[Congressional Record (Bound Edition), Volume 148 (2002), Part 1]
[Senate]
[Pages 351-365]
[From the U.S. Government Publishing Office, www.gpo.gov]




                    HOPE FOR CHILDREN ACT--Continued


                           Amendment No. 2718

  Mr. BAUCUS. Mr. President, there was a vote earlier on a small 
business amendment offered by the Senator from Missouri, Mr. Bond. It 
was adopted. That shows we are starting to make progress toward an 
agreement on a bill to stimulate economic recovery. That was the small 
business expensing amendment which increased the ceiling amount 
available for business as to expense.
  We now have an opportunity to make even more progress by adopting the 
Baucus-Smith amendment. This amendment makes two important 
improvements: First, it strikes a balance on the bonus depreciation 
issue with a 2-year compromise provision. Second, it will help States 
by increasing the Federal matching payments for Medicaid. As a bonus 
depreciation, this assistance will be provided for 2 years.
  Essentially, I am offering an amendment, joined by my good friend 
from Oregon, Mr. Smith, to provide for a 2-year bonus depreciation, as 
well as a 2-year FMAP payment. I will speak first about bonus 
depreciation.
  I think we all agree that a strong stimulus bill must create tax 
incentives for business to invest in new equipment. I do not think 
there is much doubt about that. This amendment creates jobs, lifts the 
economy, and also increases productivity in the long run. Chairman 
Greenspan and others have talked a lot about productivity. There is not 
much doubt that this amendment will help us move in that direction.
  Everyone agrees on the concept. The debate, however, has been over 
the details. The proposal before us is a 10-percent bonus. We have 
agreed to increase that to 30 percent. The question now is how long 
should the incentive last.
  The Democratic proposal was 1 year; the Republican proposal was 3 
years. Our bipartisan compromise amendment, that is the amendment of 
Senator Smith from Oregon and myself, is 2 years. This is not simply an 
effort to split the difference. Instead, if one steps back and thinks 
about it, a 2-year incentive makes good sense. Three years is too long. 
It will not encourage business to invest quickly enough. As a result, 
it will not stimulate businesses to act when we most need them to act.
  On the other hand, in the debate last week, Senator Smith and others 
made a very good point. They said that a 1-year bonus period might not 
be long enough because it does not give businesses enough time to make 
sound investment decisions. Let's not forget the investment to qualify 
has to be in place, in service within the requisite period.
  We have to assume this legislation will not be enacted before March. 
If we were to stick to the 1-year period, companies would only have a 
few months left at that point to make purchases and get assets in 
place, as we are dealing with the calendar year. That is not time 
enough, especially if we think about the kinds of investments we want 
to encourage, which is airplanes, heavy machinery, equipment used in 
manufacturing, locomotives, pipelines, and refineries. In many cases, 
these assets may take longer to build than 1 year, or the contracts for 
purchase may take some time to negotiate. This is a legitimate concern.
  To address it, our amendment gives companies until December 31, 2003, 
to make their purchases and get assets in place. Even after that, 
companies would have an extra year to put the assets in place if they 
take more than a year to build, so long as they meet a binding contract 
test.
  The amendment will provide economic stimulus. It will work quickly, 
and it recognizes business realities and gives companies the time they 
need to make sound investment decisions. That is the first part of the 
amendment.
  The second part relates to the States. The technical term is FMAP. 
What it is about is helping States by temporarily increasing the rate 
at which we match State payments under Medicaid. Let me explain why 
this is important.
  Rising Medicaid costs are already contributing to the States' fiscal 
crisis. Health care costs are increasing rapidly, while rising 
unemployment is increasing the number of people eligible

[[Page 352]]

for Medicaid services. Medicaid spending grew by 11 percent last year. 
It is likely to increase even faster this year if current economic and 
budgetary conditions persist.
  Many States have already implemented or are now considering 
implementing significant cuts in Medicaid and the State Children's 
Health Insurance Program, otherwise known as CHIP, in 2003.
  These cuts would affect thousands of children, elderly, and disabled 
people. For example, Oklahoma and New Mexico may eliminate their CHIP-
funded Medicaid expansions to children entirely.
  CHIP--that is the State Children's Health Insurance Program--has been 
very popular. It helps low-income kids get health insurance, health 
insurance they did not previously have. I think it would be very 
unfortunate if, due to State budget constraints, they either choose to 
or believe they are forced to cut back and, in some cases, eliminate 
those programs that provide health insurance for children.
  Tennessee has proposed cutting Medicaid eligibility for 180,000 low-
income people in its TennCare Program. Other States will no longer 
cover disabled workers returning to work or low-income women with 
breast and cervical cancer. These budget cuts and these tax increases 
are based on revenue forecasts that do not assume enactment of bonus 
depreciation provisions. Because most States tie their own tax 
collections to the Federal tax system, the additional loss of revenues 
in 2003 that would result from a lengthy bonus depreciation period 
would increase the likelihood and severity of State actions to cut 
programs and raise taxes.
  The underlying amendment would address this problem by providing a 
temporary 1-year increase in the Federal matching rate under Medicare. 
Our amendment goes a bit further by extending the period for 2 years to 
match the depreciation period.
  By doing so, the amendment ensures the amount of aid provided both to 
States generally and to individual States in particular, will grow if 
the recession proves deeper than currently projected. That is the 
second part of the amendment.
  All told, the amendment will help businesses, it will help workers, 
it will help States, and it will help families maintain Medicaid 
coverage.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, I have not fully read the FMAP part of the 
distinguished Senator's amendment, but I am interested in helping the 
States at this particular time because many of them are experiencing 
budget crunches, and it is really causing them a lot of difficulty.
  With regard to the CHIP program, which was a Hatch-Kennedy bill that 
was enacted over 4 years ago, my home State of Utah has now achieved 
the goal of insuring 27,000 children of people who work but do not have 
enough money to pay for their children's health insurance. In Utah, we 
have covered 27,000 kids, but there are at least 3,000 more who need to 
be covered. Due to State budget concerns, Utah has had to cap its CHIP 
program at 27,000.
  Now that is not right. I cannot blame my State leaders. They have to 
balance the budget, but it is not right that any child in our society 
should go without basic health care. The very poor in our society are 
covered by Medicaid. What we did with the CHIP bill was try to take 
care of those 7 million young people in the country who are children of 
the working poor. The parents of these children work but do not earn 
enough money to pay for health insurance but make too much money to be 
eligible for the Medicaid program. CHIP has worked immensely well. It 
has been one of the most successful health care programs in the 
country.
  I have worked on a number of important issues throughout my Senate 
career, and I think that passage of the CHIP program was one of my top 
achievements as a United States Senator. Providing access to affordable 
and quality health coverage to the medically uninsured continues to be 
a high priority for me. So while I have to read the amendment language, 
I believe it is an important amendment, and I intend to support it as 
of this juncture.
  With regard to bonus depreciation, I was the first Senator to file a 
bonus depreciation bill. My bill provided for a 50-percent bonus 
depreciation deduction rather than the 30 percent in this amendment. 
But remember, some of the other bills were only at 10-percent bonus 
depreciation, and I am pleased to see that this amendment would now 
bring it to 30 percent. I am very happy to see the work of Senator 
Smith and the distinguished chairman of the Finance Committee, whom I 
call a friend, in bringing this bonus depreciation percentage to a 
reasonable level. I would prefer it to be even higher because that 
would be even more stimulative over this 2-year period, but this is a 
good move compared to where we were. If we had gone with the Daschle 
amendment, as I understand it, it would have been effective only from 
last September until next September. It would have barely had time to 
work. So this amendment does bring the bonus depreciation more into the 
realm of workability.
  Bonus depreciation is one of the few things we are doing in this 
legislation that literally provides for an economic stimulus. It is a 
very good economic stimulus because a lot of companies are 
understandably nervous about the economic slow-down and are hesitant to 
invest in their equipment. With a bonus depreciation incentive, they 
may be able to pull out of some of their difficulties with this 
additional help that will be provided.
  With regard to the FMAP increase included in this amendment, these 
provisions will assist those who are suffering in our society today due 
to the economic downturn. In addition, there are States that are having 
tremendously difficult times meeting the needs of their citizens. The 
FMAP increase will provide these States with valuable resources so they 
can meet these demands more easily.
  So I want to commend the distinguished Chairman of the Finance 
Committee for calling up this amendment. I particularly want to commend 
him for working with Senator Smith of Oregon, who brought up the 
original bonus depreciation amendment but who wanted the incentive to 
last for 3 years. We compromised on 2 years, which I believe is a 
decent compromise. I want to pay my respects and compliment both of 
them for the work they have done on this particular amendment.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from New Hampshire.
  Mr. SMITH of New Hampshire. Mr. President, I direct a question to the 
distinguished chairman of the Finance Committee. I have four amendments 
on which I will be very brief. My intention is, if there is no 
objection, to offer the four amendments, debate one of them at a time, 
and if someone else comes and wants to offer another amendment, they 
can put my amendment aside.
  What is the position of the chairman on that suggestion?
  Mr. BAUCUS. Mr. President, the Senator from Nevada, Mr. Reid, is 
organizing the sequence of amendments. I think it is fine for the 
Senator from New Hampshire to offer his package of amendments with the 
understanding they come up one at a time, and if there is an amendment 
on this side in the interim, that amendment would be offered and we 
would go back to one of Senator Smith's amendments. That is fine.
  Mr. SMITH of New Hampshire. I thank the chairman.


               Amendments Nos. 2732 through 2735, En Bloc

  Mr. SMITH of New Hampshire. Mr. President, I send four amendments to 
the desk, and I ask unanimous consent that they be called up and 
temporarily set aside for consideration at the appropriate time.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will report the amendments, en bloc.
  The assistant legislative clerk read as follows:

       The Senator from New Hampshire [Mr. Smith] proposes 
     amendment Nos. 2732 through 2735, en bloc.

