand nothing less of our system.
  The final point is, if children are able to take scholarship tuition 
money to the school of their choice, the school from which they left 
will have a much greater incentive to improve than is the case today. 
We are talking about improvement of all schools, not just a few.
  This is an idea whose time has come, an idea we can support through a 
tax credit, through this bill before the Senate today. I hope even 
though there may not be adequate support for this when we vote on it 
tonight because of the opening of the debate on the subject, we will be 
able to promote this idea in ways that will enable it to bear fruit in 
the days and weeks to come. This is an amendment Congress needs to 
pass. It is a tax credit the Federal Government needs to provide for an 
educational benefit that the children of the country need to have.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, I yield myself 1 minute.
  I appreciate the Senator's amendment. He seeks to help encourage 
charitable giving for scholarships, a very worthy cause. Obviously, it 
is an idea that deserves to be debated and to be looked at carefully. 
Unfortunately, it falls outside the scope of the RELIEF act. I hope the 
Senator and I can work to have the Finance Committee consider a 
charitable bill down the road.
  Before I close, I thank the Senator for his good work on the Senate 
Finance Committee. He is a new member of the committee. The committee 
has greatly benefited from his energy and ideas. The people of Arizona 
are fortunate to have his service on the Finance Committee.
  I yield the floor.
  Mr. BAUCUS. Mr. President, I yield to my good friend from New Mexico.
  Mr. BINGAMAN. I speak in opposition to the amendment very briefly. 
The amendment of the Senator from Arizona is essentially a somewhat 
indirect way to provide Federal funding for private schools and 
parochial schools. That is exactly what is involved. It is a tax credit 
of $250 or up to $500 per couple which is available to any taxpayer who 
wants to contribute to one of these organizations that provide 
scholarships to people who go to schools and charge tuition. The 
schools that charge tuition are the private schools in this country, 
the parochial schools. Many of them do an excellent job. Clearly, they 
contribute a tremendous amount to our country.
  We do not have the votes in the Senate, and I do not support direct 
appropriations to private and parochial schools. That has not been the 
tradition in our country. It is generally considered contrary to our 
Constitution. The Government has stayed out of the business of funding 
the private elementary and secondary schools. What we are saying is we 
will not appropriate money directly to those schools, but we will give 
each taxpayer a $250 credit if they will give that $250 to the private 
school. That, to me, seems to be a pretty direct way of providing 
Federal support for private and parochial schools.
  Private and parochial schools do a tremendous job in educating young 
people. I support the continuation and the success of our private and 
parochial schools in the country. We have many in my home State that do 
an excellent job. But we have a limited amount of Federal tax dollars 
that we can commit to education. We have had many votes in the Senate 
and we will have more tonight that try to ensure that adequate money is 
available for public education in the country. I think while all 
Members generally agree we are not providing enough funds for public 
education, it would be foolhardy, at the same time we cannot afford to 
provide what we want for public education, to turn around and say, OK, 
we will not appropriate it directly to private education, but we will 
give this tax credit to anyone who wants to contribute.
  It is a dollar-for-dollar tax credit, not something where the Federal 
Government pays part of what someone contributes to the private school. 
This is a tax credit where the Federal Government pays every single 
dollar that a person or couple contributes to the private school, up to 
$500 in the case of a couple. It is a very expensive proposal; $43 
billion is the estimate from the Joint Tax Committee. That is an 
expensive commitment of funds. Frankly, it is one I would be willing to 
make if the money was going to the public school system to strengthen 
our public schools. I think that would be a good investment of our 
dollars. I do not think it is smart when we are unable to make that 
commitment of an additional $43 billion to the public schools to be 
turning around and saying we will go ahead and commit that amount of 
Federal expenditure for the private schools in this indirect way.
  I hope my colleagues will see this is not good policy. This is not 
the way in which to proceed. This is something which has some 
meritorious motives behind it, but clearly we should be doing all we 
can to strengthen our public school system. This is a way of 
essentially taking resources that might otherwise be available for the 
public schools and diverting them into the private schools which I 
think would be a mistake at this time in our history.
  Mr. GRASSLEY. For Senator Kyl, Mr. President, we will yield back his 
remaining time.
  Mr. BAUCUS. The same is true for our side. We yield back the 
remainder of our time.
  The PRESIDING OFFICER (Mr. Corzine). All time is now yielded back.


                           Amendment No. 713

  Mr. DORGAN. Mr. President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.

[[Page 8627]]

  The assistant legislative clerk read as follows:

       The Senator from North Dakota [Mr. Dorgan], proposes an 
     amendment numbered 713.

  Mr. DORGAN. Mr. President, I ask unanimous consent that the reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

(Purpose: Replacing the estate tax repeal with a phased-in increase in 
the exemption amount to $4,000,000, an unlimited qualified family-owned 
 business exclusion beginning in 2003, and a reduction in the top rate 
                             to 45 percent)

       On page 63, beginning with line 4, strike all through page 
     70, line 20, and insert:

          Subtitle A--Reductions of Estate and Gift Tax Rates

     SEC. 501. REDUCTIONS OF ESTATE AND GIFT TAX RATES.

       (a) Maximum Rate of Tax Reduced.--
       (1) Reduction to 53%.--The table contained in section 
     2001(c)(1) is amended by striking the highest bracket and 
     inserting the following:

$1,025,800, plus 53% of the excess over $2,500,000.''..................

       (2) Reduction to 47%.--The table contained in section 
     2001(c)(1), as amended by paragraph (1), is amended by 
     striking the two highest brackets and inserting the 
     following:

$780,800, plus 47% of the excess over $2,000,000.''....................

       (3) Reduction to 45%.--The table contained in section 
     2001(c)(1), as amended by paragraphs (1) and (2), is amended 
     by striking the two highest brackets and inserting the 
     following:

$555,800, plus 45% of the excess over $1,500,000.''....................

       (b) Repeal of Phaseout of Graduated Rates.--Subsection (c) 
     of section 2001 is amended by striking paragraph (2).
       (c) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to estates of decedents dying, and gifts made, after 
     December 31, 2001.
       (2) Subsection (a)(2).--The amendment made by subsection 
     (a)(2) shall apply to estates of decedents dying, and gifts 
     made, after December 31, 2005.
       (3) Subsection (a)(3).--The amendments made by subsection 
     (a)(3) shall apply to estates of decedents dying, and gifts 
     made, after December 31, 2009.

               Subtitle B--Increase in Exemption Amounts

     SEC. 511. INCREASE IN EXEMPTION EQUIVALENT OF UNIFIED CREDIT 
                   AND LIFETIME GIFTS EXEMPTION.

       (a) In General.--Subsection (c) of section 2010 (relating 
     to applicable credit amount) is amended by striking the table 
     and inserting the following new table:

``In the case of estates of decedentThe applicable exclusion amount is:
      2002 through 2006.....................................$1,000,000 
      2007 and 2008.........................................$1,250,000 
      2009 and 2010.........................................$1,500,000 
      2011 and thereafter................................$4,000,000.''.

       (b) Lifetime Gift Exemption Increased to $1,000,000.--
     Paragraph (1) of section 2505(a) (relating to unified credit 
     against gift tax) is amended by inserting ``(determined as if 
     the applicable exclusion amount were $1,000,000)'' after 
     ``calendar year''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying, and gifts made, 
     after December 31, 2001.

     SEC. 512. UNLIMITED QUALIFIED FAMILY-OWNED BUSINESS INTEREST 
                   DEDUCTION.

       (a) In General.--Section 2057(a) (relating to family-owned 
     business interests) is amended to read as follows:
       ``(a) General Rule.--For purposes of the tax imposed by 
     section 2001, in the case of an estate of a decedent to which 
     this section applies, the value of the taxable estate shall 
     be determined by deducting from the value of the gross estate 
     the adjusted value of the qualified family-owned business 
     interests of the decedent which are described in subsection 
     (b)(2).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2002.
       On page 79, beginning with line 7, strike all through page 
     106, line 6.

  Mr. DORGAN. Mr. President, let me describe briefly what this 
amendment does. This amendment deals with the estate tax. I have 
listened intensely to the debate on the floor of the Senate. Much of 
the debate on the estate tax has been about Senators' concerns with 
family farms and small businesses and with parents not being able to 
pass on those enterprises to their children to operate.
  I, too, am concerned about this issue and believe that the estate tax 
should not interrupt the transfer of a family business to qualified 
descendants who want to continue to operate the business. We should not 
do that. A Main Street business in Ames, IA; or Butte, MT; or Regent, 
ND; ought not suffer the death of an owner and then a crippling estate 
tax obligation that prevents the owner's children from being able to 
continue to run that business. We don't want the surviving children of 
that family business to inherit both the business and a crippling 
estate tax debt.
  I understand that problem. And I believe we should do something about 
it. That's why my legislation would exempt from the estate tax family-
owned businesses that are passed on to qualified heirs who continue to 
operate those businesses. My amendment would do that by the year 2003. 
If the family enterprise is passed on to the qualified heir or lineal 
descendent, and it continues to be operated as outlined in my 
legislation, it will be totally exempt from the estate tax. So the next 
time I hear senators stand up and say that this is their goal, I will 
say, if this is your goal, then vote for my amendment because the 
estate tax proposal now on the floor of the Senate doesn't do this 
until a long time down the road.
  My proposal exempts all family-owned and operated businesses and 
farms that are passed on to the next generation by 2003. End of 
discussion. It is done and done far more quickly than by the bill now 
being considered by the Senate.
  My legislation also includes a $4 million unified estate tax credit 
that will be available to everyone in 10 years, or $8 million for a 
husband and wife. With respect to the estate tax, what I am saying is: 
Yes, let's agree that we will exempt family businesses and family 
farms. Yes, let's agree that we will increase the unified credit in the 
estate tax.
  The only question that remains then is: Should we completely repeal 
the estate tax? My answer is no. Should we repeal the estate tax for 
those whose estates are worth more than $8 million? My answer is no. 
Here's why.
  I have heard lots of discussion today about the so-called death tax. 
And all of us know--we have read the news stories--that the term 
``death tax'' was concocted by a pollster. They used focus groups and 
found that their purposes were better served by calling this the death 
tax, not the estate tax. But, of course, dead people do not pay taxes. 
We know that. Wealthy heirs pay taxes. Trust fund babies pay taxes.
  The ancient Egyptians thought you could take it with you when you 
died. There are some demonstrations of that when they discover and open 
their tombs these days. Has anyone here ever seen a hearse pulling a U-
Haul trailer? I don't think so. You can't take it with you, and we 
don't tax death. If we do, I would like my friend from Iowa and others 
to describe to me how a dead person shows up at the tax office to pay 
that obligation.
  Dead people are not paying taxes. Estates pay taxes, which means the 
wealthy heirs get less and the trust fund babies get less.
  It seems to me, that if the point is you can either have a tax 
incident in death or life, and you decide not to tax death--if I accept 
that moniker for a moment--then what is left? Then you tax life. What 
you're saying is: Don't tax unearned income that flows to a benefactor 
through someone else's death. Rather, to pay for defense and all the 
other priorities in the country, tax the income earned by people that 
go to work every day. Is that a choice that makes much sense? Not to me 
it isn't.
  There are those who want to repeal the estate tax in its entirety, 
but they have sold this repeal as a means of alleviating the problems 
of family farms and family businesses. They should disabuse themselves 
of that notion. I say let's repeal the estate tax for the transfer of 
family farms and family businesses. So that that problem is solved. And 
my amendment does that almost immediately, and much more quickly than 
in the underlying bill.
  Once that is out of the way, the question is: What is left over? 
Those who say we must completely repeal the estate tax, even above $8 
million for a husband and wife, say it is a horrible thing to tax 
unearned wealth or large inheritances.
  If it is such a terrible thing to tax unearned wealth, than what 
should we

[[Page 8628]]

tax? Should we have a tax system that promotes opportunities for all? 
Or should we have a tax system that protects the privileges of a very 
few? A substantial portion of the estate taxes actually paid are on 
estates that have never been taxed. Close to 70 percent of their value 
has never been taxed.
  I understand that there are some who feel very strongly there should 
never have been or even be an estate tax. Let me just make a couple of 
comments about that position.
  Without the estate tax, it seems to me, you would have a world with 
an aristocracy of the wealthy, which means the ability to command 
resources would be based on heredity rather than merit. Some think that 
is all right. But let me quote Mr. Martin Rothenberg, President of 
Glottal Enterprises. He said it quite well, I think, as a business 
owner. He said:

       My wealth is not only a product of my own hard work. It 
     also resulted from a strong economy and lots of public 
     investment in me and others. My success has allowed me to 
     provide well for my family, and upon my death. I hope taxes 
     on my estate will help fund the kind of programs that 
     benefitted me and others from humble backgrounds--a good 
     education, money for research and targeted investment in poor 
     communities--to help bring opportunity to all Americans.

  Some would say they do not agree with that. That this is not what 
this is all about. But it seems to me that we ought to make some 
choices here. When we talk about repealing the estate tax and we 
describe it as a death tax, it is critically important to understand 
that what we are about to do is antithetical to good tax policy. We 
ought to, in my judgment, protect the transfer of family businesses 
from one generation to another by exempting them from the estate tax. I 
agree with that.
  My amendment is the only legislation you will vote on that will do 
that almost immediately, in 2003. And if you do not vote for this 
amendment, 6 months or 1 year from now, or 2 years from now, do not 
come to the floor of the Senate with Kleenex, dabbing tears, talking 
about how difficult it is to transfer family businesses and family 
farms to heirs because you voted against the amendment that would have 
made it possible for them to not have to pay any estate tax at all.
  This country has about one-half of the world's billionaires, or about 
309 billionaires in 1999. The wealthiest 400 Americans had $1.2 
trillion in estates. And I say good for them. This country is a country 
in which you can do well, where opportunity exists. This country has 
created opportunities in which those who work hard and are fortunate 
can do very well. I would not want to live in a different kind of 
country. I want those opportunities to be available for all Americans.
  But I also believe, when we look at who is going to pay the bills in 
this country--and, incidentally, everyone in the Senate has spending 
priorities. This isn't a case of anyone not having them because 
everyone here has spending priorities. The most conservative Member of 
the Senate who rails against Federal spending is likely going to be out 
here saying we need much more money for defense spending. Do you buy 
bombers or milk? Do you buy military equipment or food for the hungry? 
Everybody here has their spending priorities--everybody.
  The question is: How do you tax to pay for those spending priorities?
  My colleague says that the estate tax ought to be completely 
repealed. Again, using the moniker ``death tax,'' which is a pollster's 
creation to describe this tax in some pejorative way, what I say is 
this: My amendment says that the only estate tax that will be left in 
this country is one for those whose estates are $8 million and above.
  I also in my amendment propose reducing the estate tax rate, 
increasing the unified credit as I indicated, and totally repealing the 
estate tax for the transfer of family businesses to qualified heirs who 
continue to operate those businesses. The only estate taxes that are 
left then are for those whose assets are $8 million and above.
  One can say: My priority is to come to the floor of the Senate and 
protect those folks from the hand of taxation, even though almost two-
thirds of that money has never been taxed. That's right, two-thirds of 
the asset base from those estates will never, ever have been taxed. One 
might come to the floor and say: My mission in life is to support those 
estates, those above $8 million--not those who have a family business--
but those worth more than $8 million.
  Everybody has a right to stand on whose side they want to stand on. 
But it seems to me that the reasonable thing to do is: If someone dies 
with $6 or $8 billion in assets, to have a substantial exemption at the 
bottom, which my amendment will do, and then say to them, that the 
unearned income that is going to your heirs will be diminished some, by 
an estate tax, that will go into the hands of those who will redirect 
it to strengthen our school systems in this country, to invest in 
research and development, to invest in technology, and to make this a 
better country.
  There are others who say that is not a priority at all. So be it. I 
happen to think it is a priority. I think if you were to rank 
priorities with respect to the Tax Code, you should start right at the 
bottom, with those people who show up for work and make the minimum 
wage, with those who struggle at the bottom of the economic ladder to 
try to make ends meet. They are struggling mightily to figure out how 
to pay their bills, making just the minimum wage.
  There are not a lot of folks in the hallways here worrying about 
those folks today. You bet your life there are not. There are not a lot 
of lobbyists worrying about the economic interests of those folks at 
the bottom of the economic ladder. But you can bet your life there a 
lot of folks around this building that have invested a great deal of 
time looking after the interests of those who have $10 million, $50 
million, $1 billion, or $10 billion, and who want to avoid having to 
pay an estate tax.
  Before I conclude, I again say that I hope I will not hear somebody 
stand up and say that the case for repealing the estate tax is to stop 
the interruption of the transfer of small businesses or family farms, 
because my legislation repeals the estate tax for all of those 
transactions. When you are going to transfer a farm or a business from 
one generation to another, and the heirs are going to continue to 
operate it, my amendment is the only proposal that repeals that tax in 
this circumstance by 2003. It is the only.
  So you can no longer sell the proposition of repealing the estate tax 
for the largest estates in the country by putting it on the backs of 
family farms and family businesses. This is the only proposal that will 
repeal it and will stop the interruption of the transfer of a family 
farm or business to qualified heirs.
  Mr. President, I reserve the remainder of my time.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. I probably should spend most of my time speaking 
against the amendment of the Senator from North Dakota, but I have 
already spoken today on why I think the estate tax provisions in this 
bill ought to be maintained.


                           Amendment No. 674

  I want to use my time to speak at this point on the first or, I guess 
now, the second amendment that is going to be up for a vote at 6 
o'clock, the Carnahan-Daschle amendment.
  I want my colleagues to understand exactly what this amendment does 
because I think it is one of the toughest amendments and one that may 
have one of the closest votes today.
  This amendment by Senator Carnahan guts the tax relief for individual 
taxpayers by $87 billion. In effect, it increases taxes on families and 
working people by $87 billion by denying them the tax cuts contained in 
our bipartisan tax bill.
  Here is how the amendment works.
  First, this amendment not only delays the reduction of the marginal 
tax rates; it provides for only a 1-point reduction in the marginal tax 
rates over a period of years compared to the 3-point reduction in the 
bipartisan plan Senator Baucus and I have put together.
  This 1-point reduction equals the rate relief that our bipartisan tax 
plan provides in the first year alone. Our

[[Page 8629]]

plan's additional tax cuts would be eliminated entirely under the 
Carnahan-Daschle amendment.
  I have a chart here that demonstrates this better. Their amendment 
allows only a 1-percent rate cut, which our bill implements next year. 
But Senator Carnahan's amendment delays the rate cuts over 5 years. As 
you can see from the bottom part of this chart, 1 point each year, but 
with a different rate each year so that it takes 5 years.
  The Carnahan-Daschle amendment would entirely eliminate the 
bipartisan bill's tax cuts for the years 2005 and 2007.
  Our plan reduces the 28-percent rate to 25 percent over 6 years. Our 
amendment reduces the rate by 1 percentage point to 27 percent next 
year.
  Two years from now, the Carnahan-Daschle amendment would reduce the 
28-percent rate to 27 percent but would entirely stop there--no more 
tax cuts after that point for the 28-percent taxpayers.
  Who is a 28-percent taxpayer? It would include any family with 
taxable income over $45,200. Those families get the shaft under the 
Carnahan-Daschle amendment.
  Our plan also would reduce the 31-percent rate to a 28-percent rate 
over 6 years, and would do it immediately 1 point next year.
  Three years from now, the Carnahan-Daschle amendment would reduce the 
31 percent to 30 percent, but stop right there--no more tax cuts then 
for the 31-percent taxpayer.
  You can see from this chart, it is the same story over and over 
again.
  The Carnahan-Daschle amendment takes just the first year of tax cuts 
from our bipartisan bill and spreads them out over 5 years. And, of 
course, that is their idea of tax relief for American working men and 
women.
  How do they justify this? How do they justify taking away $87 billion 
of tax relief from individual taxpayers? They rationalize it by 
reducing the 15-percent rate to 14 percent; that is all. They claim a 
1-percent reduction of one bracket justifies denying a 2-point further 
reduction in all other brackets.
  Senators Carnahan and Daschle claim this 14-percent rate puts more 
benefit to middle-income taxpayers. I doubt that. I will show you with 
a little bit of math how there is reason to doubt that.
  I would like to go back to the 28-percent taxpayer family; that is, 
any family with taxable income over $45,200. Senator Baucus has noted 
that 75 percent of the benefits under the new 10-percent rate bracket 
in our bill go to taxpayers making less than $75,000. So I will use 
that as a starting point.
  Let's say we have a family with taxable income of $75,000. Under the 
Carnahan-Daschle amendment, the reduction of the 15-percent rate would 
save them $452. Two years from now, the 28-percent rate would go to 27 
percent, which would give another $298 back. Our bill would give them 
the $298 not 2 years from now but right now.
  So when their plan is fully implemented, this family will have a 
total tax cut of $750 under the Carnahan-Daschle amendment. When our 
bipartisan plan is fully implemented, this family will have tax savings 
of $894, which is $144 more than under the Carnahan-Daschle plan. That 
is because we reduce the 28-percent rate to 25 percent. Our plan 
provides over 19 percent more in tax cuts for this family than does the 
Carnahan-Daschle amendment.
  Senators Carnahan and Daschle justify their proposal because they 
claim taxpayers in this 15-percent income bracket are shorted since our 
plan does not reduce the 15-percent rate. They claim that families 
earning between $12,000 and $45,000 will get no rate cut and no tax 
relief. That is completely untrue.
  The nonpartisan Joint Committee on Taxation says that our bipartisan 
bill provides between 9 percent and 33 percent of relief for families 
making between $12,000 and $45,000. Taxpayers on the lower end of this 
range receive the biggest percentage reduction, 33 percent; those on 
the upper end receive the least, 9 percent.
  Senators Carnahan and Daschle do not consider that our bipartisan 
plan targets other benefits to taxpayers in this income range.
  They only look at the rate itself. So these benefits, including the 
child care credit, the education incentives, the pensions, and the IRA 
provisions, and various other tax relief measures in this bill, are yet 
further reductions for people at the 15-percent bracket, between 
$12,000 and $45,000.
  The child credit is one example. The entire 15-percent bracket 
qualifies for it while it is phased out in higher brackets. For many 
current 15-percent bracket families, the child credit will erase more 
than 100 percent of their tax liability. The $3,000 expansion of the 
earned-income credit income thresholds will make more 15-percent 
bracket families qualify. Higher tax brackets will not qualify.
  When fully phased in, a four-person, two-earner family earning 
$30,000 will see their tax bill change from a $346 liability to a 
$1,911 net refund under this bill, and that is a 652-percent swing.
  You may wonder why we targeted these benefits instead of reducing the 
15-percent rate. Well, Senator Daschle made this point better than I 
could when he spoke on the Senate floor last Thursday. This is the 
reason he identified in correctly pointing out that when you reduce the 
tax rate, the benefits of the rate reduction go to taxpayers in that 
rate bracket and to all other taxpayers in the higher rate brackets. 
This is because taxpayers pass through the lower rate bracket on their 
way to the higher rate brackets. If you did a rate cut, it would cause 
our plan to favor upper income levels, for which I am sure Senator 
Daschle would severely criticize us. Our plan does not do that.
  As this chart demonstrates, our bill makes the current tax system 
even more progressive than it is currently. In every one of these 
brackets, under present law, people are paying a higher share than they 
would under the new tax law, except for the highest income level of 
$200,000 and above. At that level, people at $200,000 and above are 
going to be paying a higher proportion of taxes than they do today. But 
for every other income level, as a result of our legislation, people in 
those income levels are going to be paying a lower share of taxes.
  The Daschle-Carnahan proposal would actually make our tax system less 
progressive by giving greater savings to upper income taxpayers as they 
pass through the 14-percent bracket. When you are really serious about 
reducing the tax burden for people in the 15-percent income tax 
bracket, you target available resources to people at that income level. 
That is exactly what our bipartisan bill does. It targets benefits to 
families making between $12,000 and $45,000 and provides relief 
ranging, then, from 9 percent at the $45,000 income to 33 percent at 
the lower income.
  That is better relief than Senator Carnahan's 1-percent rate 
reduction because taking a 15-percent rate to 14 percent is less than a 
7-percent reduction of the rate itself.
  I don't want you to take my word for it. I don't take Senator 
Daschle's or Senator Carnahan's word for it, either. These are 
conclusions drawn by the Joint Committee on Taxation.
  Let's look at the choice before us. Our bipartisan bill provides 9 to 
33 percent of relief for 15-percent taxpayers. Our bill provides 19 
percent more tax relief to middle-income taxpayers. Their amendment 
increases individual income taxes by $87 billion based upon the false 
assumption that we have not cut the tax burden of the 15-percent 
taxpayers.
  This all seems to be a simple decision. If you want to provide 
meaningful relief for all taxpayers, then you should vote to defeat the 
Carnahan-Daschle amendment. If you want to increase individual income 
taxes by $87 billion based upon flawed analysis, then by all means vote 
for the amendment of the opposition. Their amendment only reduces taxes 
1 percentage point. It provides a mere thimbleful of tax relief.
  This amendment creates a smokescreen to try to fool middle-income 
Americans into believing they are getting substantial tax relief when, 
in

[[Page 8630]]

fact, it will increase their tax burden by billions.
  I will also point out to my colleagues from the other side that the 
Carnahan-Daschle amendment is not the same amendment offered by Senator 
Daschle during the Finance Committee markup. That amendment would have 
cut all of the rates by 1 percent in 2002. The Carnahan-Daschle 
amendment spreads the 1-percent cuts over 5 years, a very significant 
difference.
  I hope the Carnahan-Daschle amendment to withdraw $87 billion in tax 
cuts is not the crown jewel of the Democrats' tax proposal. I believe 
the bipartisan bill put forth by our committee should be the high 
watermark for both political parties.
  I say to all of my colleagues on both sides of the aisle who 
supported the budget resolution, a vote for the Carnahan-Daschle 
amendment destroys our efforts to provide a $1.35 trillion tax cut. As 
you know, the RELIEF Act before us contains only individual income tax 
cuts. It is not larded in favor of a lot of special interest 
legislation that sometimes is in tax bills. You cannot draft bipartisan 
legislation if you do that.
  A vote to decrease the tax cuts in the RELIEF Act is a vote to 
increase income taxes of individuals across America by $87 billion. 
Obviously, I urge Members to vote to reject the Carnahan-Daschle 
amendment.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. DORGAN. Mr. President, I yield 5 minutes to the Senator from 
Montana.
  Mr. BAUCUS. Mr. President, may I ask how much time remains on the 
Dorgan amendment?
  The PRESIDING OFFICER. The sponsor has 16\1/2\ minutes; the 
opposition has 15.
  Mr. BAUCUS. I thank the Chair.
  Mr. President, the chairman of the committee, Senator Grassley, and I 
worked very hard to come up with a bill that both of us could support. 
Given all the dynamics that exist in this body and given the two-party 
system that we are operating under, it has not been easy.
  During the process of coming to this agreement, the chairman has 
given a lot--I am sure he would like the top rate to be lowered a lot 
more quickly, and I have given a lot as well. Despite how progressive 
it is, I would like this bill to be tilted more toward education, more 
toward pension reform, more toward middle-income taxpayers.
  Having said all that, I do believe the Senator from North Dakota has 
a good amendment, and I support it. It is true that the people who need 
relief most in this country under the estate tax are family farmers, 
ranchers, and family businesses. That is where the estate tax really 
hurts. They are the people who need the support. His amendment directly 
goes to the main issue before us; namely, helping families.
  It is also an improvement compared with the current bill because the 
current bill repeals the estate tax only in the last year. A lot of 
American families can't wait ten years to pass on their businesses to 
their children.
  Senator Dorgan's amendment does it. By offering his amendment, he 
does away with a very complicated carryover basis provision contained 
in this bill. We tried that in 1970. We enacted a carryover basis to 
the heirs of property after estates had been distributed. It didn't 
work. In fact, we repealed it. It was so complicated, it was a mess. By 
keeping the current stepped-up basis--again, Mr. President, I 
personally think he has a good amendment. It is not what we agreed to 
in committee. It is difficult to strike this balance between supporting 
my good friend in the committee and the bill we came up with on the one 
hand, and the one issue on which I do believe the Senator from North 
Dakota makes good sense.
  This was the last issue Senator Grassley and I negotiated--the estate 
tax provisions. It is extremely complicated, difficult, with very high 
passions on both sides. I think a good resolution for all of us in the 
Senate, frankly, is to support the amendment by my friend from North 
Dakota. In the final analysis, it improves the bill which more of us 
could support.
  I yield the remainder of my time.
  The PRESIDING OFFICER. Who seeks time?
  Mr. BAUCUS. I ask the Senator from Kentucky, does he reserve time on 
this amendment.
  Mr. BUNNING. On the bill itself, not the amendment.
  Mr. BAUCUS. Mr. President, we are still in the period of offering 
amendments. Under the unanimous consent agreement we don't get to 
general discussion until 4 o'clock.
  Mr. BUNNING. I was told I should come over because this amendment was 
going to be offered.
  Mr. GRASSLEY. Let me ask my friend on the other side of the aisle, 
would it be all right if he could have what time I had not used on the 
Dorgan amendment?
  Mr. REID. It is my understanding that the Senator from Iowa has about 
15 minutes; is that right?
  The PRESIDING OFFICER. Just under 15 minutes.
  Mr. REID. The Senator from Kentucky is not going to offer an 
amendment, just speak on the bill?
  Mr. BUNNING. That is correct.
  Mr. GRASSLEY. I will yield the rest of my time to the Senator from 
Kentucky.
  The PRESIDING OFFICER. The Senator from Kentucky is recognized.
  Mr. BUNNING. Mr. President, I voice my support for H.R. 1836, the tax 
relief bill.
  The American people deserve a tax cut. We have not given them a 
major, across-the-board tax cut since 1981. Twenty years is too long to 
wait.
  Americans are overtaxed. Personal tax payments have risen on average 
by 10.5 percent per year over the last five years, but personal income 
has risen by only 5.9 percent per year.
  The tax burden as a percentage of GDP is the highest it has been 
since World War Two.
  This is absolutely ridiculous, especially when you consider our 
budget surpluses.
  This money belongs to the people and should be returned to them.
  If we don't, it's just going to get frittered away here in 
Washington.
  President Bush is correct. No American should pay more than a third 
of their income in Federal taxes.
  This bill does not take us all the way there, but it is a step in the 
right direction.
  This bill will also help eliminate the unfair marriage penalty. We 
have penalized families for far too long.
  I have never understood why the Federal government, through the tax 
code, would penalize people for getting married.
  We should be encouraging marriage, not creating disincentives for 
marriage.
  This bill will provide a deduction up to $3,000 for two-earned 
families who file jointly.
  In Kentucky, that is real money.
  The bill will also help families by doubling the child tax credit.
  This will be a welcome addition to families and ease their burden 
just a little bit.
  As the grandfather of 35, I know this will help my nine children.
  I also strongly support the estate tax relief this bill is providing.
  For far too long, the children of American farmers and small business 
owners have labored under the burden of knowing that death could force 
them to sell their assets to satisfy the IRS.
  It is way past time to correct this.
  There is no good reason to tax individuals at death or to make this 
sad time a taxable event.
  But we need a tax cut not just for reasons of fairness, but also for 
economic reasons.
  We need tax relief to stimulate our economy. As my colleagues know, 
unemployment has been increasing, and economic growth has been 
slipping.
  The Federal reserve, though way too late in my opinion, has been 
using monetary policy to help stimulate the economy. But monetary 
policy itself is not the answer.
  We need a strong fiscal policy solution as well.
  We need an immediate decrease in withholding taxes to put more money 
in the pockets of consumers.
  We can do much better and the stimulus effect will be much more 
pronounced by putting more money in the hands of Americans immediately.

[[Page 8631]]

  We need to get people to start buying again.
  We need to give tax relief to our nation's small businesses so they 
can start reinvesting again.
  This bill will bring much needed relief to small businesses, which 
are the backbone of our economy.
  Small businesses create jobs. We need to help them innovate by 
relieving their tax burdens.
  In a perfect world this is not the bill I would have written. I 
believe that we can give more relief to our small businesses. I think 
the rates need to be cut more. And I'd like to see faster death tax and 
marriage penalty relief.
  There are some provisions in this bill which, while they have great 
merit, are not the priorities I would have chosen.
  But, obviously, this is not a perfect world.
  I believe that chairman Grassley and the Finance Committee have done 
an outstanding job under very difficult circumstances.
  I think it says a lot about chairman Grassley and the committee as a 
whole that they were able to move such a major piece of legislation, so 
quickly, in such a bipartisan fashion.
  Mr. President, I urge all of my colleagues to support this tax relief 
bill.
  It is not perfect, but it will bring much needed relief to all 
Americans who pay income taxes, and even some who don't.
  It will also help stimulate our economy, and help bring us out of 
this economic funk we are in.
  Time time for tax relief has long passed. Please support our 
President and vote for H.R. 1836.
  Thank you Mr. President. I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  The Senator from North Dakota is recognized.
  Mr. DORGAN. How much time is remaining on each side?
  The PRESIDING OFFICER. There are 11 minutes 44 seconds on the 
Senator's side; 8\1/2\ minutes remain on the other side.
  Mr. DORGAN. Mr. President, the Senator from Iowa yielded his 
remaining time. Was the time not used by the Senator from Kentucky?
  The PRESIDING OFFICER. It was not all used.
  Mr. DORGAN. Was it reserved?
  The PRESIDING OFFICER. It was reserved.
  Mr. DORGAN. Mr. President, let me try to describe where we agree and 
where we disagree on this issue of the estate tax. We agree that the 
estate tax ought to be repealed for family businesses that are 
transferred to qualified heirs who want to continue to operate the 
family business.
  We do not believe that family business ought to be interrupted by an 
estate tax. So we agree on that.
  The difference is when to do it. My amendment will totally repeal the 
estate tax obligation for the transfer of family businesses in 2003. 
The bill that is before the Senate will do it in 2011. The most 
important part of their bill is effective, as they describe it, in 
2011. Mine is effective in 2003. That is a big difference.
  We agree that the rates should go down to 45 percent. My amendment 
takes the rate to 45 percent. The underlying bill does, too. We agree 
that the unified credit should go up to $4 million. My amendment does 
that, and the underlying bill does as well.
  The difference is, those who oppose my amendment are saying they want 
to fight for additional estate tax exemptions and/or repeal for all 
estates above $8 million. That is the difference. Those who do not 
support this amendment are saying: We insist on an estate tax repeal 
for those estates over $8 million in value. They say the largest 
estates in this country need to have their tax burdens eased.
  I ask this question: Why would someone in the Senate support taxing 
the income of middle-income Americans who work for their money but then 
oppose taxing the income, in fact the largely unearned income, of those 
who inherit more than $8 million a year? It seems to me to be a rather 
strange set of priorities.
  We are having this debate about the estate tax that we will vote on 
this evening. Those who have spoken at great length in this Chamber, I 
might say, of wanting to protect a family farm or a small business, in 
my judgment, cannot with a straight face vote against this amendment 
and then go back home and say: I was supporting you, Main Street 
business, or I was supporting you, farmer or rancher, because this is 
the only amendment that, in the year 2003, will repeal the estate tax 
on the transfer of family businesses to qualified heirs. It is the only 
opportunity to do that.
  The underlying bill will only do it in the year 2011, 10 years from 
now, the sweet by-and-by as Reverend Ike used to describe it.
  I ask for some support for this amendment. I hope those who have 
talked at such great length about this subject will now have the 
opportunity and feel the obligation to vote for an amendment that does 
what they claim they want to be done.
  I will speak for a moment more generally on this bill. There is not 
any question that there is room for a tax cut in this country. We have 
a budget surplus. It is also the case that we do not know what is going 
to happen in 6, 8, and 10 years, and we ought to be conservative and 
cautious about what we commit to in terms of fiscal policy 6, 8, and 10 
years from now.
  About 20 years ago, a very large tax cut was enacted by this Congress 
and, as a result of a very substantial tax cut and a doubling of the 
defense budget, this country sailed into some pretty tough economic 
waters.
  Those rough waters caused very significant and deep Federal budget 
deficits that nearly choked this country's budget. It meant a 
difference in everything we did. It meant a difference in how much we 
had available to invest in our children, invest in education, invest in 
child care, yes, invest in a range of things that are important to make 
this a better life, invest especially in infrastructure--roads, school 
buildings, and so many other things that are important. It made a big 
difference in our ability to deal with those issues.
  We struggled and struggled and, in 1993, we turned this fiscal policy 
around. We did it by one vote, one single vote in the Senate and one 
vote in the House of Representatives.
  I remember those who stood and opposed it and said: You are going to 
wreck this country's economy. That is when we had a $290 billion annual 
deficit. They said: You are going to wreck this economy. This economy 
was headed in the wrong direction in a hurry. By one vote we supported 
a change in fiscal policy and turned this economy around. We went from 
the largest deficits in history to now a budget that is in surplus and 
gives us the opportunity to return some of that surplus to the American 
people. And, yes, we should do that.
  No one should call themselves, in my judgment, a conservative who 
comes to this Chamber and says they know what is going to happen to 
this economy 6, 8, 10 years out and, therefore, put in place a fiscal 
policy that could, if our economy turns sour, run this country right 
back into big deficits once again.
  That is not a conservative approach. A far better approach, in my 
judgment, would be to be somewhat cautious. Yes, provide a tax cut, but 
do it in a manner that is fair, do it in a way that helps American 
working families, stimulates the economy, and gives some money back to 
families who could sure use it.
  This is not the time, in my judgment, to put in place a tax cut of 
well over $1.3 trillion but when the costs are really added up may well 
be over $2 trillion in the coming 10 years. It leaves no margin for 
error if this economy should turn soft.
  It is almost zero gravity politically to be talking about tax cuts. 
Those who say their main mission in life is to cut the revenue stream 
of the Federal Government--that is not a controversial proposal I 
expect back home. It is almost a certain way for one to be popular with 
one's constituents to say they support the largest possible tax cut for 
as long as is possible.
  But there is another element to this. We should support a tax cut 
that is fair to all Americans, No. 1, and No. 2, we

[[Page 8632]]

ought to have enough revenue left to reduce the Federal debt, which 
stands at $5.6 trillion and which after this fiscal policy plays itself 
out will stand at $6.7 trillion.
  This fiscal policy and the budget passed by this Congress, coupled 
with this tax cut, will increase Federal indebtedness by $1.1 trillion. 
Think of that.
  Second, there ought to be enough left to make sure we have the 
investment necessary to improve our country's schools, to provide the 
research in health and welfare and other issues we have to deal with in 
this country, and to make this country a place in which all of us can 
lead better lives.
  I know the Senator from New Mexico is waiting to speak. May I ask how 
much time remains on my amendment?
  The PRESIDING OFFICER. There is 4 minutes 7 seconds.
  Mr. DORGAN. I reserve the remainder of my time.
  Mr. REID. Mr. President, if the Senator will yield, I was asked by 
the Senator from Iowa to protect the floor on his behalf in his 
absence. I will certainly do that. It was my understanding that he no 
longer wished to speak on this amendment. If he returns and desires to 
speak, we will restore that time. In the meantime we can get to another 
amendment.
  I was told that if I allowed Senator Bunning to go forward, Senator 
Specter was not going to offer his amendment and Senator Bingaman, who 
is next in order, could offer his. Does that make sense?
  On behalf of the Senator from Iowa----
  The PRESIDING OFFICER. If the Senator from Iowa comes back and wants 
to claim his time, he will be so allowed.
  Mr. REID. On behalf the Senator of Iowa, I yield back his time with 
the understanding that if there is a misunderstanding, he can have back 
his time.
  Does the Senator from North Dakota yield back his 4 minutes?
  Mr. DORGAN. I do so with the understanding that if the other side 
reclaims its time, I be restored the 4 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DORGAN. Mr. President, I ask for the yeas and nays on my 
amendment.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is not a sufficient second.
  Mr. DORGAN. Mr. President, I ask for the yeas and nays on my 
amendment.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The yeas and nays were ordered.
  Mr. REID. Mr. President, it is my understanding the 6 hours will run 
out at approximately 20 to 4. At that time, I alert the majority that I 
will propound a unanimous consent request to use the 20 minutes, with 
both sides having that in 5-minute increments, until 4 o'clock. I do 
not propound that at this time.
  The PRESIDING OFFICER. The Senator from New Mexico.


