[Congressional Record (Bound Edition), Volume 148 (2002), Part 1]
[Senate]
[Pages 347-349]
[From the U.S. Government Publishing Office, www.gpo.gov]




                    HOPE FOR CHILDREN ACT--Continued

  The PRESIDING OFFICER. The Chair recognizes the Senator from Montana.


                    Amendment No. 2718, As Modified

  Mr. BAUCUS. Mr. President, I call up my amendment and send a 
modification to that amendment to the desk.
  The PRESIDING OFFICER. The Senator has a right to modify the 
amendment.
  The amendment, as modified, is as follows:

 (Purpose: To amend the Internal Revenue Code of 1986 to provide for a 
  special depreciation allowance for certain property acquired after 
  December 31, 2001, and before January 1, 2004, and to increase the 
 Federal medical assistance percentage under the medicaid program for 
                     calendar years 2002 and 2003)

       Strike titles II and III and insert the following:

             TITLE II--TEMPORARY BUSINESS RELIEF PROVISIONS

     SEC. 201. SPECIAL DEPRECIATION ALLOWANCE FOR CERTAIN PROPERTY 
                   ACQUIRED AFTER DECEMBER 31, 2001, AND BEFORE 
                   JANUARY 1, 2004.

       (a) In General.--Section 168 (relating to accelerated cost 
     recovery system) is amended by adding at the end the 
     following new subsection:
       ``(k) Special Allowance for Certain Property Acquired After 
     December 31, 2001, and Before January 1, 2004.--
       ``(1) Additional allowance.--In the case of any qualified 
     property--
       ``(A) the depreciation deduction provided by section 167(a) 
     for the taxable year in which such property is placed in 
     service shall include an allowance equal to 30 percent of the 
     adjusted basis of the qualified property, and
       ``(B) the adjusted basis of the qualified property shall be 
     reduced by the amount of such deduction before computing the 
     amount otherwise allowable as a depreciation deduction under 
     this chapter for such taxable year and any subsequent taxable 
     year.
       ``(2) Qualified property.--For purposes of this 
     subsection--
       ``(A) In general.--The term `qualified property' means 
     property--
       ``(i)(I) to which this section applies which has a recovery 
     period of 20 years or less or which is water utility 
     property,
       ``(II) which is computer software (as defined in section 
     167(f)(1)(B)) for which a deduction is allowable under 
     section 167(a) without regard to this subsection,
       ``(III) which is qualified leasehold improvement property, 
     or
       ``(IV) which is eligible for depreciation under section 
     167(g),
       ``(ii) the original use of which commences with the 
     taxpayer after December 31, 2001,
       ``(iii) which is--

       ``(I) acquired by the taxpayer after December 31, 2001, and 
     before January 1, 2004, but only if no written binding 
     contract for the acquisition was in effect before January 1, 
     2002, or
       ``(II) acquired by the taxpayer pursuant to a written 
     binding contract which was entered into after December 31, 
     2001, and before January 1, 2004, and

       ``(iv) which is placed in service by the taxpayer before 
     January 1, 2004, or, in the case of property described in 
     subparagraph (B), before January 1, 2005.

[[Page 348]]

       ``(B) Certain property having longer production periods 
     treated as qualified property.--
       ``(i) In general.--The term `qualified property' includes 
     property--

       ``(I) which meets the requirements of clauses (i), (ii), 
     and (iii) of subparagraph (A),
       ``(II) which has a recovery period of at least 10 years or 
     is transportation property, and
       ``(III) which is subject to section 263A by reason of 
     clause (ii) or (iii) of subsection (f)(1)(B) thereof.