  The amendments (Nos. 2732 through 2735), en bloc, are as follows:

[[Page 353]]




                           AMENDMENT NO. 2732

   (Purpose: To provide a waiver of the early withdrawal penalty for 
distributions from qualified retirement plans to individuals called to 
active duty during the national emergency declared by the President on 
              September 14, 2001, and for other purposes)

       At the appropriate place in the bill, insert the following:

     SEC. __. WAIVER OF EARLY WITHDRAWAL PENALTY FOR DISTRIBUTIONS 
                   FROM QUALIFIED RETIREMENT PLANS TO INDIVIDUALS 
                   CALLED TO ACTIVE DUTY DURING THE NATIONAL 
                   EMERGENCY DECLARED BY THE PRESIDENT ON 
                   SEPTEMBER 14, 2001.

       (a) Waiver For Certain Distributions.--
       (1) In general.--Section 72(t)(2) of the Internal Revenue 
     Code of 1986 (relating to 10-percent additional tax on early 
     distributions from qualified retirement plans) is amended by 
     adding at the end the following:
       ``(G) Distributions to individuals performing national 
     emergency active duty.--Any distribution to an individual 
     who, at the time of the distribution, is a member of a 
     reserve component called or ordered to active duty pursuant 
     to a provision of law referred to in section 101(a)(13)(B) of 
     title 10, United States Code, during the period of the 
     national emergency declared by the President on September 14, 
     2001.''.
       (2) Waiver of underpayment penalty.--Section 6654(e)(3) of 
     such Code (relating to waiver in certain cases) is amended by 
     adding at the end the following:
       ``(C) Certain early withdrawals from retirement plans.--No 
     addition to tax shall be imposed under subsection (a) with 
     respect to any underpayment to the extent such underpayment 
     was created or increased by any distribution described in 
     section 72(t)(2)(G).''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to distributions made to an individual after 
     September 13, 2001.
       (b) Catch-up Contributions Allowed.--
       (1) Individual retirement accounts.--Section 219(b)(5) of 
     the Internal Revenue Code of 1986 (relating to deductible 
     amount) is amended by adding at the end the following:
       ``(D) Catch-up contributions for certain distributions.--In 
     the case of an individual who has received a distribution 
     described in section 72(t)(2)(G), the deductible amount for 
     any taxable year shall be increased by an amount equal to--
       ``(i) the aggregate amount of such distributions (not 
     attributable to earnings) made with respect to such 
     individual, over
       ``(ii) the aggregate amount of such distributions (not 
     attributable to earnings) previously taken into account under 
     this subparagraph or section 414(w).''.
       (2) Roth iras.--Section 408A(c) of such Code (relating to 
     treatment of contributions) is amended by redesignating 
     paragraph (7) as paragraph (8) and by inserting after 
     paragraph (6) the following:
       ``(7) Catch-up contributions for certain distributions.--
     Any contribution described in section 219(b)(5)(D) shall not 
     be taken into account for purposes of paragraph (2).''.
       (3) Employer plans.--Section 414 of such Code (relating to 
     definitions and special rules) is amended by adding at the 
     end the following:
       ``(w) Catch-up contributions for certain distributions.--
       ``(1) In general.--An applicable employer plan shall not be 
     treated as failing to meet any requirement of this title 
     solely because the plan permits an applicable participant to 
     make additional elective deferrals in any plan year.
       ``(2) Limitation on amount of additional deferrals.--
       ``(A) In general.--A plan shall not permit additional 
     elective deferrals under paragraph (1) for any year in an 
     amount greater than the lesser of--
       ``(i) the applicable dollar amount, or
       ``(ii) the excess (if any) of--

       ``(I) the participant's compensation (as defined in section 
     415(c)(3)) for the year, over
       ``(II) any other elective deferrals of the participant for 
     such year which are made without regard to this subsection.

       ``(B) Applicable dollar amount.--For purposes of this 
     paragraph, the applicable dollar amount with respect to a 
     participant shall be an amount equal to--
       ``(i) the aggregate amount of distributions described in 
     section 72(t)(2)(G) (not attributable to earnings) made with 
     respect to such participant, over
       ``(ii) the aggregate amount of such distributions (not 
     attributable to earnings) previously taken into account under 
     this subsection or section 219(b)(5)(B).
       ``(3) Treatment of contributions.--Rules similar to the 
     rules of paragraphs (3) and (4) of subsection (v) shall apply 
     with respect to contributions made under this subsection.
       ``(4) Definitions.--For purposes of this subsection, the 
     terms `applicable employer plan' and `elective deferral' have 
     the same meanings given such terms in subsection (v)(6).''.
       (4) Conforming amendment.--Section 414(v)(2)(A)(ii)(II) of 
     such Code (relating to limitation on amount of additional 
     deferrals) is amended by inserting ``(other than deferrals 
     under subsection (w))'' after ``deferrals''.
       (5) Effective date.--The amendments made by this subsection 
     shall apply to contributions in taxable years ending after 
     December 31, 2001.
                                  ____



                           AMENDMENT NO. 2733

  (Purpose: To prohibit a State from imposing a discriminatory tax on 
     income earned within such State by nonresidents of such State)

       At the appropriate place in the bill, insert the following:

     SEC. __. PROHIBITION ON IMPOSITION OF INCOME TAXES BY STATES 
                   ON NONRESIDENTS.

       (a) In General.--Chapter 4 of title 4, United States Code, 
     is amended by adding at the end the following:

     ``Sec. 116. Prohibition on imposition of income taxes by 
       States on nonresidents

       ``Except to the extent otherwise provided in any voluntary 
     compact between or among States, a State or political 
     subdivision thereof may not impose a tax on income earned 
     within such State or political subdivision by nonresidents of 
     such State.''.
       (b) Conforming Amendment.--The table of sections for 
     chapter 4 of title 4, United States Code, is amended by 
     adding at the end the following:

``116. Prohibition on imposition of income taxes by States on 
              nonresidents.''.

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



                           AMENDMENT NO. 2734

(Purpose: To provide that tips received for certain services shall not 
               be subject to income or employment taxes)

       At the appropriate place in the bill, insert the following:

     SEC. __. TIPS RECEIVED FOR CERTAIN SERVICES NOT SUBJECT TO 
                   INCOME OR EMPLOYMENT TAXES.

       (a) In General.--Section 102 of the Internal Revenue Code 
     of 1986 (relating to gifts and inheritances) is amended by 
     adding at the end the following new subsection:
       ``(d) Tips Received for Certain Services.--
       ``(1) In general.--For purposes of subsection (a), tips 
     received by an individual for qualified services performed by 
     such individual shall be treated as property transferred by 
     gift.
       ``(2) Qualified services.--For purposes of this subsection, 
     the term `qualified services' means cosmetology, hospitality 
     (including lodging and food and beverage services), 
     recreation, baggage handling, transportation, delivery, shoe 
     shine, and other services where tips are customary.
       ``(3) Annual limit.--The amount excluded from gross income 
     for the taxable year by reason of paragraph (1) with respect 
     to each service provider shall not exceed $10,000.
       ``(4) Employee taxable on at least minimum wage.--Paragraph 
     (1) shall not apply to tips received by an employee during 
     any month to the extent that such tips--
       ``(A) are deemed to have been paid by the employer to the 
     employee pursuant to section 3121(q) (without regard to 
     whether such tips are reported under section 6053), and
       ``(B) do not exceed the excess of--
       ``(i) the minimum wage rate applicable to such individual 
     under section 6(a)(1) of the Fair Labor Standards Act of 1938 
     (determined without regard to section 3(m) of such Act), over
       ``(ii) the amount of the wages (excluding tips) paid by the 
     employer to the employee during such month.
       ``(5) Tips.--For purposes of this title, the term `tip' 
     means a gratuity paid by an individual for services performed 
     for such individual (or for a group which includes such 
     individual) by another individual if such services are not 
     provided pursuant to an employment or similar contractual 
     relationship between such individual.''
       (b) Exclusion From Social Security Taxes.--
       (1) Paragraph (12) of section 3121(a) of such Code is 
     amended to read as follows:
       ``(12)(A) tips paid in any medium other than cash;
       ``(B) cash tips received by an employee in any calendar 
     month in the course of his employment by an employer unless 
     the amount of such cash tips is $20 or more and then only to 
     the extent includible in gross income after the application 
     of section 102(d).'';
       (2) Paragraph (10) of section 209(a) of the Social Security 
     Act is amended to read as follows:
       ``(10)((A) tips paid in any medium other than cash;
       ``(B) cash tips received by an employee in any calendar 
     month in the course of his employment by an employer unless 
     the amount of such cash tips is $20 or more and then only to 
     the extent includible in gross income after the application 
     of section 102(d) of the Internal Revenue Code of 1986 of 
     such month.''; and
       (3) Paragraph (3) of section 3231(e) of such Code is 
     amended to read as follows:
       ``(3) Solely for purposes of the taxes imposed by section 
     3201 and other provisions of this chapter insofar as they 
     relate to such taxes, the term `compensation' also includes 
     cash tips received by an employee in any calendar month in 
     the course of his employment by an employer if the amount of 
     such cash tips is $20 or more and then only to the

[[Page 354]]

     extent includible in gross income after the application of 
     section 102(d).''.
       (c) Exclusion From Unemployment Compensation Taxes.--
     Submission(s) of section 3306 of such Code is amended to read 
     as follows:
       ``(s) Tips Not Treated as Wages.--For purposes of this 
     chapter, the term `wages' shall include tips received in any 
     month only to the extent includible in gross income after the 
     application of section 102(d) of such month.''.
       (d) Exclusion From Wage Withholding.--Paragraph (16) of 
     section 3401(a) of such Code is amended to read as follows:
       ``(16)(A) as tips in any medium other than cash;
       ``(B) as cash tips to an employee in any calendar month in 
     the course of his employment by an employer unless the amount 
     of such cash tips is $20 or more and then only to the extent 
     includible in gross income after the application of section 
     102(d).''
       (e) Conforming Amendment.--Sections 32(c)(2)(A)(i) and 
     220(b)(4)(A) of such Code are each amended by striking 
     ``tips'' and inserting ``tips to the extent includable in 
     gross income after the application of section 102(d))''.
       (f) Effective Date.--The amendments made by this section 
     shall apply to tips received after the calendar month which 
     includes the date of the enactment of this Act.
                                  ____



                           AMENDMENT NO. 2735

 (Purpose: To allow a deduction for real property taxes whether or not 
                the taxpayer itemizes other deductions)

       At the appropriate place in the bill, insert the following:

     SEC. __. REAL PROPERTY TAX DEDUCTION ALLOWED WHETHER OR NOT 
                   TAXPAYER ITEMIZES OTHER DEDUCTIONS.