                           Amendment No. 717

  Mr. BINGAMAN. Mr. President, I wish to offer an amendment, amendment 
No. 717. It is an amendment related to our energy policy. Its purpose, 
as provided in the amendment, is to provide energy conservation and 
production tax incentives.
  Let me briefly describe the amendment and the reasons I urge my 
colleagues to support the amendment when we do get the opportunity to 
vote on it later this evening.
  Last Thursday, President Bush unveiled his national energy policy. I 
have a copy. There is a lot in this national energy policy upon which I 
think all Members can agree. There are proposals that will increase 
production; there are proposals that encourage conservation; there are 
proposals that will try to stimulate more innovation in technology to 
better capture energy and use energy in the future.
  I commend the President for the initiative he has shown. Obviously, 
there are provisions in this national energy policy that are going to 
be very controversial and that I will not support. We will have ample 
opportunity over the next weeks and months to discuss those and debate 
them and deliberate on them and vote on them.
  Members may wonder why I am talking about energy on a tax bill. This 
is supposed to be a bill to cut taxes. Why bring up the subject of 
energy? The reason I bring energy up is that the President himself, 
last Thursday, proposed a whole series of incentives to meet our energy 
challenges. These are tax incentives, reductions in people's taxes, if 
they will agree to take certain actions that will then help our country 
to meet the challenges we face in the energy area.
  I introduced a bill earlier this year that also contains many tax 
incentives that we believe will move the country toward a more 
enlightened energy policy. Senator Murkowski, the chairman of the 
Energy and Natural Resources Committee, on which I am the ranking 
member, introduced a bill early this year containing many tax incentive 
provisions. There is a great deal of commonality between the bill 
Senator Murkowski introduced, the ones I introduced, and the ones the 
President's national energy policy embraces.
  We have an issue where there is substantial consensus. The question 
is, Why talk about it on this tax bill? Let me explain the context in 
which we come to the debate on the tax bill. We are talking about this 
tax bill because we passed a budget resolution in the Senate which set 
aside $1.35 trillion over the next 10 years and directed the Finance 
Committee in the Senate to put together a tax bill that would use up 
that $1.35 trillion.
  The tax bill we are talking about today, that we are debating and 
that we will vote on later tonight, does exactly what the budget 
resolution told the Finance Committee to do. That is, it uses up all of 
that $1.35 trillion. There is no more after that. After that, according 
to the budget resolution, we should not be passing additional tax bills 
under this budget resolution.
  I very much believe if we are going to take the recommendations of 
the President, if we are going to move in the area of energy policy to 
provide tax incentives for the actions we believe people ought to take, 
then we need to adopt the amendment I am offering, this energy 
amendment, and in that way use some of the tax revenue we are proposing 
to eliminate in the tax cut legislation to provide these incentives.
  Let me go through a description of what is in the amendment. The 
amendment tries to speed up the investment in our Nation's energy 
infrastructure, speed up the investment in high-efficiency equipment in 
all parts of our economy. As I indicated before, the provisions we have 
in this amendment I believe all have good bipartisan support. They are 
nothing that I claim authorship of because many are included in what 
the President has recommended and many are included in what Senator 
Murkowski recommended.
  One large category of these incentives is the investment in 
infrastructure and highly efficient end use and in generating 
equipment. For example, one provision shortens the depreciation 
schedule for transmission lines and natural gas pipelines. We have 
heard a lot of testimony already in the Energy Committee that we need 
to move ahead more quickly with building of transmission lines, 
building of additional pipelines. This will help.
  There is a provision for incentives to push ultra-high-efficient 
appliances and equipment in the marketplace and provide incentives for 
people to purchase these appliances and equipment.
  It provides incentives for constructing and upgrading homes and 
upgrading and constructing commercial buildings that are energy 
efficient, something we all agree ought to be done.
  It provides incentives for upgrading and building the cleanest, 
lowest emission coal-fired generation.
  It provides incentives for purchase of high-efficiency hybrid 
vehicles. This is an initiative I have heard a lot of people talk about 
in this Chamber. We recognize we would be better off as a country; we 
would import less oil, if we would drive more fuel efficient vehicles. 
One way to persuade Americans to drive more fuel efficient vehicles is 
to

[[Page 8633]]

give them a tax incentive so when they buy a hybrid vehicle with an 
engine that gets 60 or 70 miles per gallon, it will be cheaper for them 
because of the tax incentive we provide.
  The amendment I will propose today extends the renewable production 
credit to include a whole range of items: Steel, cogeneration, 
geothermal, landfill methane, incremental hydropower. It provides a 7-
year depreciation schedule for distributed generation facilities. There 
are a whole range of provisions that are generally agreed by experts to 
make sense. We also provide incentives for investment in sophisticated 
real-time metering, electronic load management, so consumers can better 
control energy use and costs. All of these are provisions that I think 
will have broad bipartisan support and do have broad bipartisan 
support.
  What I am urging is that we use up the revenue that has been made 
available through the budget resolution for tax cuts; we do some of 
these things in the energy area that the President himself last 
Thursday said he believes we ought to do. It would be irresponsible to 
pass a large tax cut, cutting rates, eliminating the estate tax, doing 
a variety of things, without any consideration of the needs we have as 
a country to move toward a more enlightened energy policy. This 
amendment tries to ensure we do the right thing.
  What I proposed as an offset is slowing down the phasing in of the 
cuts in the marginal tax rates, the top marginal tax rates. That seems 
a reasonable way to pay for the cost of this amendment. It is something 
which I strongly believe would be a good procedure.
  Let me make one more general point. I think a reason it is important 
to raise this issue now is that a lot of people are being misled into 
believing there is no limit to the number of tax bills we can pass--
that we can pass this for $1.35 trillion and then we can come back 
later and pass another one that deals with extending the alternative 
minimum tax exemption; we can pass another that does the traditional 
extenders; we can pass a whole variety of bills.
  I was reading on the Associated Press wire published through the 
Albuquerque Journal on the Web site before I came over today. The title 
of the article I thought was very interesting: ``O'Neill: Further tax 
relief coming.'' It had a picture of Treasury Secretary Paul O'Neill in 
a speech he gave today where he said the administration viewed this as 
only the first tax bill, not the last. He also goes on to say in the 
future they want to accelerate the tax relief under the estate tax. 
That is another tax bill they anticipate.
  It also referred to the fact that in the newspaper interview he 
indicated they would push for repeal of the Federal corporate income 
tax. That is not a cut in the Federal corporate income tax; that is 
elimination of the corporate income tax.
  The third he mentioned was a Federal tax on capital gains that should 
be eliminated.
  Mr. President, I am told before I yield the floor I need to call up 
my amendment. Let me do that at this time. I ask the amendment be 
considered.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from New Mexico [Mr. Bingaman] proposes an 
     amendment numbered 717.

  Mr. BINGAMAN. I ask unanimous consent the reading of the amendment be 
dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The text of the amendment is printed in today's Record under 
``Amendments Submitted and Proposed''.)
  Mr. BINGAMAN. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  Mr. BINGAMAN. I yield time to the Senator from Nevada.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. REID. Mr. President, the Senator from New Mexico is the ranking 
Democrat on the Committee on Energy and Natural Resources. I am the 
ranking Democrat on the Committee on Environment and Public Works. We 
worked very closely together this year and, rather than my offering a 
separate amendment, we have joined in this amendment.
  This is a very good amendment. I hope this body will support this 
amendment. That which I am most concerned about in his amendment deals 
with renewable energy.
  We are all aware that the current energy crisis in California has 
demonstrated that America must increase its supply of electricity and 
decrease its demand.
  Ensuring that the lights and heat or air conditioning stay on is 
absolutely critical to sustaining America's economic growth and 
Americans' quality of life. Already in Nevada electricity and natural 
gas prices have skyrocketed in recent months.
  These increases are especially hard on working families who are 
already struggling to make ends meet. The impacts of high energy bills 
hits minority groups hardest.
  The citizens of Nevada, and of the nation, demand a national energy 
strategy to ensure their economic well being and security, and to 
provide for the quality of life they deserve.
  Nevadans understand that an energy strategy must encompass 
conservation, efficiency, and expanded generating capacity.
  Renewable energy is poised to make major contributions to our 
Nation's energy needs over the next decade.
  I have offered with Senator Bingaman as a lead, a good amendment. I 
have offered an amendment which expands the existing production tax 
credit for renewable energy technologies to cover all renewable energy 
technologies, increases the credit from 1.5 to 1.8 cents, and makes the 
credit permanent.
  This amendment expands the credit to include wind, animal and poultry 
waste, closed- and open loop biomass, incremental hydropower, municipal 
solid waste, geothermal energy, landfill gas, and steel cogeneration.
  Recognizing that coal provides 50 percent of the nation's electricity 
supply, this amendment also provides for a 1.0 cent production tax 
credit for co-firing coal power plants with biomass, since co-firing 
can significantly reduce emissions.
  Our nation has a promising potential of renewable energy sources.
  Wind power is the fastest growing source of electricity in the world. 
Prices have dropped 90 percent since 1980. At the Nevada Test Site, a 
new wind farm will provide 260 megawatts to meet the needs of 260,000 
people--more than 10 percent of Nevada's population within 5 years.
  Nevada is sometimes referred to as the ``Saudi Arabia of Geothermal 
Energy.'' Our state has already developed 230 Megawatts of geothermal 
power, with a longer-term potential of more than 2,500 Megawatts, 
enough capacity to meet half the state's present energy needs.
  The Department of Energy has estimated that we could increase our 
generation of geothermal energy almost ten fold, supplying ten percent 
of the energy needs of the West, and expand wind energy production to 
serve the electricity needs of ten million homes.
  As fantastic as it sounds, enough sunlight falls on an area measuring 
100 miles by 100 miles in southern Nevada that--if covered with solar 
panels--could power the entire nation. Obviously, covering this area of 
Nevada with solar panels is not a practical answer to our current 
energy challenges. However, the example does make one very practical 
point: our nation does not lack for renewable energy potential.
  In addition, we need a permanent credit to provide business certainty 
and signal America's long-term commitment to renewable energy 
resources.
  To illustrate the need for a permanent tax credit, I recently learned 
that the wind farm project in Nevada is now experiencing delays in 
securing loans from banks due to the uncertain nature of the production 
tax credit for wind energy. Without a permanent credit, we can't 
provide the business certainty

[[Page 8634]]

for utilities to invest in renewable energy resources. This we must do.
  This amendment allows for co-production credits to encourage blending 
of renewable energy with traditional fuels and provides an additional 
0.25-cent credit for renewable facilities on native American and native 
Alaskan lands.
  Finally, my amendment provides a production incentive to tax exempt 
energy production facilities like public power utilities by allowing 
them to transfer their credits to taxable entities.
  Growing renewable energy industries in the U.S. will also help 
provide growing employment opportunities in the U.S., and help U.S. 
renewable technologies compete in world markets.
  In states such as Nevada, expanded renewable energy production will 
provide jobs in rural areas--areas that have been largely left out of 
America's recent economic growth.
  Renewable energy--as an alternative to traditional energy sources--is 
a common sense way to ensure the American people have a reliable source 
of power at an affordable price.
  The United States needs to move away from its dependence on fossils 
fuels that pollute the environment and undermine our national security 
interests and balance of trade.
  We need to agree to this amendment to send the signal to utilities 
that we are committed in the long term to the growth of renewable 
energy. We must accept this commitment for the energy security of the 
U.S., for the protection of our environment, and for the health of the 
American people.
  Mr. SARBANES. Madam President, I have already expressed my 
opposition, in general, to the tax reconciliation bill the Senate is 
currently considering. But I want to take a moment, while Senator 
Bingaman's amendment is pending before us, to highlight a provision in 
that amendment which I believe can play a significant role in 
addressing our Nation's current energy problems. This provision is 
modeled after a bill I cosponsored, S. 217, the Commuter Benefits 
Equity Act, and represents an important step forward in our efforts to 
fight pollution and congestion by supporting public transportation.
  The Internal Revenue Code currently allows employers to provide a 
tax-free transit benefit to their employees of up to $65 per month to 
pay for the cost of commuting by public transportation or vanpool. This 
program is designed to encourage Americans to leave their cars behind 
when commuting to work.
  However, despite the success of this program in taking cars off the 
road, our tax laws still reflect a bias toward driving. The Internal 
Revenue Code allows employers to offer a tax-free parking benefit to 
their employees of up to $180 per month. The striking disparity between 
the amount allowed for parking, $180 per month, and the amount allowed 
for transit, $65 per month, undermines our commitment to supporting 
public transportation use. The pending amendment would address this 
discrepancy by raising the maximum monthly transit benefit to equal the 
parking benefit.
  I believe the potential of mass transit to help address our Nation's 
current energy crunch has been consistently overlooked. With gas prices 
soaring and congestion increasing, public transit offers one of the 
best solutions to America's growing pains. I am pleased that this 
measure has been included in this package of energy-related tax 
provisions, because I believe support for mass transit should be a 
component of any energy package.
  The PRESIDING OFFICER. The Senator's time has expired on this 
amendment.
  Mr. REID. Mr. President, it is my understanding the 6 hours is now 
gone or about to be gone; is that true?
  The PRESIDING OFFICER. There are 16 minutes on the Republican side of 
the aisle and no time remaining----
  Mr. REID. On this amendment of the Senator from New Mexico?
  The PRESIDING OFFICER. That is correct, also with regard to all 
amendments.
  Mr. REID. I would like to know if anyone wishes to speak against the 
amendment of the Senator from New Mexico. If there is no one who wishes 
to speak, I know there is at least one Senator who is next in order to 
offer an amendment, the Senator from Arizona. I understand the Senator 
from New Hampshire wished to speak generally on the bill for about 3 
minutes or to offer an amendment.
  If there is someone who has authority to yield back the time, we 
could get to these amendments. Otherwise, I don't know how we can get 
to the amendments.
  Could the Senator on behalf of Senator Grassley yield back the time?
  Mr. McCAIN. On behalf of Senator Grassley and his capable staff, who 
will take the responsibility if this is wrong, I yield back the 
remaining time on this side.
  Mr. REID. Before the Senator proceeds, we have now less than 20 
minutes before 4 o'clock. It will be my suggestion the two Senators who 
wish to offer amendments be recognized for up to 5 minutes each. Then 
it will be the turn of the Democrats to offer an amendment, and then it 
will be again the Republican's turn. Does that sound reasonable?
  Mr. McCAIN. I have to temporarily object because Senator Grassley 
would have to be asked. I would like to go ahead with my amendment. He 
will be back shortly.
  Mr. REID. I have no objection to the Senator from Arizona offering 
his amendment but with a limit of 5 minutes.
  Mr. McCAIN. I have an amendment and motion to recommit. Will you give 
me 7 minutes?
  The PRESIDING OFFICER. Is there objection to 7 minutes? The Chair 
hears none, and it is so ordered. The Senator from Arizona.


                           Amendment No. 660

  Mr. McCAIN. Mr. President, I have an amendment at the desk numbered 
660. I ask for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The senior assistant bill clerk read as follows:

       The Senator from Arizona [Mr. McCain] proposes an amendment 
     numbered 660.

  Mr. McCAIN. I ask unanimous consent the reading of the amendment be 
dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

(Purpose: To limit the reduction in the 39.6 percent rate bracket to 1 
percentage point and to increase the maximum taxable income subject to 
                          the 15 percent rate)

       On page 9, in the matter between lines 11 and 12, strike 
     ``37.6%'' in the item relating to 2005 and 2006 and insert 
     ``38.6%'' and strike ``36%'' in the item relating to 2007 and 
     thereafter and insert ``38.6%''.
       On page 13, between lines 15 and 16, insert:

     SEC. 104. INCREASE IN MAXIMUM TAXABLE INCOME FOR 15 PERCENT 
                   RATE BRACKET.

       Section 1(f) (relating to adjustments in tax tables so that 
     inflation will not result in tax increases), as amended by 
     section 302, is amended--
       (1) in paragraph (2)--
       (A) by redesignating subparagraphs (B) and (C) as 
     subparagraphs (C) and (D),
       (B) by inserting after subparagraph (A) the following:
       ``(B) in the case of the tables contained in subsections 
     (a), (b), (c), and (d), by increasing the maximum taxable 
     income level for the 15 percent rate bracket and the minimum 
     taxable income level for the next highest rate bracket 
     otherwise determined under subparagraph (A) (after 
     application of paragraph (8)) for taxable years beginning in 
     any calendar year after 2004, by the applicable dollar amount 
     for such calendar year,'', and
       (C) by striking ``subparagraph (A)'' in subparagraph (C) 
     (as so redesignated) and inserting ``subparagraphs (A) and 
     (B)'', and
       (2) by adding at the end the following:
       ``(9) Applicable dollar amount.--For purposes of paragraph 
     (2)(B), the applicable dollar amount for any calendar year 
     shall be determined as follows:
       ``(A) Joint returns and surviving spouses.--In the case of 
     the table contained in subsection (a)--

                                                             Applicable
``Calendar year:                                         Dollar Amount:
  2005......................................................$1,000 ....

  2006......................................................$2,000 ....

  2007......................................................$3,000 ....

  2008......................................................$4,000 ....

  2009 and thereafter.......................................$5,000.....

       ``(B) Other tables.--In the case of the table contained in 
     subsection (b), (c), or (d)--

                                                             Applicable
``Calendar year:                                         Dollar Amount:
  2005........................................................$500 ....

[[Page 8635]]

  2006......................................................$1,000 ....

  2007......................................................$1,500 ....

  2005......................................................$2,000 ....

  2009 and thereafter.....................................$2,500.''....

  Mr. McCAIN. Mr. President, the principle that guides my judgment of a 
tax reconciliation bill is tax relief for those who need it the most--
lower- and middle-income working families. I am in favor of a tax cut, 
but a responsible one that provides significant tax relief for lower- 
and middle-income families. And I commend Senator Grassley for moving 
in that direction. But I am concerned that debt will overwhelm many 
American households. That is why tax relief should be targeted to 
middle-income Americans. The more fortunate among us have less concern 
about debt. It is the parents struggling to make ends meet who are most 
in need of tax relief.
  I had expressed hope that when the reconciliation bill was reported 
out of the Senate Finance Committee, the tax cuts outlined would 
provide more tax relief to working, middle-income Americans. However, I 
am disappointed that the Senate Finance Committee preferred instead to 
cut the top tax rate of 39.6 percent to 36 percent thereby granting 
generous tax relief to the wealthiest individuals of our country at the 
expense of lower- and middle-income American taxpayers.
  This amendment would, instead, cut the top tax rate for the 
wealthiest individuals from 39.6 percent to 38.6 percent and devote the 
resulting savings that would have gone to this group to lower- and 
middle-income taxpayers by increasing the number of individuals who pay 
the 15 percent tax rate. When it is finally phased in, this amendment 
could place millions of taxpayers now in the 28 percent tax bracket 
into the 15 percent tax bracket. This amendment targets tax relief to 
the individuals who feel the tax squeeze the most: lower- and middle-
income taxpayers. Under this amendment, unmarried individuals can make 
nearly $30,000 and married individuals can make $50,000, and still be 
in the 15 percent tax bracket.
  Mr. President, this is a modest amendment. I would have preferred 
that we be able to have a larger increase in the number of taxpayers in 
the 15 percent bracket, but given the constraints of the modest savings 
from cutting the top rate by only 1 percent, this will have to do for 
now. But it is an important first step towards further reform.
  I support this amendment because it helps ordinary middle-class 
families who are struggling to make ends meet and it promotes future 
economic prosperity by increasing the amount of money taxpayers have 
available for their own saving and investment.
  We must provide American families with relief from the excessive rate 
of taxation that saps job growth and robs them of the opportunity to 
provide for their needs and save for the future. This amendment would 
deliver tax relief to more middle-class taxpayers by increasing the 
number of individuals who pay the 15 percent tax rate.
  This amendment results in millions of taxpayers being able to keep 
more of the money they earn. This extra income will allow individuals 
to save and invest more. Increased savings and investment are key to 
sustaining our current economic growth.
  In sum, the measure is a win for individuals, and a win for America 
as a whole. Therefore, Mr. President, on behalf of the millions of 
Americans in need of relief from over-taxation, I urge my colleagues to 
support this amendment.
  This amendment targets tax relief to the individuals who feel the tax 
squeeze the most: lower and middle-income taxpayers. Under this 
amendment, unmarried individuals can make nearly $30,000 and married 
individuals can earn up to $50,000 and still be in the 15-percent tax 
bracket.


                            Motion to Commit

  Now, Mr. President, I send a motion to commit with instructions on 
behalf of myself, Senator Conrad, and Senator Levin to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. Without objection, the pending amendment will 
be laid aside and the clerk will report.
  The legislative clerk read as follows:

       The Senator from Arizona [Mr. McCain], for himself, Mr. 
     Conrad, and Mr. Levin, moves that the Act, H.R. 1836, as 
     amended, be committed to the Senate Finance Committee with 
     instructions to report back forthwith.

  The motion is as follows:
       (1) strike any reduction in the top 2 income tax rates, and 
     it shall not be in order for the Committee or the Senate to 
     consider any such reductions--
       (A) until the President has submitted a comprehensive 
     defense budget amendment to the Congress; and
       (B) until the Congressional Budget Office has submitted to 
     the Committees on Budget, Appropriations, and Armed Services 
     a re-estimate of the budget authority and outlays necessary 
     to implement the policies proposed by the President in such 
     budget amendment through fiscal year 2011; and
       (2) any other bill reported by the Committee containing 
     reductions in the 2 top income tax rates--
       (A) shall be considered as a reconciliation bill in 
     accordance with the Budget Act; and
       (B) shall provide that any such reductions to the 2 top 
     income tax rates reflect any adjustment necessary to 
     accommodate the additional outlays estimated by the 
     Congressional Budget Office under paragraph (1)(B) of this 
     motion to be necessary to fund the President's defense budget 
     amendment and to ensure that such outlays, taken in 
     combination with the revenue impact of the income tax rate 
     reduction bill, do not reduce the Federal budget surplus in 
     any year below the levels necessary to preserve the estimated 
     surplus under current law in either the Medicare Hospital 
     Insurance Trust Fund or the Social Security Trust Fund.

  Mr. McCAIN. Mr. President, without knowing what the administration 
intends to spend on our national defense, it is difficult for me to 
support the Budget Reconciliation bill. In the wake of large tax cuts, 
non-defense spending initiatives, and uncertain surplus projections, we 
cannot be sure how much money will remain to fund such defense 
priorities as National Missile Defense, force modernization, spare 
parts, flight hours, overdue facility maintenance, training programs, 
and the care of our service members.
  My motion would ensure that those funds needed for these critical 
defense priorities are available, especially in light of an article 
from today's Defense Week, which I will include in the Record, that 
suggests the so-called reserve fund for defense may be much smaller 
than predicted for the next ten years.
  Mr. President, we have the world's finest military, but that is 
principally because of the fine people in the military who continue to 
do more with less. Our ability to field credible front-line forces is 
due to the efforts of our servicemembers, as we live off of the 
remnants of the Reagan military buildup. That may be difficult to 
admit, unless you have reviewed the list of aircraft, ships, artillery, 
and tanks in our current weapons inventory, and recognized the extent 
of this problem.
  Anyone who dismisses our military forces' serious readiness problems, 
concerns with morale and personnel retention, and deficiencies in 
everything from spare parts to training, is either willfully uninformed 
or just not ready to face reality. Highly skilled service men and 
women, who have made ours the best fighting force the world, have been 
leaving in droves--unlikely to be replaced in the near future. The 
reason for deciding to leave the service is simple; if one is 
overworked, underpaid, and away from home more and more often, why 
stay? Potential recruits say why join? Failure to fully and quickly 
address our readiness problem will be more damaging to both the near 
and long-term health of our all-volunteer force than we can imagine.
  The cure for our defense decline will be neither quick nor cheap. We 
should not only shore up the services' immediate needs, but also should 
address the modernization and personnel problems caused by years of 
chronic under-funding.
  The administration must take several important steps: propose 
realistic budget requests; specifically budget for ongoing contingency 
operations; provide adequately for modernization; ensure equipment and 
base operations maintenance is adequately funded; and resolve the wide 
pay and benefits disparity between the military and civilian sector. In 
turn, civilian and uniformed leadership must be willing to break from 
service parochialism and

[[Page 8636]]

institutional affinities for ``cold war'' legacy weapons systems and 
funding priorities.
  Recently, I voted in favor of the Budget Resolution for Fiscal Year 
2002 in the interest of moving the budget process forward. But I did so 
in the hope that the Reconciliation bill would address many of the 
reservations I had about the priorities and assumptions contained in 
the resolution.
  My chief concern was that the Reconciliation bill should explicitly 
provide sufficient resources for our national security. Our military 
services have been neglected for too many years. But with appropriate 
increases and money freed up from eliminating waste and inefficiency in 
the defense budget, we can make progress toward restoring the morale 
and readiness of our Armed Forces.
  Currently, the administration is conducting a defense review. My 
motion would ensure that the reconciliation bill before us provides not 
only the resources for these overdue reforms, but also funds to 
substantially strengthen air, sea, and land forces in the near term.
  Today in Defense Week there is a very interesting article entitled 
``Federal Spending Blueprint Limits Defense Dollars'':

       Congress has set aside so much of the $5.6 trillion budget 
     surplus--for a tax cut, Social Security, Medicare and more--
     that just $12 billion in outlays is left for fiscal 2002 
     spending increases across the federal government, according 
     to officials and documents. . . .
       The annual budget reserve figures have not been previously 
     disclosed. They demonstrate the limits within which military 
     programs must compete against other priorities. These 
     constraints are tighter than is widely known. While a chorus 
     of voices have advocated increasing the Pentagon budget by up 
     to $100 billion a year, the new figures show how difficult 
     even a fraction of that increase will be to attain.

  Mr. President, I ask unanimous consent that the article from Defense 
Week be printed in the Record.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

                   [From Defense Week, May 21, 2001]

           Federal Spending Blueprint Limits Defense Dollars

                         (By John M. Donnelly)

       Congress has set aside so much of the $5.6 trillion budget 
     surplue--for a tax cut, Social Security, Medicare and more--
     that just $12 billion in outlays is left for fiscal 2002 
     spending increases across the federal government, according 
     to officials and documents.
       The relatively small pot of money for budget boosts sets 
     tight limits on the resources available for Defense Secretary 
     Donald Rumsfeld's emerging plans for the military.
       In the budget resolution that Congress passed earlier this 
     month, lawmakers pencilled in plans for the massive surplus 
     that largely ignore the Pentagon. All told, $504 billion of 
     the $5.6 trillion surplus is reserved for any spending, 
     defense or otherwise, above what's currently planned in 
     federal budgets. But in not one of the next five fiscal years 
     does the amount in the reserve exceed $20 billion in outlays, 
     said William Hoagland, majority staff director of the Senate 
     Budget Committee, in an interview.
       The annual budget reserve figures have not been previously 
     disclosed. They demonstrate the limits within which military 
     programs must compete against other priorities. Those 
     constraints are tighter than is widely known. While a chorus 
     of voices have advocated increasing the Pentagon budget by up 
     to $100 billion a year, the new figures show how difficult 
     even a fraction of that increase will be to attain.
       Still the Department of Defense and Energy national 
     security programs will not be starved for cash next year: 
     They'll get at least $325 billion in budget authority, about 
     5 percent more than was appropriated this fiscal year.
       Although the $504 billion surplus is a lot of money, on an 
     annual basis, it becomes available only slowly, according to 
     the plan.
       After the $12 billion in outlays reserved for the fiscal 
     year that begins Oct. 1, Congress left $19 billion reserved 
     for fiscal 2003, $10 billion for fiscal 2004, $11 billion for 
     2005 and $20 billion for 2006, Hoagland said. Those figures 
     taken into account the annual rate at which taxes would be 
     slashed in the Senate-passed tax-cut bill, he said.
       He hastened to add that those reserve dollars could 
     increase, because the budget resolution is a blueprint and 
     Congress has yet to actually authorize and appropriate the 
     money. On the other hand, many analysts contend that the pool 
     of reserve money is likely to be smaller than the current 
     projection.


                            How big a raise?

       Calls for annual Pentagon budget boosts of between $50 
     billion and $100 billion have become commonplace as the 
     rising cost of maintaining an aging force structure and 2 
     million active-duty military and civilian personnel has 
     become more evident. Recent press reports have indicated the 
     Pentagon may even ask for increases of up to $50 billion a 
     year.
       The annual dollar amounts described by Hoagland represent 
     what's left in the next five years to increase the budget of 
     any federal department or agency above President Bush's plan. 
     Once Rumsfeld and Bush unveil the findings of a review of 
     military priorities in the coming weeks, the Pentagon is 
     expected to ask for a raise in fiscal 2002 above what Bush 
     put forth in a ``placeholder'' defense budget in late 
     February.
       The question of the hour is: How much of a raise?
       ``Budget authority'' is the total amount that Congress 
     empowers the executive branch to make available for programs; 
     the ``outlay'' figure applicable in this case is the 
     estimated value of the checks the government will sign. In a 
     given year, the Pentagon's outlays typically represent about 
     60 percent of its budget authority.
       Consequently, assuming that all the reserve $12 billion in 
     outlays is slated for the Pentagon alone (an arguably risky 
     assumption), then Bush would need to ask for perhaps an 
     additional $20 billion in budget authority, roughly speaking.
       The president's February budget requested $325 billion in 
     budget authority for Defense and Energy security programs. 
     That was $16 billion more than President Clinton's plan for 
     fiscal 2002 and $14 billion over Congress's appropriation for 
     the current fiscal year.
       Consequently, $20 billion in a additional budget authority 
     now would make the Pentagon's budget $36 billion higher than 
     Clinton had planned for fiscal 2002 and $34 billion above 
     this year's mark. That's big money, but far less than the $90 
     billion a senior defense official recently told Defense Week 
     was required.
       Although far less of an increase than many have predicted 
     or hoped for, such an increase would not be insignificant and 
     would be criticized in some quarters as unneeded a decade 
     after the Cold War ended.


                         assumptions questioned

       There are several reasons to suspect that the $504 billion 
     reserve for the next 10 years may end up smaller than 
     predicted.
       According to a non-partisan analyst, Steven Kosiak of the 
     Center for Strategic and Budgetary Assessments, a defense 
     think tank in Washington, D.C., the budget blueprint assumes 
     that non-defense spending will not grow much faster than 
     inflation.
       But if those programs grow by 1 percent above inflation, 
     then the $504 billion reserve over 10 years would be cut more 
     than 50 percent, Kosiak says. Domestic programs have been 
     kept below inflation only in 1996 and during two years of the 
     Reagan administration, a Democratic aide said. Over the past 
     decade, the growth has averaged 2 percent, Kosiak said.
       If past is prologue, the reserve won't materialize. But 
     Bush has promised to hold the line on government outlays.
       All told, when a host of other non-defense priorities are 
     considered, Kosiak sees $700 billion in non-military items 
     competing for the $504 billion pot.
       In addition, many Republicans are committed to adding to 
     the 11-year $1.35 trillion tax cut now being debated or to 
     pass separate tax cut measures in the future. That, too, 
     would threaten the Pentagon's share of the pie.
       Finally, the Congressional Budget Office's assumptions 
     about the economy's growth undergird the projected surplus. 
     If those assumptions fail to come true, the surplus itself 
     may not materialize, some experts warn. For example, 
     according to Kosiak, CBO concedes there's a 50-50 chance that 
     its five-year projections of the surplus could be off by $250 
     billion, either plus or minus.
       If CBO has overstated economic growth, the impact on the 
     reserve could be substantial. Kosiak says that ``even a very 
     modest reduction'' of future growth could completely 
     eliminate the $500 billion reserve.
       However, when the CBO has been wrong lately, it has 
     underestimated the economy's strength and so understated the 
     size of U.S. revenues. New revenue numbers are due this 
     summer, and they may change the fiscal picture.