       ``(ii) Only pre-january 1, 2004, basis eligible for 
     additional allowance.--In the case of property which is 
     qualified property solely by reason of clause (i), paragraph 
     (1) shall apply only to the extent of the adjusted basis 
     thereof attributable to manufacture, construction, or 
     production before January 1, 2004.
       ``(iii) Transportation property.--For purposes of this 
     subparagraph, the term `transportation property' means 
     tangible personal property used in the trade or business of 
     transporting persons or property.
       ``(C) Exceptions.--
       ``(i) Alternative depreciation property.--The term 
     `qualified property' shall not include any property to which 
     the alternative depreciation system under subsection (g) 
     applies, determined--

       ``(I) without regard to paragraph (7) of subsection (g) 
     (relating to election to have system apply), and
       ``(II) after application of section 280F(b) (relating to 
     listed property with limited business use).

       ``(ii) Election out.--If a taxpayer makes an election under 
     this clause with respect to any class of property for any 
     taxable year, this subsection shall not apply to all property 
     in such class placed in service during such taxable year.
       ``(D) Special rules.--
       ``(i) Self-constructed property.--In the case of a taxpayer 
     manufacturing, constructing, or producing property for the 
     taxpayer's own use, the requirements of clause (iii) of 
     subparagraph (A) shall be treated as met if the taxpayer 
     begins manufacturing, constructing, or producing the property 
     after December 31, 2001, and before January 1, 2004.
       ``(ii) Sale-leasebacks.--For purposes of subparagraph 
     (A)(ii), if property--

       ``(I) is originally placed in service after December 31, 
     2001, by a person, and
       ``(II) sold and leased back by such person within 3 months 
     after the date such property was originally placed in 
     service,

     such property shall be treated as originally placed in 
     service not earlier than the date on which such property is 
     used under the leaseback referred to in subclause (II).
       ``(E) Coordination with section 280f.--For purposes of 
     section 280F--
       ``(i) Automobiles.--In the case of a passenger automobile 
     (as defined in section 280F(d)(5)) which is qualified 
     property, the Secretary shall increase the limitation under 
     section 280F(a)(1)(A)(i) by $4,600.
       ``(ii) Listed property.--The deduction allowable under 
     paragraph (1) shall be taken into account in computing any 
     recapture amount under section 280F(b)(2).
       ``(3) Qualified leasehold improvement property.--For 
     purposes of this subsection--
       ``(A) In general.--The term `qualified leasehold 
     improvement property' means any improvement to an interior 
     portion of a building which is nonresidential real property 
     if--
       ``(i) such improvement is made under or pursuant to a lease 
     (as defined in subsection (h)(7))--

       ``(I) by the lessee (or any sublessee) of such portion, or
       ``(II) by the lessor of such portion,

       ``(ii) such portion is to be occupied exclusively by the 
     lessee (or any sublessee) of such portion, and
       ``(iii) such improvement is placed in service more than 3 
     years after the date the building was first placed in 
     service.
       ``(B) Certain improvements not included.--Such term shall 
     not include any improvement for which the expenditure is 
     attributable to--
       ``(i) the enlargement of the building,
       ``(ii) any elevator or escalator,
       ``(iii) any structural component benefiting a common area, 
     and
       ``(iv) the internal structural framework of the building.
       ``(C) Definitions and special rules.--For purposes of this 
     paragraph--
       ``(i) Binding commitment to lease treated as lease.--A 
     binding commitment to enter into a lease shall be treated as 
     a lease, and the parties to such commitment shall be treated 
     as lessor and lessee, respectively.
       ``(ii) Related persons.--A lease between related persons 
     shall not be considered a lease. For purposes of the 
     preceding sentence, the term `related persons' means--

       ``(I) members of an affiliated group (as defined in section 
     1504), and
       ``(II) persons having a relationship described in 
     subsection (b) of section 267; except that, for purposes of 
     this clause, the phrase `80 percent or more' shall be 
     substituted for the phrase `more than 50 percent' each place 
     it appears in such subsection.