       (a) In General.--Section 62(a) of the Internal Revenue Code 
     of 1986 (defining adjusted gross income) is amended by 
     inserting after paragraph (18) the following:
       ``(19) Real property taxes.--The deduction allowed by 
     section 164(a)(1).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to any payment due after December 31, 2000.

  Mr. SMITH of New Hampshire. Mr. President, these amendments I have 
offered encompass a number of important issues, including property 
taxes, commuter taxes, tip taxes for those who work as waiters and 
waitresses for the most part, and Reservists. Those are the four 
categories.
  Mr. President, I thank my colleagues for their courtesy in allowing 
me to offer four amendments. I will have a very brief discussion of 
each of these amendments.


                           Amendment No. 2735

  The amendment No. 2735 is an amendment dealing with property taxes. 
It provides an above-the-line deduction for State and local property 
taxes. Right now, these taxes are only deductible for those who itemize 
their taxes. The nonitemizers are at the lower income levels. 
Therefore, this will help stimulate the economy by encouraging home 
purchases and home ownership for those at the lower income levels that 
do not itemize their taxes.
  As we all know, property taxes tend to fund local education. So 
providing this tax deduction makes it easier for a local taxpayer to 
afford the quality education. As a former teacher and a parent, I 
believe it is very important to our economy.
  It is important to understand, if a citizen makes enough money to 
have enough deductions to itemize taxes, they can deduct property 
taxes. But what about the senior citizen who has property that has 
gained in value, they don't want to sell their home, and they are on a 
fixed income? They could be forced to sell their home to pay the 
property taxes--which go up every year, usually because of the schools 
or other costs in the community.
  This gives immediate tax relief to every working American or senior 
citizen or anyone else who owns property, pays property taxes, but does 
not get a tax deduction because they do not itemize. There is a direct 
stimulus to the economy. Imagine being able to deduct $2,000 or $3,000 
in property taxes and having that cash on hand to be used for something 
else, whether the purchase of a refrigerator or whatever.
  If we want to stimulate the economy and help those who need it most, 
this is the kind of legislation that does it. I hope my colleagues will 
look seriously at this matter and pass it as an amendment to the 
stimulus package.


                           Amendment No. 2733

  The second amendment I will speak to, No. 2733, involves a commuter 
tax. This prohibits the imposition of a nonresident income tax unless 
two States agree to a compact permitting that tax. It happens in New 
Hampshire; it happens in other States. A State does not have an income 
tax and a person who lives in a State with no income tax works in 
another State. That State taxes their income. It is taxation without 
representation. It is not fair.
  This prohibits this tax from being implemented. In the long run, it 
is fair, and it is best for all people, no matter in what State you 
live. Even if you are in a State that collects those taxes, it is the 
issue of fairness. Is it fair for you to collect an income tax from a 
person who works in your State who gets no benefit? It does not mean 
only the interstate exchange of goods and services, it also means the 
exchange of labor.
  One of the best ways to stimulate economic growth is allow people to 
work wherever they want in whatever State they want. Why make it a 
disincentive for the person living on the border of one State to go to 
another State. That is what we are doing. It is especially unfair in 
States such as New Hampshire, where there is no income tax, and there 
is no reciprocating. In the State of New Hampshire, $2 or $3 million 
goes out of that State into several of the surrounding States.
  We all have constituents who work in neighboring States. In most 
cases, these constituents pay income taxes to those States; they are 
called commuter taxes. This is called taxation without representation, 
where I went to school. This is one of the issues that the colonists in 
our country fought over when they began to remove themselves from the 
authority of the King. The Declaration of Independence lists the 
reasons our country broke away from the Crown, and one of them was 
imposing taxes without our consent. That is exactly what happens in 
every State in America where there is an income tax for a person, say, 
living in Montana, who works in a neighboring State, and they have to 
pay the tax of that neighboring State.
  It is not fair. I understand where politically it is easier for a 
State legislator to support an income tax on citizens who cannot vote 
them out of office. There is no way you can vote these people out of 
office for imposing these taxes, but it goes against the very 
principles on which our country was founded.
  My amendment says if the State consents to allow its citizens to be 
taxed by a neighboring State, that is OK because now the constituents 
have an opportunity to either support or not support the legislators 
who imposed that. It is a very important distinction as to this 
amendment. If a State consents to allow citizens to be taxed by a 
neighboring State, fine. But right now that is not the case. They could 
sign an interstate compact, which would be fine, but it should be up to 
the States. My amendment preserves the right of citizens to be governed 
by their own States, not by the tax-hungry legislators of another 
State.
  If you examine this issue, it is a States rights issue, and I urge 
its adoption.


                           Amendment No. 2734

  Mr. President, the attacks of September 11 have left a great deal of 
devastation in their wake. Thousands perished during the attacks while 
tens of thousands of friends and family members are left to grieve for 
their loved ones. But the economic impact of those attacks continue to 
be felt throughout the Nation. With more than 1.6 million working men 
and women laid off last year, we need to look for ways to provide 
assistance to working individuals and their families.
  The business community, particularly the travel industry, are bearing 
the brunt of the burden. With airline travel and hotel bookings down 
sharply, communities which largely depend on tourism and travel as 
their chief source of revenue will soon, if not already, be in the red 
and may soon be forced to cut vital services. It is, therefore, 
imperative that we pass a strong, sensible economic stimulus plan that 
will provide immediate relief to all Americans and stimulus to local 
businesses to help them weather this storm

[[Page 355]]

and expand employment. However, we must not overlook those who need 
help the most. The working poor.
  Many of the these hardworking Americans supplement their often, 
minimum wage incomes, with tips received for their excellent service. 
However, this discriminatory tax is levied against those who can least 
afford it. Therefore, I am offering an amendment to address this 
unfairness in the tax code and provide direct relief to hardworking 
Americans. My amendment is very simple. It recognizes a tip for what it 
is: a gift. All tips, not exceeding $10,000 annually, would be tax-
free. Result: hundreds of dollars a month remains in the pocket of hard 
working individuals. By exempting these monies from both income and 
FICA taxes, more money will be returned to the pockets of both 
employees and employers.
  Under current law, service employees who typically receive tips are 
assumed to have made at least 8 percent of their gross sales in tips. 
Taxes are applied regardless of the actual level of the tip. The end 
result for these employees is that they may have to pay taxes on income 
they didn't receive.
  By passing my amendment, the Federal Government will provide direct 
relief to at least 2.3 million low to middle income individuals who 
depend on tips to make ends meet. Industry statistics show that most of 
the employees that will be helped by my amendment are either students, 
single mothers, or employees at the beginning of their careers. My 
amendment will benefit millions of Americans directly, substantially, 
and quickly, while lifting some of the heavy burden of Government off 
of thousands of small businesses. My amendment eliminates the current 
cumbersome system under which tips cannot possibly be reported 
accurately. Hard working, law-abiding citizens who are given tips as a 
result of their extra effort do not wish to be labeled cheaters by the 
IRS which does not understand the realities of their work. It is time 
to change the tax law covering income from tips. My amendment caps the 
tax-free earnings at $10,000 for the small percentage who make a career 
of waiting on tables in high-end restaurants and resorts. For States 
that have a tip credit rule, this bill will not impact the employee's 
and employer's obligations and contributions up to the minimum wage.
  Congress should show the hard working men and women of America that 
the Federal Government is not out of touch, and that it has some 
compassion for the struggle facing the millions of citizens in the 
service industry. By passing my amendment, we pass a common sense 
proposal that will directly help millions of hard-working Americans.
  To reiterate, the third amendment is No. 2734, known as the tip tax. 
This amendment would consider tips to be gifts for income tax purposes. 
This would provide a great amount of much needed relief and stimulus to 
the hospitality and other service sectors of our economy by eliminating 
the tax burden imposed on these tips.
  Think about the types of people who hold these jobs. There are many 
single mothers, working women, working hard. You have all been to 
restaurants and you see how hard waiters and waitresses work. 
Frequently these are single-income mothers who have children at home. 
They are working hard. This would exempt the first $10,000 of those 
tips from Federal income tax. That is a pretty good incentive and would 
help every waitress, every waiter, every person who receives gratuities 
as the primary source of their income. It would help them tremendously 
to exempt the first $10,000.
  We treat the tip income the same way--the first $10,000 a year tax 
free. It is good policy and good stimulus, and I urge its adoption.
  In summary, again, if you work as a waitress or waiter, the first 
$10,000 of the money you earn in tips would be exempted from Federal 
taxes.