  Mr. McCAIN. I asked the Office of Management and Budget Director to 
send me information as to how much we were going to spend on defense 
both this year and in the next 10 years. No answer. There has not been 
even an estimate as to what the supplemental will be. We are about to 
enact one of the most massive tax cuts in history, and we do not have 
any idea how much money is going to be devoted to defense spending and 
how much is going to be left over for it.
  I believe the American people and Members of this body have a right 
to know that answer. This motion basically says that we should wait, as 
far as the top tiers are concerned, until we

[[Page 8637]]

find out how much money is going to be spent on defense.
  It instructs the Budget Committee to come up with the information 
that is necessary for us to make these decisions in the overall context 
of other spending but most importantly defense spending.
  I campaigned all across this country telling service men and women 
that help was on the way. So far not one penny of help has been on the 
way. So far we have not had a supplemental appropriations bill to meet 
the pressing, compelling needs just to keep our planes flying, our 
ships at sea, and our men and women in the military. We do not have the 
supplemental. We have no estimate of what our defense spending needs 
are going to be for the next 10 years. According to recent information, 
including from Defense Week, there will be very little.
  I urge the adoption of the motion to commit with instructions.
  Mr. President, how much time do I have remaining?
  The PRESIDING OFFICER. The Senator has 3 minutes remaining.
  Mr. McCAIN. I yield back the remainder of my time.
  Mr. REID. Is the Senator from New Hampshire ready to proceed?
  The PRESIDING OFFICER. Does the Senator from Nevada yield back time 
on the McCain amendment?
  Mr. BAUCUS. Yes. Mr. President, all time in opposition to the 
amendment is yielded back.
  Mr. McCAIN. Could I say to my friend, my understanding is that 
Senator Conrad wanted to speak on this motion to commit, so I want to 
reserve 2 minutes of my time remaining for Senator Conrad, if he wants 
to speak. If not, I will yield it back.
  Mr. BAUCUS. I yield back all time. If Senator Conrad wants to speak 
for 2 minutes later on during the day, I think we can find time to let 
him speak on the amendment.
  Mr. McCAIN. What is the point? What is the problem? I reserve the 2 
minutes.
  Mr. BAUCUS. So we can go on with this amendment.
  The PRESIDING OFFICER. The Senator has reserved 2 minutes.
  Without objection, it is so ordered.
  Mr. REID. Mr. President, the Senator from New Hampshire is next in 
order to speak for not more than 5 minutes.
  The PRESIDING OFFICER. The Senator from New Hampshire.
  Mr. SMITH of New Hampshire. Mr. President, on behalf of the leader, I 
ask unanimous consent that following the two previously scheduled votes 
that will begin at approximately 6:08 this evening, the Senate proceed 
to votes in relation to the pending amendments in the order in which 
they were offered. I ask consent that there be 2 minutes equally 
divided for debate between the votes.
  The PRESIDING OFFICER. Is there objection?
  Mr. REID. Mr. President, reserving the right to object, that time may 
slide a little bit because the two leaders have their leader time 
reserved. They may use that. So with that in mind, I have no objection.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SMITH of New Hampshire. On behalf of Senator McCain, I ask 
unanimous consent that it be in order for me to ask for the yeas and 
nays on the McCain amendment and on the McCain motion to commit.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. SMITH of New Hampshire. I ask for the yeas and nays on the McCain 
amendment and the McCain motion to commit.
  Is there a sufficient second?
  There appears to be a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The Senator from New Hampshire.
  Mr. SMITH of New Hampshire. What is the pending business before the 
Senate?
  The PRESIDING OFFICER. The Senator from New Hampshire has 5 minutes.


                           amendment no. 680

  Mr. SMITH of New Hampshire. Mr. President, I call up my amendment No. 
680.
  The PRESIDING OFFICER. The clerk will report.
  The senior assistant bill clerk read as follows:

       The Senator from New Hampshire [Mr. Smith] proposes an 
     amendment numbered 680.

  Mr. SMITH of New Hampshire. I ask reading of the amendment be 
dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

 (Purpose: To remove the limitation that certain survivor benefits can 
 only be excluded with respect to individuals dying after December 31, 
                                 1996)

       On page 802, after line 21, add the following:

     SEC. 803. REMOVAL OF LIMITATION.

       (a) In General.--Section 101(h) of the Internal Revenue 
     Code of 1986 (relating to exclusion of survivor benefits from 
     gross income) is amended by adding after paragraph (2) the 
     following new paragraph:
       ``(3) Application.--This subsection shall apply to amounts 
     received after December 31, 2000.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

  Mr. SMITH of New Hampshire. Mr. President, there is no more noble 
calling than for those who choose to put their lives on the line every 
day to serve and protect our families.
  On November 29, 1989, about 12 years ago, New Hampshire State Trooper 
Gary P. Parker from Wolfeboro, NH, was tragically killed in the line of 
duty. He left behind his wife Amy, a 16- month-old son Gregory, and a 
daughter Lindsay, who was to be born just 10 weeks after Trooper Parker 
lost his life.
  Amy Parker is now alone with her grief and was faced with raising 
both her son and daughter alone, something that I can certainly 
understand since my father died in the Second World War when I was 3. I 
was raised by my mother, with my brother, without a dad.
  But, fortunately, because her husband had prepared for the 
unthinkable, both children were left with a small survivor benefit 
pension. Believe it or not, they were forced to hand over a large 
portion of those benefits in taxes to the Federal Government, leaving 
the family very little on which to live.
  In 1996, Congress recognized the unfairness of this provision and 
rightly corrected the oversight. However, the correction only applied 
to those who died after 1997, leaving all of those families who were 
currently living with the grief and hardship of a tragic death with 
that additional burden still there.
  This amendment that I am offering, amendment No. 680, is a very 
simple amendment. I hope I will have the support of my colleagues. It 
will correct this oversight and bring relief to all the families of law 
enforcement officers who have lost their lives in the line of duty and 
are currently living under this inequity in the law.
  This is an important amendment that will send a message to our law 
enforcement community and their families that we hold them in the 
highest esteem, and we honor them for their service and sacrifice. We 
ought not have the Tax Code of the United States of America 
discriminate against them. I hope we will correct this inequity by 
adopting my amendment.
  Mr. President, I ask for the yeas and nays on the amendment.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be.
  The yeas and nays were ordered.


                 Amendment No. 723 to Amendment No. 680

  Mr. SMITH of New Hampshire. Mr. President, before yielding the floor, 
I send a second-degree amendment to the desk and ask for the yeas and 
nays on that.
  The PRESIDING OFFICER. The clerk will report the amendment.
  The senior assistant bill clerk read as follows:

       The Senator from New Hampshire [Mr. Smith] proposes an 
     amendment numbered 723 to amendment No. 680.

  Mr. SMITH of New Hampshire. I ask unanimous consent reading of the 
amendment be dispensed with.
  Mr. REID. Objection. Let's read this.
  The PRESIDING OFFICER. Objection is heard.

[[Page 8638]]

  The senior assistant bill clerk read as follows:

       At the appropriate place, add the following:

     SEC.   . PERMANENT MORATORIUM ON IMPOSITION OF TAXES ON THE 
                   INTERNET.

       Section 1101(a) of the Internet Tax Freedom Act (title XI 
     of division C of the Omnibus Consolidated and Emergency 
     Supplemental Appropriations Act, 1999; 47 U.S.C. 151 note) is 
     amended by striking ``during the period beginning on October 
     1, 1998, and ending 3 years after the date of the enactment 
     of this Act'' and inserting ``after September 30, 1998''.

  Mr. SMITH of New Hampshire. Mr. President, this amendment will 
permanently extend the current moratorium on the imposition of taxes on 
the Internet. It will also stop those who wish to establish a national 
sales tax from doing so. In May of last year, the House overwhelming 
passed this legislation, and the American people strongly oppose taxing 
the Internet and they vehemently oppose a national sales tax.
  Mr. President, let us not forget, as a result of leaving the Internet 
to its own device, we have seen an explosion in Internet trade, 
commerce and information available to consumers. Numerous organizations 
have backed my amendment to extend the moratorium on Internet taxes, 
including the Association of Concerned Taxpayers, U.S. Business and 
Industrial Council, and United Seniors Association. Now some have 
argued that it is not a level playing field because Internet companies 
don't pay taxes. Well, this is absolutely not true. Every business and 
every person is required to pay all tax demanded by their state and 
local government, and just about every business does. And those that 
don't can expect the tax man to come a knock'n.
  Mr. President, my amendment would only continue the current 
moratorium. It does not abolish any sales or use tax nor does it 
prevent any government from taking or even increasing sales or use 
taxes on its own residents. And it also prohibits local or state 
government in one state from imposing a tax on businesses or people in 
another state without a proper nexus--nor could they impose a national 
sales tax.
  If we don't pass this legislation, businesses will not only be 
subject to the state and local governments from which they reside, but 
could be open to nearly 30,000 state, local, and municipal cities and 
towns looking to squeeze businesses and individuals for a few extra 
dollars.
  Indeed, the vast array of federal, state, and even international 
bureaucrats needed to implement these programs and regulations would 
add on enormous amount of cost, paperwork and redtape which would not 
only hinder commerce and growth, but will crush small businesses.
  Local governments argue that if they can require so-called brick and 
mortar businesses to pay sales taxes on main street, then they should 
be allowed to force business men and women in other states to collect 
these taxes as well.
  Well, I disagree. And the Supreme Court disagrees as well. In 
National Bellas Hess v. Illinois (1967), Complete Auto Transit, Inc. v. 
Brady 333 (1977), and the Supreme Court's ruling (in Quill v. North 
Dakota, 1992) held that states attempting to tax out-of-state commerce 
without a proper nexus was unconstitutional. By allowing states to tax 
businesses and people in another state, and if we establish a national 
sales tax, we do this at our own peril.
  Mr. President, we must say ``no'' to those who want to raise taxes--
we must say ``no'' to those who want to tax the Internet--and we must 
say ``no'' to those who want a national sales tax.
  Mr. President, I urge passage of my amendment.
  Mr. President, I renew my request for the yeas and nays on the second 
degree.
  The PRESIDING OFFICER. Is there a sufficient second? At the moment, 
there is not a sufficient second.
  Mr. SMITH of New Hampshire. I yield the floor.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, I rise to address the underlying 
amendment. It is a good idea. There is no reason for the exclusion of 
certain income under survivor benefits with respect to persons who died 
before 1996. Sometimes those benefits are distributed after 1996, and I 
think the amendment offered by the Senator from New Hampshire is a good 
one.
  I must say, I am a little bit surprised by the second-degree 
amendment. It is not an improvement on the first degree. It is an 
entirely different subject. It is a subject which is not in the 
jurisdiction of this committee. I urge the Senator, frankly, to 
withdraw it or maybe offer the amendment later on. We have not debated 
that issue at any length. At least with respect to the underlying 
amendment, I think the Senator has a good idea.
  Mrs. CARNAHAN. Mr. President, I would like to take a moment to 
explain that while I wholeheartedly support extending the current 
moratorium on Internet access taxes, I must oppose this amendment.
  I believe that we should, and I am confident that we will, pass 
legislation this year that extends the moratorium on Internet access 
taxes. However, I think it is crucial that the legislation we pass to 
extend the ban on access taxes also address the ability of states to 
require remote sellers to collect and remit sales taxes.
  The Internet is still a growing and dynamic innovation and I believe 
that we must ensure that its development is not encumbered by 
discriminatory taxation. However, as the Internet becomes an 
increasingly important medium for the transaction of commerce, an 
unlevel playing field is emerging. While sales transacted at main 
street businesses are subject to state sales taxes, goods sold over the 
Internet are often free of such taxes.
  This creates two distinct problems. First, brick-and-mortar retailers 
are being subjected to a competitive disadvantage as consumers are able 
to purchase goods over the Internet without having to pay state sales 
tax on them. This situation provides a disincentive to shop at 
traditional retail locations and could have very negative long-term 
consequences for main street retailers.
  The second problem is that state and local governments rely on sales 
tax revenues for education, transportation infrastructure, law 
enforcement services, fire protection and more. The rise in untaxed 
electronic commerce is eroding state and local governments' revenue 
bases and may eventually compromise their ability to provide these 
essential services.
  Therefore I believe that we must address the issue of the collection 
of state sales taxes, and I fear that if this amendment is adopted, the 
impetus to deal with such issues will be diminished.
  I look forward to the opportunity to support an extension to the 
current moratorium in the context of a larger bill that also deals with 
the ability of states to require remote sellers to collect and remit 
sales taxes.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. REID. Mr. President, on behalf of Senator Kennedy, I call up 
amendment No. 684.
  The PRESIDING OFFICER. There is still time remaining on the second-
degree amendment--25 seconds.
  Mr. BAUCUS. If the Senator from New Hampshire is willing, I am 
willing to yield back the remainder of our time on both the first- and 
second-degree amendments.
  Mr. SMITH of New Hampshire. Mr. President, I yield back.
  Mr. BAUCUS. I yield back the remainder of our time as well.
  The PRESIDING OFFICER. All time is yielded back.


                           Amendment No. 684

  Mr. REID. Mr. President, I call up amendment No. 684.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Nevada [Mr. Reid], for Mr. Kennedy, for 
     himself, Mr. Dodd, and Mr. Johnson, proposes an amendment 
     numbered 684.

  Mr. REID. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.

[[Page 8639]]

  The amendment is as follows:

       On page 9, between lines 14 and 15, insert:
       ``(4) Delay of top rate reduction.--
       ``(A) In general.--Notwithstanding paragraph (2), with 
     respect to a calendar year, no percentage described in that 
     paragraph shall be substituted for 39.6 percent until the 
     requirement of subparagraph (B) is met.
       ``(B) Fully funding basic education services.--The 
     requirement of this subparagraph is that legislation be 
     enacted that appropriates funds for core education programs 
     at or above the levels that have been authorized for such 
     programs by the Senate in the following amendments to Senate 
     bill 1 (the Better Education for Students and Teachers Act, 
     107th Congress):
       ``(i) Senate Amendment 360 (107th Congress; as offered by 
     Senator Hagel and Senator Harkin), which passed the Senate on 
     a voice vote with no dissenters, to honor the Federal 
     commitment to provide States with 40 percent of the cost of 
     implementing the Individuals with Disabilities Education Act, 
     instead of the 17 percent of costs that the Federal 
     Government currently provides.
       ``(ii) Senate Amendment 365 (107th Congress; as offered by 
     Senator Dodd), which passed the Senate on a vote of 79 to 21, 
     to provide support under title I of the Elementary and 
     Secondary Education Act of 1965 (as amended by the Better 
     Education for Students and Teachers Act) for 100 percent of 
     the economically disadvantaged children by 2008 rather than 
     the 33 percent who are currently aided under such title.
       ``(iii) Senate Amendment 375 (107th Congress; as offered by 
     Senator Kennedy), which passed the Senate on a vote of 69 to 
     31, to improve teacher quality for all students under the 
     bipartisan agreement reflected in part A of title II of the 
     Elementary and Secondary Education Act of 1965 (as amended by 
     the Better Education for Students and Teachers Act).
       ``(iv) Senate Amendment 451 (107th Congress; as offered by 
     Senator Lincoln), which passed the Senate on a vote of 62 to 
     34, to improve the quality of education available to 
     bilingual students with limited English proficiency, 
     especially in light of the nation's growing immigrant 
     population.
       ``(v) Senate Amendment 563 (107th Congress; as offered by 
     Senator Boxer), which passed the Senate on a vote of 60 to 
     39, to ensure that more of the nation's 7,000,000 latchkey 
     children have access to safe, constructive activities after 
     school while their parents are at work.

  Mr. REID. Mr. President, because supporters of this bill assert that 
the size of the total tax cut is not so large as to prevent adequate 
funding of the nation's education needs, and prior to passage of this 
tax cut, many of this tax cut's supporters also voted to pass education 
amendments that anticipate meeting the nation's core education funding 
needs, it is the purpose of this amendment to provide that reductions 
of the top marginal income tax rate will not take effect unless funding 
is provided at the levels authorized in amendments to Senate bill 1, 
the Better Education for Students and Teachers Act, 107th Congress, 
that have been adopted by the Senate with respect to the Individuals 
With Disabilities Education Act, title I, State Grants for 
Disadvantaged Students, and part A of title II, Teacher Quality, of the 
Elementary and Secondary Education Act of 1965, as amended by the 
Better Education for Students and Teachers Act, and provisions of such 
Act concerning the education of students with limited English 
proficiency, and after school care in 21st Century Learning Centers.
  I yield back the time on this amendment.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Very briefly, Mr. President, to help clarify where the 
managers of the bill are on this amendment, I think it is a very good 
amendment, but I cannot agree to it. Essentially, it is conditional. It 
violates the Constitution. This is not the time and place for this 
particular amendment, even though it is meritorious, not on this bill.
  I yield back the remainder of my time.
  The PRESIDING OFFICER. The Senator from Wisconsin.
  Mr. FEINGOLD. Mr. President, I ask unanimous consent that the pending 
amendment be temporarily set aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 724

  Mr. FEINGOLD. Mr. President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Wisconsin (Mr. Feingold), for himself and 
     Mr. Kohl, proposes an amendment numbered 724.

  Mr. FEINGOLD. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

             (Purpose: To eliminate the Medicaid death tax)

       On page 314, after line 21, add the following:

     SEC. 803. ELIMINATION OF MEDICAID ESTATE RECOVERY 
                   REQUIREMENT.

       (a) Medicaid Amendment.--
       (1) In general.--Section 1396p(b) of Title 42, U.S.C., is 
     amended--
       (A) in paragraph (1), by striking ``except that'' and all 
     that follows and inserting ``except that, in the case of an 
     individual described in subsection (a)(1)(B), the State shall 
     seek adjustment or recovery upon sale of the property subject 
     to a lien imposed on account of medical assistance paid on 
     behalf of the individual.'';
       (B) in paragraph (2)(B), by striking ``in the case of a 
     lien on an individual's home under subsection (a)(1)(B),'';
       (C) in paragraph (3), by striking ``(other than paragraph 
     (1)(C))''; and
       (D) by striking paragraph (4).
       (2) Effective date.--The amendments made by paragraph (1) 
     shall apply to individuals dying on or after the date of 
     enactment of this Act.
       (b) Revenue Offset.--The Secretary of the Treasury shall 
     adjust the reductions of the rates of tax under section 
     2001(c) of the Internal Revenue Code of 1986 (as amended by 
     section 511 of this Act) with respect to estates of decedents 
     dying and gifts made in such manner as to increase revenues 
     by $120,000,000 in each fiscal year beginning before October 
     1, 2011.

  Mr. FEINGOLD. Mr. President, my amendment would eliminate the 
Medicaid Estate Recovery Program, the real ``death tax'' for thousands 
of elderly of modest means. It offsets the cost of eliminating this 
program by shaving back the reductions in the estate tax rates.
  The Medicaid Estate Recovery Program may be the most regressive tax 
of all. It effectively imposes a 100 percent estate tax on our most 
vulnerable citizens--severely disabled seniors who are impoverished. It 
is levied against the first dollar of the estate's value.
  At a time when we are considering completely eliminating all estate 
taxes on the super wealthy, it is indecent to retain a 100 percent tax 
on the estates of those with practically nothing.
  The average annual cost of nursing home care is about $40,000 or 
about $110 per day. That cost poses an enormous burden on many elderly 
or disabled individuals, many of whom are forced to spend down a 
lifetime's savings before they become poor enough to qualify for 
Medicaid. After having spent down those savings, a home may be the only 
thing they have left to leave to their children.
  The estate recovery program not only places liens on homes, I also 
understand that personal property may be at risk in some areas. 
Grandma's locket may have little material worth but may have great 
sentimental value to children and grandchildren. Nevertheless, they may 
go on the block, too, and there is strong anecdotal evidence that many 
forgo needed care in order to avoid losing their homes and personal 
property to the estate recovery program.
  The estate recovery program does little to offset the cost of 
Medicaid, accounting for only one-tenth of one percent of the funding 
for the program according to data from the Congressional Research 
Service.
  In fact, there is reason to believe that the estate recovery program 
may not even achieve this tiny savings, but instead may actually result 
in greater Medicaid expenditures. Individuals who forgo nursing home 
care to avoid liens on their homes and personal keepsakes may end up 
requiring far more expensive care as a result, and the ensuing higher 
cost of care only leaves the taxpayers worse off because of this self-
neglect.
  The estate recovery program can work a real hardship on surviving 
spouses. After surviving the chronic illness of their loved one, and 
spending down their life's savings, they then must cope with a lien on 
their home. As the Congressional Research Service notes, though claims 
on an individual's estate cannot be acted upon until after

[[Page 8640]]

the death of the surviving spouse, liens placed on houses can affect an 
individual's financial credit, preventing that spouse from mortgaging 
property, getting a bank loan, or taking out a new credit card in order 
to pay for essential living expenses such as home repairs like a new 
furnace or a leaking roof.
  This program turns States into Realtors and pawn brokers. Some States 
have simply not implemented the program, and I understand that among 
them is the President's home State of Texas. Under my amendment the 
rest of the country would conform to the practice of Texas.
  Mr. President, my amendment gets States out of the real estate 
business. It ends a program that dissuades elderly with severe 
disabilities from seeking the care they need while generating a 
pitifully small revenue stream. It ends the 100 percent ``death tax'' 
that is imposed on families with the most modest means.
  I urge my colleagues to support this amendment.
  Mr. President, I ask unanimous consent that the pending amendment be 
temporarily set aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. Mr. President, since there is nobody on the other side, I 
think somebody should be here before we do this.
  Mr. FEINGOLD. Mr. President, it was for that reason that I did not 
ask for the yeas and nays on my amendment.
  Mr. REID. I wonder if we could have someone on the other side. It is 
really unfair without someone being over there.
  Mr. BAUCUS. Mr. President, if there is some way we could work out 
waiting for a couple minutes so the chairman of the committee could be 
here, I think that would be appropriate.
  Mr. FEINGOLD. Mr. President, I ask unanimous consent that I be 
recognized at that point.
  Mr. REID. Reserving the right to object, I say to my friend from 
Wisconsin, we are going to run out of time at 4 o'clock and have to go 
to 4:08; is that correct?
  The PRESIDING OFFICER. The vote is scheduled at 6:08, and there is to 
have been 2 hours prior to the vote.
  Mr. REID. Remember, at 6 o'clock the debate was supposed to start 
with Senator Judd Gregg having 5 minutes and Senator Baucus 3 minutes.
  The PRESIDING OFFICER. The Senator is correct. The Parliamentarian is 
incorrect.
  Mr. REID. I will make sure that, under leader time, the Senator from 
Wisconsin is protected to offer his amendments.
  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. REID. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. Mr. President, if there is some problem that I find at a 
later time, Senator Baucus and I find with Senator Grassley not being 
here, it appears all Senator Feingold is doing is offering amendments, 
just as Senator Smith did and Senator McCain. Having had the break, I 
don't see anything wrong with that. If anyone does, we will find out 
about it later.
  The PRESIDING OFFICER. The Senator from Wisconsin.
  Mr. FEINGOLD. Mr. President, I ask unanimous consent that the current 
amendment be set aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 725

  Mr. FEINGOLD. Mr. President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The senior assistant bill clerk read as follows:

       The Senator from Wisconsin [Mr. Feingold] proposes an 
     amendment numbered 725.

  Mr. FEINGOLD. I ask unanimous consent that reading of the amendment 
be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

 (Purpose: To increase the income limits applicable to the 10 percent 
               rate bracket for individual income taxes)

       On page 7, line 24, strike ``$12,000'' and insert 
     ``$15,000''.
       On page 8, line 1, strike ``$10,000'' and insert 
     ``$11,250''.
       On page 9, in the table between lines 11 and 12, strike 
     column relating to 39.6 percent.

  Mr. FEINGOLD. Mr. President, this amendment is about tax fairness.
  The bill before us is tilted heavily toward high-income taxpayers. 
According to Citizens for Tax Justice, when this bill's tax cuts are 
fully phased in, the highest-income one percent of taxpayers would 
receive 35 percent of the benefits of the bill. The majority of 
taxpayers in the bottom three-fifths of the population would get only a 
little more than 15 percent of the bill's benefits.
  When this bill's tax cuts are fully phased in, the one percent of 
taxpayers with the highest incomes would receive an average tax cut of 
more than $44,000, while taxpayers in the middle fifth of the 
population would receive an average tax cut of less than $600.
  Even as a share of their income, those with the highest incomes would 
receive greater benefits under this bill. According to the Center on 
Budget and Policy Priorities, when fully phased in, this bill's tax 
cuts would increase the after-tax income of the highest-income one 
percent of families by an average of 5 percent, but it would increase 
the average after-tax income of the middle fifth of families by just a 
little more than 2 percent.
  Nationwide, only 907,990 taxpayers, or \7/10\ of a percent of 
taxpayers are in the top tax bracket. But that group is not too small 
to capture the attentions of this tax bill. In response to an inquiry 
from Senator Rockefeller during the Finance Committee markup on 
Tuesday, the Joint Committee on Taxation indicated that reducing the 
top rate from 39.6 percent to 36 percent in steps over 10 years costs 
$120 billion in this bill. That's $120 billion for fewer than a million 
taxpayers. In contrast, fully 128 million taxpayers do not fall into 
the top tax bracket and would get no benefits whatsoever from the 
reduction in the top tax rate.
  In my own State of Wisconsin, fewer than 15,600 taxpayers, or \6/10\ 
of a percent of taxpayers, are in the top tax bracket, and fully 2.5 
million taxpayers are not in the top tax bracket.
  My amendment is a simple one. It would strike the cut in the top 
income tax rate, and use the savings to increase the amount of income 
covered by the 10 percent income tax bracket. It would thus reduce the 
already large benefits to that less than one percent of the population 
with incomes of more than $297,000, and use the savings to give tax 
cuts to all income taxpayers.
  Mr. President, this amendment would restore a modicum of fairness to 
this bill, and I urge my colleagues to support it.
  Mr. President, I ask unanimous consent that the pending amendment be 
temporarily set aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                   Motion To Commit With Instructions

  Mr. FEINGOLD. Mr. President, I send a motion to commit to the desk 
and ask for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Wisconsin [Mr. Feingold] moves to commit 
     the bill to the Finance Committee with instructions that the 
     Committee report the bill back within 3 days, with changes 
     that would strike all the estate tax rate reductions in the 
     bill and use the savings to expand the amounts of the estate 
     tax unified credit exemption amounts.

  Mr. FEINGOLD. Mr. President, it is no secret that the benefits of 
this bill are not fairly distributed. The highest-income one percent 
receive 35 percent of this bill's benefits.
  A significant contributor to this imbalance is the estate tax 
provisions of the bill. Even under current law, roughly 98 percent of 
Americans will never have to pay a cent of estate tax. So this bill's 
$145 billion in estate tax cuts will benefit only the wealthiest 2 
percent of Americans, and will have no benefit for the other 98 percent 
of us.

[[Page 8641]]

  But even in the estate tax provisions themselves, this bill tilts 
unnecessarily to the very wealthiest.
  The bill would increase the unified credit exemption up to $4 million 
a person, or $8 million a couple. This change alone will exempt all but 
the very wealthiest Americans from any contact with the estate tax.
  But the bill goes further. It would also reduce the rate of taxation 
that the few extremely wealthy families who still have to pay the 
estate tax would pay. It thus focuses tax cuts on the very pinnacle of 
wealth.
  Let me give you an idea of the numbers. According to an analysis done 
by the Center on Budget and Policy Priorities, fewer than 50,000 
families in the entire United States paid any estate tax at all in 
1999. But of those families, fewer than 3,300 families had estates 
larger than $5 million in size. These small numbers are indicative of 
the very few who would benefit from the rate reductions in this bill.
  My motion to recommit would spread the estate tax relief in this bill 
more broadly. My motion would instruct the Finance Committee to strike 
all the estate tax rate reductions in the bill and use the savings to 
expand the amounts of the estate tax unified credit exemption amounts. 
Thus under my motion, more relatively smaller estates would be exempted 
from taxation altogether. I have been told that elimination of the rate 
reductions would allow the unified credit exemption to increase to $5 
million, or $10 million a couple.
  This motion would give complete estate tax relief to more families 
earlier than the underlying bill.
  That is the direction we should go, and I urge my colleagues to 
support it.
  Madam President, I ask unanimous consent that the pending amendment 
be temporarily set aside.
  The PRESIDING OFFICER (Ms. Collins). Without objection, it is so 
ordered.


                           Amendment No. 726

  Mr. FEINGOLD. Madam President, I send an amendment to the desk and 
ask for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The senior assistant bill clerk read as follows:

       The Senator from Wisconsin [Mr. Feingold] proposes an 
     amendment number 726.

  Mr. FEINGOLD. Madam President, I ask unanimous consent that further 
reading of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

  (Purpose: To preserve the estate tax for estates of more than $100 
  million in size and increase the income limits applicable to the 10 
           percent rate bracket for individual income taxes)

       On page 9, between lines 4 and 5, insert the following:
       ``(D) Adjustments after 2010.--In prescribing the tables 
     under subsection (f) which apply with respect to taxable 
     years beginning in calendar year 2011, the Secretary shall, 
     in addition to the adjustments made under subparagraph (C) of 
     this subsection, increase the initial bracket amounts for 
     subsection (a) and subsection (b) so as to decrease revenues 
     by the amount of revenues generated by the other provisions 
     of the amendment creating this provision.''
       On page 63, strike line 4 and all that follows through page 
     64, line 16.
       On page 65, in line 12, strike ``and before 2011''.
       On page 66, in the table after line 1, strike ``2007, 2008, 
     2009, and 2010'' and insert ``2007 and thereafter''.
       On page 68, between lines 14 and 15, following the item 
     relating to 2010, insert the following:

  2011 and thereafter......................................$100,000,000
       On page 106, after line 6, insert the following:
       ``(g) Notwithstanding any other provision of law, this 
     subtitle shall not apply to property subject to the estate 
     tax.''

  Mr. FEINGOLD. Madam President, this is a simple amendment. It limits 
the estate tax repeal for estates of over one hundred million dollars 
and uses the savings to give tax cuts to all income tax payers.
  This debate is about priorities. It is a debate about where we should 
devote our resources.
  This amendment provides a clear, easily definable choice.
  The Senate has indicated that reforming the estate tax, especially 
for small businesses and farms, should be a priority. I support that 
goal, but this bill goes much further than any reasonable limit to 
address that concern.
  This bill goes beyond any common-sense definition of small businesses 
or modest estates. This bill provides massive amounts to money tax cuts 
to extremely wealthy multi-millionaires.
  How can anyone suggest that distributing the nation's hard-won 
surplus to multi-millionaires should be among our highest priorities? 
Literally hundreds of millions of Americans have more pressing needs.
  Specific tax cuts or spending increases come with a price. Every time 
we lower a tax rate or create a new tax loophole, the tax burden on 
everyone else increases.
  Last year, the Treasury Department's Office of Tax Policy told us how 
much we would have saved from our amendment to cap the estate tax 
repeal at estates of $100 million in size. At that time, their most 
current data was for 1998, for people who died in 1997 and paid taxes 
in 1998. In that year, 35 estates amounted to more than $100 million. 
Of those, 31 paid taxes, and 4 did not. Those 31 estates paid $1.4 
billion in taxes, or 7 percent of all estate taxes. Repealing the 
estate tax for those estates would have given those estates a tax cut 
averaging $45 million each.
  Too often, the choices we weigh are heartbreakingly difficult. This 
is not one of those cases.
  It makes some sense to increase the current exemption on estates; it 
makes no sense at all to repeal the estate tax for the handful of 
estates over one hundred million dollars.
  Madam President, surely the supporters of estate tax cuts must agree 
that eliminating the estate tax on those handful of estates over one 
hundred million dollars is not our highest priority or anywhere close 
to it.
  My amendment eliminates the repeal of the estate tax on estates of 
more than $100 million, and uses the savings to increase the income tax 
cut for all income tax payers. It is a simple choice.
  Madam President, I ask unanimous consent that the Senate temporarily 
set aside the pending amendments.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. FEINGOLD. I thank my colleagues.
  Madam President, I ask for the yeas and nays on my amendment.
  The PRESIDING OFFICER. Is there a sufficient second?
  At the moment, there is not a sufficient second.
  Mr. REID. Which amendment is it?
  Mr. FEINGOLD. The last one.
  Madam President, I yield the floor.


                           Amendment No. 727

  Mr. REID. Madam President, I send an amendment to the desk on behalf 
of Senator Harkin and ask that the prior amendment be set aside.
  The PRESIDING OFFICER. Without objection, the pending amendment is 
set aside.
  The clerk will report.
  The senior assistant bill clerk read as follows:

       The Senator from Nevada [Mr. Reid], for Mr. Harkin, 
     proposes an amendment numbered 727.

  Mr. REID. Madam President, I ask unanimous consent that further 
reading of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

(Purpose: To delay the effective date of the reductions in the tax rate 
relating to the highest rate bracket until the enactment of legislation 
that ensures the long-term solvency of the social security and medicare 
                              trust funds)

       On page 11, strike lines 14 through 22 and insert the 
     following:
       (1) In general.--Except as provided in paragraphs (2) and 
     (3), the amendments made by this section shall apply to 
     taxable years beginning after December 31, 2000.
       (2) Amendments to withholding provisions.--The amendments 
     made by paragraphs (6), (7), (8), (9), (10), and (11) of 
     subsection (b) shall apply to amounts paid after the 60th day 
     after the date of the enactment of this Act.
       (3) Assurance of trust fund solvency.--
       (A) CBO certification.--The reductions in the tax rate 
     relating to the highest rate bracket under the amendments 
     made by this section shall not take effect unless the 
     Congressional Budget Office submits to Congress

[[Page 8642]]

     and the Secretary of the Treasury a certification that 
     legislation has been enacted that ensures the solvency of--
       (i) the Federal Old-Age and Survivors Insurance Trust Fund 
     and the Federal Disability Insurance Trust Fund for a period 
     of not less than 75 years; and
       (ii) the Federal Hospital Insurance Trust Fund and the 
     Federal Supplementary Medical Insurance Trust Fund for a 
     period of not less than 50 years.
       (B) Application.--
       (i) In general.--Except as provided in clause (ii), the 
     reductions in the tax rate relating to the highest rate 
     bracket under the amendments made by this section shall begin 
     with the rate for the taxable year beginning after the date 
     on which the Congressional Budget Office submits the 
     certification described in subparagraph (A).
       (ii) Retroactive application.--If the Congressional Budget 
     Office submits the certification described in subparagraph 
     (A) before October 1, 2002, this subsection shall be applied 
     as if this paragraph had not been enacted.

  Mr. GRASSLEY. Madam President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The senior assistant bill clerk proceeded to call the roll.
  Mrs. LINCOLN. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  Mr. BAUCUS. I object.
  The PRESIDING OFFICER. Objection is heard. The clerk will continue 
with the call of the roll.
  The senior assistant bill clerk continued the call of the roll.
  Mrs. LINCOLN. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  Mr. REID. Madam President, I yield 2 minutes to the Senator from 
Arkansas to offer an amendment.
  The PRESIDING OFFICER. The Senator from Arkansas is recognized.


                           Amendment No. 711

  Mrs. LINCOLN. Madam President, I have an amendment at the desk.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Arkansas [Mrs. Lincoln] proposes an 
     amendment numbered 711.

  Mrs. LINCOLN. Madam President, I ask unanimous consent that further 
reading of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

  (Purpose: To eliminate expenditures for tuition, fees, and room and 
  board as qualified elementary and secondary education expenses for 
   distributions made from education individual retirement accounts)

       On page 31, line 1, strike ``tuition, fees,''.
       On page 31, line 11, strike ``room and board,''.