       ``(D) Improvements made by lessor.--In the case of an 
     improvement made by the person who was the lessor of such 
     improvement when such improvement was placed in service, such 
     improvement shall be qualified leasehold improvement property 
     (if at all) only so long as such improvement is held by such 
     person.''.
       (b) Allowance Against Alternative Minimum Tax.--
       (1) In general.--Section 56(a)(1)(A) (relating to 
     depreciation adjustment for alternative minimum tax) is 
     amended by adding at the end the following new clause:
       ``(iii) Additional allowance for certain property acquired 
     after december 31, 2001, and before january 1, 2004.--The 
     deduction under section 168(k) shall be allowed.''
       (2) Conforming amendment.--Clause (i) of section 
     56(a)(1)(A) is amended by striking ``clause (ii)'' both 
     places it appears and inserting ``clauses (ii) and (iii)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after December 31, 
     2001, in taxable years ending after such date.

              TITLE III--ASSISTANCE FOR MEDICAID COVERAGE

     SEC. 301. TEMPORARY INCREASES OF MEDICAID FMAP.

       (a) Permitting Maintenance of Fiscal Year 2001 FMAP For 
     Last 3 Calendar Quarters of Fiscal Year 2002.--
     Notwithstanding any other provision of law, but subject to 
     subsection (g), if the FMAP determined without regard to this 
     section for a State for fiscal year 2002 is less than the 
     FMAP as so determined for fiscal year 2001, the FMAP for the 
     State for fiscal year 2001 shall be substituted for the 
     State's FMAP for the second, third, and fourth calendar 
     quarters in fiscal year 2002, before the application of this 
     section.
       (b) Permitting Maintenance of Fiscal Year 2002 FMAP For 
     Fiscal Year 2003.--Notwithstanding any other provision of 
     law, but subject to subsection (g), if the FMAP determined 
     without regard to this section for a State for fiscal year 
     2003 is less than the FMAP as so determined for fiscal year 
     2002, the FMAP for the State for fiscal year 2002 shall be 
     substituted for the State's FMAP for each calendar quarter of 
     fiscal year 2003, before the application of this section.
       (c) Permitting Maintenance of Fiscal Year 2003 FMAP For 
     First Calendar Quarter of Fiscal Year 2004.--Notwithstanding 
     any other provision of law, but subject to subsection (g), if 
     the FMAP determined without regard to this section for a 
     State for fiscal year 2004 is less than the FMAP as so 
     determined for fiscal year 2003, the FMAP for the State for 
     fiscal year 2003 shall be substituted for the State's FMAP 
     for the first calendar quarter in fiscal year 2004, before 
     the application of this section.
       (d) General 1.50 Percentage Points Increase for Calendar 
     Years 2002 and 2003.--Notwithstanding any other provision of 
     law, but subject to subsections (g) and (h), for each State 
     for the second, third, and fourth calendar quarters of fiscal 
     year 2002, each calendar quarter of fiscal year 2003, and the 
     first calendar quarter of fiscal year 2004, the FMAP (taking 
     into account the application of subsections (a), (b), and 
     (c)) shall be increased by 1.50 percentage points.
       (e) Further Increase for States With High Unemployment 
     Rates for Calendar Years 2002 and 2003.--
       (1) In general.--Notwithstanding any other provision of 
     law, but subject to subsections (g) and (h), the FMAP for a 
     high unemployment State for the second, third, or fourth 
     calendar quarters of fiscal year 2002, any calendar quarter 
     of fiscal year 2003, or the first calendar quarter of fiscal 
     year 2004, (and any subsequent such calendar quarters after 
     the first such calendar quarter for which the State is a high 
     unemployment State regardless of whether the State continues 
     to be a high unemployment State for the subsequent such 
     calendar quarters) shall be increased (after the application 
     of subsections (a), (b), (c), and (d)) by 1.50 percentage 
     points.
       (2) High unemployment state.--
       (A) In general.--For purposes of this subsection, a State 
     is a high unemployment State for a calendar quarter if, for 
     any 3 consecutive months beginning on or after June 2001 and 
     ending with the second month before the beginning of the 
     calendar quarter, the State has an average seasonally 
     adjusted unemployment rate that exceeds the average weighted 
     unemployment rate during such period. Such unemployment rates 
     for such months shall be determined based on publications of 
     the Bureau of Labor Statistics of the Department of Labor.
       (B) Average weighted unemployment rate defined.--For 
     purposes of subparagraph (A), the ``average weighted 
     unemployment rate'' for a period is--
       (i) the sum of the seasonally adjusted number of unemployed 
     civilians in each State and the District of Columbia for the 
     period; divided by
       (ii) the sum of the civilian labor force in each State and 
     the District of Columbia for the period.
       (f) Increase in Cap on Medicaid Payments To Territories.--
     Notwithstanding any other provision of law, with respect to 
     the second, third, and fourth calendar quarters fiscal year 
     2002, each calendar quarter of fiscal year 2003, and the 
     first calendar quarter in fiscal year 2004, the amounts 
     otherwise determined for Puerto Rico, the Virgin Islands,