                           Amendment No. 2732

  After the treacherous attacks of September 11, the need to increase 
security around the country was and continues to be imperative.
  Much of the security needs were filled by National Guard and Reserve 
units. Many were forced to leave high or higher paying jobs than the 
military was able to pay. In some cases, this caused a financial burden 
on the men and women who were called to duty.
  In order to help the Guard and Reserve units who were called up as a 
result of the terrorist attacks, my amendment would allow those units 
to access their retirement plans without paying the 10 percent penalty 
for early withdrawal.
  The legislation would also allow them an underpayment waiver as well 
as a catch-up contribution without caps up to the amount they withdrew 
from their retirement fund.
  While we have rightfully provided tax relief to the business and 
families involved in the September 11 attacks, we must also look for 
ways to provide relief to those brave men and women who have been 
called up to protect us from further attacks.
  I ask the Senate to support the members of our National Guard and 
Reservists and agree to my amendment.
  In conclusion--I may want to speak to these amendments a little bit 
later--these are four opportunities for us to help people who need help 
and stimulate the economy at the same time. These are working women, 
for the most part, single mothers, working women who have children at 
home, to exempt that first $10,000 in tip income; to help the reservist 
who is called up on active duty who has a tough time now making 
payments on the home; third, to help those who work in one State and 
have to pay taxes in that State even though they do not get any vote on 
it; and finally, the property tax where with the above-the-line 
deduction, if you don't itemize, you can deduct your property taxes.
  That will help mostly seniors, those people who are on fixed incomes 
who are basically property poor. They do not want to sell their house. 
They don't want to mortgage their house. Why should they have to? They 
have worked all their lives for it. They can't pay the taxes on it. 
This will give them a chance to deduct it right off their income.
  My amendment will provide tax relief to low income homeowners who do 
not have enough in deductions to itemize.
  Giving low income working Americans an above the line tax deduction 
for their family home will encourage home ownership and provide a much 
needed economic stimulus in financially challenged neighborhoods.
  School districts depend, in large part, on property taxes. 
Encouraging home ownership will increase greater tax dollars to these 
school districts and provide greater learning opportunities for our 
children.
  As a former teacher, I believe it is very important to our children 
and our economy.
  I ask that the Senate consider the working poor and agree to this 
amendment.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Alabama.
  Mr. SESSIONS. Mr. President, what is the pending business?
  The PRESIDING OFFICER. The amendment offered by the Senator from New 
Hampshire is the pending business.
  Mr. SESSIONS. I ask unanimous consent to lay aside the pending 
amendment in order that I might introduce my own amendment, along with 
Senator Allen.
  The PRESIDING OFFICER (Mr. Carper). Is there objection?
  Mr. REID. Reserving the right to object, what is the consent request?
  The PRESIDING OFFICER. The Senator will repeat his request.
  Mr. SESSIONS. That we lay aside the pending amendment and I and 
Senator Allen be allowed to offer an amendment.
  Mr. REID. I object to that.
  The PRESIDING OFFICER. Objection is heard.
  Mr. REID. Mr. President, I announce to Members that we are trying to 
have a consent agreement entered into within the next few minutes to 
have a vote on or about a quarter to 4 today on the Harkin amendment. 
We have an agreement that was formalized last night to

[[Page 356]]

alternate amendments. And that is what we have been doing. We have a 
formal agreement that during this stimulus package we are alternating 
amendments. The next two that were to be in order were two Democratic 
amendments. We are going to dispose of these. We are going vote on the 
Harkin amendment and vote on Senator Allen's and work our way through 
this matter. Senator Smith offered four amendments. The manager on the 
other side can decide how to handle those. We will do what we have been 
doing. Unless Senator Smith combines those into one amendment, we will 
spread those out, having four amendments on the other side.
  I have no objection at this time to Senator Sessions offering the 
amendment in keeping with the agreement that was entered. His amendment 
would be offered in the normal course of the alternating amendments.
  Does the Senator from Iowa agree with me?
  Mr. GRASSLEY. Mr. President, if what the Senator is saying is that 
when it comes to a Member who offered four amendments, we would only 
vote on one of his amendments and alternate back and forth. Is that 
your goal?
  Mr. REID. Yes. It doesn't matter to me how the manager of the bill 
handles that. It is strictly up to him.
  Mr. GRASSLEY. Since we started the other day with an agreement to go 
back and forth with one Democratic amendment and one Republican 
amendment, we will stick with that.
  Mr. REID. We entered into that agreement yesterday.
  I withdraw my objection to Senator Sessions' amendment.
  I ask unanimous consent that the Senate vote at 3:45 on or in 
relation to the Harkin amendment, there be no amendments in order prior 
to that time, and the time be equally divided.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  The Senator from Alabama.


                           Amendment No. 2736

  Mr. SESSIONS. Mr. President, I thank the Senator from Nevada for his 
courtesy which he displays so often.
  The American Family Security and Stimulus Act is a stimulus package 
that I offered along with Senator Allen and Senator Smith. Several 
other Senators also support it. It is designed to provide a stimulus to 
this economy and to middle-class working Americans, by emphasizing help 
to families who tend to be hurt most in an economic slowdown and by 
trying to get money into this economy in a way that can move us out of 
here. It is time to blast out of this recession--not ease out of it.
  When we look at our budget numbers and our hopes for the future and 
jobs in America, what we know is that the sooner we get this economy 
humming again the better. It will even benefit the politicians because 
we will have more money in our Government Treasury. But, most 
importantly, it will help create jobs and income for American families 
and workers.
  It is time for us to quit dawdling about and get moving on something 
that can be reached. I know the great leadership on both sides of the 
aisle has worked really hard. Sometimes I have been wont to call them 
masters of the universe, as they told us they were going to work out 
something. Sooner or later, they were going to get an agreement. But 
time has gone by and no agreement has been reached. So I suggest the 
plan that we would offer today--Senator Allen and I--is a bipartisan 
plan that can include much of what is in other people's plans. It also 
includes some items that would provide stimulus to the economy that are 
not special interest oriented but family oriented. So everybody should 
be able to rally behind them.
  I will make a few brief remarks and then I will allow Senator Allen 
to make some comments. I hope I might be able to speak on it as the day 
goes by.
  The components of this plan include a number of items. I believe one 
of them that has not been given sufficient thought in this process is 
the requirement that we advance payment of the earned-income tax 
credit--a $31 billion program for low-income workers. They get that 
earned-income tax credit the year after they work as a refund on their 
tax return. If we could begin to put it on their paychecks now--it is 5 
percent--they would receive maybe a 60-cent, 80-cent, or 90-cent-an-
hour increase in their pay. It would advance payment maybe $10 billion 
or $15 billion in this fiscal year's economy when we need that advanced 
payment, and it would reduce next year's payment. It would be a one-
time infusion of cash for hard-working Americans with low income with 
no cost to the budget over a 2-year period. In fact, I think that is 
the right approach.
  I do not believe I sent my amendment to the desk. I send it at this 
time.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Alabama [Mr. Sessions] for himself, Mr. 
     Allen, Mr. Smith of New Hampshire, and Mr. Hutchinson 
     proposes an amendment numbered 2736 to the language proposed 
     to be stricken by amendment No. 2698.

  Mr. SESSIONS. 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 printed in today's Record under ``Amendments 
Submitted.'')
  Mr. SESSIONS. Mr. President, the cost is $15 billion this year, but 
it saves the Treasury $15 billion next year because that money would 
have been paid out earlier than would otherwise have been the case.
  I ask that we accelerate the 25-percent individual income tax rate 
reduction that is now set at 27 to go to 25 by the year 2002, instead 
of 2006. We would accelerate that to this year providing families a 
break on their tax return. For example, an individual making $27,000 to 
$67,000 would receive a 2-percent break on their tax return.
  We would allow penalty-free IRA withdrawals for health insurance 
premiums for unemployed workers. That has the potential to help people 
who are hurting and need health insurance. We would increase the child 
tax credit from $500, as it is today for the year 2001, to $1,000 per 
child, allowing families to receive an additional $500 tax credit on 
their tax returns for this year. We would do that just for 1 year 
because it is my belief that we need a stimulus in the economy now. It 
is going to phase into a $1,000 tax credit for families over 10 years, 
but for 1 year we would accelerate that in these economic times to 
provide relief for families.
  We would increase from $3,000 to $5,000 the capital loss deduction. A 
number of plans have had that--both Democrat and Republican.
  We provide a 3-month $500 tax credit for the purchase of computers 
for elementary and secondary students, for which Senator Allen is such 
a passionate proponent, and who will explain in detail.
  We will extend the unemployment benefit by 13 weeks and provide the 
option for States to provide unemployment, if they choose, for part-
time workers.
  I think that goes beyond Senator Daschle's proposal and, I believe, 
would be very much a compromise that would be acceptable across the 
aisle.
  We would provide $5 billion for national emergency grants to States 
for people who are hurting and provide temporary business relief by 
allowing an additional 2-year depreciation deduction of 30 percent of 
the adjusted basis of certain qualified properties. That is projected 
at an approximate $38 billion cost, and it would have a cost this year 
when the money is pumped into the economy. But by allowing people to 
take that depreciation deduction early, it would be something not 
available to them in the future, thereby saving Government expenditures 
or costs in income in the future.
  That is a good package. I know Senator Allen wants to talk about it. 
I believe it is a step in the right direction. There is nothing in this 
that is not bipartisan. There is nothing in this that is special 
interest. Every bit of it is fair and just, which stimulates the 
economy, over $100 billion worth, without creating a bureaucracy, 
without