  Mrs. LINCOLN. Madam President, the amendment that I am offering 
strikes the provision within the education savings accounts language 
that covers K-12 tuition, fees and room and board expenses while 
permitting the use of ESA tax savings for other education-related 
expenses for all students. This amendment will create a level playing 
field by providing the same tax benefits to all parents regardless of 
where they send their children to school.
  Under my amendment, all parents will be able to take advantage of ESA 
accounts for K-12 related expenses to buy computers, uniforms, or other 
items that children use to supplement or further their education. In 
short, it treats all parents equally.
  Using ESA accounts for private school tuition is simply vouchers by 
another name. While I strongly believe in a parents' right to choose a 
public school education or private school education for their children, 
I am concerned that providing a tax incentive to pay private school 
tuition will divert the attention and resources needed to improve our 
public schools.
  Strengthening our public schools should be a priority for all of us. 
The philosopher Edmund Burke once said that ``education is the cheap 
defense of nations.'' How true that is. If we are to continue our role 
as a world leader, we've got to make sure all of our children are 
prepared to pick up where we leave off. So in my view, education is a 
national security issue and an economic one as well.
  Many of you know that rural development is a priority for me, and I 
am continually looking for ways to bring jobs to the impoverished Delta 
region where I grew up. Whenever I meet with industry folks and urge 
them to consider the Delta, one of their first questions is: ``How are 
the public schools?'' They don't ask about the private schools, just 
the public schools. To attract industry anywhere in this country, we've 
got to have strong public schools.
  My amendment isn't the silver bullet. It is about crafting tax policy 
that recognizes the important role public schools play in our 
communities, especially rural communities in poor states like Arkansas.
  As a proud graduate of public schools of Arkansas, I have enormous 
faith in our system of public education. And I offer this amendment 
today, Madam President, because I am passionate about fulfilling our 
responsibility at the federal level to give schools and parents the 
support and resources they need to be successful.
  I urge my colleagues to resist the false promise the current ESA 
provision provides to parents and public schools and support a tax 
policy that treat all parents equally.
  The PRESIDING OFFICER. The Senator's 2 minutes have expired.
  The Senator from Montana.
  Mr. BAUCUS. Madam 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. REID. Madam President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. I ask that when I suggest the absence of a quorum 
momentarily, the time run equally against both sides.
  The PRESIDING OFFICER. Is there objection?
  Mr. GRASSLEY. Starting now, the 2 hours is evenly divided.
  Mr. REID. That is right, except for the 2 minutes we have already 
used.
  Madam President, has the unanimous consent agreement been agreed to?
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. GRASSLEY. Madam President, it has been suggested by some of those 
who are opposed to our legislation that the tax cuts are backloaded, 
and there is some legitimacy to that argument, although don't forget 
that the tax rate reduction that benefits most Americans--in fact, 
every income-tax payer in America--the new 10-percent bracket, going 
back to January 1, 2001, benefits everybody. From that standpoint, this 
legislation is very frontloaded. But we are dealing with a 
congressional budget resolution that was adopted earlier this month.
  The budget surplus, excluding Social Security, will be $2.3 trillion 
over the next 11 years. The proposed tax reductions over the next 11 
years will be $1.3 trillion of that $2.3 trillion.
  When one looks at the budget surplus and the tax cuts on a year-by-
year basis, one will see that tax cuts are designed to stay within the 
available surplus each and every year. Twenty-nine percent of the 
budget surplus occurs over the next 5 years, and 29 percent of the tax 
cut is phased in over the next 5 years. Sixteen percent of the budget 
surplus occurs in the last year, while only 14 percent of the tax cuts 
occur the last year. In other words, the tax cuts are phased in to 
reflect the surpluses available to pay for them.
  To the extent one argues that our bill is backloaded, our tax relief 
is frontloaded for the lower income taxpayers, particularly that 10-
percent new bracket about which I have been talking. The tax cuts for 
the higher income taxpayers who pay the bulk of the Federal tax burden 
come later.
  The reason for this is we want to help lower income taxpayers first, 
and the tax surplus itself is phased in. So additional tax relief needs 
to wait until the year 2006. As a result, lower and middle-income 
taxpayers benefit by getting their money back first and for the time 
value of having that money in their pocket longer than higher rate 
taxpayers.
  It amazes me; if we had $1.6 trillion the President wanted for tax 
cuts, we

[[Page 8643]]

would not have to backload some of these benefits. Wouldn't you know 
that the people who are complaining about backloading are the same ones 
who voted against the $1.6 trillion tax cut authority that is in the 
budget resolution. They deny us the tools then to enact full tax cuts 
today and then complain because we have to wait a few years to make the 
tax cuts. These are the same people who, during the budget 
reconciliation debate, cried that 10-year projections are unreliable. 
Now they rely on 20-year projections to claim that our tax cut will 
have negative effects in the second 10 years.
  It is a fictitious argument because the bill ends in 2011. Under 
Senate rules, the bill will not be in effect in the second 10 years.
  We are about national priorities, but that issue was settled last 
week during the budget resolution debate. The budget resolution itself 
decides what our national priorities are. This bipartisan tax bill 
before us then is one part of the priorities the entire Senate set 2 
weeks ago when we voted for the budget resolution by a vote of 52-48.
  The Senate Finance Committee in this bipartisan tax bill is 
responding to the majority of the Senate in bringing this bill before 
us as one part of everything that was decided in that budget 
resolution.
  We have had people tell us that we cannot rely on projected surpluses 
to pay for our tax cuts. However, the biggest threat to fiscal 
discipline is higher spending, not lower taxes. In 1997, Congress and 
the President agreed to cap discretionary spending in an effort to 
balance the Federal budget. Unfortunately, as Federal revenues rose to 
record levels and our deficits turned into surpluses, these spending 
caps were broken.
  Since 1997, discretionary spending has exceeded the budget caps by 
$272 billion. Over the next 10 years, discretionary spending will 
exceed the levels established in 1997 by $1.3 trillion and, as one can 
see, that is so close to what this tax bill is that it is enough to pay 
for our entire tax reduction.
  No one seems to worry about how unreliable the surplus projections 
are when we add trillions of dollars in higher spending to the Federal 
budget. It seems as if there is plenty of money in these 10-year 
projections if we want to appropriate money, spend more money, but, lo 
and behold, we bring a tax bill before the Senate to let people keep 
the money they have earned rather than sending it to Washington, and 
somehow these 10-year budget projections we rely upon to make policy 
decisions are undependable.
  I have come to the conclusion, or I would not be a part of this 
bipartisan tax bill, and I would not have voted for the budget 
agreement, that there is plenty of money from the tax surplus to give 
tax relief to working men and women and to do it in a way that is 
fiscally disciplined but, more importantly, imposes fiscal discipline 
on a lot of the big spenders around this Congress who think they know 
more how to handle the taxpayers' money than the taxpayers do, who 
believe if we spend more money, we are going to create more wealth.
  Common sense dictates that the Government does not create wealth. 
Common sense dictates that individual Americans using the resources of 
their labor and their brain create wealth.
  On the other hand, if that money were in the pockets of Members of 
Congress, it would burn a hole. So we return it to the taxpayers of 
America, and it allows them, through individual decisionmaking, to 
decide what they want to do with that money.
  The process is going to turn over many more times in the economy, 
particularly if it is invested, than if we spend it in Washington in a 
political decision as to how the goods and services in our country 
ought to be distributed. It is better not to make a political decision 
but let the marketplace empower the individuals to make a choice. We 
are going to create more wealth, and the money is going to turn over 
more times in the economy that way and do more good.
  We have also heard the accusation that we are raiding the trust 
funds. Some people continue to suggest that the tax cut will do this to 
the Social Security trust fund and the Medicare trust fund. Let me 
explain it this way.
  The budget resolution for which I voted is the basis for this 
bipartisan tax bill and also, to some extent, what the President said 
in his budget to the Congress: We can fund our priorities, we can give 
tax relief to working men and women, we can preserve the Social 
Security trust fund and the Medicare trust fund, and we can pay down 
every dollar due on the national debt throughout the 10-year projection 
of our budget resolution.
  There are people who disagree with that, but obviously the vast 
majority of this body understands that to be a fact.
  Under current law, when Social Security and Medicare collect more 
than they spend--in other words, more income than outgo yearly in the 
Medicare trust fund and the Social Security trust fund--that money is 
invested in U.S. Government bonds. These bonds are held by the trust 
fund until needed to pay benefits. That will be roughly 2017 for Social 
Security, probably roughly 2010 for Medicare. In the case of Social 
Security, that will keep benefits at 100 percent, at least through the 
year 2037.
  So when people talk about raiding the trust fund--I don't know 
whether this is their intent--they do mislead Americans. They want 
people to believe we are reducing the balance in the trust fund to pay 
for tax reduction. They know that is not true. The balance in the trust 
fund can only be reduced to pay for Social Security and Medicare 
benefits. The tax cuts cannot reduce the balance in the trust fund.
  Once again, the chart emphasizes what I first said. It shows we will 
continue to have tax surpluses, indicated by the blue bar, each of the 
next 10 years. The tax cuts are the red bar and are a small part of 
each of those tax surpluses each year. We can see the charge of 
backload. Albeit we are giving relief to every taxpayer this year, in 
2001, the tax reductions of this bill kick in over the next few years 
to reflect the growing tax surplus we have coming into the Federal 
Treasury.
  I hope people see that as a responsible way to make sure we are able 
to fund our priorities, maintain the Social Security/Medicare trust 
funds, pay down every dollar due on the national debt over the next 10 
years, and still give tax relief to working men and women.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. BAUCUS. I ask the Senator from North Dakota, does he have an 
amendment he wishes to offer?
  Mr. CONRAD. I have amendments as discussed, for which we just 
received the scoring, so the amendments are being redrafted and will be 
here momentarily. I would like to talk about the bill if I may, and I 
ask for 10 minutes.
  Mr. BAUCUS. I don't know if we have 10 minutes. There are a lot of 
Senators desiring to speak.
  Mr. REID. I think the ranking member on the Budget Committee deserves 
10 minutes. He indicated he would make sure you were adequately 
protected with time, and I told him you are.
  I yield 10 minutes to the Senator from North Dakota.
  Mr. GRASSLEY. I have several Members on my side of the aisle who want 
part of the 1 hour. I would like to know who they are and have them get 
over here and take up their share; otherwise, I will use it.
  Mr. REID. I think the Senator from Iowa raises a very good point. We 
have attempted this afternoon to get people to offer amendments. We are 
about out of time. I say the same to people on my side of the aisle. 
Anyone who wants to speak or has an amendment to offer, time is just 
about gone.
  The Senator from North Dakota is yielded 10 minutes.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. CONRAD. I thank Senator Reid on behalf of the leadership for the 
time.
  Madam President, the New York Times said it best of all: ``More Tax-
cut Follies.'' They made the point that

[[Page 8644]]

while some of the provisions have been improved over what President 
Bush proposed, nonetheless, overall this bill amounts to ``another 
gross abdication of fiscal responsibility.'' That sums it up. That is 
what this tax bill is, an abdication of fiscal responsibility.
  Sometimes I wonder if we learn anything from history. If we look back 
at the Reagan, Bush, and Clinton administrations, we can go back to the 
time of the Reagan administration where we saw a proposal for a massive 
tax cut, a massive defense buildup, and an overall package that did not 
add up. The results were to absolutely explode the budget deficit of 
the United States. We went from an $80 billion deficit to over $200 
billion. We quadrupled the national debt. Then President Bush came in 
and the deficits doubled again to nearly $290 billion.
  It was not until 1993, when we put in place a plan that actually 
raised income taxes on the wealthiest 1 percent and cut spending that 
we were able to get back on a path to fiscal responsibility, balancing 
the books. Then in 1997 we passed a bipartisan plan that finished the 
job that put us into surplus.
  Madam President, it seems we are forgetting those lessons completely. 
We are now headed back to deficits, back to debt based on a rosy 
scenario, based on a massive tax cut, based on a massive defense 
buildup. The numbers we have not yet seen; they are not even part of 
the budget resolution; that is the fatal flaw of the budget resolution. 
We don't have the defense numbers. We don't have the money to 
strengthen Social Security even though President Bush says we should. 
We don't have the money to fix the alternative minimum tax. We don't 
have the money for item after item. The reason is, that when we get all 
those items together, we will find that the overall package does not 
add up.
  The Philadelphia Inquirer said it well: ``Tax-slashers at Work: Once 
Started, They Can't Seem to Stop.''
  Just like the frat brothers, the Senators are going through weird 
contortions. In the bipartisan mess of a bill that the committee worked 
on yesterday, one gimmick is to phase in ballyhooed tax breaks over 
periods as long as a decade.
  With other tax breaks, the bill does the opposite trick: Providing 
tax relief right away, then supposedly ending it a few years down the 
road.
  That is called backloading, and this bill is loaded with it. The bill 
costs $1.35 trillion in the years 2001 to 2011. But look what happens 
in the second 10 years. It explodes. The cost goes up to over $4 
trillion. That is because item after item is back-loaded.
  The estate tax is one example. The cost in the first 10 years is 
$1.45 billion. Look at what happens in the second 10 years when they 
completely eliminate the estate tax. The cost goes up to $790 billion 
right at the time the baby boomers retire.
  The same thing happens with the estate tax rate. The 2011 repeal 
masks massive costs. We can see the cliff effect of the estate tax.
  It does not end there. It continues with the marriage penalty but in 
a different way. With the marriage penalty, they don't put it into 
place until the year 2004. There is no marriage penalty relief until 
then. Then they increase relief so it takes full effect in the year 
2008.
  But it doesn't stop there because they have done the same thing with 
the alternative minimum tax. They hide backloading by sunsetting the 
alternative minimum tax relief right in the middle of the period. It is 
bizarre. They start out by providing alternative minimum tax relief, 
and then they take it away.
  What will happen with the alternative minimum tax? We are going to go 
from 1.5 million people being affected by the alternative minimum tax 
to, when this bill passes, nearly 40 million people.
  It is just not the back end loading that makes no sense; it is the 
lack of fairness. This bill we have before the Senate gives the top 20 
percent of taxpayers 70 percent of the benefits. It gives the bottom 20 
percent 1 percent of the benefits. It doesn't strike me as fair.
  But the evidence of unfairness goes on and on. The top 1 percent gets 
twice as much of the benefits as the bottom 60 percent. The top 1 
percent of taxpayers who earn on average $1.1 million a year get 33.5 
percent of the benefits. The bottom 60 percent of American taxpayers 
get 15 percent of the benefits, one-half as much.
  The evidence of the unfairness in this bill is in item after item. 
Perhaps the most interesting part of this bill is the various rate 
brackets. There are five rate brackets. Every one of them gets rate 
relief except one. What do you think the one is? The one is the 15-
percent bracket where 70 percent of American taxpayers are; 70 percent 
of American taxpayers get no rate relief under this bill. But as you go 
up the income ladder, you get more and more generous relief. The big 
bucks, the big benefits go to those at the very top. The biggest, 
highest income folks get the biggest rate relief of all. It is not 
fair.
  We have heard discussion in this Chamber that it is a big improvement 
over what President Bush proposed. There is some improvement but not 
much. Under the Bush plan, the top 20 percent of taxpayers got 72 
percent of the benefits. Under this plan, the top 20 percent get 70 
percent of the benefits.
  The other thing that has been said about this bill is it is a 
stimulus to lift the economy. There is precious little stimulus in this 
bill. We passed in the Senate $85 billion of stimulus. What came back 
from conference and what is in this bill is $10 billion, $10 billion in 
nearly a $9 trillion economy. There is precious little stimulus in this 
bill.
  As I pointed out, this bill is flawed in even more ways. The number 
of taxpayers affected by the alternative minimum tax explodes under 
this bill. Boy, are those folks in for a big surprise. Today, 1.5 
million people are caught up in the alternative minimum tax. Under this 
bill, at the end of the 10-year period nearly 40 million people will be 
affected by the alternative minimum tax. Those folks, nearly 1 in 4 
American taxpayers, are not getting a tax cut. They are going to get a 
tax increase. They are going to have it as a result of the flaws of 
this bill.
  There has been a lot of talk that this bill is reducing the debt. It 
is reducing the publicly held debt. That is this red line on this 
chart. It will go from $3.4 trillion today down to about $800 billion. 
But another part of the debt is increasing. That is the debt that is 
owed to the trust funds of the United States. You can see that this 
debt is going to go from about $2 trillion to over $5.5 trillion. And 
the overall, the gross debt of the United States is actually increasing 
from $5.6 trillion today, to $6.7 trillion at the end of this 10-year 
period.
  So all the talk about paying down debt, one part of the debt is being 
paid down, but the overall debt is actually increasing.
  Here is the sad history of Federal debt. This is what has happened to 
it from 1950 to 1999. In 1981, the last time we followed the fiscal 
policy that is embraced by this bill, we saw the debt of the United 
States absolutely explode to $5.6 trillion, which is where it is today. 
At the end of this period, the gross debt of the United States is going 
to be $6.7 trillion. Here we are passing a massive tax cut. Shame on 
us. Shame on us for pushing this debt onto our kids. We are the ones 
who ran up this debt. This was during our time. This was on our watch. 
This is while we were in charge and we ran up this debt and it is going 
to continue.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Mr. CONRAD. I ask my colleagues to think carefully and oppose this 
bill.
  The PRESIDING OFFICER. Who yields time?
  Mr. GRASSLEY. Madam President, I yield 7 minutes to the Senator from 
Pennsylvania.
  The PRESIDING OFFICER. The Senator from Pennsylvania is recognized.
  Mr. SPECTER. Madam President, I thank my distinguished colleague from 
Iowa for yielding the time.
  I am going to be submitting for the Record an amendment which would 
provide for a tax credit for clean coal technology research, but I am 
not going to be pressing for a vote at this

[[Page 8645]]

time because of the very crowded calendar and the limitation of time 
for debate. But in an era when we are struggling with a national energy 
policy, it is my view that we ought to be relying on coal as a major 
source of supply to avoid reliance on foreign oil, and to ease off on a 
great many of the controversies which are present as we look to oil 
exploration in a variety of places.
  My own State, Pennsylvania, has some 7.2 billion tons of demonstrated 
reserves of anthracite coal in the northeastern part of the State and 
some 21.4 billion tons of demonstrated reserves of bituminous coal. 
Coal is spread across the United States in great supply. 
Notwithstanding the tremendous problems we are having in finding 
sources of energy, we have never developed coal as a source because of 
the problems with sulfur dioxide and the problems of pollution which we 
confronted in the Clean Air Act of 1990.
  The legislation I would like to see enacted would provide a tax 
credit for clean coal technology research. The distinguished Senator 
from West Virginia, Mr. Byrd, has introduced legislation, S. 60, which 
provides a broader range of tax credits regarding which I have deferred 
to the Senator's proposed legislation. I only recently joined as a 
cosponsor to S. 60 because of some concerns which I had about the 
environmental aspects. But more recently there has been an addressing 
of those concerns, so I think what Senator Byrd seeks to accomplish in 
S. 60 is very sound.
  In the reconciliation bill, as we all know, with the very limited 
period of time for debate, there is really not an opportunity to have 
the kind of exploration of this issue which is required. I have talked 
to a number of my colleagues about it and I am advised that in July, 
perhaps, there will be on the floor a tax bill and a energy bill which 
would provide a better opportunity for the in-depth discussion which 
this issue requires. But there is no doubt about the need for 
additional energy. There is no doubt about the problems from OPEC oil 
and from drilling in many places which have been proposed, with 
environmental concerns. There is no doubt that coal could provide the 
answer if we had clean coal technology and sufficient tax incentives 
for people to move to develop coal as an alternative.
  Madam President, I ask unanimous consent a copy of this amendment be 
printed in the Record.
  There being no objection, the amendment was ordered to be printed in 
the Record, as follows:

   (Purpose: To provide a business credit for 10 percent of research 
               expenses regarding clean coal technology)

       At the end of title VIII, add the following:

     SEC. __. CREDIT FOR CLEAN COAL TECHNOLOGY RESEARCH EXPENSES.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 (relating to business related credits), as amended 
     by section 620, is amended by adding at the end the following 
     new section:

     ``SEC. 45G. CLEAN COAL TECHNOLOGY RESEARCH CREDIT.

       ``(a) General Rule.--For purposes of section 38, the clean 
     coal technology research credit determined under this section 
     for the taxable year is an amount equal to 10 percent of the 
     excess (if any) of--
       ``(1) the qualified clean coal technology research expenses 
     for the taxable year, over
       ``(2) the base amount.
       ``(b) Qualified Clean Coal Technology Research Expenses.--
     For purposes of this section--
       ``(1) Qualified clean coal technology research expenses.--
       ``(A) In general.--Except as otherwise provided in this 
     paragraph, the term `qualified clean coal technology research 
     expenses' means the amounts which are paid or incurred by the 
     taxpayer during the taxable year which would be described in 
     subsection (b) of section 41 if such subsection were applied 
     by substituting `clean coal technology research' for 
     `qualified research' each place it appears in paragraphs (2) 
     and (3) of such subsection.
       ``(B) Exclusion for amounts funded by grants, etc.--The 
     term `qualified clean coal technology research expenses' 
     shall not include any amount to the extent such amount is 
     funded by any grant, contract, or otherwise by another person 
     (or any governmental entity).
       ``(C) Special rule.--For purposes of this paragraph, 
     section 41 shall be deemed to remain in effect for periods 
     after June 30, 2004.
       ``(2) Clean coal technology research.--
       ``(A) In general.--The term `clean coal technology 
     research' means research regarding the uses and development 
     of clean coal technology.
       ``(B) Clean coal technology.--The term `clean coal 
     technology' means technology which--
       ``(i) uses coal to produce 45 percent or more of its 
     thermal output as electricity, including advanced pulverized 
     coal or atmospheric fluidized bed combustion, pressurized 
     fluidized bed combustion, integrated gasification combined 
     cycle, or any other technology for the production of 
     electricity,
       ``(ii) has a maximum design heat rate of not more than 
     9,000 Btu/kWh when the design coal has a heat content of more 
     than 8,000 Btu per pound, and
       ``(iii) has a maximum design heat rate of not more than 
     10,500 Btu/kWh when the design coal has a heat content of 
     8,000 Btu per pound or less.
       ``(c) Base Amount.--For purposes of this section, the term 
     `base amount' means the amount which would be determined for 
     the taxable year under section 41(c) (without regard to 
     paragraph (4) thereof) if such subsection were applied by 
     substituting `qualified clean coal technology research 
     expenses' for `qualified research expenses' each place it 
     appears.
       ``(d) Coordination With Credit for Increasing Research 
     Expenditures.--Any qualified clean coal technology research 
     expenses for a taxable year to which an election under this 
     section applies shall not be taken into account for purposes 
     of determining the credit allowable under section 41 for such 
     taxable year.
       ``(e) Special Rules.--
       ``(1) Certain rules made applicable.--Rules similar to the 
     rules of paragraphs (1) and (2) of section 41(f) shall apply 
     for purposes of this section.
       ``(2) Election.--This section shall apply to any taxpayer 
     for any taxable year only if such taxpayer elects to have 
     this section apply for such taxable year.
       ``(3) Coordination with department of energy program.--The 
     amount of any credit allowed a taxpayer under subsection (a) 
     for the taxable year shall not be taken into account for 
     purposes of determining the Federal share of any clean coal 
     technology project of such taxpayer receiving or scheduled to 
     receive funding under the Clean Coal Technology Program of 
     the Department of Energy.''.
       (b) Inclusion in General Business Credit.--
       (1) In general.--Section 38(b) (relating to current year 
     business credit), as amended by section 620, is amended by 
     striking ``plus'' at the end of paragraph (14), by striking 
     the period at the end of paragraph (15) and inserting ``, 
     plus'', and by adding at the end the following new paragraph:
       ``(16) the clean coal technology research credit determined 
     under section 45G.''.
       (2) Transition rule.--Section 39(d), as amended by section 
     620, (relating to transitional rules) is amended by adding at 
     the end the following new paragraph:
       ``(12) No carryback of section 45g credit before 
     enactment.--No portion of the unused business credit for any 
     taxable year which is attributable to the clean coal 
     technology research credit determined under section 45G may 
     be carried back to a taxable year ending before the date of 
     the enactment of section 45G.''.
       (c) Denial of Double Benefit.--Section 280C (relating to 
     certain expenses for which credits are allowable) is amended 
     by adding at the end the following new subsection:
       ``(d) Credit for Qualified Clean Coal Technology Research 
     Expenses.--
       ``(1) In general.--No deduction or credit shall be allowed 
     for that portion of the qualified clean coal technology 
     research expenses (as defined in section 45G(b)) otherwise 
     allowable as a deduction or credit for the taxable year which 
     is equal to the amount of the credit determined for such 
     taxable year under section 45G(a).
       ``(2) Certain rules to apply.--Rules similar to the rules 
     of paragraphs (2), (3), and (4) of subsection (c) shall apply 
     for purposes of this subsection.''.
       (d) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1, as amended by 
     section 620, is amended by adding at the end the following 
     new item:

``Sec. 45G. Clean coal technology research credit.''.

       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

  Mr. SPECTER. Since I have a few more minutes remaining, I would like 
to comment about the bill generally.
  When President Bush established a target of $1.6 trillion in a tax 
cut over a 10-year period, it was my view that it was a reasonable 
figure. It is very hard to pick out a figure without any precision, but 
I was prepared to follow the lead that President Bush had established 
which was based upon the projection of a surplus over the 10-year 
period of some $5.6 trillion.

[[Page 8646]]

  I have said before that I was willing to see the figure up to $1.6 
trillion. It has been reduced somewhat to $1.350 trillion now over an 
11-year period. I think that is an accommodation which is reasonable. 
The President and the Administration have come forward and accepted 
that as a reasonable allocation, but still, in my view, it depends upon 
that surplus materializing.
  I am concerned about having a repeat of what happened with the Kemp-
Roth legislation which was enacted in 1981, where we had substantial 
tax cuts. At the beginning of President Reagan's term, there was a 
national debt of $1 trillion, and it escalated to $4 trillion in the 
course of 8 years. I think that is a path which we do not want to 
repeat. A tax cut will stimulate the economy. I think it is useful, but 
at the same time we do not want to add to the national debt.
  Paying down the deficit is also a very good way to stimulate the 
economy by eliminating the Government's use of a portion of the capital 
and having it come into private hands. There have been quite a number 
of discussions about ways to have the so-called trigger mechanism, that 
if the surplus does not hold up, there will be a time for reevaluation 
as to what we are doing with respect to the tax cut.
  Of course, it is always possible for Congress to revisit this as a 
legislative matter. Although from my experience, I know it is much 
harder to get a tax increase--much, much harder to get a tax increase--
than it is to get a tax cut, and for good reason. The Government at the 
National, State, and local level now takes an enormous bite.
  We had a battle in 1993, the first year of President Clinton's 
administration, when I opposed the tax increase. However, I do think it 
is important to keep our eye on many balls at the same time, and on the 
ball to be sure that the surplus materializes.
  I know the manager has given me 7 minutes, but I was negotiating for 
10. So I will ask Senator Grassley, if I could have his attention, for 
my other 3 minutes at this time.
  Mr. GRASSLEY. Two minutes then. I have Senator Gramm who needs some 
time. I grant the Senator 2 more minutes.
  Mr. SPECTER. At the end of the 2 minutes, I will have to ask for 
another minute, I say to Senator Grassley. It will take more time than 
the full allocation. How about 3 minutes? Going, going----
  Mr. GRASSLEY. Please take 2 minutes.
  Mr. SPECTER. The balance of my 3-minute speech, which will now be 
condensed, relates to a concern on the estate tax. I do believe the 
estate tax is burdensome. The exemption of $675,000 is not realistic. 
We ought not to burden small businesses and the family farm with the 
threat of sale or disillusion or problems on the death of the 
principal. But, I do believe there is some ground where billionaires 
ought not to escape the estate tax.
  I am not sure exactly what that figure is, but we do not want to 
create a situation for inherited wealth to eliminate incentives in 
America. It may be that $100 million is an appropriate figure, perhaps 
even somewhat less.
  Also, in the elimination of the estate tax, which is not triggered 
for some 11 years, there are some real problems which will be caused 
when there will be taxes on capital gains. Obviously, while we ought 
not to tax twice, we ought not to have a system where people avoid 
taxes entirely with the stepped-up basis. That is very complicated.
  I am concerned generally with what may happen on unintended 
consequences. Once we start to deal in the tax field, the unintended 
consequences may take over. It is my hope that we can have some 
balance.
  I see the Presiding Officer with the gavel, so I yield the floor.
  The PRESIDING OFFICER. The Senator's time has expired.
  Who yields time?
  Mr. REID. Madam President, how much time does the minority have?
  The PRESIDING OFFICER. The minority has 44\1/2\ minutes.
  Mr. REID. And the majority?
  The PRESIDING OFFICER. The majority has 31 minutes 44 seconds.
  Mr. REID. The Senator from Massachusetts, Mr. Kerry, wishes to offer 
an amendment. I yield him 5 minutes.
  The PRESIDING OFFICER. The Senator from Massachusetts.


                           Amendment No. 721

  Mr. KERRY. Madam President, I call up amendment No. 721.
  The PRESIDING OFFICER. The clerk will report.
  The bill clerk read as follows:

       The Senator from Massachusetts (Mr. Kerry) proposes an 
     amendment No. 721

  The amendment is as follows:

 (Purpose: To exempt individual taxpayers with adjusted gross incomes 
    below $100,000 from the alternative minimum tax and modify the 
                  reduction in the top marginal rate)

       On page 9, between lines 11 and 12, strike the table and 
     insert the following:


------------------------------------------------------------------------
                                         The corresponding percentages
                                         shall be substituted for the
   ``In the case of taxable years           following percentages:
   beginning during calendar year:   -----------------------------------
                                        28%      31%      36%     39.6%
------------------------------------------------------------------------
2002, 2003, and 2004................    27%      30%      35%     39.1%
2005 and 2006.......................    26%      29%      34%     39.1%
2007 and 2008.......................    25%      28%      33%      39%
2009 and 2010.......................    25%      28%      33%      38%
2011 and thereafter.................    25%      28%      33%      37%
------------------------------------------------------------------------


       Strike section 701 and insert:

     SEC. 701. ALTERNATIVE MINIMUM TAX EXEMPTION FOR CERTAIN 
                   INDIVIDUAL TAXPAYERS.

       (a) Exemption.--Section 55 (relating to imposition of 
     alternative minimum tax) is amended by adding at the end the 
     following:
       ``(f) Exemption for Certain Individuals.--
       ``(1) Reduction in tentative minimum tax.--
       ``(A) In general.--In the case of an individual, the 
     tentative minimum tax for any taxable year (determined 
     without regard to this subsection) shall be reduced by the 
     applicable percentage.
       ``(B) Applicable percentage.--For purposes of subparagraph 
     (A), the applicable percentage with respect to a taxpayer is 
     100 percent reduced (but not below zero) by 10 percentage 
     points for each $1,000 (or fraction thereof) by which the 
     taxpayer's adjusted gross income for the taxable year exceeds 
     $100,000.
       ``(2) Prospective application if subsection ceases to 
     apply.--If paragraph (1) applies to a taxpayer for any 
     taxable year and then ceases to apply to a subsequent taxable 
     year, the rules of paragraphs (2) through (5) of subsection 
     (e) shall apply to the taxpayer to the extent such rules are 
     applicable to individuals.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

  Mr. KERRY. This is an amendment which seeks to address the problem of 
the alternative minimum tax in this bill. My amendment would exempt all 
taxpayers with incomes of $100,000 or less from the alternative minimum 
tax, as it is known.
  For millions of Americans, the tax cut under consideration today is a 
phantom tax cut. It is a phantom tax cut because some don't get it at 
the outset, and it is a phantom tax cut that, because of the 
alternative minimum tax, millions will be pushed into a tax bracket 
that they were never in previously, and that will take away from them 
the very tax cut they are being promised.
  The alternative minimum tax was created, as we know, in 1969, to 
curtail the ability of high-income individuals to escape payment of 
income tax through various deductions, exclusions, and exemptions. It 
is effectively a separate tax system that rides parallel to the normal 
tax system. It was originally intended to prevent wealthier people from 
being able to make use of credits and deductions and thereby escape any 
tax liability whatsoever.
  In 1998, we began to notice that something was happening that was 
unintended. There was an encroachment of the AMT on middle-class 
taxpayers. That year, our omnibus appropriations bill included a 
provision allowing taxpayers to claim personal tax credits--such as the 
HOPE and lifetime learning credits, as well as the adoption credit--
without being pushed into the AMT liability. In 1999, we extended this 
provision through this year.
  Last year, about $1.3 million taxpayers confronted AMT liability. 
Under the current law, that number would climb to over 17 million 
taxpayers in 2010. But under the bill before us, the number of 
taxpayers subject to the AMT will climb to nearly 40 million by 2011. 
As a result, overall alternative minimum tax liability will rise from

[[Page 8647]]

about $6 billion in the year 2000 to nearly $40 billion in 2010.
  The increase in AMT liability, for the most part, is attributable to 
inflation, but unlike the AMT, the regular tax system is indexed for 
inflation. The AMT is not. The personal exemptions, standard deduction, 
and tax brackets increase annually. Under the AMT, the exemption 
amounts and the tax brackets remain constant. Thus, every year 
taxpayers whose incomes rise with inflation are taxed at the same rate 
under the regular income tax but they are increasingly penalized by the 
AMT.
  It is simply fraudulent to say in this tax bill that we are offering 
a great number of Americans tax relief when we know we are pushing 
millions of Americans into the alternative minimum tax. That is No. 1.
  Secondly, everybody knows this is coming down the road, and yet we 
are under the limits of the total tax cut of $1.35 trillion. We know 
there is going to be a cost of several hundred billion over a number of 
years in order to pay for the tax cut we are giving because the 
consequence of this tax cut is to create a liability on the AMT. But lo 
and behold, we do not pay for it. That means, once again, the Congress 
is prepared to defer the tough decisions from today into the future. 
And everybody knows what will happen in the future. That will, indeed, 
be dealt with, and it will mean it is a much larger tax cut than is 
even being promised to the American people today.
  For taxpayers, navigating the maze of AMT rules is a significant 
administrative burden. The National Taxpayer Advocate at the IRS ranks 
the AMT as one of the most burdensome areas of tax law. To comply with 
the AMT, taxpayers must compute their regular tax liability and then 
recalculate their AMT liability using a different base of income, 
different exemptions, and different tax rates.
  The AMT also applies different treatments to certain income 
deductions, exclusions, and credits that may be used by taxpayers under 
the regular income tax. In essence, taxpayers are required to apply two 
methods of accounting--one for the regular tax and one for the AMT.
  If Congress fails to adequately address the AMT problem, the coverage 
will gradually shift from higher income taxpayers to more and more 
middle-class American taxpayers in States with high income and property 
taxes, such as States like Massachusetts that are particularly hard 
hit, because under the AMT, taxpayers are prohibited from deducting 
State and local taxes. In addition, as the grasp of the AMT spreads, 
incentives in the regular tax systems, such as the HOPE and the 
lifetime learning credits, and the adoption credit, completely lose 
their effectiveness. Not only do we create a liability, but we undo a 
benefit that we have put into effect previously.
  Madam President, the amendment I am proposing today would ensure that 
the AMT never touches the vast majority of middle-class Americans. It 
is simple and straightforward. It exempts all taxpayers with incomes of 
$100,000 or less from the AMT.
  As many employees in high-tech firms have already learned, stock 
options are another item treated differently under the AMT.
  The Joint Committee on Taxation, in its recent tax simplification 
report, recommended complete repeal of the alternative minimum tax. The 
committee stated in its report, ``the alternative minimum tax can be a 
trap for the unwary, especially for large families, and creates 
disparate treatment of taxpayers depending on where they live.''
  Despite the overwhelming sentiment against the AMT, the legislation 
before us moves in the opposite direction. While the bill would provide 
some limited AMT relief through 2006, all such relief would be repealed 
in 2007.
  Even with the purported AMT fix in the bill before us, during the 
next five years, the number of taxpayers subject to the AMT will 
continue to rise steadily--nearly doubling next year alone. In 2002, as 
a result of the bill before us--with its combination of significant 
rate reductions and limited AMT relief--thousands of taxpayers will 
find themselves confronted for the first time by the AMT. And during 
the second five years, the number of taxpayers subject to the AMT will 
explode, reaching nearly 40 million in 2011.
  In short, the tax bill's proponents want to give Americans a tax cut 
with the right hand and take it away with the left hand. It is 
misleading--it is deceptive--and for millions of Americans, it is a 
phantom tax cut.
  And finally, it is fiscally irresponsible. Nobody truly believes 
Congress will allow the AMT to hit 40 million taxpayers. But the 
solution has been put off for another day. When we finally deal with 
the problem, it will be expensive--perhaps costing as much as $300 
billion.
  The amendment I am proposing today would ensure that the AMT never 
touches the vast majority of middle-class Americans. It is simple and 
straightforward. My amendment would exempt all taxpayers with incomes 
of $100,000 or less from the AMT.
  By exempting taxpayers with incomes below $100,000 from the AMT, the 
amendment protects the original goal--to ensure that wealthy 
individuals do not entirely escape taxation--while also ensuring that 
the AMT will never touch the vast majority of maiddle-class taxpayers.
  The Joint Committee on Taxation estimates that exempting taxpayers 
with incomes below $100,000 from the alternative minimum tax will cost 
$110 billion over the next ten years. That is a small price to pay to 
ensure that middle-class Americans are able to benefit from the 
proposed tax reduction.
  The Joint Committee on Taxation further estimates that the amendment 
would eliminate AMT liability for 18 million taxpayers. If the 
amendment passes, 18 million middle-class taxpayers will be freed from 
the unintended burden of the alternative minimum tax.
  We should not miss our opportunity to address the growing AMT 
problem. We should not wait. AMT reform deserves more than the token 
measures included in the bill before us. Anything less is misleading 
and fiscally irresponsible. I urge my colleagues to support my 
amendment.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. REID. Madam President, I yield 4 minutes to the Senator from 
Connecticut, Mr. Lieberman, to offer an amendment.
  The PRESIDING OFFICER. The Senator from Connecticut.