[[Page 349]]

     Guam, the Northern Mariana Islands, and American Samoa under 
     section 1108 of the Social Security Act (42 U.S.C. 1308) 
     shall each be increased by an amount equal to 6 percentage 
     points of such amounts.
       (g) Scope of Application.--The increases in the FMAP for a 
     State under this section shall apply only for purposes of 
     title XIX of the Social Security Act and shall not apply with 
     respect to--
       (1) disproportionate share hospital payments described in 
     section 1923 of such Act (42 U.S.C. 1396r-4); or
       (2) payments under titles IV and XXI of such Act (42 U.S.C. 
     601 et seq. and 1397aa et seq.).
       (h) State Eligibility.--A State is eligible for an increase 
     in its FMAP under subsection (d) or (e) or an increase in a 
     cap amount under subsection (f) only if the eligibility under 
     its State plan under title XIX of the Social Security Act 
     (including any waiver under such title or under section 1115 
     of such Act (42 U.S.C. 1315)) is no more restrictive than the 
     eligibility under such plan (or waiver) as in effect on 
     October 1, 2001.
       (i) Definitions.--In this section:
       (1) FMAP.--The term ``FMAP'' means the Federal medical 
     assistance percentage, as defined in section 1905(b) of the 
     Social Security Act (42 U.S.C. 1396d(b)).
       (2) State.--The term ``State'' has the meaning given such 
     term for purposes of title XIX of the Social Security Act (42 
     U.S.C. 1396 et seq.).

  Mr. BAUCUS. Mr. President, I ask unanimous consent my amendment be 
temporarily laid aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 2719

  Mr. BAUCUS. Mr. President, I ask Senator Harkin be allowed to call up 
his amendment at this time.
  The PRESIDING OFFICER. Without objection, it is so ordered. The 
amendment is once again pending.
  The Senator from Iowa.
  Mr. HARKIN. Parliamentary inquiry: I want to make sure what the 
business is before the Senate.
  The PRESIDING OFFICER. Amendment No. 2719.
  Mr. HARKIN. That is the amendment which this Senator offered 
yesterday; is that correct?
  The PRESIDING OFFICER. It was offered by Senator Reid on behalf of 
the Senator from Iowa.
  Mr. REID. Mr. President, if the Senator will withhold just for one 
brief comment, the minority did not have a manager here. This has been 
cleared. The unanimous consent we just got has been cleared with 
Senator Grassley. I had also talked to those--I thought--on the other 
side who knew what we were doing.
  If the Senator will withhold proceeding until we make sure someone, a 
manager on the other side, is here because we don't want to take 
advantage of them because we got a unanimous consent agreement when no 
one was on the floor. If the Senator will withhold, the staff has gone 
to seek someone on the other side.
  Mr. HARKIN. I withhold.
  Mr. REID. 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.
  Mrs. CARNAHAN. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________