[[Page 357]]

creating a welfare program, and actually doing the things we want it to 
do.
  I thank the Chair and yield the floor.
  The PRESIDING OFFICER. Who yields time? The Senator from Virginia.
  Mr. ALLEN. Mr. President, I commend Senator Sessions for his 
leadership and echo all of the comments he made in support of this 
measure. I strongly support, as a cosponsor, this amendment which is 
entitled the American Family Economic Security and Stimulus Act.
  This amendment, due to the great leadership of Senator Sessions, as 
well as his ingenuity, has provided us with what I believe to be a very 
common sense, compassionate, pro-family package that will help 
stimulate the economy and help American families and businesses get 
through the current economic recession.
  When one thinks of stimulus or stimulus policy--I know the Presiding 
Officer remembers the discussion on the concept of stimulus--it should 
be a change in policy which will induce or spur economic activity, 
whether it is investment or whether it is spending, that would 
otherwise not occur but for the change in policy.
  This amendment represents a very worker-oriented, pro-family economic 
aid and stimulus package that will provide immediate financial relief 
to working families. It will ensure more of their hard-earned money 
stays in their wallets, and they spend it as they see fit. There is the 
additional $150 a month in the hands of working Americans through 
advanced payment on the earned-income tax credit. That is really an 
immediate 50 to 60 cents per hour pay raise for workers in the lowest 
income levels.
  It increases the child tax credit to $1,000 for the current fiscal 
year, and it accelerates the rate reduction for the 28 percent tax 
bracket to 25 percent.
  I thank Senator Sessions for including the educational opportunity 
tax credit in this important legislation. This is a concept that I ran 
on in my campaign. It is one many have heard me discuss. What I am 
doing in adapting this idea, the education opportunity tax credit, to a 
stimulus package is to create an immediate incentive for families, 
parents of children who are in kindergarten through 12th grade, to buy 
computers, educational software, or computer peripherals. It is a 
technology-related amendment.
  Specifically, what this amendment, the Sessions-Allen amendment, 
would do is provide parents who have children in kindergarten through 
12th grade with an immediate $2,500 tax credit to buy computers, 
educational software, or peripherals. It would be for only 3 months. It 
would provide those families with the financial means necessary to 
provide their children with greater educational choice and 
opportunities best suited to their individual needs.
  Parents know the needs of their children better than anyone. We know 
in studies about the digital divide that youngsters who have computers 
at home do better in school. They stay in school. They don't drop out. 
This is an important way of empowering parents to provide computers and 
educational software and peripherals to their children.
  As far as the economic stimulus of it, if the idea of education and 
empowering parents is not sufficient to convince my colleagues, let's 
recognize what this will do for the economy. We can look at the States 
as our laboratories for a lot of good ideas.
  Experience shows in the States that even a small temporary reduction 
in taxes can bring about huge increases in computer sales. In South 
Carolina, they had a sales tax holiday on computers for only 3 days. 
What was the result? Computer sales increased more than tenfold, over 
1,000 percent, in those 3 days. In Pennsylvania, they eliminated the 
sales tax on computers for 1 week. CPU sales increased sixfold in that 
time.
  The PRESIDING OFFICER. All time controlled by the minority has 
expired.
  Mr. ALLEN. Mr. President, I hope the Senate will support this idea of 
empowering parents, helping with technology, and helping out our 
economy as well. It is a good, commonsense approach. I thank the 
Presiding Officer for giving me the additional 30 seconds.
  The PRESIDING OFFICER. Who yields time? The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, I believe we have consent from the other 
side to let the Senator from Virginia speak longer.
  Mr. ALLEN. I would appreciate that, Mr. President.
  Mr. GRASSLEY. I ask unanimous consent to give the Senator 3 
additional minutes, Mr. President.
  The PRESIDING OFFICER. Without objection, it is so ordered. The 
Senator from Virginia is recognized for an additional 3 minutes.
  Mr. ALLEN. Mr. President, as I was stating, the educational 
opportunity tax credit, empowering parents with a $500 tax credit for a 
3-month period to buy computers and educational software and 
peripherals for their children, as we see from the States, works very 
well. It is not just the computers themselves. Again, South Carolina 
realized about a 664 percent increase in monitor sales and a 700 
percent increase in printer sales, with only a 5 percent tax break. 
Pennsylvania had a similar experience.
  The impact of this will be at least $5 billion of stimulus into this 
sector of the economy while also helping out the education of children 
in this country.
  We know that this will have much more of an impact than that because 
whoever is fabricating the chips, the semiconductor chips, whoever the 
contractors and vendors may be, whoever the sales folks are, all of 
them, the computer software writers, all of those people will benefit 
from more business investment, more sales in the tech sector. This idea 
is supported by Information Technology Industries; Global Learning 
System; ITIC, which is the Information Technology Industry Council; 
John Chambers with CISCO, who is well known for his efforts in 
education and technology, Gateway Computers, who have seen the impact 
of this in the States, the Consumer Electronics Association, Radio 
Shack, and Circuit City.
  This is a good, balanced, pro-family, pro-taxpayer, pro-jump 
starting, and ``stimulating this economy to create more jobs'' idea. I 
hope we will find bipartisan support for this idea that will really 
allow families to keep more of their money, help educate their 
children, and also provide the job placement and financial assistance 
needed to workers during this economic downturn while also making sure 
that businesses have the capabilities to make investments with 
accelerated depreciation.
  I look forward to working with my colleagues as we move this country 
forward in a way of trusting free people and free enterprise.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. ALLEN. Mr. President, if I may, I ask unanimous consent to add as 
cosponsors of the Sessions-Allen amendment Senator Tim Hutchinson of 
Arkansas and Senator Bob Smith of New Hampshire.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRASSLEY. I suggest the absence of a quorum.
  The PRESIDING OFFICER. Without objection, the clerk will call the 
roll.
  The legislative clerk proceeded to call the roll.
  Mr. GRASSLEY. 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. GRASSLEY. Mr. President, I ask unanimous consent that the 
amendment of the Senator from Virginia be set aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 2700

  Mr. GRASSLEY. Mr. President, on behalf of Senator McCain, I call up 
amendment No. 2700, and I ask unanimous consent that it be explained 
and then laid aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will report.
  The legislative clerk read as follows:

       The Senator from Iowa [Mr. Grassley], for Mr. McCain, for 
     himself, Mr. Allard, Mr. Lieberman, Ms. Snowe, Mr. Levin, Mr. 
     Murkowski, Mr. Cleland, Mr. Inhofe, Ms.

[[Page 358]]

     Landrieu, Mr. Burns, Mr. Durbin, Mr. Sessions, Mr. DeWine, 
     Mr. Thurmond, Mr. Shelby, Mr. Hagel, Mr. Lugar, Mr. Kennedy, 
     Mr. Warner, Ms. Collins, Mr. Hatch, Mr. Helms, Mr. Allen, Mr. 
     Kerry, Mr. Fitzgerald, Mr. Stevens, Mr. Reid, Mr. Miller, Mr. 
     Roberts, Mr. Bayh, Mr. Ensign, Mr. Bunning, Mr. Campbell, Mr. 
     Nelson of Nebraska, Mr. Dodd, Mr. Jeffords, Mr. Brownback, 
     Mr. Biden, Ms. Stabenow, and Mr. Cochran, proposes an 
     amendment numbered 2700 to the language proposed to be 
     stricken by amendment No. 2698.

  The amendment is as follows:

   (Purpose: To amend the Internal Revenue Code of 1986 to provide a 
special rule for members of the uniformed services and Foreign Service 
   in determining the exclusion of gain from the sale of a principal 
                               residence)

       At the appropriate place insert the following:

     SEC. __. SPECIAL RULE FOR MEMBERS OF UNIFORMED SERVICES AND 
                   FOREIGN SERVICE IN DETERMINING EXCLUSION OF 
                   GAIN ON SALE OF PRINCIPAL RESIDENCE.

       (a) In General.--Section 121(d) (relating to special rules) 
     is amended by adding at the end the following:
       ``(9) Members of uniformed services and foreign service.--
       ``(A) In general.--The running of the 5-year period 
     described in subsection (a) shall be suspended with respect 
     to an individual during any time that such individual or such 
     individual's spouse is serving on qualified official extended 
     duty as a member of a uniformed service or of the Foreign 
     Service.
       ``(B) Qualified official extended duty.--For purposes of 
     this paragraph--
       ``(i) In general.--The term `qualified official extended 
     duty' means any period of extended duty during which the 
     member of a uniformed service or the Foreign Service is under 
     a call or order compelling such duty at a duty station which 
     is a least 50 miles from the property described in 
     subparagraph (A) or compelling residence in Government 
     furnished quarters while on such duty.
       ``(ii) Extended duty.--The term `extended duty' means any 
     period of active duty pursuant to a call or order to such 
     duty for a period in excess of 90 days or for an indefinite 
     period.
       ``(C) Definitions.--For purposes of this paragraph--
       ``(i) Uniformed service.--The term `uniformed service' has 
     the meaning given such term by section 101(a)(5) of title 10, 
     United States Code.
       ``(ii) Foreign service of the united states.--The term 
     `member of the Foreign Service' has the meaning given the 
     term `member of the Service' by paragraph (1), (2), (3), (4), 
     or (5) of section 103 of the Foreign Service Act of 1980.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to sales or exchanges on or after the date of the 
     enactment of this Act.