                           Amendment No. 693

  Mr. LIEBERMAN. Madam President, I rise to speak on amendment No. 693 
which would offer a rebate of $300 to every taxpayer, income tax and 
payroll taxpayer, in the United States within weeks of its passage.
  Labels like conservative, liberal, or moderate are used very loosely 
in our politics and take on a new meaning from moment to moment. For 
example, the tax plan in the bill before us has been described as 
moderate or conservative. I have always understood the definition of 
``fiscal conservatism'' or ``moderation'' to be centered on fiscal 
responsibility and balanced budgets.
  This tax plan is not fiscally responsible because it wastes the 
projected surpluses the American people have earned on a too big tax 
cut, more than we can afford, a tax cut that will take us back into 
deficits and raise interest rates and, I fear, raise unemployment, and 
a tax cut that commits nothing of the non-Social Security and Medicare 
surpluses to pay down our national debt, which is still over $3 
trillion.
  Because I consider myself a fiscal conservative or fiscal moderate, I 
will therefore vote against this tax bill.
  I have been thinking of the bill in nutritional terms lately: The old 
line ``you can have too much of a good thing,'' ``you can eat too much 
of a good thing''--ice cream, for instance. It ultimately is not good 
for your system. We strive for a balanced diet.
  This is an imbalanced budget proposal. Tax cuts are a good thing, but 
our economy can have too much of them. That is exactly what this bill 
does.
  It leaves out business tax incentives, growth incentives, and it 
leaves out the kind of genuine short-term fiscal stimulus that our 
uncertain economy needs today and that was part of the

[[Page 8648]]

budget resolution we adopted last month. Our plan adopted in the budget 
resolution was fair, fast, and fiscally responsible.
  Unfortunately, the so-called stimulus included in this bill that is 
on the floor today does none of those things. It is not fair because it 
provides no relief to millions of Americans who do not pay income 
taxes. It is not fast because it is phased in over 11 years. And it is 
certainly not fiscally responsible because it is part of a budget-
busting tax cut.
  That is why this amendment offers a stimulus that is the real thing, 
a plan that will get cash into the hands of America's consumers and 
into the veins of our economy in a matter of weeks.
  This amendment will reduce, as of July 1, the 15-percent rate for all 
income-tax payers to 10 percent, but it goes beyond that and sends a 
$300 check to every American taxpayer, income tax or payroll tax. That 
means individuals would receive $300; joint filers, husband and wife, 
couple, $600; and it creates a separate category of rebate which is 
$450 this year in a check to single heads of households.
  This is the kind of relief and rebate America's workers and taxpayers 
and families need now. I urge my colleagues to support this amendment.
  I thank the Chair.
  The PRESIDING OFFICER. Is the Senator calling up his amendment?
  Mr. LIEBERMAN. I was, indeed, calling up amendment No. 693.
  The PRESIDING OFFICER. The clerk will report.
  The bill clerk read as follows:

       The Senator from Connecticut [Mr. Lieberman], for himself 
     and Mr. Daschle, proposes an amendment numbered 693.

  Mr. LIEBERMAN. I ask unanimous consent that reading of the amendment 
be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

  (Purpose: To provide immediate tax refund checks to help boost the 
 economy and help families pay for higher gas prices and energy bills 
    and to modify the reduction in the maximum marginal rate of tax)

       On page 7, line 15, insert ``(12.5 percent in taxable years 
     beginning in 2001)'' after ``percent''.
       On page 13, between lines 15 and 16, insert the following:

     SEC. __. REFUND OF INDIVIDUAL INCOME AND EMPLOYMENT TAXES.

       (a) Refund.--
       (1) In general.--Subchapter B of chapter 65 (relating to 
     rules of special application in the case of abatements, 
     credits, and refunds) is amended by adding at the end the 
     following new section:

     ``SEC. 6428. REFUND OF INDIVIDUAL INCOME AND EMPLOYMENT 
                   TAXES.

       ``(a) General Rule.--Except as otherwise provided in this 
     section, each individual shall be treated as having made a 
     payment against the tax imposed by chapter 1 for any taxable 
     year beginning in 2001, in an amount equal to the lesser of--
       ``(1) the amount of the taxpayer's liability for tax for 
     the taxpayer's last taxable year beginning in calendar year 
     2000, or
       ``(2) the taxpayer's applicable amount.
       ``(b) Liability for Tax.--For purposes of this section, the 
     liability for tax for the taxable year shall be the sum of--
       ``(1) the excess (if any) of--
       ``(A) the sum of--
       ``(i) the taxpayer's regular tax liability (within the 
     meaning of section 26(b)) for the taxable year, and
       ``(ii) the tax imposed by section 55(a) with respect to 
     such taxpayer for the taxable year, over
       ``(B) the sum of the credits allowable under part IV of 
     subchapter A of chapter 1 (other than sections 31, 33, and 
     34) for the taxable year, and
       ``(2) the taxes imposed by sections 1401, 3101, 3111, 
     3201(a), 3211(a)(1), and 3221(a) on amounts received by the 
     taxpayer for the taxable year.
       ``(c) Applicable Amount.--For purposes of this section--
       ``(1) In general.--The applicable amount for any taxpayer 
     shall be determined under the following table:

``In the case of a taxpayer described in:     The applicable amount is:
  Section 1(a)................................................$600 ....

  Section 1(b)................................................$450 ....

  Section 1(c)................................................$300 ....

  Section 1(d)................................................$300 ....

  Paragraph (2)...............................................$300.....

       ``(2) Taxpayers with only payroll tax liability.--A 
     taxpayer is described in this paragraph if such taxpayer's 
     liability for tax for the taxable year does not include any 
     liability described in subsection (b)(1).
       ``(d) Date Payment Deemed Made.--
       ``(1) In general.--The payment provided by this section 
     shall be deemed made on the date of the enactment of this 
     section.
       ``(2) Remittance of payment.--The Secretary shall remit to 
     each taxpayer the payment described in paragraph (1) within 
     90 days after such date of enactment.
       ``(3) Claim for nonpayment.--Any taxpayer who erroneously 
     does not receive a payment described in paragraph (1) may 
     make claim for such payment in a manner and at such time as 
     the Secretary prescribes.
       ``(e) Certain Persons Not Eligible.--This section shall not 
     apply to--
       ``(1) any individual with respect to whom a deduction under 
     section 151 is allowable to another taxpayer for a taxable 
     year beginning in the calendar year in which such 
     individual's taxable year begins,
       ``(2) any estate or trust, or
       ``(3) any nonresident alien individual.''.
       (2) Determination of withholding tables.--Section 3402(a) 
     (relating to requirement of withholding) is amended by adding 
     at the following new paragraph:
       ``(3) Changes made by restoring earnings to lift 
     individuals and empower families (relief) act of 2001.--
     Notwithstanding the provisions of this subsection, the 
     Secretary shall modify the tables and procedures under 
     paragraph (1) to reflect the amendments made by section 101 
     of the Restoring Earnings To Lift Individuals and Empower 
     Families (RELIEF) Act of 2001 with respect to the 10-percent 
     rate bracket, and such modification shall take effect on July 
     1, 2001, as if the lowest rate of tax under section 1 (as 
     amended by such section 101) was the 10-percent rate 
     effective on such date.''.
       (3) Conforming Amendments.--
       (A) Section 1324(b)(2) of title 31, United States Code, is 
     amended by inserting before the period ``, or enacted by the 
     Restoring Earnings To Lift Individuals and Empower Families 
     (RELIEF) Act of 2001''.
       (B) The table of sections for subchapter B of chapter 65 is 
     amended by adding at the end the following new item:

``Sec. 6428. Refund of individual income and employment taxes.''.

       (4) Effective Dates.--
       (A) In general.--Except as provided in subparagraph (B), 
     the amendments made by this subsection shall take effect on 
     the date of the enactment of this Act.
       (B) Amendments to withholding provision.--The amendments 
     made by paragraph (2) shall apply to amounts paid after June 
     30, 2001.
       (b) Revenue Offset.--The Secretary of the Treasury shall 
     adjust the reduction in the highest marginal tax rate in the 
     table contained in section 1(i)(2) of the Internal Revenue 
     Code of 1986, as added by section 101(a), as necessary to 
     offset the decrease in revenues to the Treasury for each 
     fiscal year resulting from the amendments made by subsection 
     (a).

  Mr. LIEBERMAN. Madam President, I ask for the yeas and nays on the 
amendment.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is not a sufficient second at this time.
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. Who yields time?
  Mr. GRASSLEY. I yield 10 minutes to the Senator from Texas.
  The PRESIDING OFFICER. The Senator from Texas is recognized for 10 
minutes.
  Mr. GRAMM. Madam President, I thank the distinguished chairman of the 
Finance Committee. I congratulate him on the new leadership he has 
brought to the committee. I can't imagine a chairman doing a better job 
under more difficult circumstances. He has impressed everybody with his 
fairness to both Republican and Democrat Members.
  I thank Senator Baucus for working with us on a bipartisan basis. The 
product before us is not perfect, but then we are not in the business 
of perfection. And there is still an opportunity to improve. I 
congratulate them.
  There are four things I need to do, and I have only 10 minutes to do 
it so I am going to try, even though I speak very slowly, to do it 
quickly.


                           Amendment No. 736

  Mr. GRAMM. First, I send an amendment to the desk and ask for its 
immediate consideration.
  The PRESIDING OFFICER. The clerk will report the amendment.
  The assistant legislative clerk read as follows.

       The Senator from Texas [Mr. Gramm] proposes an amendment 
     numbered 736.

  Mr. GRAMM. Madam President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.

[[Page 8649]]

  The amendment is as follows:

(Purpose: To ensure debt reduction by providing for a mid-course review 
                                process)

       At the appropriate place, insert the following:

     ``SEC.   . MID-COURSE REVIEW.

       ``(a) In General.--Notwithstanding any other provision of 
     law, if at the end of fiscal year 2003 or 2010, the Secretary 
     of the Treasury certifies that the actual reduction in debt 
     held by the public since fiscal year 2001 is less than the 
     actual surplus of the Old Age, Survivors, and Disability 
     Insurance Trust Fund and the Medicare Federal Hospital 
     Insurance Trust Fund since fiscal year 2001, any Member of 
     Congress may introduce and may make a privileged motion to 
     proceed to a bill that implements a mid-course review.
       ``(b) Mid-Course Review Legislation.--To qualify under 
     subsection (a), a bill must delay any provision of this Act 
     or any subsequent Act that takes effect in fiscal year 2004 
     or 2011 and results in a revenue reduction or causes 
     increased outlays through mandatory spending, and must also 
     limit discretionary spending in fiscal year 2004 or 2011 to 
     the level provided for the prior fiscal year plus an 
     adjustment for inflation. It shall not be in order to 
     consider any amendment to mid-course review legislation that 
     does not affect spending and tax reductions proportionately.
       ``(c) Prevention of Unintended Tax Increases or Benefit 
     Cuts.--Notwithstanding any other provision of law, any 
     provision of this Act or any subsequent Act that would be 
     affected by the legislation described in subsection (b) shall 
     become final if no mid-course review legislation is enacted 
     into law.

  Mr. GRAMM. Madam President, this is a very simple amendment. There 
will be a vote on a trigger amendment later. I am adamantly opposed to 
that. It is very poor economic policy for the Congress to put itself in 
a straitjacket where if we were in a recession in the future, we could 
lock America into a tax increase and, in the process, make the economy 
worse and potentially turn a recession into a depression.
  Secondly, the trigger amendment which will be voted on later tonight, 
in addition to holding out the prospect of putting us in a straitjacket 
and having an automatic tax increase in a recession, holds out the 
prospect that Congress could literally spend itself into a tax increase 
without ever having to vote for the tax increase. What the amendment 
actually says is, if we are not meeting our deficit reduction targets, 
taxes would go up automatically.
  There are only two reasons you would not meet the targets. One is you 
are spending a lot more money than you said you were going to spend in 
the budget, in which case we ought not to be rewarding profligate 
spending by pouring more gasoline on the fire with a tax increase to 
fund more spending. Or, two, we are in a recession and we don't want to 
turn a recession into a depression.
  Knowing that my colleagues are determined to deal with this issue, I 
have put together an amendment that does it in a rational way. It has 
two mid-course reviews--one in 2003, one in 2010--that if we don't meet 
our debt reduction targets, if the Secretary of the Treasury certifies 
we don't, on a highly privileged basis a resolution would come before 
the Senate that would allow us to debate controlling spending and 
deferring the tax cut, but there would be a rational decision. And the 
tax cut would not become permanent until we have at least exercised 
that decision in terms of the decisions we make in the Senate to act or 
not act.
  It is the rational way to do something. I hope my colleagues will 
look at doing it in that rational way.
  I have covered triggers in my remarks. I am hoping that if the 
trigger amendment fails, that my amendment would be accepted. In fact, 
if the trigger amendment passed, I would still hope my amendment would 
be accepted.
  There is an amendment before us that tries to say that there is 
something wrong with the way the President gave the tax cut to the 
lowest bracket. What the President did, instead of cutting the 15-
percent rate, he gives enough money in tax cuts for the 15-percent 
bracket to cut it to 14 percent and then ultimately to 13 percent for 
everybody. But in trying to help lower income people, he creates a new 
bracket at 10 percent. The net result is, for the people in the lowest 
income part of the 15-percent bracket, he gives a 33-percent tax cut. 
For the people in the highest part of the 15-percent bracket, he gives 
a 9-percent tax cut. But the effect is exactly the same in terms of the 
dollars you pay in taxes as if you had lowered it from 14 to 13 percent 
for people in the highest part of the income bracket.
  We have an amendment before us that has been offered by two of my 
Democrat colleagues that creates the impression that somehow there is 
something wrong with the President's plan because some people don't get 
a reduction in rates.
  The fact is, they get a dramatic reduction in rates with the new 10-
percent bracket. It is an incredible paradox that something that was 
aimed at helping the poorest workers in America the most is now held up 
by Democrats as an excuse to raise marginal tax rates on the highest 
income workers. I trust my colleagues will not fall for that poor, weak 
argument and that it will fail.
  Here is my point. A, this is not a huge, irresponsible tax cut, this 
is a modest tax cut. Of every dollar we are going to send to Washington 
in the next 10 years under this bill, how much do we get back? If we 
had adopted the President's entire package, we would have gotten 6.2 
cents. We are now talking about roughly 5.2 cents out of every dollar. 
How does that compare with the Kennedy tax cut? That was 12.6 cents out 
of every dollar, so it is less than half that size. The Reagan tax cut 
of 1981 was 18.7 cents out of every dollar. It is roughly a third that 
size. So we have a tax cut in 1961, 1981, and now in 2001 it is time 
for America to have a tax cut. This is a prudent, responsible tax cut.
  It sounds large if your objective was to spend all this money. And we 
know our Democrat colleagues offered $1 trillion of new spending 
proposals above the budget this year alone. Also, in the last 6 months, 
the Clinton administration approved, with the Congress, $561 billion in 
new spending over the next 10 years--almost a third of the tax cut.
  This is a tax cut America can afford. Even with a trillion dollars of 
new spending contained in the budget President Bush has proposed, we 
have a $5.6 trillion surplus. When you take out the amount of the 
surplus that belongs to Social Security, it is $3.1 trillion. The 
President asked for $1.6 trillion. We are giving $1.35 trillion. This 
tax cut is less than half of the unclaimed surplus of the Federal 
Government. Since when is giving half the money back to the people who 
earned it irresponsible? I say only if you intended to spend it is that 
irresponsible.




  You have heard a lot of talk here about 45 percent of Americans get 
no income tax cut. Well, 45 percent of Americans don't pay any income 
taxes. Income taxes are for taxpayers. You have heard our colleagues 
talking about, the President of Microsoft is going to get a Lexus. He 
already has a Lexus. What we are trying to do is reduce the tax burden 
to promote investment and boost the economy.
  Let me talk about the richest 1 percent, the most maligned people in 
America. The only kind of bigotry that is still acceptable in America 
is not bigotry based on race, or ethnicity, or religion; you are 
rightly ostracized by every right-thinking American if you have bigotry 
on that basis. But you can be bigoted on the basis of success. You can 
be bigoted against the successful and be not only accepted in America 
but embraced. I believe it is an outrage.
  In 1981, the top 1 percent of income earners paid 17.9 percent of the 
tax burden. By 1989, it was 25.2. By 1993, it was 29. Today, 35.6 
percent of all income taxes are paid by the top 1 percent of income 
earners. They earn 17 percent of the income, and they pay 35.6 percent 
of the taxes.
  Now the President did not propose to reduce that percentage, he 
proposed raising it, because he cut the bottom bracket twice as much as 
the top bracket. So under his bill this would go up to over 36.5 
percent. Do you know what our Democrat colleagues say? It is not 
enough. They want to pile a heavier and heavier burden on successful 
Americans. I think enough is enough. That ought to be rejected.

[[Page 8650]]

  We have reduced the top rate to 36 percent here. It will go down in 
conference. I have tried, finally, to the extent I have had the time, 
to explain the fallacy of their proposal in terms people could 
understand. Here is a chart representing an alumni meeting, a class 
reunion of Dimmitt High School, class of 1951. They met in 1991, and 
they had a $100 lunch. They had five people show up, and they decided 
to divide the cost up. Do you remember Kent Hance from the House? He is 
rich now. Kent paid $60; Sally paid $20; Lamont paid $10; Sue paid $10; 
and Joe, who has done poorly, paid zero.
  Now they meet again, 10 years later, for their 50th reunion. The 
restaurant says: We are going to cut the rate $50 because, gosh, it is 
their 50th high school reunion. They were paying $100, and now they are 
only paying $50. They say: All right, let's cut everybody's cost by 50 
percent. So Kent pays $30, Sally pays $10, Lamont pays $5, Sue pays $5, 
and Joe doesn't pay anything. The Democrats say this is an outrage 
because poor Joe gets nothing back, even though the lunch cost has been 
cut in half, $50, and $30 went to Kent, $10 went to Sally, $5 went to 
Lamont, Sue got $5, and poor Joe got zip. Is that not an outrage? So 
they want to break up the class reunion. Their proposal is: Let Kent 
pay $50, Sally pay $10, Lamont and Sue pay zero, but they have to give 
Joe $10 back.
  Would that make any sense to anybody? No.

       Mr. President, I ask unanimous consent that the attached 
     chart be included in the Record at the conclusion of my 
     remarks.

  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                   Dimmitt High School, Class of 1951

                           40TH REUNION, 1991
                      [Total cost for lunch: $100]
------------------------------------------------------------------------
                Alumnus
------------------------------------------------------------------------
Kent...................................          $60  3X Cost.
Sally..................................          $20  Full Cost.
Lamont.................................          $10  Half Cost.
Sue....................................          $10  Half Cost.
Joe....................................           $0  No Cost.
------------------------------------------------------------------------


                           50TH REUNION, 2001
                       [Total cost for lunch: $50]
------------------------------------------------------------------------
 Standard reunion: Reduce all payments by    Democratic reunion: Reduce
                   50%                          all payments by $10
------------------------------------------------------------------------
Kent:
    $30--3X Cost.........................  $50
Sally:
    $10--Full Cost.......................  $10
Lamont:
    $5--Half Cost........................  $0
Sue:
    $5--Half Cost........................  $0
Joe:
    $0--No Cost..........................  -$10 (Refund)
------------------------------------------------------------------------

  The PRESIDING OFFICER. The time of the Senator has expired.
  The Senator from Nevada.
  Mr. REID. Madam President, I yield 5 minutes to the Senator from 
Massachusetts.
  The PRESIDING OFFICER. The Senator from Massachusetts is recognized 
for 5 minutes.
  Mr. KENNEDY. Madam President, I think I have heard it all now. My 
good friend from Texas is talking about how outraged he is about the 
discrimination against the top 1 percent of taxpayers being an outrage.
  This whole piece of legislation is really a question of a nation's 
priorities. That is basically what we are talking about. This tax 
proposal is irresponsible and unfair. It is irresponsible for the 
economic reasons that have been spelled out by our colleagues, and it 
is unfair in the way it distributes the resources in this country.
  You don't have to be a mathematical genius to see the enormous 
disparities that are growing between the wealthiest and the neediest in 
our society. That has been developing over the period of the last 20 
years. There has to be some relief for working families and the middle 
class. We agree with that. But I do think that the American people want 
to fund education priorities before they give the wealthiest 
individuals in our society the kinds of tax relief they are receiving.
  What are the kinds of priorities? We talk about education being 
important. We have to bring focus and attention on the investment in 
our children because our children are our future. Investing in our 
children is, one, to make sure all children are going to be able to 
have a headstart experience and are eligible for it. We will have an 
amendment on that.
  Secondly, we are going to have the funding for elementary and 
secondary education. That means we are going to commit to provide well-
trained teachers in the classrooms of this country. We are going to 
give the option to local school districts to move to smaller class 
size. We are going to have afterschool programs. We are going to also 
provide help to local communities that are meeting their 
responsibilities for special needs children. All of that is going to be 
included. We are going to defer the reduction and the highest rates in 
this proposal until we are able to implement those kinds of 
commitments.
  There it is, Madam President. We will have a chance, on the one hand, 
to invest in our future, in our children, and say that this is a 
priority, and defer the reduction for the wealthiest individuals in our 
society.
  This is a question of priorities. It is a question of choice.
  Finally, I add my strongest support to the amendment that has been 
offered by Senator Rockefeller. Again, it is a question of priorities. 
Do we really mean it when we say we want to provide a prescription drug 
benefit program for our seniors and for other needy people in our 
society?
  This legislation does not do so. The Finance Committee and the 
Republican leadership knew how to do it precisely when they wanted the 
tax cut. They knew how to get it, and they set the time and dates to 
get it, but that is not so with regard to a prescription drug program. 
The Rockefeller amendment does so.
  I hope our senior citizens know their interests are going to be voted 
on this afternoon; not only now, but we are going to have an additional 
series of votes to make sure this institution has an opportunity to 
make important choices.
  This afternoon and tonight, one of the important choices will be: Are 
we going to really have a meaningful prescription drug program for the 
seniors in this country, which is absolutely essential, particularly 
when we realize about whom we are talking. We are talking about the 
average senior being 76 years old, widowed, and having important health 
needs that can be addressed by prescription drugs.
  The Rockefeller amendment addresses that, and I again say this is an 
issue of choice. It is an issue of priorities. Do we want to say it is 
more important to invest in our children, invest in our future, defer 
the reductions for the wealthiest individuals who have done exceedingly 
well over the years? Do we want to make a commitment to our senior 
citizens in getting a prescription drug program?
  Those are important priorities. Those are important choices. Those 
are issues that are going to be before the Senate. I am hopeful this 
body will reflect what is in the real national interest and support 
those amendments. I thank the Senator from Nevada.
  The PRESIDING OFFICER (Mr. Fitzgerald). The Senator from Nevada.
  Mr. REID. Mr. President, I offer 2 minutes to the Senator from 
Delaware, Mr. Carper, and 2 minutes to the Senator from Rhode Island, 
Mr. Chafee. It is my understanding they have an amendment they will 
offer at a subsequent time, so 2 minutes to the Senator from Delaware 
and 2 minutes to the Senator from Rhode Island.
  The PRESIDING OFFICER. The Senator from Delaware is recognized.
  Mr. CARPER. Mr. President, I thank the Senator for yielding. Later 
this evening, Senator Chafee and I will offer an amendment to the tax 
bill that we believe is consistent with the budget resolution that 
passed this Chamber roughly a month ago with 65 affirmative votes, 
including votes of 15 Democrats, including this Senator.
  That budget resolution provided for a tax cut over the next 10 years 
of about $1.2 trillion, and it also provided for an extra $300 billion 
above the baseline for educational programs, including Head Start, 
special education, title I, extra learning time programs.
  When the budget resolution came back to us from conference, the tax 
cut

[[Page 8651]]

had grown larger by about $150 billion, and the education moneys we 
added were gone.
  Senator Chafee and I will offer this amendment in an effort to get us 
back to where we thought we ought to be and still believe we ought to 
be as a body and as a country, and that is to have a tax cut of $1.2 
trillion over the next 10 years and provide an extra $150 billion above 
the baseline for education funding.
  I want to mention a couple provisions of the amendment. For example, 
we create a new 10-percent tax bracket that will be effective at the 
beginning of this year.
  We also cut marginal rates for each of the other tax brackets by 1 
percent. The lowest rate of 15 percent would drop to 14 percent. The 
top rate of 39.6 would come down to 38.6. It is an incremental approach 
to tax cutting that I believe is more reasonable.
  We also anticipate further reductions later, but we visit with the 
new economic status a couple of years down the line and consider those 
further changes at that time.
  We further propose to take the marriage penalty relief this bill 
offers, to move it up in time, provide estate tax relief, doubling the 
estate tax exclusion, and then indexing it to the rate of inflation as 
we go forward.
  We double the child tax credit and make it partially refundable, 
provide a college tuition tax deduction of $5,000 per year, and take 
the retirement savings incentives that are in this bill and include 
those in our own amendment.
  The PRESIDING OFFICER. The Senator's 2 minutes have expired. The 
Senator from Rhode Island is recognized for 2 minutes.
  Mr. CHAFEE. Mr. President, I commend Senator Grassley and Senator 
Baucus for their hard work on this tax package. I know they have worked 
hard to forge a bipartisan tax package and worked hard to make that 
happen. However, I will join Senator Carper in offering an amendment 
which will reduce the size of the tax cut to $1.2 trillion.
  The reason I join Senator Carper is I believe there is a whole 
population forgotten in this tax debate, and that is the property-tax 
payer. Of course, one of the Federal mandates that is the hardest and 
most onerous on the property-tax payers is the special education costs.
  The Supreme Court ruled in the early seventies that all students have 
to be educated in the public school system. Congress acted by passing 
the Individuals with Disabilities Education Act which said we will get 
the funding up to 40 percent. Of course, we have never gotten above 12, 
13, 14 percent, and there is a very onerous cost to the communities in 
property taxes.
  We are proposing to reduce this to $1.2 trillion which, of course, 
leaves about $150 billion available for the property tax relief. That 
should be done on IDEA.
  Property taxes are the most difficult on communities and on 
individuals because with an income tax, if one's fortunes decline, one 
pays less income tax. On a sales tax, if one does do not want to 
purchase goods, one pays less in sales tax.
  With a property tax, it is most onerous because it is always there. 
Whether your fortunes decline, lose a job, lose a spouse, the income 
part of your property-tax-paying abilities, and also if you become 
elderly and want to keep your house, of course, that property tax is 
always there.
  We are not talking about taxes. We need help for the property-tax 
payers by leaving money available to give relief in IDEA, something we 
promised in the early seventies, passed in 1975, and we have not done 
it.
  If we are not doing it with the surpluses we have, we will never do 
it. A vote for the Carper-Chafee amendment is a vote for property tax 
relief.
  The PRESIDING OFFICER. The time of the Senator has expired.
  The Senator from Nevada.
  Mr. REID. Mr. President, I yield 10 minutes to the manager of the 
bill on the minority side, Senator Baucus from Montana, who has worked 
so hard for so many weeks on this legislation.
  The PRESIDING OFFICER. The Senator from Montana is recognized for 10 
minutes.
  Mr. BAUCUS. Mr. President, I thank my good friend from Nevada who has 
worked very hard in maintaining order in the Chamber. He has done a 
terrific job, and I compliment him.
  I start by expressing my respect for Senators, especially on the 
Democratic side, who made arguments against the bill and have proposed 
amendments to it.
  As the chairman of the committee and I have both said, this bill is a 
compromise. It is not perfect. It is not what anybody would want if he 
or she were writing it, but it is a compromise. There has been a lot of 
give and take. Nobody got everything he or she wanted because that is 
what compromises are all about.
  It is almost inevitable that there will be legitimate, good-faith 
disagreements about the resulting bill. This is a tax bill. There are 
lots of points of view. It is very complicated. There are going to be 
very passionate arguments made about various provisions of this bill on 
both sides.
  On top of that, we have been debating under very stringent 
conditions; that is, constraints of reconciliation. This debate is 
rushed. It is hard to get revenue estimates. Many Senators have come to 
me and said it is difficult to get revenue estimates from joint tax. I 
wish we were not in such a rush mode. I wish this bill could have been 
debated more thoroughly, but that is not with what we are faced. I 
understand the frustrations many of my colleagues have.
  I also say the criticisms of the bill are very well intended. I 
appreciate how thoughtful Senators have been in this debate. I 
especially thank the Democratic leader. As my colleagues will soon 
hear, he is no fan of this bill, but while voicing his strong opinions, 
he has fully respected other points of view, and that, to my mind, is 
the essence of leadership, and I highly compliment him.
  My point is this: This is a much better bill than that proposed by 
the administration.
  Some may vote no against this bill because the amount is too high, 
there is not a tax cut not too great. I respect that. I think the 
amount in this bill could be a bit lower. I am concerned about the size 
of the tax cut, as well.
  Given the budget resolution providing for $1.35 trillion over 11 
years, I think this is a much better bill than we would have had if 
Senator Grassley and I had not been negotiating to get a compromise. 
Otherwise, we would be faced on this floor with another bill, a bill 
that is probably the administration bill or something very close to it.
  I say to my friends, particularly on the Democratic side of the 
aisle, there are two choices. One is to vote against the bill because 
the tax cut is too large, a view which I respect; the other is to vote 
for it because it is a lot better than what we otherwise would be 
facing on the floor. It is much more progressive. There are many very 
good provisions in the bill. The education provisions, for example, the 
10-percent bracket which is made retroactive to the beginning of this 
year. It is much better than the bill we otherwise would have.
  The single biggest part of this tax cut is the $435 billion provision 
that provides for a cut from the 15-percent rate to the 10-percent 
rate. That is the biggest single provision in this bill. As a 
consequence, 75 percent of this tax cut in this bill goes to people who 
earn $75,000 or less. We also double the child credit and make it 
partly refundable, covering 16 million more children than the 
President's proposal. We expand and simplify the earned-income credit 
which may be the best program ever created to help lower income working 
families. These are for working families. This is not welfare but 
working families.
  We include a $35 billion package of education incentives. For the 
first time, one can deduct college tuition, up to $5,000. That is a 
good start, one of which I think all will be proud. We expand IRAs, 
expand 401(k)s. We reduce the marriage penalty. We address the Federal 
estate tax. These are a lot of the provisions.
  What is the practical effect? Under this bill, every individual and 
family

[[Page 8652]]

who pays income tax will get a tax cut. That is more than 100 million 
individuals and families. Another 10 million get a higher tax refund 
because of refundable credits. That reduces the payroll tax. There are 
a lot of Americans whose bigger tax is the payroll tax compared to 
income tax. That helps them directly.
  Nineteen million taxpayers at the lower end of the income scale have 
marginal rates reduced from 15 percent to 10 percent. That is by a 
third. That is not an unimportant point. There is a lot of talk about 
the marginal rate, particularly at the top end. Let me repeat, for 
lower income taxpayers, the marginal rates, for 19 million taxpayers, 
are reduced by a full one-third. Not 1 percent but 33 percent.
  Thirty million families get a higher child credit. For 10 million, 
the credit is refundable. Four million low-income couples benefit from 
expansion of the earned-income tax credit. Three million benefit from 
the higher standard deduction. Forty million couples get relief from 
the marriage penalty. That is 40 million, no small number. Two million 
taxpayers benefit from the IRA limits. Another 8 million benefit from 
the new low-income saver credit. Twelve million seniors pay lower taxes 
on their Social Security income.
  I could go on. There are many other provisions in this bill that are 
very good. Some Senators criticized certain parts of the bill, but I 
think it is important to know there are also many provisions that are 
good in the bill, and those Senators who criticize the bill do not 
mention a lot of the provisions which I think otherwise they would also 
support.
  The present proposal may have been targeted to upper income 
taxpayers. This bill is not. It is written in a balanced way, and it 
cuts taxes and creates incentives for all Americans.
  All in all, taking both income and payroll taxes into account, this 
bill makes our tax system more progressive than the administration's 
bill. Every income group under $75,000 will pay a lower percentage of 
their overall tax burden. Every income group over $100,000 will pay a 
higher percentage of the overall tax burden than contained in the 
President's proposal. This bill, regarding income taxes and payroll 
taxes, is more progressive than the President's proposal.
  Now, briefly, the prospects for conference. It is common to say at 
this point in the process the Senate bill constitutes a very delicate 
balance and that nothing can be changed without jeopardizing the 
prospect of getting a bipartisan bill enacted into law. This time it 
happens to be true. The Senate is divided, 50/50. On our side of the 
aisle, there is some support for the bill, but it hinges on a series of 
careful changes that we made to provide that balance. If, in 
conference, that balance is lost, the prospects for passing the 
conference report may be lost, as well. I hope that does not happen.
  In conclusion, this bill is not perfect but it is balanced. It is a 
compromise. It is good for taxpayers. It is good for working families. 
It is good for the economy. I strongly urge Senators to support the 
bill.
  In conclusion, I pay my highest compliments to the chairman of the 
committee, Senator Grassley, who has worked more in good faith and back 
and forth, to and fro, frankly, than any other Senator I can think of 
in any other situation. He is a real credit to the State of Iowa and a 
real credit to the United States of America. I thank him for his 
cooperation and working together to get this bill where it is.
  I yield back the remainder of my time.
       The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. I yield myself 7 minutes of the 19 remaining minutes.
  The PRESIDING OFFICER. The Senator has 19 minutes remaining, that is 
correct.
  Mr. GRASSLEY. I thank the Senator from Montana for his compliment. I 
have said many times on the floor of the Senate, we are here with a 
bipartisan bill only because of his willingness to work with us and our 
desire to have a bipartisan bill as opposed to a partisan debate. I 
think that is the way the Senate Finance Committee normally works. I am 
glad to have it work in this particular instance.
  As we come to the end of our 20 hours of deliberation and begin 
voting on amendments, I want to make some final comments.
  This is a bipartisan effort. This bill was drafted in concert with 
Senator Baucus and with the benefit of the comments of all the members 
of the Finance Committee with whom I consulted personally.
  We took as a starting point President Bush's efforts to provide 
income tax relief to all Americans. This legislation includes the four 
main elements of President Bush's goals of providing tax relief to 
working men and women.
  First, this legislation reduces marginal rates at all levels and 
creates the new 10 percent level proposed by the President. While we 
don't go as far as the President in reducing the top rates--and I would 
add we didn't go as far as I would like--we also began to address the 
hidden marginal rate increases such as PEPS and PEASE that complicate 
the code.
  As I said earlier today, America is a society of opportunity. Over 60 
percent of all families will at one time or another be in the top fifth 
of income in this country. A man will make more at 55, after 30 years 
of hard work, then he did at 25. A family should not face a crushing 
marginal rate tax burden when they finally get a good paycheck for a 
few years as a reward for many, many years of hard work.
  Second, we provide income tax relief for married families--for 
families where both spouses work and where only one spouse works. In 
addition, thanks to the strong advocacy of Senator Jeffords, we expand 
the earned income credit for married families with children. Further, 
there was wide bipartisan agreement to simplify the earned income 
credit which will mean that hundreds of thousands of more children will 
receive the EIC benefits.
  Third, the President's desire to expand the child credit to $1,000 is 
met in this bill. And in response to the concerns of Senators Snowe, 
Lincoln, Breaux, Jeffords, and Kerry the child credit was expanded to 
help millions of children whose working parents do not pay income tax.
  Fourth, the burden of the death tax is reduced and finally 
eliminated--as called for by President Bush. The committee was 
successful in this effort due to the work of many Senators but I would 
particularly note the efforts of Senators Kyl and Lincoln.
  Thus, this bill contains the four main elements of President Bush's 
efforts to provide tax relief for working families--marginal rate 
reduction, relief for married families, the expansion of the child 
credit and the reduction and ultimate elimination of the death tax.
  I remind my colleagues again that the hallmark of this bill is that 
relief for low income families comes first. The marginal rate drop to 
10 percent is immediate, the child credit expansion to low income 
families is immediate, the expansion of EIC is immediate.
  In addition, the numbers show that the Finance Committee took 
President Bush's proposal--which was already quite progressive as 
compared to current law--that is, at the end of the day upper income 
families would be paying a greater share of taxes than lower income--
and the Finance Committee made the President's proposal even more 
progressive.
  The greater progressivity and ensuring that low income families are 
first in receiving the benefits of the tax cut is certainly due in no 
small part to the work of Senator Baucus.
  So I am somewhat chagrined, reading in the press the constant carping 
of Senator Baucus' efforts to draft a bipartisan bill. It seems that 
while many are happy to talk about bipartisanship that can't stand to 
see bipartisanship practiced.
  I can assure my colleagues on the other side of the aisle that if 
Senator Baucus had not been present at the creation of this bill--it 
would have been a very different piece of legislation. It is because of 
his efforts that there are many elements in the RELIEF Act that members 
on the other side of the aisle can enthusiastically support.

[[Page 8653]]

  In addition to President Bush's proposals to provide tax relief to 
working families, the Finance Committee also included legislation that 
had already been considered by the Finance Committee earlier this year 
or last year.
  I believe that not all good ideas come from just one end of 
Pennsylvania Avenue. Thus, we included the Grassley/Baucus pension 
reform legislation which probably would not have made it in the bill 
without the longtime support of Senators Hatch, Jeffords, and Graham.
  In addition, the bill contains over $30 billion targeted for 
education. elements of this include language to expand the prepaid 
tuition programs to help families pay for college--long advocated by 
Senators Collins, McConnell, and Sessions. In addition, we provide 
college tuition deduction thanks to Senators Torricelli, Snowe, and 
Jeffords, private activity bonds for school construction in response to 
Senator Graham's concerns, as well as an expansion of the education 
savings accounts--in honor of Senator Coverdell--thanks to the work of 
Senator Torricelli and the majority leaders.
  As I have said all along, no once got everything they wanted in this 
bill, including the chairman. But I do believe that everyone got 
something that they believe is important included in the RELIEF Act.
  I have provided this outline of the legislation to remind Senators of 
the balanced approach that took place in crafting this legislation; to 
highlight the fact that it reflects the views and priorities of a wide 
range of members of the committee on both sides of the aisle; and, to 
explain why the RELIEF Act took the form it did.
  But setting aside the priorities and concerns of Senators, none of us 
should forget the great winners of the RELIEF Act--the American 
taxpayer. We are providing the American taxpayer the greatest amount of 
tax relief in a generation. And they deserve it. It is wrong that in a 
time of surplus we are still imposing a record tax burden on workers.
  With passage of the RELIEF Act struggling families will have more 
money to make ends meet; parents and students will be able to more 
easily afford the costs of a college education; a successful business 
woman will be able to expand and hire more people; a father finally 
getting a good paycheck after years of work will be able to better 
provide for his aging mother; and, a farmer can pass on the family farm 
without his children having to sell half the land to pay estate taxes.
  The examples are endless of the great benefits that we realize when 
we give tax relief to working families.
  I urge my colleagues to support the RELIEF Act for working families.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  The Senator from Nevada.


                     Amendment No. 685, As Modified

  Mr. REID. I send a modification of an amendment to the desk on behalf 
of Senator Evan Bayh and others.
  I ask the modification be reported on behalf of Senator Bayh.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Nevada [Mr. Reid], for Mr. Bayh, proposes 
     an amendment numbered 685, previously proposed, as modified.

  Mr. REID. I ask unanimous consent the reading of the amendment be 
dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       At the appropriate place, insert the following:

     SEC. __. ENSURING DEBT REDUCTION.

       (a) Trigger.--
       (1) In general.--Notwithstanding any other provision of 
     this Act or any other law, the effective date of a provision 
     of law described in paragraph (2) shall be delayed as 
     provided in paragraph (3).
       (2) Provision described.--A provision of law described in 
     this paragraph is--
       (A) a provision of this Act that takes effect in calendar 
     year 2005 or 2007 and results in a revenue reduction; or
       (B) a provision of law that--
       (i) is enacted after the date of enactment of this Act; and
       (ii) takes effect in fiscal year 2005 or 2007 and causes 
     increased outlays through mandatory spending (except for 
     automatic or annually enacted cost of living adjustments for 
     benefits enacted prior to the date of enactment of this Act).
       (3) Delay.--If, on September 30 of fiscal year 2004 or 
     2006, the Secretary of the Treasury determines that the limit 
     on the debt held by the public in section 253A(a) of the 
     Balanced Budget and Emergency Deficit Control Act of 1985 has 
     been exceeded for that fiscal year, the effective date of any 
     provision of law described in paragraph (2) that takes effect 
     during the next fiscal year shall be delayed by 1 calendar 
     year.
       (4) Discretionary spending limitation.--Notwithstanding any 
     other provision of law, in any fiscal year subject to the 
     delay provisions of paragraph (3), the amount of budget 
     authority for discretionary spending in each discretionary 
     spending account shall be the level provided for that account 
     in the preceding fiscal year plus an adjustment for 
     inflation.
       (5) Reports to congress.--On July 1 and September 5 of 2004 
     and 2006, the Secretary of the Treasury shall report to 
     Congress the estimated amount of the debt held by the public 
     for the fiscal year ending on September 30 of that year.
       (6) Congressional action.--
       (A) Trigger.--
       (i) Modification.--In fiscal year 2005 or 2007, if the 
     level of debt held by the public at the end of the preceding 
     fiscal year, as determined by the Secretary of the Treasury, 
     would be below the debt target for that fiscal year in 
     section 253A(a) of the Balanced Budget and Emergency Deficit 
     Control Act of 1985 as a result of the effect of the 
     triggering of paragraphs (3) and (4), any Member of Congress 
     may move to proceed to a bill that would increase the rate of 
     discretionary spending and make changes in the provisions of 
     law described in paragraph (2) to increase direct spending 
     and reduce revenues (proportionately) in a manner that would 
     increase the debt held by the public for that fiscal year to 
     a level not exceeding the level provided in section 253A(a) 
     of the Balanced Budget and Emergency Deficit Control Act of 
     1985. The motion to proceed shall be voted on at the end of 4 
     hours of debate. A bill considered under this clause shall be 
     considered as provided in sections 310(e) and 313 of the 
     Congressional Budget Act of 1974 (2 U.S.C. 641(e) and 644). 
     Any amendment offered to the bill shall maintain the 
     proportionality requirement.
       (ii) Waiver.--

       (I) In general.--The delay and limitation provided in 
     paragraphs (3) and (4) may be disapproved by a joint 
     resolution. A joint resolution considered under this 
     subclause shall not be advanced to third reading in either 
     House unless a motion to proceed to third reading is agreed 
     to by three-fifths of the Members, duly chosen and sworn.
       (II) Low growth.--(aa) The delay and limitation provided in 
     paragraphs (3) and (4) may be disapproved by a joint 
     resolution for low growth as provided in this subclause. A 
     joint resolution considered under this subclause shall not be 
     advanced to third reading in either House unless a motion to 
     proceed to third reading is agreed to by a majority of the 
     whole body.
       (bb) For purposes of this subclause, a period of low growth 
     occurs when the most recent of the Department of Commerce's 
     advance, preliminary, or final reports of actual real 
     economic growth indicate that the rate of real economic 
     growth (as measured by real GDP) for each of the most 
     recently reported quarter and the immediately preceding 
     quarter is less than 1 percent.

       (B) Other fiscal years.--
       (i) In general.--In fiscal year 2003, 2005, 2007, 2008, 
     2009, or 2010, if the level of debt held by the public at the 
     end of the preceding fiscal year, as determined by the 
     Secretary of the Treasury, would exceed the debt target for 
     that fiscal year in section 253A(a) of the Balanced Budget 
     and Emergency Deficit Control Act of 1985 as a result of the 
     effect of the triggering of paragraphs (3) and (4), any 
     Member of Congress may move to proceed to a bill that would 
     defer changes in law that take effect in that fiscal year 
     that would increase direct spending (except for automatic or 
     annually enacted cost of living adjustments for benefits 
     enacted prior to the date of enactment of this Act) and 
     decrease revenues and freeze the amount of discretionary 
     spending in each discretionary spending account for that 
     fiscal year at the level provided for that account in the 
     preceding fiscal year plus an adjustment for inflation (all 
     proportionately) in a manner that would reduce the debt held 
     by the public for that fiscal year to a level not exceeding 
     the level provided in section 253A(a) of the Balanced Budget 
     and Emergency Deficit Control Act of 1985. The motion to 
     proceed shall be voted on at the end of 4 hours of debate. 
     Any amendment offered to the bill shall either defer 
     effective dates or adjust discretionary spending and maintain 
     the proportionality requirement.
       (ii) Consideration of legislation.--A bill considered under 
     clause (i) shall be considered as provided in sections 310(e) 
     and 313 of the Congressional Budget Act of 1974 (2 U.S.C. 
     641(e) and 644).
       (b) Public Debt Targets.--The Balanced Budget and Emergency 
     Deficit Control Act of 1985 is amended--
       (1) in section 250(c)(1), by inserting `` ` debt held by 
     the public' '' after ``outlays', ''; and

[[Page 8654]]

       (2) by inserting after section 253 the following:

     ``SEC. 253A. DEBT HELD BY THE PUBLIC LIMIT.

       ``(a) Limit.--The debt held by the public shall not 
     exceed--
       ``(1) for fiscal year 2002, $2,955,000,000,000;
       ``(2) for fiscal year 2003, $2,747,000,000,000;
       ``(3) for fiscal year 2004, $2,524,000,000,000;
       ``(4) for fiscal year 2005, $2,279,000,000,000;
       ``(5) for fiscal year 2006, $2,011,000,000,000;
       ``(6) for fiscal year 2007, $1,724,000,000,000;
       ``(7) for fiscal year 2008, $1,418,000,000,000;
       ``(8) for fiscal year 2009, $1,089,000,000,000; and
       ``(9) for fiscal year 2010, $878,000,000,000.
       ``(b) Adjustments to Debt Targets.--
       ``(1) In general.--The debt held by the public targets may 
     be adjusted in a specific fiscal year if the Secretary of the 
     Treasury certifies that the target cannot be reached 
     because--
       ``(A) the Department of the Treasury will be unable to 
     redeem a sufficient amount of securities from holders of 
     Federal debt to achieve the target; or
       ``(B) the social security and medicare revenues are less 
     than assumed in the concurrent resolution on the budget for 
     fiscal year 2002 (H. Con. Res. 83).
       ``(2) Certification.--The certification shall--
       ``(A) be transmitted by the President to Congress;
       ``(B) outline the specific reasons that the targets cannot 
     be achieved; and
       ``(C) not be the result of a budget surpluses being 
     available to redeem debt held by the public.
       ``(3) Congressional action.--The adjustment provided in 
     this subsection may be disapproved by a joint resolution. A 
     joint resolution considered under this paragraph shall not be 
     advanced to third reading in either House unless a motion to 
     proceed to third reading is agreed to by a majority of the 
     whole body.
       ``(c) Suspension of Limit on Debt Held by the Public for 
     War.--If a declaration of war is in effect, the limit on the 
     debt held by the public established in this section is 
     suspended.''.
       (c) Congressional Budget Process.--
       (1) Point of order.--Section 301 of the Congressional 
     Budget Act of 1974 is amended by adding at the end the 
     following:
       ``(j) Debt Held by the Public Point of Order.--It shall not 
     be in order in the Senate to consider any concurrent 
     resolution on the budget or amendment, motion, or conference 
     report thereto that would--
       ``(1) increase the limit on the debt held by the public in 
     section 253A(a) of the Balanced Budget and Emergency Deficit 
     Control Act of 1985; or
       ``(2) provide additional borrowing authority that would 
     result in the limit on the debt held by the public in section 
     253A(a) of the Balanced Budget and Emergency Deficit Control 
     Act of 1985 being exceeded.''.
       (2) Supermajority waiver and appeal.--Subsections (c)(1) 
     and (d)(2) of section 904 of the Congressional Budget Act of 
     1974 are amended by striking ``305(b)(2),'' and inserting 
     ``301(j), 305(b)(2),''.
       (3) Additional amendments to the budget act.--The 
     Congressional Budget Act of 1974 is amended--
       (A) in section 3, by adding at the end the following:
       ``(11)(A) The term `debt held by the public' means the 
     outstanding face amount of all debt obligations issued by the 
     United States Government that are held by outside investors, 
     including individuals, corporations, State or local 
     governments, foreign governments, and the Federal Reserve 
     System.
       ``(B) For the purpose of this paragraph, the term `face 
     amount', for any month, of any debt obligation issued on a 
     discount basis that is not redeemable before maturity at the 
     option of the holder of the obligation is an amount equal to 
     the sum of--
       ``(i) the original issue price of the obligation; plus
       ``(ii) the portion of the discount on the obligation 
     attributable to periods before the beginning of such 
     month.''; and
       (B) in section 301(a) by--
       (i) redesignating paragraphs (6) and (7) as paragraphs (7) 
     and (8), respectively; and
       (ii) inserting after paragraph (5) the following:
       ``(6) the debt held by the public; and''.
       (d) Rule of Construction.--This section and the amendments 
     made by this section shall have no effect on Social Security 
     or Medicare as in effect on the day before the date of 
     enactment of this section.
       It shall not be in order in the Senate to consider any 
     bill, joint resolution, motion, amendment, or conference 
     report, pursuant to this section, that contains any 
     provisions other than those enumerated in section 310(a)(1) 
     and 310(a)(2) of the Congressional Budget Act of 1974. This 
     point of order may be waived or suspended in the Senate only 
     by the affirmative vote of three-fifths of the Members, duly 
     chosen and sworn. An affirmative vote of three-fifths of the 
     Members, duly chosen and sworn, shall be required in the 
     Senate to sustain an appeal of the ruling of the Chair on a 
     point of order raised under this paragraph.

  Mr. REID. Mr. President, I yield 2 minutes to the Senator from New 
Jersey.
  The PRESIDING OFFICER. The Senator from New Jersey is recognized for 
2 minutes. The Chair yields the Senator from New Jersey an additional 
minute.


                            Motion To Commit

  Mr. CORZINE. Mr. President, I send a motion to the desk and ask for 
its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from New Jersey [Mr. Corzine] moves to commit 
     the pending legislation to the Finance Committee, with 
     instructions to report back within three days, with an 
     amendment that eliminates income tax reductions for taxpayers 
     with annual incomes greater than $500,000 and reserves all 
     resulting savings to provide a tax credit to help families 
     afford the costs of long-term health care.

  Mr. CORZINE. As my colleagues just heard, this motion would commit 
the bill to the Finance Committee and direct it to report back promptly 
with an amendment that eliminates an income tax for those earning more 
than $500,000 a year, and use those savings to establish a tax credit 
to help families afford the cost of long-term care.
  Before I explain the need for my motion, let me first commend 
Senators Grassley and Graham of Florida, who have provided true 
leadership on a critical issue for seniors across America, the issue of 
long-term care.
  This motion does not require adoption of their specific approach, 
though I am proud to support their bill which would provide a $3,000 
tax credit for long-term care expenses.
  Now is the time to address America's long-term health care needs, 
before we approve one of the largest, and I believe one of the most 
inequitable, tax cuts that we could bring before the country, a tax cut 
that would undermine the largest surplus ever and prevent us from 
meeting critical health care needs, particularly for our seniors.
  Over 12 million seniors and disabled Americans need long-term care, 
and as many as twice that number may need it as the population ages, as 
the baby boomers retire. Families who are primary caregivers pay a 
tremendous price for this care. I believe no one should have to go 
bankrupt or stress their budgets to afford long-term care and no family 
should bear the burden alone.
  Long-term care should not be just a privilege for the wealthy. A tax 
credit, as I propose, would provide much needed relief to the families 
who provide long-term care for their loved ones. It is to ensure a 
better and fairer use of the surplus than a rate cut targeted for the 
very wealthiest Americans.
  This is not about class warfare. This is about providing relief for 
our elderly and for the overburdened families who care for them.
  I hope my colleagues will agree that we should not provide a windfall 
for those earning more than $\1/2\ million a year while ignoring the 
very real needs of so many families and the loved ones for whom they 
struggle.
  The PRESIDING OFFICER. Who yields time?
  Mr. REID. Mr. President, I yield 3 minutes to the Senator from New 
York, Mrs. Clinton.
  The PRESIDING OFFICER. The Senator from New York is recognized for 3 
minutes.
  Mrs. CLINTON. Mr. President, let me begin by commending Chairman 
Grassley and Ranking Member Baucus for the hard work they have put in 
on this very difficult assignment. I appreciate greatly their efforts.
  It pains me that I rise in opposition to the bill which they have 
presented and that we will be voting on later this evening.
  I wish I could support this bill. I wish I could support it because I 
believe in affordable, reasonable tax cuts. I believe in continuing to 
pay down our budget debt. And I believe in making the kinds of 
investments that will enable our country to be richer and stronger and 
smarter.
  However, it is my analysis that, unfortunately, this bill does not 
meet those criteria. What bothers me is that, despite the pressures 
that have been working on the Finance Committee to come up with the 
best possible alternative in a bipartisan way, which they just labored 
so hard to do,

[[Page 8655]]

we read there will be additional requests for tax cuts coming down the 
road, and that there will be additional dollars requested, which might 
very well be fully justified, to raise our defense expenditures.
  It bothers me that we see, in the bill that has been presented to us, 
that it will be very difficult to find the resources we need for the 
investments that I think everyone in this Chamber knows are demanded by 
the people we represent: investments in education, investments in 
health care, such as a prescription drug benefit, or, as my colleague 
from New Jersey rightly pointed out, a long-term care tax credit.
  I am concerned that, in fact, this bill does squeeze out the 
opportunity that we have to address, in a realistic way, our energy 
needs, as well as the other priorities I have mentioned.
  There are several considerations that are very important to the 
people I represent. It is very difficult to look at this tax bill, 
without adequate alternative minimum tax reform, and not realize that 
we are going to be pushing millions of Americans, many of them New 
Yorkers, into a higher tax bracket.
  The Joint Tax Committee estimates that 40 million taxpayers will be 
subject to the AMT after the tax bill, now debated, is fully phased in. 
That will have a tremendous impact. It will be a rude surprise for many 
citizens in New York, California, Connecticut, Wisconsin, Oregon, and 
other States when they find they do not really gain much from this tax 
bill but, in fact, they get a higher tax bill.
  I am also concerned that due to repeal of the estate tax, and the 
earlier elimination of the State credit from the estate tax, we are 
going to find States such as New York in a terrible budgetary dilemma. 
They are going to be losing dollars from the State side of the estate 
tax before the Federal Government loses the revenues in 2011.
  In some States that will be an incredible burden: several percentage 
points out of their revenue base where they would have to find some way 
to amend their constitution or find new revenues. It seems eminently 
unfair for the Federal Government to be able to shift that burden to 
the backs of the States with so little warning.
  The PRESIDING OFFICER. The Senator has used her 3 minutes.
  Mr. REID. I yield the Senator 1 more minute.
  Mrs. CLINTON. This reminds me of what we went through in 1981, so I 
went back and read the account. I wish my colleagues would recall what 
David Stockman said in December of 1981. He said:

       The reason we did it wrong . . . was that we said, Hey, we 
     have to get a program out fast. And when you decide to put a 
     program of this breadth and depth out fast, you can only do 
     so much . . . . We didn't think it all the way through. We 
     didn't add up all the numbers. We didn't make all the 
     thorough, comprehensive calculations about where we really 
     needed to come out. . . . In other words, we ended up with a 
     list that I'd always been carrying of things to be done, 
     rather than starting the other way and asking, What is the 
     overall fiscal policy required to reach the target?

  I am afraid that is what we are doing again.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. I intend to use my 10 minutes this way, so if anybody 
else is planning to speak, they will know time is used up: 3 minutes to 
the Senator from Virginia, and 7 minutes to the Senator from Oklahoma.
  The PRESIDING OFFICER. The Senator from Virginia is recognized for 3 
minutes.
  Mr. ALLEN. Mr. President, I thank the chairman, Senator Grassley, and 
the ranking member, Senator Baucus, as well as their staffs, for their 
hard work and dedication on this tax bill, but, in particular, I thank 
them for working with me to include an amendment, No. 673, which is my 
education opportunity tax relief amendment.
  This bill, with the education savings account, will be a good help 
for parents who have children in kindergarten through the 12th grade.
  The education savings accounts previously were only available for 
those who had children in college or a university. It is now expanded 
for K-12, for up to $2,000 a year that you can get in tax relief for 
that allocation of your funds, reducing your taxes, and making it a 
tax-free withdrawal for education-related expenses.
  What my amendment makes clear is that if a parent with a child in K-
12 wants to buy their child a computer or educational software, or 
Internet access at home, that is permissible. The way the measure right 
now is worded, very few schools--certainly not public schools--would 
actually require parents to purchase a computer or education-related 
technology as a term of enrollment. So what this does is empower 
parents to purchase those computers or educational software or Internet 
access.
  It is very important for us to understand that computers are 
important in schools, in community centers, and in libraries, but 
computers need to be in the home. Studies show that children who have 
computers at home stay in school, do better academically, and go on to 
better jobs because they are more technologically proficient.
  This is an idea which will specifically allow parents of K-12 school-
aged children to use education savings accounts for the purchase of 
computers, related technology, and peripherals, educational software, 
and Internet access. And the purchase would not need to be a 
requirement of enrollment or attendance at a school.
  This also is supported by many groups in the technology area, such as 
the Information Technology Industry Council, the Computer and 
Communications Industry Association, Global Learning Systems, and many 
others.
  I ask unanimous consent that letters I have in support be printed in 
the Record immediately following my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See Exhibit 1.)
  Mr. ALLEN. So, Mr. President, and Members of the Senate, I thank you 
all for working with me.
  The PRESIDING OFFICER. The Senator has used his time.
  Mr. NICKLES. I yield the Senator 15 seconds.
  Mr. ALLEN. This amendment we are working on in a bipartisan manner is 
supported by parents and the technology community, and it will be 
beneficial to the schoolchildren all across America.
  Thank you, Mr. President. And I thank both mangers of the bill.

                               Exhibit 1


                                         ITT Industries, Inc.,

                                 White Plains, NY, April 12, 2001.
     Ms. Rachael Bohlander,
     Legislative Assistant, Office of Senator George Allen,
     Russell Senate Office Building, Washington, DC.
       Dear Ms. Bohlander: I write to thank you for your recent 
     communication to ITT Industries concerning the Education 
     Opportunity Tax Credit Act, a bill introduced by Senator 
     Allen to provide educational assistance through tax credits 
     and for other purposes.
       ITT Industries strongly favors efforts to strengthen 
     education in the United States. As a global engineering and 
     manufacturing company with nearly 19,000 employees in this 
     country, ITT Industries shares Senator Allen's interest in 
     assisting American students to prepare for technology jobs in 
     the digital economy. We are also following the 
     administration's proposals concerning education, and will 
     take appropriate account of Senator Allen's initiative.
       Thank you for bringing Senator Allen's bill to our 
     attention.
           Sincerely yours,

                                             Thomas R. Martin,

                                            Senior Vice President,
     Director of Corporate Relations.
                                  ____



                                        GlobalLearningSystems,

                                                       McLean, VA.
     Hon. George F. Allen,
     U.S. Senator, Russell Senate Office Building, Washington, DC.
       Dear Senator Allen: On behalf of 
     GlobalLearningSystemsTM, I would like to express 
     our enthusiastic support for your recently introduced 
     legislation, S. 488, The Education Opportunity Tax Credit 
     Act.
       This bill addresses major education concerns as well as the 
     looming Digital Divide, which hinders not only students, but 
     also their parents. Access to the Internet is a growing 
     necessity of everyday life. For those with modest means, your 
     forward-looking legislation assures that no family's children 
     will be left behind because they did not have the basic tools 
     to keep up.
       Since we are a global learning and e-Learning company, we 
     particularly appreciate the

[[Page 8656]]

     impact of the inclusion of e-Learning services in the 
     provisions of the bill, which can improve the success 
     possibilities for all students. For the first time, we can 
     tailor learning to the need of the individual student and 
     make learning the motivating experience all parents seek for 
     their children.
       Again, let me congratulate you for making such a positive 
     legislative statement with the introduction of S. 488.
       With best wishes for your continuing efforts.
           Sincerely yours,

                                                  Scott Sobel,

                                                   Vice President,
     Communications and Marketing.
                                  ____

                                            Information Technology


                                             Industry Council,

                                     Washington, DC, May 14, 2001.
     Senator George Allen,
     U.S. Senate,
     Washington, DC.
       Dear Senator Allen: The Information Technology Industry 
     Council (ITI) would like to applaud your leadership in 
     introducing S. 488, the Education Opportunity Tax Credit Act. 
     ITI recognizes that the success of our nation and its 
     continued global leadership in information technology depends 
     upon our ability to equip all of our children with 21st 
     century skills. S. 488 takes important steps towards 
     achieving that goal.
       ITI is the association of leading information technology 
     companies, employing more than 1.3 million people in the 
     United States and generating $633 billion in worldwide 
     revenues in 1999. ITI's member companies have a long history 
     of working with local school systems to introduce technology 
     into the learning environment and have committeed over $1 
     billion to provide students, teachers and schools with the 
     equipment and training they need to make the most of 
     technology.
       ITI has adopted education principles recognizing the 
     importance of integrating technology into the curriculum and 
     providing students access to that technology. In addition, 
     recent studies have shown that access to technology outside 
     the classroom can increase the benefits students get from 
     having technology in the classroom. Your legislation 
     recognizes this value and helps to bring that digital 
     opportunity to a greater number of students.
       We look forward to working with you on this issue. If you 
     have any question please contact me or Matt Tanielian of my 
     staff at (202) 626-5751.
           Best regards,
                                                     Rhett Dawson,
                                                        President.

  The PRESIDING OFFICER. The Senator from Montana.


                           Amendment No. 743

  Mr. BAUCUS. Mr. President, on behalf of Senator Conrad, I send an 
amendment to the desk and ask for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Montana [Mr. Baucus], for Mr. Conrad, 
     proposes an amendment numbered 743.

  Mr. BAUCUS. I ask unanimous consent reading of the amendment be 
dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

 (Purpose: To increase the standard deduction and to strike the final 
            two reductions in the 36 and 39.6 rate brackets)

       On page 9, strike the matter between lines 11 and 12, and 
     insert:


------------------------------------------------------------------------
                                         The corresponding percentages
                                         shall be substituted for the
   ``In the case of taxable years           following percentages:
   beginning during calendar year:   -----------------------------------
                                        28%      31%      36%     39.6%
------------------------------------------------------------------------
2002, 2003, and 2004................    27%      30%      35%     38.6%
2005 and 2006.......................    26%      29%      35%     38.6%
2007 and thereafter.................    25%      28%      35%     38.6%
------------------------------------------------------------------------


       On page 13, between lines 15 and 16, insert:

     SEC. 104. INCREASE IN STANDARD DEDUCTION.

       (a) In General.--Section 63(c) (relating to standard 
     deduction), as amended by section 301, is amended by adding 
     at the end the following:
       ``(8) Additional increase in basic standard deduction.--In 
     the case of taxable years beginning after December 31, 2004--
       ``(A) the basic standard deduction in effect for the 
     taxable year under subparagraph (B) or (C) of paragraph (2) 
     (without regard to this paragraph) shall be increased by--
       ``(i) $600 in the case of taxable years beginning in 2005 
     and 2006, and
       ``(ii) $1,600 in the case of taxable years beginning after 
     2006, and
       ``(B) the basic standard deduction in effect for the 
     taxable year under subparagraph (A) of paragraph (2) (without 
     regard to this paragraph) shall be increased by the 
     applicable percentage (as defined in paragraph (7)) of the 
     increase under subparagraph (A) of this paragraph.''
       (b) Effective Date.--The amendments made by this section 
     apply to taxable years beginning after December 31, 2004.


                           Amendment No. 744

  Mr. BAUCUS. Mr. President, I send an amendment to the desk on behalf 
of Senator Conrad and ask for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Montana [Mr. Baucus], for Mr. Conrad, 
     proposes an amendment numbered 744.

  Mr. BAUCUS. I ask unanimous consent reading of the amendment be 
dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

 (Purpose: To increase the standard deduction and to reduce the final 
   reduction in the 39.6 percent rate bracket to 1 percentage point)

       On page 9, in the matter between lines 11 and 12, strike 
     ``36%'' in the item relating to 2007 and thereafter and 
     insert ``36.6%''.
       On page 13, between lines 15 and 16, insert:

     SEC. 104. INCREASE IN STANDARD DEDUCTION.

       (a) In General.--Section 63(c) (relating to standard 
     deduction), as amended by section 301, is amended by adding 
     at the end the following:
       ``(8) Additional increase in basic standard deduction.--In 
     the case of taxable years beginning after December 31, 2006--
       ``(A) the basic standard deduction in effect for the 
     taxable year under subparagraph (B) or (C) of paragraph (2) 
     (without regard to this paragraph) shall be increased by 
     $300, and
       ``(B) the basic standard deduction in effect for the 
     taxable year under subparagraph (A) of paragraph (2) (without 
     regard to this paragraph) shall be increased by the 
     applicable percentage (as defined in paragraph (7)) of the 
     increase under subparagraph (A) of this paragraph.''
       (b) Effective Date.--The amendments made by this section 
     apply to taxable years beginning after December 31, 2006.

  The PRESIDING OFFICER. Who yields time?
  Mr. GRASSLEY. I yield time to the Senator from Oklahoma.
  The PRESIDING OFFICER. The Senator from Oklahoma is recognized for 
6\1/2\ minutes.
  Mr. NICKLES. Mr. President, I thank my friend and colleague, Senator 
Grassley, for his leadership on this bill, as well as Senator Baucus. I 
think they have managed it very well, both in committee and on the 
floor.
  I also would like to inform our colleagues that we are going to begin 
a series of rollcall votes at about 6 o'clock. I urge Members to come 
to the Chamber and stay in the Chamber. We are going to have these 
amendments within a strict timeframe. My guess is there will be 10 or 
12 minutes, and they will be enforced.
  Again, our colleagues should be aware that these votes will start and 
begin probably about 6 o'clock, and we are going to have numerous 
rollcalls, probably a lot more than we need. I urge my colleagues, many 
of whom offered amendments, to accept voice votes, if possible.
  I urge my colleagues to vote in favor of this package. It is not 
perfect. I have heard some people say it is too big. I disagree. This 
is a very timid package. This is about one-fourth of the surplus. I 
heard a couple of our colleagues say: Wait a minute, maybe we are 
reenacting the mistakes made in 1981, the massive tax cuts in 1981.
  I looked at the amount of money we raised in 1980 from all sources in 
the Federal Government. It was $517 billion. In 1990, the Federal 
Government raised over $1 trillion. It doubled in that 10-year period 
of time, the revenues that came in.
  What happened in that interim is that spending went up even faster 
than revenues. So I don't think it was because of the tax cuts, 
although we had a very significant tax cut. If you look at the 1981 tax 
bill, the 1986 tax bill, you saw maximum rates go down significantly. 
All taxpayers had significant rate reductions. The maximum rate was 70 
percent in 1980. It was 28 percent in 1988. So it was a big change.
  This bill is much more timid. And for those who are saying we have 
cut too much for the wealthy, I don't think they have read the bill. 
The maximum tax rate under the income-tax code right now is 39.6 
percent. Guess what it will be in December of the year 2004, after this 
massive tax cut. It will be 38.6 percent. It will go down one point. 
How much did it increase in the 1993 tax increase? The maximum tax rate

[[Page 8657]]

then went from 31 percent to 39.6. It went up 8.6 points. In addition, 
what used to be a cap on the Medicare tax was eliminated. So you can 
add another 1.45 for an individual. You can double that for a couple, 
so that is another 2.9.
  So the effect of the 1993 tax increase was moving the maximum rate 
from 31 percent to 42.5 percent. That is an 11.5-point increase for 
maximum taxpayers.
  This bill, in the first 4 years, reduces that only 1 point, only one-
tenth as much as the increase that we had, and it just so happens the 
increase in 1993 was retroactive back to January of 1993.
  So my point is, this is a very timid tax cut compared to the tax 
increase we had in 1993. Those are just the facts.
  We are slow, very slow in phasing in the tax cuts, the rate cuts for 
all taxpayers. They are not fully in effect until the year 2007.
  I hope we can accelerate that. It takes us too long to get there. But 
I make this point because I keep seeing amendments: We will delay the 
effective date for the high tax payers. I guess they don't want to give 
taxpayers tax cuts. I don't follow that. It is like using the Tax Code 
only for redistribution of wealth. Let's load up more on the low-income 
side.
  The bill we have before us does a lot for low-income taxpayers. It 
creates a 10-percent rate. Those taxpayers were paying 15 percent. That 
is a 33-percent reduction. That is $600 in savings for taxpayers on the 
low-income scale, married couples. That is $600 more that they get to 
keep if they have $12,000 in adjusted taxable income. That is very 
positive. So that is weighted toward the low income.
  There is also a $500 tax credit per child. We passed the first $500 
tax credit per child in 1997. That is very positive. If you have four 
kids, as do I--they are grown now, so I don't get it--who are 
dependents, that is $2,000. Over the period of this bill we double 
that. So we make it a $1,000 tax credit per child. This bill even makes 
it refundable. I don't think that is very good policy, but it is in 
this bill.
  So my point is, this bill is loaded very much towards low-income 
groups. For those people who say we want to load it more, I disagree. 
We ought to have a tax cut for taxpayers. The greatest percentage of 
tax reduction definitely goes towards low- and middle-income taxpayers 
in this group.
  Certainly, individuals who have kids, certainly individuals who are 
paying that 15-percent rate, who have income on the lower side, they 
get a very significant rate reduction. And they get it retroactive to 
January 1 of this year. All other taxpayers don't get a rate reduction 
until January of next year and only one point. In some cases, that is 
only one-tenth of the increase they had in 1993.
  This bill does a lot of other things that will benefit families. It 
has educational tax provisions. It has savings provisions dealing with 
IRAs, education, making savings more affordable, enhancing individual 
pensions. It does other things, including the death tax. I started to 
say death tax repeal, but that is not until the year 2001. It does 
increase the exemption amount or the unified credit amount up to $1 
million, $2 million, $3 million, $4 million in the ninth year--that is 
a positive provision--and ultimately repeal. So we don't penalize 
somebody for dying. The taxable event would not be when somebody died. 
The taxable event would be when the property is sold, and then that tax 
rate would be at the capital gains rate. It wouldn't be at these 
unbelievably high and punitive rates of 55 percent that are now present 
law.
  I urge my colleagues to vote in favor of final passage of this bill. 
Let's give taxpayers relief. It is long overdue.
  The PRESIDING OFFICER. All time controlled by the majority has 
expired.
  The PRESIDING OFFICER. Who yields time on the bill?
  Mr. REID. I yield 2 minutes to the Senator from New Jersey, Mr. 
Corzine.
  The PRESIDING OFFICER. The Senator from New Jersey is recognized for 
2 minutes.
  Mr. CORZINE. Mr. President, I rise to speak to the overall bill. I 
congratulate Senators Grassley and Baucus for their effort at 
bipartisanship to put together a very complicated and difficult piece 
of legislation.
  I also have serious reservations which lead to a conclusion that I 
think we are overreaching, far overreaching relative to our financial 
stability. My read of this particular piece of legislation is that it 
will potentially bring grave concerns to marketplaces around the world 
when people do the analyses and see the great depth of backloaded tax 
cuts that are embedded in the bill. It is a very serious concern, 
particularly in a country that has been running the kinds of serious 
current account deficits that we have had over the last few years. That 
backs into concerns about our bond markets, as people analyze these 
numbers and see how they fit together, particularly in the context of 
an upcoming increase in defense expenditures that have not been allowed 
for in this bill.
  I have very serious concerns that we will return to periods of 
deficits--some say a ``deficit ditch.'' I think we need to be very 
mindful of that tonight as we go to the vote.
  It is more than just the principles that are involved, which I have 
serious concerns with, too, about the distribution, who gets the 
benefit. I think there are serious concerns about the financial 
underpinnings that this will provide for our Nation in the years ahead.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. REID. Mr. President, I yield such time as we have remaining to 
the Senator from Montana.
  The PRESIDING OFFICER. The Senator from Montana.