  Mr. McCAIN. Mr. President, I, along with 39 cosponsors, am proud to 
sponsor amendment 2700 to H.R. 622 to allow members of the Uniformed 
and Foreign Services, who are deployed or are away on extended active 
duty, to qualify for the same tax relief on the profit generated when 
they sell their main residence as other Americans. I am pleased to 
announce that Secretary of State Colin Powell fully supports this 
legislation and this legislation enjoys overwhelming support by the 
senior uniformed military leadership--the Joint Chiefs of Staff--as 
well as the Office of Management and Budget Director Mitch Daniels, the 
31-member associations of the Military Coalition, the American Foreign 
Service Association, and the American Bar Association.
  The average American participates in our Nation's growth through home 
ownership. Appreciation in the value of a home because of our country's 
overall economic growth allows everyday Americans to participate in our 
country's prosperity. Fortunately, the Taxpayer Relief Act of 1997 
recognized this and provided this break to lessen the amount of tax 
most Americans will pay on the profit they make when they sell their 
homes.
  The 1997 home sale provision unintentionally discourages home 
ownership among members of the Uniformed and Foreign Services, which is 
bad fiscal policy. Home ownership has numerous benefits for communities 
and individual homeowners. Owning a home provides Americans with a 
sense of community and adds stability to our Nation's neighborhoods. 
Home ownership also generates valuable property taxes for our Nation's 
communities.
  This amendment will not create a new tax benefit. Let me say that 
again: this bill will not create a new tax benefit, it merely modifies 
current law to suspend the time members of the Uniformed and Foreign 
Services are away from home on active duty. In short, this amendment 
treats service members and foreign service officers fairly, by treating 
them like all other Americans.
  The Taxpayer Relief Act of 1997 delivered sweeping tax relief to 
millions of Americans through a wide variety of important tax changes 
that affect individuals, families, investors, and businesses. It was 
also one of the most complex tax laws enacted in recent history.
  As with any complex legislation, there are winners and losers. But in 
this instance, there are unintended losers: service members and Foreign 
Service Officers.
  The 1997 act gives taxpayers who sell their principal residence a 
much-needed tax break. Prior to the 1997 act, taxpayers received a one-
time exclusion on the profit they made when they sold their principal 
residence, but the taxpayer had to be at least 55 years old and live in 
the residence for 2 of the 5 years preceding the sale. This provision 
primarily benefitted elderly taxpayers, while not providing any relief 
to younger taxpayers and their families.
  Fortunately, the 1997 act addressed this issue. Under this law, 
taxpayers who sell their principal residence on or after May 7, 1997, 
are not taxed on the first $250,000 of profit from the sale; joint 
filers are not taxed on the first $500,000 of profit they make from 
selling their principal residence. The taxpayer must meet two 
requirements to qualify for this tax relief. The taxpayer must, first, 
own the home for at least 2 of the 5 years preceding the sale; and, 
second, live in the home as their MAIN home for at least 2 years of the 
last 5 years.
  I applaud the bipartisan cooperation that resulted in this much-
needed form of tax relief. The home sales provision sounds great and it 
is. Unfortunately, the second part of this eligibility test 
unintentionally and unfairly prohibits many of our men and women in the 
Armed Forces and Foreign services from qualifying for this beneficial 
tax relief.
  Constant travel across the United States and abroad is inherent in 
the military and Foreign Services. Nonetheless, some service members 
and Foreign Service Officers choose to purchase a home in a certain 
locale, even though they will not live there much of the time. Under 
the new law, if a service member does not have a spouse who resides in 
the house during his or her absence or the spouse is also in the 
military and also must travel, that service member will not qualify for 
the full benefit of the new home sales provision, because no one 
``lives'' in the home for the required period of time. The law is 
prejudiced against dual-military couples who are often away on active 
duty, because they would not qualify for the home sales exclusion 
because neither spouse ``lives'' in the house for enough time to 
qualify for the exclusion.
  This amendment simply remedies an inequality in the 1997 law. It 
amends the Internal Revenue Code so that the 5-year time period is 
suspended while the service member or Foreign Service Officer is 
ordered, I underscore ordered, away from their primary home of 
residence. In short, active and reserve service members will still be 
required to live in their primary residence for 2 years, but the 5-year 
time period is suspended while they are stationed to such places like 
Afghanistan, the Philippines, Bosnia, the Persian Gulf, in the ``no 
man's land,'' commonly called the DMZ between North and South Korea, or 
anywhere else on active duty orders.
  In 1998 alone, the United States had approximately 37,000 men and 
women deployed to the Persian Gulf region, preparing to go into combat, 
if so ordered. There were also 8,000 American troops deployed in 
Bosnia, and another 70,000 U.S. military personnel deployed in support 
of other commitments worldwide. That is a total of 108,000 men and 
women deployed outside of the United States, away from their primary 
home, protecting and furthering the freedoms we Americans hold so dear. 
Since the September 11th attacks on the United States we have asked

[[Page 359]]

well over 110,000 service members to deploy abroad to seek out and 
destroy the terrorists and their supporting organizations responsible 
for this barbaric deed.
  We cannot afford to discourage military service by penalizing 
military personnel with higher taxes merely because they are doing 
their job. Military and Foreign service entails sacrifice, such as long 
periods of time away from friends and family and the constant threat of 
mobilization into hostile territory. We must not allow the Tax Code to 
heap additional burdens upon our men and women in uniform.
  In my view, the way to decrease the likelihood of further inequities 
in the Tax Code, intentional or otherwise, is to adopt a fairer, 
flatter tax system that is far less complicated than our current 
system. But, in the meantime, we must insure that the Tax Code is as 
fair and equitable as possible.
  The Taxpayer Relief Act of 1997 was designed to provide sweeping tax 
relief to all Americans, including our men and women in uniform. It is 
true that there are winners and losers in any tax code, but this 
inequity was unintended. Enacting this narrowly-tailored remedy to 
grant equal tax relief to the members of our Uniformed and Foreign 
Services restores fairness and consistently to our increasingly complex 
Tax Code.
  I ask unanimous consent that the letters of support from the American 
Foreign Service Association, the Joint Chiefs of Staff, American Bar 
Association, the Military Coalition, the Office of Management and 
Budget, and the Secretary of State be printed in the Record.
  There being no objection, the letters were ordered to be printed in 
the Record, as follows:

                                       The Secretary of State,

                                Washington, DC, November 30, 2001.
     The Hon. John McCain,
     U.S. Senate,
     Washington, DC.
       Dear Senator McCain: I am writing in support of the 
     legislation you have introduced to provide members of the 
     Foreign Service, as well as military personnel, the same 
     relief extended to other Americans in the sale of their 
     principal residence. Your efforts on behalf of the men and 
     women of the Foreign Service are very much appreciated.
       The Tax Relief Act of 1997 has acted to the disadvantage of 
     many members of the Foreign Service by requiring that they 
     must live in their principal residence for two of the five 
     years prior to sale. Much of a Foreign Service member's 
     career is spent serving his or her country far away from that 
     residence, thereby making it impossible for many of them to 
     utilize the capital gains tax exclusion. Not counting the 
     time on extended duty away from the principal residence as 
     part of the five-year period will give to our Foreign Service 
     personnel and their military colleagues the same tax 
     treatment enjoyed by their fellow Americans.
           Sincerely,
     Colin L. Powell.
                                  ____



                                        Joint Chiefs of Staff,

                                Washington, DC, November 27, 2001.
     The Hon. John McCain,
     U.S. Senate,
     Washington, DC.
       Dear Senator McCain: I join the Service Chiefs and strongly 
     endorse the Military Homeowners Equity Act. This legislation 
     would correct an inequity in the Internal Revenue Code of 
     1997 and would afford Service members the same opportunity to 
     build equity in a home that most other Americans enjoy.
       One of the most effective ways to maintain outstanding 
     combat capability in our military personnel is to allow them 
     to concentrate fully on their mission without worrying 
     excessively about the home front. This Bill would be a major 
     step in the right direction.
       Thank you for the opportunity to review the legislation, 
     and for your efforts on behalf of our soldiers, sailors, 
     airmen, marines, and coastguardsmen.
           Sincerely,
                                                 Richard B. Myers,
     Chairman.
                                  ____



                                    Chief of Naval Operations,

                                                November 21, 2001.
     The Hon. John McCain,
     Senate Russell Office Building, Washington, DC.
       Dear Senator McCain: Thank you for your efforts on behalf 
     of our service members to correct the disparity created by 
     the Tax Relief Act of 1997. I would like to extend my support 
     for your legislative tax relief proposal, S. 1678 which would 
     help relieve the hardships experienced by military homeowners 
     and encourage more members to purchase homes.
       Many military homeowners who sold their homes after the Tax 
     Relief Act of 1997 have been unable to meet the two-year 
     residency requirement. I ask that you also consider adding 
     language to your proposal to make the tax relief retroactive 
     to sales and exchanges that occurred after the 1997 act, 
     adding a specific exception to the statute of limitations 
     period for filing refund claims.
       Please let me know if I may be of further assistance.
           Sincerely,
                                                       Vern Clark,
     Admiral, U.S. Navy.
                                  ____

                                                 October 31, 2001.
     The Hon. John McCain,
     U.S. Senate, Washington, DC.
       Dear Senator McCain: Your efforts to improve the quality of 
     service enjoyed by our Navy-Marine Corps team are greatly 
     appreciated. I would like to extend my support for the 
     legislation that you intend to introduce to correct the tax 
     disadvantage created by The Tax Reform Act of 1997.
       The Marine Corps has been tracking several bills intended 
     to correct this tax disadvantage. As you know, The Tax Reform 
     Act repealed certain portions of the existing law that 
     allowed military members to maintain the status quo with 
     other taxpayers for exclusion of capital gains. The Act 
     provided for an exclusion, obviously not intended to 
     disadvantage military service members or members of the 
     Foreign Service. In order to qualify, a taxpayer must ``own 
     and use'' the property for two of the five years preceding 
     the sale. Since our personnel seldom remain in one location 
     for over three years, it is difficult to qualify for the 
     exclusion.
       Please let me know if there is any way in which I can be of 
     assistance or service.
           Semper Fidelis,
                                                       J.L. Jones,
                                       General, U.S. Marine Corps,
     Commandant of the Marine Corps.
                                  ____