                           Amendment No. 676

  (Purpose: To allow a credit to holders of qualified bonds issued by 
                    Amtrak, and for other purposes)

  Mr. BAUCUS. Mr. President, I send up amendment No. 676.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Montana [Mr. Baucus], for Mr. Biden, for 
     himself, Mr. Torricelli, Mr. Kerry, Mr. Schumer, Mr. Baucus, 
     Mr. Allen, Mrs. Boxer, Mr. Carper, Mr. Chafee, Mrs. Clinton, 
     Mr. Corzine, Mr. Dayton, Mr. Dodd, Mr. Durbin, Mr. Leahy, Ms. 
     Mikulski, Mrs. Murray, Mr. Rockefeller, Mr. Sarbanes, Mr. 
     Specter, Mr. Warner, Ms. Collins, Mr. Daschle, Mrs. 
     Feinstein, Mr. Kennedy, Ms. Landrieu, Mr. Reid, and Mr. 
     Wellstone, proposes amendment numbered 676.

  Mr. BAUCUS. Mr. President, I ask unanimous consent that further 
reading of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The text of the amendment is printed in today's Record under 
``Amendments Submitted and Proposed.'')


                      Amendment No. 676, withdrawn

  Mr. BIDEN. Mr. President, amendment 676 is essentially the High Speed 
Rail Investment Act I introduced with Senator Hutchison earlier this 
year, that has 57 cosponsors, including the Majority and Minority 
leaders. Indeed, a majority of the Finance Committee supports this 
bill, as well.
  Both of the leaders have given us their public commitments to move 
this legislation this year, commitments to finish a job that was 
started in the last Congress.
  As the Administration introduces its proposal for a new energy 
policy, as we read daily about increasing congestion on our highways 
and at our airports, we simply must make safe, clean, high-speed 
passenger rail a key component of our nation's transportation system.
  I say that this is essentially the same as the legislation that I 
introduced with Senator Hutchison and others earlier this year. 
Actually, the amendment we are offering today is an improved version, 
that addresses two key concerns of many of our colleagues.
  At the insistence of Senator Baucus, and with his cooperation, we 
have included new language with an unambiguous prohibition on the use 
of the Highway Trust Fund by States in meeting their matching 
requirements under this legislation. That is something that has always 
been important to him, and I am glad to say that we have reached an 
agreement on that issue.

[[Page 8658]]

  Just as important, we have also added new language on the question of 
State and local taxation of the improvements that will come from 
upgrading rail lines around the country to carry high-speed passenger 
trains. I know that was a concern of Senator Grassley, along with many 
other Senators.
  As Senator Baucus knows, with this change the bill now has the 
support of the National League of Cities, the National Conference of 
State Legislatures, the United States Conference of Mayors, the 
National Association of Counties, and the Council of State Governments.
  So, with the help of Senator Baucus, from now forward we have an 
improved version of the bill. This is the version we hope will move in 
the Finance Committee soon.
  While supporters of this legislation are a majority in both the 
Finance Committee and here on the Senate floor, I will respect the 
wishes of Senator Baucus that we not ask for a vote today.
  I am grateful that he is not only willing to sign on to this 
amendment, with the improvements he was seeking, but he is committed to 
helping us move this legislation through the Finance Committee and on 
to the floor as soon as we can.
  This is an important move forward, and an important step toward 
fulfilling the commitments Senate leaders have made to move the High 
Speed Rail Investment Act this year.
  I thank Senator Baucus for his help in this matter.
  Mr. BAUCUS. Mr. President, I rise to make a commitment regarding the 
High Speed Rail Investment Act.
  I support passenger rail in the United States and I support Amtrak. 
The State of Montana relies on Amtrak in the north and hopes to secure 
passenger rail in the south. Last Congress, I worked with Senators 
Lautenberg, Moynihan and Roth to protect the Highway Trust Fund from a 
raid by Amtrak. I have been working with Senator Biden this Congress to 
ensure a similar protection of the Highway Trust Fund.
  I am extremely concerned about Amtrak ``Double Dipping,'' by raiding 
the Highway Trust Fund in addition to selling bonds. I was so concerned 
that I withdrew my name as a cosponsor of the bill.
  I am pleased to say that since then, I have worked with Senator Biden 
on acceptable language to protect the trust fund. However, this 
language has not been added to the current High Speed Rail Investment 
Act, S. 250. It has been included in an amendment that Senator 
Torricelli filed during the markup of this tax package in the Finance 
Committee and that Senator Biden offered and withdrew today. I can 
support the language in this amendment.
  I know that Senators Torricelli and Biden and others wanted to offer 
this amendment today. I appreciate that they withdrew this amendment, 
because I don't think that this language belongs on this tax bill. I 
feel very strongly that we need to examine this bill further before we 
include it in any package.
  As ranking Democrat on this Committee, with the changes included in 
this amendment, it is my intention to go through the official Committee 
process of mark-up and hearings, before we let this amendment be voted 
on. I would like to hold a hearing within a month after the completion 
of this tax package.
  Mr. President, this is the High-Speed Rail Investment Act. I have 
worked with Senator Biden to help work out provisions to make it 
acceptable to me, at least with respect to not infringing on the 
highway trust fund. I support the latest amendment, but it is not 
germane to the bill. I now withdraw the amendment.
  The PRESIDING OFFICER. Without objection, the amendment is withdrawn. 
The Senator has 2\1/2\ minutes remaining.


                           Amendment No. 656

  Mr. REID. Mr. President, I yield that time and defer to the Senator 
from New Hampshire who has 5 minutes under the agreement previously 
entered.
  The PRESIDING OFFICER. The Senator from New Hampshire.
  Mr. GREGG. Are we now back on my amendment?
  The PRESIDING OFFICER. The Senator is correct.
  Mr. GREGG. Mr. President, I yield 2 minutes to the Senator from 
Colorado.
  Mr. ALLARD. Mr. President, I am pleased to join with Senators Gregg, 
Ensign, Allen, Bunning, and others in offering this capital gains tax 
rate reduction. This will provide an immediate stimulus to the economy, 
there is no tax cut out there that can do a better job of heading off a 
recession. A capital gains tax rate cut will encourage saving and 
investment in our economy. It will help entrepreneurs to start 
businesses and create jobs. The capital gains tax cut will raise 
revenue for the federal government. After we cut the rate in 1997, the 
federal government received $200 billion in additional revenue. In just 
four years, we have $200 billion more than forecast before the rate 
cut. The tax cut will increase economic growth, increase revenues and 
reward investment in our economy. I urge my colleagues to support this 
reduction in the capital gains tax rate from 20 percent to 15 percent.
  I think this is one of the most substantial things we can do to, 
again, head off a recession in our economy.
  Mr. President, I yield back the remainder of my time.
  Mr. BAUCUS. Mr. President, parliamentary inquiry: What is the pending 
business?
  The PRESIDING OFFICER. The amendment of the Senator from New 
Hampshire.
  Mr. BAUCUS. Under the order, how much time does the Senator have and 
how much time is allocated to those in opposition?
  The PRESIDING OFFICER. The Senator from Montana has 3 minutes. The 
Senator from New Hampshire has 5\1/2\ minutes remaining.
  Mr. REID. Mr. President, parliamentary inquiry: The Senator from New 
Hampshire----
  The PRESIDING OFFICER. Does the Senator from Montana yield?
  Mr. BAUCUS. Yes.
  Mr. REID. The Senator from New Hampshire had 5 minutes. He yielded 2 
minutes. How can he end up with 5\1/2\ now?
  The PRESIDING OFFICER. The Senator from Nevada yielded 3 minutes to 
the Senator----
  Mr. REID. The Senator from Nevada yielded his time back on the bill.
  Mr. GREGG. I think we can straighten this out. I ask unanimous 
consent that the Senator from Montana have 3 minutes and I have 3 
minutes and we then move to a vote.
  The PRESIDING OFFICER. Is there objection?
  Mr. LOTT. Mr. President, reserving the right to object, I will use a 
brief part of my leader time to outline the schedule of how we will 
proceed tonight after the other two speakers have spoken. I withdraw my 
reservation.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BAUCUS. The pending amendment is the amendment offered by Senator 
Gregg, No. 656. At the appropriate time, I am going to make a point of 
order against the amendment. On the substance, I might add, however, 
that there are no capital gains provisions in the President's proposed 
tax cut bill. This would be adding a whole new subject, which, frankly, 
is difficult for us in the committee to incorporate along with the 
other provisions we have in the bill.
  Second, I might add that the provision offered by the Senator 
provides for a lower capital gains rate, which is temporary--only a 
couple, 3 years.
  In effect, we have heard a lot of criticisms of the bill because of 
phase-ins and phaseouts, now-you-get-it, now-you-don't, which in the 
main are legitimate criticisms. But they are there because Senators 
want other provisions; namely, marriage penalty relief and the child 
tax credit increased $1,000 over $500. They would like to have rates 
reduced, estate tax provisions, and they would like to have this new 10 
years.
  Altogether, it is hard to fit everything within $1.35 trillion, to 
make it fit, because Senators so strenuously argue for other 
provisions. We have had these phase-ins and we hope at a subsequent 
date we can reduce them.

[[Page 8659]]

  I might add that we have begun to phase out the Pease amendment, and 
we phased out the personal exemption.
  I might add that this amendment adds another complexity. I don't 
think we want to do that. There are a lot of ways to address capital 
gains. One is offered by the Senator from New Hampshire. Another is to 
provide for exclusions up to a certain level, a 50-percent exclusion. 
Another way is, frankly, just to change the rates in other ways. I 
might say, because of the various different ideas of how to deal with 
capital gains, that should be dealt with on a more comprehensive basis, 
not as an amendment here, which has complexity and does not really help 
the taxpayers as much as other proposed capital gains amendments would.
  For those reasons, on the substance, I think this is not the right 
time. I also, at the appropriate time, will make a point of order 
against this amendment.
  Mr. GREGG. Mr. President, this amendment would cut the capital gains 
rate from 20 percent to 15 percent. It is sort of trifecta tax law. We 
just saw the Preakness run here a couple days ago. If you want a triple 
winner, this is it.
  First off, the American taxpayer wins because the majority of 
American taxpayers presently own stock. A lot of that stock is locked 
up. They are not able to convert it to cash and reinvest because they 
have capital gains and they want to pay that tax. This frees up those 
locked up assets and middle America wins.
  Secondly, the Federal Government wins. Historically, and on the basis 
of the projections from the Joint Tax, this will be a revenue winner 
for the next 3 years and, historically, for the next 10 years. We 
actually generate more revenue. Why? Because of the fact that economic 
activity is increased and that economic activity is a taxable event.
  Today it is not taxable because everybody is sitting on those capital 
gains. So we are not creating activity, and we are not creating a 
taxable event.
  This amendment creates revenue to the Federal Treasury and scores 
positively for the next 3 years. In my opinion, it scores positively 
for the next 10 years. The Joint Tax Committee found it to lose $10 
billion on a $1.3 trillion bill, obviously a big number but a minor 
amount in the context of the whole bill.
  The third winning item of this is that it creates prosperity. When 
you free up capital, people can take that capital and reinvest it in 
productive activity, either in small business activity or in the stock 
market to create capital for people who are entrepreneurs, and 
entrepreneurs create jobs; they create prosperity.
  This is a triple winner. It is a benefit to the American taxpayers, 
especially middle-income taxpayers. It is a benefit to the Federal 
Government because it generates positive revenue and is a benefit to 
the economy because it is an engine for prosperity.
  A motion will be made that it is not germane. I argue it is germane. 
There are two areas of capital gains in this bill, No. 1, dealing with 
AMT and, No. 2, dealing with the estate tax.
  More importantly than that, if my colleagues want to vote on 
something that is a win-win-win, a trifecta for our Government, our 
country, and our people, this is it: a capital gains cut from 20 to 15 
percent. I hope my colleagues will join me in this vote. I yield back 
whatever time I have remaining.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, the pending amendment is not germane. 
Therefore, I raise a point of order that the amendment violates section 
305(b)(2) of the Congressional Budget Act of 1974.
  Mr. GREGG. Mr. President, I move to waive the point of order and ask 
for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The majority leader.
  Mr. LOTT. Mr. President, I yield myself such time as I may consume 
under the leader's time, but it will only be 2 or 3 minutes. First, 
parliamentary inquiry: We are now ready to proceed with a vote on the 
first amendment in sequence that could very well go on for quite some 
time; is that correct?
  The PRESIDING OFFICER. The leader is correct.
  Mr. LOTT. Before we do that, I want to make two or three points.
  First, we have reached a historic point. Tonight we are going to pass 
this very important, significant tax relief package for working 
Americans. When one looks at all that is in this bill, it is very 
impressive, not just the amounts, but also what it does in reducing 
individual income tax rates, dealing with the death tax, doubling the 
child tax credit, and reducing the marriage penalty. It provides relief 
on the alternative minimum tax, encourages savings for education, and 
it also encourages retirement security.
  This is a very large package already in the number of provisions that 
are in it. In fact, one of the greatest dangers we face right now is 
loving it to death or loading it down because we still have a number of 
amendments we may be voting on tonight that could begin to drive up the 
overall cost of the bill, but also every time colleagues add something, 
unless they can get over 60 votes, they are taking something away. So I 
hope we will stick with the package we have before us. It is a good 
package. It will benefit the economy in America. It will help working 
American families.
  Once again, I have to give a lot of credit to the chairman of the 
Finance Committee, Chuck Grassley, for working very hard and reaching 
out to everybody on both sides of the aisle. He is the new chairman of 
the committee but has worked it as the old pro he really is.
  He also was determined from the beginning that this was going to be 
bipartisan. He and the Senator from Montana got together and talked. 
They came to some agreements that maybe the leaders on both sides of 
the aisle would not have necessarily preferred, but that is the way the 
Finance Committee has worked in all the years I have watched it up 
close and now as a member. It has come out not always on a partisan 
vote but a bipartisan vote as we have tried to get the job done.
  I commend the chairman and the ranking Democrat. Despite the fact 
Senator Baucus, the ranking member, will be criticized on his side of 
the aisle for crossing the aisle a little ways along the way, he did 
the job and he deserves credit.
  With regard to the schedule, we have a lot of work to do this week. 
This could be a breakthrough week in which we provide tax relief for 
Americans and pass the most fundamental education reform in years, 
again, in a bipartisan way, and that would be a tremendous boost to the 
American people if they see us doing both of those things this week.
  We will begin voting now in sequence. We will limit the votes to 10 
minutes plus not more than 5 minutes overtime. After the first vote, we 
will cut the votes off. If we can get all the Senators to stay in the 
Chamber, we can actually get votes done in 12 minutes and then, of 
course, have 2 minutes equally divided to explain the next amendment.
  We are going to stick to our guns tonight. Senator Byrd has been 
calling for that. He is right. If ever there was a time we needed to do 
it, it is tonight. If we do not do that, we will be here voting at 10 
o'clock, 11 o'clock, 12 o'clock, however long it takes.
  I emphasize this point. We are going to vote on the amendments on 
which we need to vote. I encourage Senators not to insist on a vote 
unless they absolutely have to. We are going to keep voting until we 
complete our work and get to final passage tonight because we must go 
back to the education bill in the morning, and we must begin to have a 
conference meeting across the aisle and across the Capitol tomorrow on 
how we are going to proceed on tax relief.
  We are going to limit the time on these votes. We are going to vote 
on the amendments, and we are going to vote on final passage tonight. I 
hope Senators prepared for that and will not

[[Page 8660]]

be leaving the Capitol. Senators will have a few minutes between votes 
to run and get a sandwich. Maybe we can get pizzas brought up. We will 
be glad to invite Senators to come into our Cloakrooms and have pizzas. 
We need to get this bill finished, and we are going to do it tonight.
  Mr. REID. Will the leader yield?
  Mr. LOTT. I yield to the distinguished Senator from Nevada who has 
been in the Chamber again doing yeoman work. I appreciate it.
  Mr. REID. I say to the leader, we have approximately 40 amendments 
that already have votes ordered on them. It does not take much math to 
figure out, if we are lucky, we can figure that is about 10 hours.
  I hope people will understand the difficulty the clerks have hearing 
people respond to the votes. People in the Chamber should remain as 
quiet as possible, but also I hope the leader will end some of these 
votes when it is required. It may mean some people will be upset at the 
leader for not waiting for them until they finish their dinner or 
finish a speech, whatever it might be. But I say to my friend, if he 
relents on one vote, it means it is going to happen the whole night.
  Mr. LOTT. If I can say to the Senator, he is right, and the only way 
we are going to complete our work is stay in the Chamber and cut them 
off in the regular time. I will do that. I ask for the Senator's 
support in that effort and the managers. That is the only way we are 
going to complete this at a reasonable hour.
  Mr. BAUCUS. Will the leader yield?
  Mr. LOTT. I will be glad to yield.
  Mr. BAUCUS. That means the first vote will take how many minutes?
  Mr. LOTT. Not more than 20 minutes; 15 minutes, and I believe 
tradition allows for 5 minutes overtime--not more than 20 minutes.
  Mr. BAUCUS. And subsequent amendments?
  Mr. LOTT. Subsequent amendments will be 10 minutes or could go as 
much as 5 minutes overtime. When every Senator is in, it could be as 
little as 12 minutes, but not more than 15 minutes.
  Mr. BAUCUS. I appreciate that. I encourage the leader to stick with 
10 minutes.
  Mr. LOTT. I did that one time, and I found out it is actually 10 
minutes plus 5 minutes that is allowed under the rule. Once every 
Senator is recorded, if it is 10 minutes, 11 minutes, we will cut it 
off right then. I am going to stay here and watch every vote.
  Mr. BAUCUS. And that includes 2 minutes to explain votes.
  Mr. LOTT. That is correct.
  Mr. REID. Will the Senator yield for a unanimous consent request?
  Mr. LOTT. I will be glad to.
  Mr. REID. Mr. President, I was supposed to call up an amendment, and 
I did not. I ask unanimous consent that amendment No. 747 of the 
Senator from Delaware, Mr. Carper, be allowed in order. It is way down 
at the bottom, but it is here.
  Mr. LOTT. Mr. President, I do not believe there is an objection to 
that request.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 747

 (Purpose: To provide responsible tax relief for all income taxpayers, 
   by way of a $1,200,000,000,000 tax cut, and to make available an 
  additional $150,000,000,000 for critical investments in education, 
  particularly for meeting the Federal Government's commitments under 
    IDEA, Head Start, and the bipartisan education reform and ESEA 
                         reauthorization bill)

  Mr. REID. Can the clerk report amendment No. 747?
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Delaware [Mr. Carper] proposes an 
     amendment numbered 747.

  Mr. REID. Mr. President, I ask unanimous consent that the reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The text of the amendment is located in today's Record under 
``Amendments Submitted and Proposed.'')
  Mr. LOTT. Mr. President, I yield the floor.
  Mr. REID. Mr. President, I ask for the yeas and nays on the amendment 
No. 747.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.


                        Vote on Motion to Waive

  The PRESIDING OFFICER. The question is on agreeing to the motion. The 
yeas and nays have been ordered. The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. NICKLES. I announce that the Senator from Alabama (Mr. Sessions) 
and the Senator from Alaska (Mr. Stevens) are necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The yeas and nays resulted--yeas 47, nays 51, as follows:

                      [Rollcall Vote No. 115 Leg.]

                                YEAS--47

     Allard
     Allen
     Bayh
     Bennett
     Bond
     Brownback
     Bunning
     Burns
     Campbell
     Cleland
     Cochran
     Collins
     Craig
     Crapo
     Ensign
     Enzi
     Fitzgerald
     Frist
     Gramm
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Kyl
     Lieberman
     Lott
     Lugar
     McConnell
     Miller
     Murkowski
     Nickles
     Roberts
     Santorum
     Schumer
     Shelby
     Smith (NH)
     Smith (OR)
     Specter
     Thomas
     Thompson
     Thurmond
     Torricelli
     Warner
     Wyden

                                NAYS--51

     Akaka
     Baucus
     Biden
     Bingaman
     Boxer
     Breaux
     Byrd
     Cantwell
     Carnahan
     Carper
     Chafee
     Clinton
     Conrad
     Corzine
     Daschle
     Dayton
     DeWine
     Dodd
     Domenici
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham
     Grassley
     Harkin
     Hollings
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Leahy
     Levin
     Lincoln
     McCain
     Mikulski
     Murray
     Nelson (FL)
     Nelson (NE)
     Reed
     Reid
     Rockefeller
     Sarbanes
     Snowe
     Stabenow
     Voinovich
     Wellstone

                             NOT VOTING--2

     Sessions
     Stevens
       
  The PRESIDING OFFICER. On this vote, the yeas are 47, the nays are 
51. Three-fifths of the Senators duly chosen and sworn not having voted 
in the affirmative, the motion is rejected. The point of order is 
sustained, and the amendment falls.
  Mr. LOTT. Mr. President, I move to reconsider the vote.
  Mr. GRASSLEY. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. LOTT. Mr. President, I ask unanimous consent that the next votes 
in the series be limited to 10 minutes each, with 2 minutes before each 
vote for an explanation.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 674

  The PRESIDING OFFICER. Who yields time on the Carnahan amendment?
  The Senator from Missouri.
  Mrs. CARNAHAN. Mr. President, this tax bill has a glaring omission. I 
call upon my colleagues to correct it. One group, those in the 15-
percent marginal tax bracket, have been overlooked. There is no rate 
cut for them.
  Who are these people? They are the forgotten middle-income, working 
families, those who have a gross family income of $30,000 to $65,000, 
72 million Americans--1.7 million of them in Missouri; 44 percent of 
all Missouri taxpayers. They do not walk these halls. They work every 
day. They pick up their children at daycare. They pay their bills. They 
help their children with their homework. They take care of their 
elderly parents. They trust us to do what is fair. We can do so by 
reducing this tax rate by 1 point, to 14 percent.
  To overlook 17 million Americans is a sin of omission we must not 
commit. I encourage my Democratic and Republican colleagues to correct 
this wrong.
  I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The Senator from Iowa.

[[Page 8661]]


  Mr. GRASSLEY. Mr. President, this amendment guts our tax relief bill 
by $87 billion. It increases taxes, then, on families and working 
people by $87 billion by denying the tax cuts in the bipartisan bill.
  This amendment not only delays the reduction in marginal rates; it 
provides only a 1-point reduction in marginal rates. This 1-point 
reduction equals the tax relief that our bipartisan tax plan provides 
in the first year alone. Our plan's additional tax cuts would be 
eliminated entirely by this amendment.
  The proposal of Senators Daschle and Carnahan would actually make our 
tax system less progressive by giving greater savings to upper income 
taxpayers as they pass through the 14-percent bracket.
  When you are really serious about reducing the tax burden for people 
in the 15-percent income bracket, you target your available resources 
to people at that income level. That is exactly what we have done. For 
those earning between $12,000 and $45,000, we have provided tax relief 
ranging from 9 percent on one end to 33 percent on the other. This is a 
conclusion made by the nonpartisan Joint Committee on Taxation.
  To all of my colleagues on both sides of the aisle who supported the 
budget resolution, a vote for this amendment destroys our efforts to 
provide a $1.35 trillion tax cut.
  I urge you to vote against the amendment.
  The PRESIDING OFFICER. The question is on agreeing to amendment No. 
674. The yeas and nays have been ordered. The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. INOUYE. Mr. President, on this vote, I have a pair with the 
Senator from Alaska, Mr. Stevens. If he were present and voting, he 
would vote ``nay.'' If I were at liberty to vote, I would vote ``yea.'' 
Therefore, I withhold my vote.
  The PRESIDING OFFICER (Mr. Ensign). Are there any other Senators in 
the Chamber desiring to vote?
  The result was announced--yeas 48, nays 50, as follows:

                      [Rollcall Vote No. 116 Leg.]

                                YEAS--48

     Akaka
     Bayh
     Biden
     Bingaman
     Boxer
     Breaux
     Byrd
     Cantwell
     Carnahan
     Carper
     Cleland
     Clinton
     Conrad
     Corzine
     Daschle
     Dayton
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham
     Harkin
     Hollings
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Leahy
     Levin
     Lieberman
     Lincoln
     McCain
     Mikulski
     Murray
     Nelson (FL)
     Nelson (NE)
     Reed
     Reid
     Rockefeller
     Sarbanes
     Schumer
     Stabenow
     Torricelli
     Wellstone
     Wyden

                                NAYS--50

     Allard
     Allen
     Baucus
     Bennett
     Bond
     Brownback
     Bunning
     Burns
     Campbell
     Chafee
     Cochran
     Collins
     Craig
     Crapo
     DeWine
     Domenici
     Ensign
     Enzi
     Fitzgerald
     Frist
     Gramm
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kyl
     Lott
     Lugar
     McConnell
     Miller
     Murkowski
     Nickles
     Roberts
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Thomas
     Thompson
     Thurmond
     Voinovich
     Warner

                             NOT VOTING--1

       
     Stevens
       

                   PRESENT AND GIVING A LIVE PAIR--1

      
     Inouye
       
  The amendment (No. 674) was rejected.
  Mr. LOTT. Mr. President, I move to reconsider the vote and I move to 
lay that motion on the table.
  The motion to lay on the table was agreed to.


                           Amendment No. 670

  The PRESIDING OFFICER. There are 2 minutes evenly divided on the 
Fitzgerald amendment No. 670.
  Who yields time?
  Mr. GRASSLEY. Mr. President, we are going to yield back all time on 
this amendment and accept the amendment.
  The PRESIDING OFFICER. All time has been yielded back.
  The question is on agreeing to the amendment of the Senator from 
Illinois.
  The amendment (No. 670) was agreed to.


                           Amendment No. 675

  The PRESIDING OFFICER. The question is on agreeing to the Collins 
amendment No. 675. Who yields time?
  Mr. GRASSLEY. Mr. President, may we have order, please.
  The PRESIDING OFFICER. The Senate will come to order.
  Mr. GRASSLEY. Mr. President, I ask that we pass over the Collins 
amendment and not vote on it now and go on to the next amendment.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.


                           Amendment No. 679

  The PRESIDING OFFICER. The next amendment is Rockefeller amendment 
679.
  Who yields time?
  Mr. BAUCUS. Mr. President, the Senate is not in order. The Senator 
from West Virginia has an amendment, and I think we all should give him 
our attention.
  The PRESIDING OFFICER. The Senator from West Virginia is recognized.
  Mr. ROCKEFELLER. Mr. President, my amendment is a very simple one. It 
asks Senators to choose between whether or not they would rather first 
implement a prescription drug provision for all Americans, a universal 
prescription drug provision for all Americans, before the top income 
tax bracket reduction would become available. It does not eliminate the 
income tax reduction. It only says we have to do the prescription drug 
provision first. We have a year and a half to do it. That is plenty of 
time.
  The objection raised on the floor was that it was not constitutional. 
We consulted extensively over the weekend and OMB found it to be 
constitutional and that, in fact, it could be and would be 
constitutional. There was not a problem.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Mr. ROCKEFELLER. I ask unanimous consent for 10 seconds.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ROCKEFELLER. Mr. President, the modification that I would ask is 
that OMB be allowed to certify the amendment as being in proper order.
  The PRESIDING OFFICER. Without objection----
  Mr. GRASSLEY. I object.
  The PRESIDING OFFICER. Is the Senator seeking to modify his 
amendment?
  Mr. ROCKEFELLER. Yes, I seek to modify the amendment.
  The PRESIDING OFFICER. Is there objection?
  Mr. ROCKEFELLER. Mr. President, I believe the Senator has a right to 
modify his amendment.
  Mr. GRASSLEY. I object.
  The PRESIDING OFFICER. It takes unanimous consent at this time to 
modify an amendment. Is there objection?
  Mr. GRASSLEY. I object.
  The PRESIDING OFFICER. Objection is heard.
  Mr. GRASSLEY. Mr. President, 2 weeks ago, we passed the budget 
resolution. It seems as if we are involved in redebating the enacted 
budget resolution. The budget resolution provides record levels of 
funding for prescription drug coverage. The budget resolution also says 
we have more than enough tax surplus to enact the tax cut before us. We 
handle one issue at a time in the Senate.
  The Finance Committee will address the prescription drug issue at a 
later time. I have said that I hope to do that in committee the last 2 
weeks of July. The Senate does make one piece of legislation contingent 
upon another.
  The pending amendment is not germane to the provisions of the 
reconciliation measure. I therefore raise a point of order against the 
amendment under section 305(b)(2) of the Budget Act.
  The PRESIDING OFFICER. The Senator from West Virginia.
  Mr. ROCKEFELLER. Mr. President, I heard the Senator from Iowa, and I 
move to waive the Budget Act and ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.

[[Page 8662]]

  The question is on agreeing to the motion. The clerk will call the 
roll.
  The assistant legislative clerk called the roll.
  Mr. NICKLES. I announce that the Senator from Arkansas (Mr. Stevens) 
is necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The yeas and nays resulted--yeas 48, nays 51, as follows:

                      [Rollcall Vote No. 117 Leg.]

                                YEAS--48

     Akaka
     Bayh
     Biden
     Bingaman
     Boxer
     Byrd
     Cantwell
     Carnahan
     Carper
     Cleland
     Clinton
     Conrad
     Corzine
     Daschle
     Dayton
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham
     Harkin
     Hollings
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Leahy
     Levin
     Lieberman
     Lincoln
     McCain
     Mikulski
     Murray
     Nelson (FL)
     Reed
     Reid
     Rockefeller
     Sarbanes
     Schumer
     Specter
     Stabenow
     Wellstone
     Wyden

                                NAYS--51

     Allard
     Allen
     Baucus
     Bennett
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Campbell
     Chafee
     Cochran
     Collins
     Craig
     Crapo
     DeWine
     Domenici
     Ensign
     Enzi
     Fitzgerald
     Frist
     Gramm
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Kyl
     Lott
     Lugar
     McConnell
     Miller
     Murkowski
     Nelson (NE)
     Nickles
     Roberts
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Thomas
     Thompson
     Thurmond
     Torricelli
     Voinovich
     Warner

                             NOT VOTING--1

       
     Stevens
       
  The PRESIDING OFFICER. On this vote the yeas are 48, the nays are 51. 
Three-fifths of the Senators duty chosen and sworn not having voted in 
the affirmative, the motion is rejected. The point of order is 
sustained, and the amendment falls.


                     Amendment No. 685, as modified

  The PRESIDING OFFICER. The question is on amendment No. 685 offered 
by the Senator from Indiana, Mr. Bayh.
  Mr. BAYH. Mr. President, I thank my colleague from Montana for his 
graciousness.
  The decisions we are soon to make will affect the welfare of our 
Nation for many years to come. The estimates and assumptions that 
underlie these decisions are uncertain and unstable, at best. The last 
time we were called upon as a body to make decisions of this magnitude, 
we did not make them as well as we might have, for the assumptions and 
estimates were inaccurate, leading to the largest budget deficits, the 
largest increase in the national debt in our Nation's history and six 
separate tax increases to right the fiscal ship of state.
  We must do better than that. We owe it to those who have sent us to 
the Senate to do more than hope for the best. We owe it to them to do 
more than to hope things work out better than they did the last time.
  This amendment will ensure that we take the fiscally responsible 
course to preserve Social Security and Medicare, to balance the budget, 
and to pay down the debt. I urge adoption.
  Mr. NELSON of Florida. Mr. President, I rise in support as a 
cosponsor of the amendment offered by Senator Bayh and other colleagues 
to create a ``Trust Fund Protection Trigger.'' this amendment is 
simple. This amendment would keep us honest. It would prevent us from 
raiding Social Security and Medicare Trust funds. As long as specified 
debt reduction targets are met, the phase in of tax cuts continue as 
scheduled.
  This amendment to the tax cut reconciliation bill would create a 
safety mechanism to address the danger of fiscally irresponsible tax 
cuts or federal spending leading our nation back to a period of budget 
deficits. We must make sure we continue paying down our national debt 
and protecting Social Security and Medicare.
  Mrs. FEINSTEIN. Mr. President, I rise in support of the amendment 
offered by my colleagues Senators Bayh and Snowe to create a ``trigger 
mechanism'' to make sure that the tax cuts we are considering here 
today will not endanger the projected surpluses or undo the hard work 
and hard choices of the past decade which have allowed us to eliminate 
deficits and pay down the debt.
  The Congressional Budget Office has projected a unified budget 
surplus over the next 10 years of some $5.6 trillion, with a $3.1 
trillion on-budget surplus. These projected surpluses provide the basis 
for the consideration of the tax bill before us today.
  Indeed, the unprecedented economic expansion of the past decade and 
our current and projected budget surpluses have provided an 
unparalleled opportunity for the Congress and the administration to 
take action to provide all working Americans with a reduction in their 
taxes, pay down the debt, and meet urgent domestic priorities such as 
health care, education, and the environment, and to do so in a fiscally 
responsible way.
  And although there are many elements of the reconciliation bill as 
reported out of committee which I support--marriage penalty relief, for 
example--one of my concerns with this tax bill is that there is little 
margin for error if the surpluses not materialize.
  In January 2000 the CBO baseline surplus estimate was $3.2 trillion. 
In January 2001 the estimate was $5.6 trillion, a $2.4 trillion change. 
There is no guarantee that these projections will not swing back in the 
other direction and, in fact, there is $4 trillion difference in 
surplus projections between the CBO baseline and the CBO 
``pessimistic'' scenario.
  Now, I am not saying that the pessimistic scenario is likely. But I 
do believe that we have to be cautious.
  When I first came to the Senate in 1993 we were facing mounting 
deficits and an ocean of red ink. It took a lot of hard work and a lot 
of tough decisions to get spending under control. I am proud of what we 
accomplished, and don't want to go back to a situation where instead of 
paying down the Federal debt as we are now we are once again incurring 
more and more debt.
  That is why I support this amendment, which creates a trigger 
mechanism that would make the implementation of the tax cuts--or any 
new large spending increases--dependent on the surplus projections 
actually materializing and continued success in meeting debt reduction 
targets.
  The amendment creates a review mechanism for Congress to make sure 
that as we proceed with implementing the elements of the tax cuts in 
this legislation that the surpluses have actually materialized and that 
phasing-in new elements of the tax package would not set us back down 
the road to deficits and growing debt. Should the surplus drop, and we 
do not meet debt reduction targets, the tax cuts scheduled to phase-in 
the following year would be delayed by one year.
  The advantage of this approach is that it makes tax cuts dependent on 
fiscal discipline and provides a brake against runaway spending. It is 
a safety valve against a return to deficits. In fact, Federal Reserve 
Chairman Greenspan endorsed this approach in testimony before the 
Senate earlier this year.
  We have a great opportunity to provide tax cuts to the American 
people. We need to take advantage of this opportunity, but we must do 
so in a way that is fiscally responsible. I urge my colleagues to 
support this bipartisan trigger amendment.
  Mr. BAUCUS. Mr. President, these remarks are meant as a substitution 
for remarks regarding the trigger amendment to H.R. 1836 when debated 
May 17, 2001. I speak in opposition to the pending amendment as it is 
based upon uncertainty, the uncertainty layered on top of the 
uncertainty is whether the trigger will be pulled.
  We cannot legislate certainty. We can only exercise good judgment. 
We, as a Congress, in these next years, have to decide what to do 
according to the circumstances at the time and exercise good judgment 
as to what we should do.
  Unfortunately, we have not been able to explore the full policy 
ramifications of this amendment. We have not been able to adequately 
debate the substance of this amendment. It is because

[[Page 8663]]

we are in this time constraint where everything is rushed, and nobody 
has been able to look at the substance. There have been no hearings on 
this.
  First, you cannot and should not limit public debt management. The 
Treasury Secretary has to have discretion in debt management. Right off 
the top, we are tying the hands of the Treasury Secretary, for whatever 
reason he or she may want to borrow more, sell more securities, sell 
more bonds for domestic reasons or for international reasons.
  Secretary Rubin has said consistently that we should not tie debt 
management to fiscal policy. You should not do it. It is wrong.
  I understand why the Senator from Indiana is offering this amendment, 
and I understand why the Senator from Maine is offering the amendment.
  Let me talk about the uncertainties in this amendment. This amendment 
essentially provides, I will summarize it, scheduled debt reduction 
targets, in even numbered years, and the Treasury Secretary will 
certify whether these targets are being met.
  If they are not being met, then what happens? What is triggered is 
that reductions in taxes are automatically stopped, the growth rates 
for discretionary spending are automatically held at the rate of 
inflation, and entitlement spending increases are automatically 
stopped.
  What about a Medicare drug benefit? I heard that entitlement 
increases will be stopped. No, I will stand corrected because I see the 
Senator from Indiana shaking his head. But the way it is drafted, new 
entitlement spending, as I understand it, is included in the trigger. 
But I stand to be corrected if that is not the case, but that is how I 
read this amendment now.
  What happens in odd-numbered years? Things are not automatic. But any 
Member can stand up in this Chamber and say the targets have not been 
met and set a trigger process in motion. That is too much uncertainty.
  Do we really want to tie our hands like that? Do we want to limit our 
discretion in future years as to what is best by putting this automatic 
provision in the law? Do we want to tie the hands of our Treasury 
Secretary in debt management? Do we really want to do that?
  Talk about the steepness of the yield curve. Why is the yield curve 
steep? It is steep because the bond market today believes in the 
outyears that interest rates are going to rise. Why? Because the 
Federal Reserve has just lowered interest rates by 50 basis points. And 
because this tax cut is going to pass. The market thinks there is going 
to be growth because of the stimulus of this tax cut and because of the 
lowering of short-term interest rates. As a result, the market believes 
there will be inflation in the outyears; therefore, long-term interest 
rates are going to be higher.
  I believe the policy consequences of this amendment have not been 
fully explored and that it is based on too much uncertainty. We should 
not adopt it.
  Mr. GRASSLEY. I raise two points about this amendment before I raise 
a point of order. A trigger would substantially reduce the economic 
benefits of tax cuts, making it more likely that the debt reduction 
target would not be met.
  Second, there is no reason that we need a trigger to raise taxes. The 
reality is, Congress is not shy about raising taxes. We have actually 
reduced taxes in 1981, and we raised taxes in 1982, 1984, 1987, 1989, 
1990, and 1993 before we reduced taxes once again in 1997.
  What is rare is for Congress, then, to actually give tax relief such 
as we are now.
  The Senator from Virginia, Mr. Allen, has an amendment to the 
amendment, and I defer to him at this time.
  The PRESIDING OFFICER. The Senator from Virginia.


                 Amendment No. 751 to Amendment No. 685

  Mr. ALLEN. Mr. President, I have a second-degree amendment that I 
send to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:
  The Senator from Virginia [Mr. Allen] proposes an amendment numbered 
751 to amendment No. 685.
  Mr. ALLEN. I ask unanimous consent the reading of the amendment be 
dispensed.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

            (Purpose: To provide for a tax cut accelerator)

       At the end of the amendment, add the following:

                     TITLE __--TAX CUT ACCELERATOR

     SEC. __. TAX CUT ACCELERATOR.

       (a) Reporting Additional Surpluses.--If any report provided 
     pursuant to section 202(e)(1) of the Congressional Budget Act 
     of 1974, estimates an on-budget surplus, excluding social 
     security and medicare surplus accounts, that exceeds such an 
     on-budget surplus set forth in such a report for the 
     preceding year, the chairman of the Committee on the Budget 
     of the Senate shall make adjustments in the resolution for 
     the next fiscal year as provided in subsection (b).
       (b) Adjustments.--The chairman of the Committee on the 
     Budget of the Senate shall make the following adjustments in 
     an amount not to exceed the difference between the on-budget 
     surpluses in the reports referred to in subsection (a):
       (1) Reduce the on-budget revenue aggregate by that amount 
     for the fiscal years included in such reports.
       (2) Adjust the instruction to the Committee on Finance to 
     increase the reduction in revenues by the sum of the amounts 
     for the period of such fiscal years in such manner as to not 
     produce an on-budget deficit in the next fiscal year, over 
     the next 5 fiscal years, or over the next 10 fiscal years and 
     to require a report of reconciliation legislation by the 
     Committee on Finance not later than March 15.
       (3) Adjust such other levels in such resolution, as 
     appropriate, and the Senate pay-as-you-go scorecard.

  Mr. BAYH. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The Senator from Virginia has the floor.
  Mr. ALLEN. There is a great deal of discussion about slowdowns or 
breaking on tax cuts. In my view, there ought to be an accelerator if 
more revenues come in than anticipated. Too often the Federal 
Government reminds me of the Jerry Reed tune: The Federal Government 
gets the gold mine but the taxpayers get the shaft.
  In my view, if more gold is coming in for surplus, the taxpayers 
ought to get a few of those nuggets and they ought to get the first 
claim on surplus revenues coming in at a greater rate than anticipated.
  This amendment makes sure if there are breaks, there also is an 
accelerator for the taxpayers. I hope it would be the pleasure of the 
Senate to adopt my amendment in the event that the amendment of the 
Senator from Indiana is adopted.
  The PRESIDING OFFICER. Who yields time? There is 1 minute in 
opposition.
  The Senator from Michigan.
  Ms. STABENOW. I ask my colleagues for the opportunity for an up-or-
down vote on this very important trigger. I ask we vote no on the Allen 
amendment and instead support this bipartisan amendment.
  We thank Senator Snowe for working with us on an amendment that 
simply says we will not use Medicare and Social Security trust funds 
for either tax cuts or increased spending. The tax cuts go into place 
under our amendment, as does the spending, through the normal budget 
process, but the point at which the revenues are not available, both 
the next phase of the tax cut and any increased spending above 
inflation, would be suspended until we had the opportunity to reassess 
the situation.
  This is a recommendation given by Chairman Greenspan before our 
Budget Committee that puts before us the very important value of paying 
down our national debt first, protecting Social Security and Medicare 
first.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, I raise a point of order on germaneness; 
that the underlying amendment is not germane to the provisions of the 
reconciliation measure. The point of order is against the amendment 
under section 305(b)(2) of the Budget Act.
  Mr. BAYH. I move to waive the Budget Act, and I ask for the yeas and 
nays.

[[Page 8664]]

  The PRESIDING OFFICER. Is there a sufficient second? There is a 
sufficient second.
  The question is on agreeing to the motion. The clerk will call the 
roll.
  The legislative clerk called the roll.
  Mr. NICKLES. I announce that the Senator from Alaska (Mr. Stevens) is 
necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The yeas and nays resulted--yeas 49, nays 50, as follows:

                      [Rollcall Vote No. 118 Leg.]

                                YEAS--49

     Akaka
     Bayh
     Biden
     Bingaman
     Boxer
     Cantwell
     Carnahan
     Carper
     Chafee
     Cleland
     Clinton
     Collins
     Conrad
     Corzine
     Daschle
     Dayton
     Dodd
     Dorgan
     Durbin
     Edwards
     Feinstein
     Graham
     Harkin
     Hollings
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Murray
     Nelson (FL)
     Nelson (NE)
     Reed
     Reid
     Sarbanes
     Schumer
     Snowe
     Specter
     Stabenow
     Torricelli
     Wellstone
     Wyden

                                NAYS--50

     Allard
     Allen
     Baucus
     Bennett
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Byrd
     Campbell
     Cochran
     Craig
     Crapo
     DeWine
     Domenici
     Ensign
     Enzi
     Feingold
     Fitzgerald
     Frist
     Gramm
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Kyl
     Lott
     Lugar
     McCain
     McConnell
     Miller
     Murkowski
     Nickles
     Roberts
     Rockefeller
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Thomas
     Thompson
     Thurmond
     Voinovich
     Warner

                             NOT VOTING--1

       
     Stevens
       
  The PRESIDING OFFICER. On this vote the yeas are 49, the nays are 50. 
Three-fifths of the Senators duly chosen and sworn not having voted in 
the affirmative, the motion is rejected. The point of order is 
sustained and the amendment falls.
  The Senator from Montana.


                      Amendment No. 686, withdrawn

  Mr. BAUCUS. Mr. President, on behalf of Senator Landrieu, I ask her 
amendment be withdrawn. We are working on it. I think we will find a 
way.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 687

  The PRESIDING OFFICER. The question is on agreeing to amendment 687 
offered by Senator Graham of Florida.
  Mr. GRAHAM. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The Senator from Florida.
  Mr. GRAHAM. Mr. President, this amendment has two principal 
provisions. First, it stands for the principle that we should have a 
series of tax bills before the Congress where we can consider one at a 
time, rather than a single gargantuan bill as is before us tonight. 
Second, we believe the purpose of the first tax bill should be to deal 
with the first economic challenge of America, which is a slowing 
economy.
  I would like to call on my colleague, Senator Corzine, for 
discussion.
  Mr. CORZINE. Mr. President, let me say it is clear we have a need to 
take out an economic insurance policy on an economy for which the 
Federal Reserve judged it needed to reduce interest rates five times--
2\1/2\ percent--in less than 4 months. I think there is clear need to 
address rising unemployment, making sure that consumer confidence stays 
secure. If we want to have those economic assumptions strong, we should 
pass this bill.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, this is a key amendment that would 
destroy the bipartisan tax bill that we have before us. He proposes to 
stimulate the economy by expanding the range of the income eligible for 
the new 10-percent rate. But Senator Graham has not emphasized the 
tremendous price that would be paid, and that would be eliminating the 
rest of the tax bill. The only thing that would survive is the 10-
percent rate. Worst of all, the Senator's proposal would actually 
increase taxes on middle-income Americans because a family of four with 
$60,000 in taxable income would pay $100 more in taxes under the Graham 
amendment than they would pay under our bipartisan tax bill when fully 
phased in.
  If this amendment is successful, Senator Graham then would, of 
course, destroy our bipartisan effort to provide $1.3 trillion tax 
relief.
  The PRESIDING OFFICER. The time of the Senator has expired.
  The question is on agreeing to the amendment. The yeas and nays have 
been ordered. The clerk will call the roll.
  Mr. NICKLES. I announce that the Senator from Alaska (Mr. Stevens), 
is necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 35, nays 64, as follows:

                      [Rollcall Vote No. 119 Leg.]

                                YEAS--35

     Akaka
     Biden
     Bingaman
     Boxer
     Byrd
     Cantwell
     Clinton
     Conrad
     Corzine
     Daschle
     Dayton
     Dodd
     Dorgan
     Feingold
     Graham
     Hollings
     Inouye
     Johnson
     Kennedy
     Kerry
     Leahy
     Levin
     Lieberman
     Mikulski
     Murray
     Nelson (FL)
     Reed
     Reid
     Rockefeller
     Sarbanes
     Schumer
     Stabenow
     Torricelli
     Wellstone
     Wyden

                                NAYS--64

     Allard
     Allen
     Baucus
     Bayh
     Bennett
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Campbell
     Carnahan
     Carper
     Chafee
     Cleland
     Cochran
     Collins
     Craig
     Crapo
     DeWine
     Domenici
     Durbin
     Edwards
     Ensign
     Enzi
     Feinstein
     Fitzgerald
     Frist
     Gramm
     Grassley
     Gregg
     Hagel
     Harkin
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kohl
     Kyl
     Landrieu
     Lincoln
     Lott
     Lugar
     McCain
     McConnell
     Miller
     Murkowski
     Nelson (NE)
     Nickles
     Roberts
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Thomas
     Thompson
     Thurmond
     Voinovich
     Warner

                             NOT VOTING--1

       
     Stevens
       
  The amendment (No. 687) was rejected.


                           Amendment No. 688

  The PRESIDING OFFICER. There will now be 2 minutes evenly divided on 
the Graham amendment No. 688.
  The PRESIDING OFFICER. Who yields time?
  Mr. GRAHAM. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  Mr. GRAHAM. Mr. President, when President Bush sent us his proposal 
for the repeal of the estate tax, he suggested that both the State and 
the Federal components of that estate tax be treated equitably. Twenty 
percent of the estate tax collected by the Federal Government is 
remitted to our 50 States in the form of a State credit. The other 80 
percent stays in the Federal Treasury.
  Under the bill that is before us, half of the State's share will go 
out of effect as of January 1, 2002, and the other half will go out of 
effect as of January 1, 2005, and the Federal share does not go out of 
effect until January 1, 2011.
  So what we are essentially saying is, we are rejecting the 
recommendation of the President. We are saying that we are going to get 
ours first, and let the States have to eat a substantial amount of this 
reduction beginning January 1 of next year.
  My State, as probably most of yours, has already passed its budget 
for the next fiscal year. Gov. Jeb Bush told me today it is going to 
cost him approximately $200 million in this year's already-passed 
budget.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. GRAHAM. I recommend that my colleagues look at the letter from 
the NGA as to what this will do to your

[[Page 8665]]

State. Call your Governor and support this amendment.
  The PRESIDING OFFICER. The Senator's time has expired.
  Who yields time in opposition?
  The Senator from Iowa.
  Mr. GRASSLEY. This amendment was offered at 11 p.m., Thursday, so you 
have not had a chance to take into consideration what he proposes to 
provide for the State treasuries at the expense of the Federal 
Treasury.
  What Senator Graham has not shared is that his zeal to protect the 
State treasuries is at the expense of the American taxpayer and, most 
importantly, the estate tax reform provisions in this bill.
  If you would read from his amendment: Beginning on page 64 strike 
through page 66. What that really says is: Strike all estate tax 
reductions. Strike all State death tax changes and slash the unified 
credit.
  We may have heard from Governors, obviously, on this. Do we believe 
that the Governors really believe our bipartisan death tax reform 
package should be slashed for the mere convenience of State treasuries?
  Do we really believe that the American taxpayer with estates between 
$2 million and $4 million should accept the burden of funding the 
States' coffers merely because the States have already drafted a budget 
and they do not want to get around to drafting another budget for a 
couple years?
  I ask that you kill this amendment.
  The PRESIDING OFFICER. The question is on agreeing to Graham 
amendment No. 688. The yeas and nays have been ordered.
  The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. NICKLES. I announce that the Senator from Alaska (Mr. Stevens) is 
necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 39, nays 60, as follows:

                      [Rollcall Vote No. 120 Leg.]

                                YEAS--39

     Akaka
     Biden
     Bingaman
     Boxer
     Byrd
     Cantwell
     Carper
     Clinton
     Conrad
     Corzine
     Daschle
     Dayton
     Dodd
     Dorgan
     Durbin
     Feinstein
     Graham
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kerry
     Kohl
     Leahy
     Levin
     Lieberman
     Mikulski
     Murray
     Nelson (FL)
     Reed
     Reid
     Rockefeller
     Sarbanes
     Schumer
     Stabenow
     Thomas
     Torricelli
     Wellstone

                                NAYS--60

     Allard
     Allen
     Baucus
     Bayh
     Bennett
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Campbell
     Carnahan
     Chafee
     Cleland
     Cochran
     Collins
     Craig
     Crapo
     DeWine
     Domenici
     Edwards
     Ensign
     Enzi
     Feingold
     Fitzgerald
     Frist
     Gramm
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kyl
     Landrieu
     Lincoln
     Lott
     Lugar
     McCain
     McConnell
     Miller
     Murkowski
     Nelson (NE)
     Nickles
     Roberts
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Thompson
     Thurmond
     Voinovich
     Warner
     Wyden

                             NOT VOTING--1

       
     Stevens
       
  The amendment (No. 688) was rejected.
  Mr. LOTT. Mr. President, I move to reconsider the vote, and I move to 
lay that motion on the table.
  The motion to lay on the table was agreed to.


                            Motion to Commit

  The PRESIDING OFFICER. There are 2 minutes equally divided on the 
Wellstone motion to commit. The Senator from Minnesota.
  Mr. WELLSTONE. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The yeas and nays were ordered.
  Mr. WELLSTONE. Mr. President, this motion will provide $120 billion 
over the next 10 years for children and education. We do this by 
cutting the tax cuts for the top .7 percent, although a couple will 
still be able to have tax cuts up to $8,400 a year. This is just half 
of the Harkin amendment. Fifty-two Senators voted to take money out of 
the tax cuts and put it into children and education. We need 60 votes 
on this amendment. In other words, even after this amendment passes, 
you have $10 for tax cuts and you will have $1 for children and 
education. That seems to be balance to me. I hope there will be a 
strong vote for this amendment.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, I appreciate the Senator from Minnesota 
always speaking strongly for the need to do more for education, but 
this is not the place for this particular issue. In addition, this 
motion, if it went into effect, would delay the over $30 billion of tax 
incentives for education that we already have in this bipartisan bill.
  This amendment also is not germane. Consequently, I raise a point of 
order on the germaneness of this provision on a reconciliation measure 
and that the amendment will come under section 305(b)(2) of the Budget 
Act.
  Mr. WELLSTONE. Mr. President, I move to waive the Budget Act, and I 
ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The question is on agreeing to the motion. The clerk will call the 
roll.
  The assistant legislative clerk called the roll.
  Mr. NICKLES. I announce that the Senator from Alaska (Mr. Stevens) is 
necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The yeas and nays resulted--yeas 41, nays 58, as follows:

                      [Rollcall Vote No. 121 Leg.]

                                YEAS--41

     Akaka
     Bayh
     Biden
     Bingaman
     Boxer
     Byrd
     Cantwell
     Clinton
     Conrad
     Corzine
     Daschle
     Dayton
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Leahy
     Levin
     Lieberman
     Mikulski
     Murray
     Nelson (FL)
     Reed
     Reid
     Rockefeller
     Sarbanes
     Schumer
     Stabenow
     Wellstone
     Wyden

                                NAYS--58

     Allard
     Allen
     Baucus
     Bennett
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Campbell
     Carnahan
     Carper
     Chafee
     Cleland
     Cochran
     Collins
     Craig
     Crapo
     DeWine
     Domenici
     Ensign
     Enzi
     Fitzgerald
     Frist
     Gramm
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kyl
     Lincoln
     Lott
     Lugar
     McCain
     McConnell
     Miller
     Murkowski
     Nelson (NE)
     Nickles
     Roberts
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Thomas
     Thompson
     Thurmond
     Torricelli
     Voinovich
     Warner

                             NOT VOTING--1

       
     Stevens
       
  The PRESIDING OFFICER. On this vote the yeas are 41, the nays are 58. 
Three-fifths of the Senators duly chosen and sworn not having voted in 
the affirmative, the motion is rejected. The point of order is 
sustained and the motion falls.
  Mr. LOTT. I move to reconsider the vote, and I move to lay that 
motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The Senator from Iowa.


                 Amendment Nos. 697 and 701, withdrawn

  Mr. GRASSLEY. Mr. President, I ask unanimous consent that Senator 
Hatch's amendment No. 697 and Senator Kerry's amendment No. 701 be 
withdrawn. We are working on those in other ways, so that Members 
understand.
  The PRESIDING OFFICER. Without objection, it is so ordered. The 
amendments are withdrawn.


                           Amendment No. 703

  The PRESIDING OFFICER. The question is on agreeing to amendment No. 
703, authored by the Senator from West Virginia, Mr. Byrd.
  The Senator from West Virginia is recognized.
  Mr. BYRD. Mr. President, Congress has the opportunity to ensure the 
long-

[[Page 8666]]

term solvency of Social Security and Medicare. This tax cut, however, 
would squander that opportunity.
  My amendment would reduce the size of the tax cut and place the 
savings into a reserve fund for Social Security reform, Medicare 
reform, and a prescription drug benefit. This amendment would retain 
those tax cuts included in the bill that would benefit lower and 
middle-income taxpayers, such as the creation of a 10-percent bracket, 
expansion of the child credit, marriage penalty relief, pension reform, 
education tax incentives, and alternative minimum tax relief.
  This amendment would also retain the estate tax relief provided in 
the bill through an increased exemption credit. But the amendment would 
strike from the bill the marginal rate reductions and the estate and 
gift tax repeal, both of which would only benefit the wealthiest 
taxpayers in the Nation, so that those funds can be redirected into 
Social Security and Medicare reform.
  Unlike the underlying bill, this amendment would help to ensure that 
Social Security and Medicare benefits are available for future 
retirees, while still providing a substantial tax cut that would be 
more evenly distributed amongst the American taxpayers.
  I hope the Senators will vote to support the amendment.
  Mr. GRASSLEY. Mr. President, the Senator from West Virginia has very 
well described what his amendment does, and that description in itself 
gives the reasons why we should be against it.
  No. 1, it would deny the death tax relief this bill provides with a 
credit up to $4 million to help the estates from paying the estate tax.
  This will also be a massive tax increase compared to the bill before 
us because it eliminates all relief in marginal rates except for the 
10-percent rate. And also it would eliminate the entire estate tax 
amendments we have.
  Also, I believe this amendment is not germane, and I raise the point 
of germaneness on a reconciliation measure because it does not comply 
with section 305(b)(2) of the Budget Act.
  Mr. BYRD. Mr. President, pursuant to section 904 of the Congressional 
Budget Act of 1974, I move to waive the applicable sections of that act 
for the purposes of the pending amendment. I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The question is on agreeing to the motion. The clerk will call the 
roll.
  The legislative clerk called the roll.
  Mr. NICKLES. I announce that the Senator from Alaska (Mr. Stevens) is 
necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The yeas and nays resulted--yeas 39, nays 60, as follows:

                      [Rollcall Vote No. 122 Leg.]

                                YEAS--39

     Akaka
     Biden
     Bingaman
     Boxer
     Byrd
     Cantwell
     Carper
     Clinton
     Conrad
     Corzine
     Daschle
     Dayton
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham
     Harkin
     Hollings
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Leahy
     Levin
     Lieberman
     Mikulski
     Murray
     Nelson (FL)
     Reed
     Reid
     Rockefeller
     Sarbanes
     Stabenow
     Wellstone

                                NAYS--60

     Allard
     Allen
     Baucus
     Bayh
     Bennett
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Campbell
     Carnahan
     Chafee
     Cleland
     Cochran
     Collins
     Craig
     Crapo
     DeWine
     Domenici
     Ensign
     Enzi
     Fitzgerald
     Frist
     Gramm
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Kyl
     Landrieu
     Lincoln
     Lott
     Lugar
     McCain
     McConnell
     Miller
     Murkowski
     Nelson (NE)
     Nickles
     Roberts
     Santorum
     Schumer
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Thomas
     Thompson
     Thurmond
     Torricelli
     Voinovich
     Warner
     Wyden

                             NOT VOTING--1

       
     Stevens
       
  The PRESIDING OFFICER. On this vote the yeas are 39 and the nays are 
60. Three fifths of the Senators duly chosen and sworn not having voted 
in the affirmative, the motion is rejected. The point of order is 
sustained and the amendment falls.


                      Amendment No. 707, Withdrawn

  Mr. GRASSLEY. Mr. President, for Mr. Jeffords, I ask unanimous 
consent that amendment No. 707 be withdrawn.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 707) was withdrawn.


                           Amendment No. 695

  The PRESIDING OFFICER. The question is on agreeing to amendment No. 
695 offered by Senator Dodd of Connecticut.
  Mr. DODD. Mr. President, very briefly, what this amendment does is to 
try to provide some resources for reducing the level of the national 
debt. We are spending $220 billion a year in interest payments on the 
debt, a number that is vastly in excess of what it ought to be.
  We also believe, in addition to reducing the debt, in providing 
resources for nontransportation infrastructure needs--water, wastewater 
systems, sewage systems, schools. We are told that some $23 billion a 
year for the next 20 years every year will be needed just to repair 
water and wastewater treatment facilities in the United States.
  My amendment takes the rate reductions for the top income earners 
from 39.6 to 38. And it also modifies the estate tax to accommodate 
reducing that national debt and providing resources for the 
infrastructure needs of this country.
  You are never going to have economic growth if you continue to have 
debt amounting to the levels we do and if you don't invest in the basic 
infrastructure of this country. For those reasons, I urge adoption of 
the amendment.
  Mr. GRASSLEY. Mr. President, I urge the defeat of this amendment. We 
have hundreds of thousands of American taxpayers who deserve immediate 
tax relief and they are being cast aside if this amendment is adopted.
  For instance, the unified credit would only be $2 million in the year 
2010, whereas our bipartisan RELIEF Act raises the unified credit to $4 
million per person.
  Remember, that is $8 million per family, no strings attached. You 
don't need to have a family farm or a family business. The RELIEF Act 
makes it simple. There is no long-term lien. It is simple. The death 
tax stays at 60 percent under this amendment. There is no repeal, no 
help at all. I urge the defeat of this amendment. Also, the marginal 
rate tax cuts are scaled back.
  Finally, even though the Senator talks about infrastructure, this 
amendment spends not one penny on infrastructure.
  The PRESIDING OFFICER. The question is on agreeing to the amendment. 
The yeas and nays have been ordered. The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. NICKLES. I announce that the Senator from Alaska (Mr. Stevens) is 
necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 39, nays 60, as follows:

                      [Rollcall Vote No. 123 Leg.]

                                YEAS--39

     Akaka
     Biden
     Bingaman
     Boxer
     Byrd
     Cantwell
     Carper
     Chafee
     Clinton
     Conrad
     Corzine
     Daschle
     Dayton
     Dodd
     Dorgan
     Durbin
     Feingold
     Feinstein
     Graham
     Harkin
     Hollings
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Leahy
     Levin
     Lieberman
     Mikulski
     Murray
     Reed
     Reid
     Rockefeller
     Sarbanes
     Schumer
     Stabenow
     Wellstone

                                NAYS--60

     Allard
     Allen
     Baucus
     Bayh
     Bennett
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Campbell
     Carnahan
     Cleland
     Cochran
     Collins
     Craig
     Crapo
     DeWine
     Domenici
     Edwards
     Ensign
     Enzi
     Fitzgerald
     Frist
     Gramm
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Kyl
     Landrieu
     Lincoln
     Lott
     Lugar
     McCain
     McConnell
     Miller
     Murkowski

[[Page 8667]]


     Nelson (FL)
     Nelson (NE)
     Nickles
     Roberts
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Thomas
     Thompson
     Thurmond
     Torricelli
     Voinovich
     Warner
     Wyden

                             NOT VOTING--1

       
       
     Stevens
       
  The amendment (No. 695) was rejected.


                           Amendment No. 691

  The PRESIDING OFFICER (Ms. Snowe). The question is on agreeing to the 
Kyl amendment No. 691. The Senator from Arizona.
  Mr. KYL. Madam President, this amendment would provide a $500 tax 
credit for contributions to scholarship funds which could then be given 
to parents and needy families to enroll their children in the school of 
their choice. It is an idea that is now being tried in several States, 
including my own State of Arizona. It is an idea whose time has come.
  The Federal Government should provide a tax credit for this purpose, 
but I understand a point of order will be raised against the amendment. 
I ask the Senator from Montana, will there be a point of order raised 
against the amendment?
  Mr. BAUCUS. Madam President, there will be a point of order raised.
  Mr. KYL. Madam President, the point of order would be well taken, 
although the amendment is a darned good amendment, and I hope we will 
be able to vote on it again some other time. In the interests of time 
this evening, I will not move to challenge the point of order.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Madam President, I appreciate the generosity and 
cooperation of the Senator from Arizona.
  The point of order is well taken. It is not good policy. I think we 
are making progress tonight. This is the first time we are going to 
move along here in a way that does not occupy a lot of time.
  Madam President, the pending amendment is not germane. Therefore, I 
raise a point of order the pending amendment violates section 305(b)(2) 
of the Congressional Budget Act of 1974.
  The PRESIDING OFFICER. The point of order is well taken. The 
amendment falls.
  Who seeks recognition? The Senator from North Dakota.


                           Amendment No. 713

  Mr. DORGAN. Madam President, if your priority is to help folks on the 
family farm or family business or their kids or grandkids, then support 
estate tax reform and my amendment. But if your priority is to make 
sure, as Leona Helmsley put it, ``Only little people pay taxes,'' 
support the committee bill.
  The committee bill also repeals the estate tax in its entirety for 
all estates in 2011, even the most wealthy estates. My amendment does 
not. It does abolish the estate tax for all family farms and all family 
businesses passed on to the qualified heirs who continue to operate 
them in 2003. It exempts from the estate tax all family businesses and 
family farms in that category 8 years earlier than the committee's 
does. My amendment also contains the $4 million unified credit, the 45-
percent rate. The only difference is my legislation would continue to 
impose an estate tax on the estates of billionaires and those in the 
upper income areas. I think that is a reasonable thing to do. But I do, 
in this amendment, believe we ought to repeal the estate tax obligation 
on family businesses and family farms transferred to qualified heirs. 
This will do it in 2003. The committee bill will do it 8 years later.
  Those who have talked about this issue as their priority certainly 
ought to support this amendment.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Madam President, an unlimited family business deduction 
sounds good, but what does it really mean? Really in the end, nothing. 
It totally guts the estate tax reform. It postpones rate decreases. It 
postpones meaningful unified credit increases until the year 2011. The 
RELIEF Act gives American taxpayers $3 million by the year 2006 and 
Senator Dorgan does not.
  The RELIEF Act is simple. Under our bill, there are no requirements, 
no long-term obligations to the IRS. I ask you to give real relief now 
and do that by defeating this amendment.
  The PRESIDING OFFICER. The question is on agreeing to the amendment. 
The yeas and nays have been ordered.
  The clerk will call the roll.
  Mr. NICKLES. I announce that the Senator from Alaska (Mr. Stevens) is 
necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 43, nays 56, as follows:

                      [Rollcall Vote No. 124 Leg.]

                                YEAS--43

     Akaka
     Baucus
     Bayh
     Biden
     Bingaman
     Boxer
     Byrd
     Cantwell
     Carnahan
     Chafee
     Cleland
     Clinton
     Conrad
     Corzine
     Daschle
     Dayton
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Graham
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Leahy
     Levin
     Lieberman
     McCain
     Mikulski
     Reed
     Reid
     Rockefeller
     Sarbanes
     Schumer
     Stabenow
     Torricelli
     Wellstone

                                NAYS--56

     Allard
     Allen
     Bennett
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Campbell
     Carper
     Cochran
     Collins
     Craig
     Crapo
     DeWine
     Domenici
     Ensign
     Enzi
     Feinstein
     Fitzgerald
     Frist
     Gramm
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kyl
     Lincoln
     Lott
     Lugar
     McConnell
     Miller
     Murkowski
     Murray
     Nelson (FL)
     Nelson (NE)
     Nickles
     Roberts
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Thomas
     Thompson
     Thurmond
     Voinovich
     Warner
     Wyden

                             NOT VOTING--1

       
     Stevens
       
  The amendment (No. 713) was rejected.
  Mr. LOTT. I move to reconsider the vote.
  Mr. BROWNBACK. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                           Amendment No. 717

  The PRESIDING OFFICER. The question is on agreeing to Bingaman 
amendment No. 717.
  The Senator from New Mexico.
  Mr. BINGAMAN. Madam President, have the yeas and nays been ordered on 
this amendment?
  The PRESIDING OFFICER. Yes.
  Mr. BINGAMAN. Madam President, I offer this amendment on behalf of 
myself and Senator Reid of Nevada.
  Last Thursday, President Bush made a series of recommendations to the 
Congress to adopt credits and deductions to encourage the country to do 
what is needed to deal with the energy crisis that he and many of us 
see.
  Many of those same tax proposals are contained in a bill that Senator 
Murkowski introduced earlier this year and are also contained in a bill 
I introduced with various Democratic colleagues earlier this year.
  This is the time that we should step up to that challenge and pass 
those tax recommendations to deal with our energy situation. There are 
credits for energy-efficient appliances, energy-efficient commercial 
buildings, and energy-efficient residential construction. There are 
credits for hybrid vehicles.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. BINGAMAN. I urge my colleagues to support this amendment.
  The PRESIDING OFFICER. The Senator from Alaska.
  Mr. MURKOWSKI. Madam President, while I support many of the 
statements of my good friend, there are several fatal flaws in the 
amendment. There are 23 provisions in the 141-page amendment. I do not 
know the cost of all of these tax changes.
  On the last page of this amendment, the Senator attempts to offset 
its cost by delegating to the Secretary of the Treasury the authority 
to adjust tax rates. This is an unprecedented delegation of authority. 
I believe it is unconstitutional.

[[Page 8668]]

  Further, the amendment allows the unelected Secretary of the Treasury 
to raise the new 10-percent rate on low-income taxpayers to 12 percent 
or 15 percent or the Secretary could raise the 28-percent bracket on 
middle-income families to 29 percent or 30 percent. The Secretary of 
the Treasury has no constitutional authority to set tax rates. That is 
what we were elected to do.
  I believe we should develop an energy policy in the Energy Committee 
and in the Finance Committee, not on the floor of the Senate. We have 
not had any hearings on the proposal. I look forward to working with 
Senator Bingaman in both committees to develop a rational energy 
policy.
  Madam President, the pending amendment is not germane to the 
provisions of the reconciliation measure. I, therefore, raise a point 
of order against the amendment under section 305(b)(2) of the Budget 
Act.
  Mr. BINGAMAN. Madam President, I move to waive the Budget Act and ask 
for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The question is on agreeing to the motion.
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. NICKLES. I announce that the Senator from Alaska (Mr. Stevens) is 
necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The yeas and nays resulted--yeas 43, nays 56, as follows:

                      [Rollcall Vote No. 125 Leg.]

                                YEAS--43

     Akaka
     Bayh
     Biden
     Bingaman
     Boxer
     Cantwell
     Carnahan
     Carper
     Cleland
     Clinton
     Conrad
     Corzine
     Daschle
     Dayton
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kerry
     Kohl
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Murray
     Nelson (FL)
     Reed
     Reid
     Sarbanes
     Schumer
     Stabenow
     Torricelli
     Wellstone
     Wyden

                                NAYS--56

     Allard
     Allen
     Baucus
     Bennett
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Byrd
     Campbell
     Chafee
     Cochran
     Collins
     Craig
     Crapo
     DeWine
     Domenici
     Ensign
     Enzi
     Fitzgerald
     Frist
     Gramm
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kyl
     Landrieu
     Lott
     Lugar
     McCain
     McConnell
     Miller
     Murkowski
     Nelson (NE)
     Nickles
     Roberts
     Rockefeller
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Thomas
     Thompson
     Thurmond
     Voinovich
     Warner

                             NOT VOTING--1

       
     Stevens
       
  The PRESIDING OFFICER. On this vote the yeas are 43, the nays are 56. 
Three-fifths of the Senators duly chosen and sworn not having voted in 
the affirmative, the motion is rejected. The point of order is 
sustained and the amendment falls.

                          ____________________