                                           Department of the Army,


                                 Office of the Chief of Staff,

                                Washington, DC, November 27, 2001.
     The Hon. John McCain,
     U.S. Senate,
     Washington, DC.
       Dear Senator McCain: I strongly support the legislation you 
     have introduced, S. 1678, to correct the inequitable tax 
     consequences suffered by many soldiers when they sell their 
     principal residence.
       As you are aware, under the 1997 Tax Relief Act, a 
     homeowner who sells a principal residence can exclude gain of 
     $250,000 ($500,000 for joint fliers) if the taxpayer owned 
     and used the residence for two of the five years immediately 
     preceding the date of sale. Unlike the previous law, the 1997 
     Tax Relief Act does not recognize an exception for military 
     service. Accordingly, service members making frequent 
     military moves are often unable to meet the two-year 
     residency requirement required for the home sale exclusion.
       Your legislation would correct this inequity by permitting 
     service members to apply time served on extended active duty 
     toward the use of a principal residence to qualify for the 
     home sale exclusion. This change would allow many more 
     service members and their families to take advantage of the 
     home ownership tax incentives enjoyed by other Americans.
       I greatly appreciate your commitment to enhance the quality 
     of life for service members and their families. Thank you for 
     your continued support.
           Sincerely,

                                                John M. Keane,

                                      General, United States Army,
     Vice Chief of Staff.
                                  ____

                                                       HQ USAF/CC,


                                      1670 Air Force Pentagon,

                                Washington, DC, November 28, 2001.
     The Hon. John McCain,
     U.S. Senate,
     Washington, DC.
       Dear Senator McCain: Your consistent commitment to 
     improving the quality of life of our Airmen is greatly 
     appreciated. The Air Force fully supports your Military 
     Homeowners' Equity Act--S. 1678. This bill will correct the 
     tax disadvantaged created by the Tax Reform Act of 1997 by 
     allowing members of the Uniformed Services who are deployed 
     or are away on extended active duty to qualify for the same 
     tax relief on the profit generated when they sell their main 
     residence as other Americans. Ideally, this legislation would 
     be retroactive to the effective date of the Tax Reform Act.
       The 1997 Tax Reform Act repealed certain portions of the 
     existing law that allowed military members to maintain the 
     status quo with other taxpayers for exclusion of capital 
     gains. The Act provided for an exclusion, obviously not 
     intended to disadvantaged military service members or members 
     of the Foreign Service. In order to qualify, a taxpayer must 
     ``own and use'' the property for two of the five years 
     preceding the sale. With the frequent moves required by 
     military service, it is often times difficult for our service 
     members to qualify for the exclusion. Your bill corrects that 
     inequity.

[[Page 360]]

       Thank you again for your continuing support and leadership.
           Sincerely
                                                   John P. Jumper,
     General, USAF, Chief of Staff.
                                  ____

         Executive Office of the President, Office of Management 
           and Budget,
                                Washington, DC, November 15, 2001.
     The Hon. Grant S. Green, Jr.,
     Under Secretary for Management, Department of State, 
         Washington, DC.
       Dear Grant: Thank you for your letter regarding Senator 
     McCain's tax relief proposal. After careful review, there is 
     a case to be made that the current capital gains tax system 
     poses a burden on servicemen and women and foreign service 
     officers. These men and women spend much of their careers 
     being assigned overseas and moving from post to post. We 
     should not penalize these Americans in effect for serving 
     their country.
       The Office of Management and Budget supports Senator 
     McCain's proposal which would allow military and foreign 
     service personnel equitable capital gains tax treatment. I 
     appreciate your persistence on this matter as we continue to 
     ensure that our Foreign Service Officers and Military service 
     men and women enjoy such benefits especially during these 
     difficult times.
           Sincerely,

                                              Robin Cleveland,

                                               Associate Director,
     National Security Programs.
                                  ____



                                       The Military Coalition,

                                  Alexandria VA, November 6, 2001.
     The Hon. John McCain,
     U.S. Senate,
     Washington, DC.
       Dear Senator McCain: The Military Coalition, a consortium 
     of nationally prominent uniformed services and veterans 
     organizations, representing more that 5.5 million members, 
     plus their families and survivors, is grateful to you for 
     introducing The Military Homeowners Equity Act--a bill that 
     would restore capital gains tax equity for military 
     homeowners.
       Your legislation is essential to correct a serious 
     oversight in the Taxpayer Relief Act of 1997, which 
     inadvertently penalizes servicemembers who are assigned away 
     from their principal residence for more than three years on 
     government orders. Very often, servicemembers keep their 
     homes while reassigned overseas or elsewhere in the hopes of 
     returning to their residence. On occasions when this proves 
     impossible, and the home must be sold to permit purchase of a 
     new principal residence, servicemembers find themselves 
     subjected to substantial tax liabilities--all because 
     military orders kept them from occupying their principal 
     residence for at least two of the five years before the sale.
       The 1999, both the House and Senate passed corrective 
     legislation (H.R. 865) as part of the Taxpayer Refund and 
     Relief Act of 1999, but the President vetoed this bill over 
     an unrelated issue. Your new bill will be important to 
     resurrect this fairness issue and allow servicemembers to 
     comply with government orders and leave home to serve their 
     country without risking a large capital gains tax liability.
       The Military Coalition pledges to work with you to seek 
     inclusion of your bill in the pending economic stimulus 
     package so military members can once again enjoy the same 
     capital gains tax relief already provided to all other 
     Americans.
           Sincerely,
     The Military Coalition.
                                  ____



                         American Foreign Service Association,

                                 Washington, DC, November 5, 2001.
     The Hon. John McCain,
     Senate Russell Building,
     Washington, DC.
       Dear Senator McCain: On behalf of the 23,000 active-duty 
     and retired members of the Foreign Service which the American 
     Foreign Service Association (AFSA) represents, thank you for 
     your leadership and support with your soon-to-be introduced 
     bill extending to the Uniformed Services and Foreign Service 
     the tax treatment enjoyed by all other Americans when they 
     sell their principal residence.
       As you know this is an important active-duty issue for the 
     Uniformed Services and the Foreign Service. Your bill, 
     amending section 121(d) of the Internal Revenue Code of 1986, 
     addresses an inequity faced by our members because of the 
     particular nature of our profession. As you are well aware, 
     our careers require us to live for years at a time away from 
     our homes in duty posts around the world in service to our 
     nation. In the case of the Foreign Service, our duty 
     assignments range from 2-4 years. Back-to-back assignments 
     abroad are common. It is no unusual for a member of the 
     Foreign Service to spend six or more years abroad before 
     returning to Washington for an assignment here. With the 
     current two-in-five year occupancy test, many of our members 
     in both the Uniformed Services and the Foreign Service find 
     that we do have the same flexibility in selling our homes as 
     enjoyed by our fellow Americans. After several years abroad, 
     there are many reasons why we may with to sell our homes upon 
     returning home. As with other Americans, we would like our 
     homes to reflect and be suited-to the changes in our lives--
     the increase or decrease in the size of our families, 
     divorce, retirement, promotions and the ability to pay more 
     for a house, the schools our children would attend, etc. Yet 
     because of current law, we cannot sell our principal 
     residences without living in them again for two years or else 
     pay a serious tax penalty. Your bill, gratefully, addresses 
     these problems.
       The members of the Uniformed Services and the Foreign 
     Service have been faced with this problem since the change in 
     the tax code in 1997. We hope that your provision can become 
     law soon. If we can be of any assistance, please do not 
     hesitate to contact me or Ken Nakamura, AFSA's Director of 
     Congressional Relations at (202) 944-5517 or by e-mail at 
     [email protected].
           Sincerely,
                                                   John K. Naland,
     President.
                                  ____

                                         American Bar Association,


                                  Governmental Affairs Office,

                                                 November 7, 2001.
     The Hon. John McCain,
     Russell Senate Office Building,
     Washington, DC.
       Dear Senator McCain: On behalf of the American Bar 
     Association, I would like to commend you for your leadership 
     in developing a proposal on the issue of the military 
     homeowners capital gains exemption. Such legislation is 
     needed to correct an inequity that occurred as a result of 
     the Taxpayer Relief Act of 1997 (Public Law No. 105-34).
       As you know, Section 121 of the Internal Revenue Code 
     permits a single taxpayer to exclude up to $250,000 of the 
     capital gains on the sale of a principal residence and 
     permits a married couple filing jointly to exclude up to 
     $500,000 on such a sale. Yet in order to qualify for such an 
     exclusion, a taxpayer must have owned and used the home as a 
     principal residence for two out of the five years prior to 
     its sale. Otherwise, a taxpayer must pay taxes on all or a 
     pro rata share of the capital gains on the sale of the home.
       Unfortunately, this provision penalizes service members who 
     are unable to use a principal residence for two out of the 
     five years prior to its sale, because they are deployed 
     overseas or required to live in military housing. The ABA 
     urges Congress to amend Section 121 of the IRC to either: (1) 
     treat time spent away from a principal residence while away 
     from home on official active duty as counting towards the 
     ownership and use requirement, or (2) suspend the ownership 
     and use requirement for time spent away from a principal 
     residence due to official active duty. Earlier this year, the 
     ABA submitted comments to the Internal Revenue Service on 
     proposed regulations regarding Section 121. A copy of our 
     comments is enclosed for your review.
       We want to thank you for your plans to rectify the inequity 
     created for service members by Section 121. We look forward 
     to working with you to establish a military homeowners 
     capital gains exemption.
           Sincerely,
                                                  Robert D. Evans.

  Mr. GRASSLEY. Mr. President, I ask unanimous consent that the 
amendment be set aside.
  The PRESIDING OFFICER. Without objection, it is so ordered. The 
amendment is set aside.


                           Amendment No. 2719

  Mr. BAUCUS. Mr. President, what is the regular order?
  The PRESIDING OFFICER. The time has arrived for the vote with respect 
to the amendment of the Senator from Iowa.
  Mr. BAUCUS. Is the Chair about to put the question for a vote?
  The PRESIDING OFFICER. The Senator is correct.
  The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, I raise a point of order under section 
302(f) of the Congressional Budget Act against the pending amendment, 
which is No. 2719, for exceeding the spending allocations of the Senate 
Committee on Finance.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, pursuant to section 904 of the 
Congressional Budget Act of 1974, I move to waive the applicable 
sections of the act for purposes of the pending amendment, and I 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 legislative clerk called the roll.
  Mr. REID. I announce that the Senator from Hawaii (Mr. Akaka) and the 
Senator from Connecticut (Mr. Dodd) are necessarily absent.

[[Page 361]]


  Mr. NICKLES. I announce that the Senator from Montana (Mr. Burns), 
the Senator from New Hampshire (Mr. Gregg), and the Senator from Nevada 
(Mr. Ensign) are necessarily absent.
  I further announce that if present and voting the Senator from 
Montana (Mr. Burns) would vote ``no.''
  The yeas and nays resulted--yeas 54 nays 41, as follows:

                       [Rollcall Vote No. 8 Leg.]

                                YEAS--54

     Baucus
     Bayh
     Biden
     Bingaman
     Boxer
     Breaux
     Byrd
     Campbell
     Cantwell
     Carnahan
     Carper
     Cleland
     Clinton
     Collins
     Corzine
     Daschle
     Dayton
     Dorgan
     Durbin
     Edwards
     Feinstein
     Graham
     Harkin
     Hollings
     Hutchinson
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Miller
     Murkowski
     Murray
     Nelson (FL)
     Reed
     Reid
     Rockefeller
     Sarbanes
     Schumer
     Sessions
     Shelby
     Snowe
     Stabenow
     Torricelli
     Warner
     Wellstone
     Wyden

                                NAYS--41

     Allard
     Allen
     Bennett
     Bond
     Brownback
     Bunning
     Chafee
     Cochran
     Conrad
     Craig
     Crapo
     DeWine
     Domenici
     Enzi
     Feingold
     Fitzgerald
     Frist
     Gramm
     Grassley
     Hagel
     Hatch
     Helms
     Hutchison
     Inhofe
     Kyl
     Lott
     Lugar
     McCain
     McConnell
     Nelson (NE)
     Nickles
     Roberts
     Santorum
     Smith (NH)
     Smith (OR)
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Voinovich

                             NOT VOTING--5

     Akaka
     Burns
     Dodd
     Ensign
     Gregg
  The PRESIDING OFFICER (Mr. Edwards). On this vote the yeas are 54, 
the nays are 41. 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 Colorado.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. REID. Mr. President, for the information of Members, we are in 
the process of arranging a unanimous consent request to have a vote on 
or about 4:45 p.m. today on the Allen amendment, and the second would 
be on the Baucus amendment.
  While we are doing that, 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. REID. I ask unanimous consent the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. I say to my friend from Virginia, if he could start his 
remarks, I ask his permission we be allowed to interrupt him to enter 
the unanimous consent agreement when that is ready.
  Mr. ALLEN. You have my agreement.
  The PRESIDING OFFICER. The Senator from Virginia.


                           Amendment No. 2702

  Mr. ALLEN. Mr. President, I wish to speak to my amendment, the 
Terrorist Zone Tax Exemption Act, which I believe will be the next 
measure on which we will be voting.
  Last fall the attack on our country represented the worst of mankind, 
but at the same time it demonstrated the best of the American spirit.
  While we as a nation are united and resolved to combat terrorism, 
unfortunately other things have changed as a result of these attacks. 
As my colleagues know, this war on terrorism has changed our definition 
of combatants. For terrorism targets not only military personnel and 
equipment but innocent men, women, and children at work in office 
buildings and, as we have seen, on civilian aircraft. So it is also 
with those tasked to respond to these attacks. Under the threat of 
terrorism, not only are military personnel tasked to locate and 
eradicate potential terrorist threats, but civilian fire, police, and 
rescue personnel are charged with maintaining public safety after a 
terrorist attack. We read about and heard about the heroic acts of 
firefighters, rescue personnel, and police officers--whether at the 
Pentagon or at the World Trade Center--who risked their lives with 
burning debris, toxic gases and fumes who tried and indeed did save 
hundreds if not thousands of lives. And like their military 
counterparts, they too are subject to attack and risks themselves.
  As my colleagues know, our tax laws recognize that the income of 
those brave men and women in military uniforms fighting overseas and 
serving in a zone designated as a combat zone is exempt from taxation. 
Recognizing that the war on terrorism has sadly changed the way we look 
at war, and recognizing that our local and State fire police and rescue 
personnel are now pressed into homeland defense, we ought to similarly 
change our tax laws to reflect this new reality.
  My Amendment would allow the income of those who are working in 
designated terrorist attack zones--for example, at the World Trade 
Center or at the Pentagon, if so designated by the President--to be 
exempt from Federal taxes.
  The fiscal implication of this is about $205 a month for the 
September attack--a cost of a little over $7 million to the federal 
government. And it is retroactive to September 11, although we pray we 
will never need to use this again.
  It is supported by many groups--from the International Association of 
Fire Chiefs, the Fraternal Order of Police with nearly 300,000 members, 
the National Association of Police Organizations which represents over 
220,000 police officers, the Detectives' Endowment Association which 
represents 7,500 City of New York Detectives, and other organizations, 
including the Capitol Police Labor Board.
  These firefighters and police and rescue personnel are heroes. They 
are super heroes. Let us give them this recognition to boost their 
morale and show our appreciation to them as they protect us here in our 
homeland.
  I hope in a bipartisan nature we can work and vote in favor of this 
logical, commonsense amendment and I ask for my colleagues' support.
  Mr. NICKLES. Mr. President, will the Senator yield for a question 
concerning the cleanup at the Pentagon or at the World Trade Center? 
They are still cleaning up. Under the Senator's amendment, would that 
still be classified as a terrorist center, and, therefore, they would 
still be exempt? If the cleanup lasted a year, would the cleanup crews 
be exempt from taxation for a year?
  Mr. ALLEN. The designation of a terrorist attack zone would be made 
by the President. Once you get past the rescue mission, the immediate 
response, and when the zone is designated a recovery scene, the tax 
exemption ends. The intent is for this to benefit those who rush in 
when there is still an opportunity to save a life; those first 
responders who themselves are endangered by the initial attack. I would 
not imagine that would last for anymore than a month. And again, it is 
validated on a monthly basis, like the combat zone tax exemption.
  Mr. NICKLES. I thank my colleague.
  Mr. REID. Mr. President, I appreciate the Senator from Virginia 
rushing through with his presentation. It was very articulate. I 
appreciate his recognizing that we are trying to get this agreement 
before the vote.
  Mr. President, I ask unanimous consent that the time until 4:45 p.m. 
today be equally divided with respect to the Allen amendment No. 2702 
and the Baucus amendment No. 2718, that no second-degree amendments be 
in order to either amendment prior to the vote in relation to each 
amendment; that the first vote be in relation to the Allen amendment; 
and that regardless of the outcome there be 4 minutes equally divided 
prior to the vote in relation to the Baucus amendment.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  The PRESIDING OFFICER. The Senator from Virginia.
  Mr. ALLEN. Mr. President, I ask unanimous consent that Senator Helms 
be added as a cosponsor of amendment No. 2702.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ALLEN. Mr. President, does the Senator from Montana wish to 
discuss

[[Page 362]]

this amendment? I only have maybe 30 seconds, and I would be happy to 
yield to the Senator from Montana.
  Mr. BAUCUS. I thank my good friend. I have looked at the Senator's 
amendment. It is a good idea. I support it. There are a few little 
wrinkles that I want to look at to make sure the definitions coincide 
with the definitions for income taxes excluded for combat zones and 
make sure all those declarations are the same and equitable. That is 
just a minor matter. We will work that out.
  I commend the Senator for offering this amendment. It is a good idea.
  Mr. ALLEN. Mr. President, I thank the Senator from Montana, Mr. 
Baucus, for his support. I look forward to further discussion. If there 
are some amendments that need to be made in the definitions, we have 
been working on this for several months, but nevertheless we will 
continue to work together on it. I conclude by saying very strongly 
that we need to adapt our tax policy and properly and logically provide 
similar tax benefits for the fire, rescue, and police personnel who are 
serving here in our homeland. This is where these terrorist attacks 
have occurred and we all agree that these heroes have responded in the 
true spirit of America. Please stand with our heroes, our firefighters, 
and police and rescue workers.
  I ask for the yeas and nays on the amendment.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  Mr. BAUCUS. Mr. President, we have two amendments pending and at 
least two votes at approximately 5:45. We have discussed the amendment 
offered by the Senator from Virginia, which I support.
  I don't know whether the Senator wishes to discuss the amendment. If 
he doesn't, that is fine. Otherwise, I was going to ask my friend from 
Oregon, Senator Smith, if he wishes to say a few words before the other 
votes that will occur following the vote on the amendment offered by 
the Senator from Virginia. That, of course, is up to my good friends 
from Virginia and Colorado.
  Mr. ALLEN. Mr. President, I would rather make sure there is adequate 
discussion on the other votes. I believe there is complete agreement on 
my amendment.
  I yield my time to the Senator so he may explain his amendment.
  Mr. BAUCUS. I haven't heard anybody speak in opposition to the 
Senator's amendment. I think he is pretty close to his goal.
  Mr. President, I see my friend from Oregon in the Chamber.
  The PRESIDING OFFICER. Who is yielding time?
  Mr. BAUCUS. I yield such time as my friend from Oregon would desire.
  The PRESIDING OFFICER. The Senator from Oregon.


                           Amendment No. 2718

  Mr. SMITH of Oregon. Mr. President, I thank the Chair and I thank the 
chairman of the Finance Committee for yielding time.
  I learned as a little boy from my mother that if you at first don't 
succeed you should try and try again.
  I come to the Chamber to try again on the issue of accelerated 
depreciation. I am proud to be joined by Senator Baucus. This is the 
Baucus-Smith amendment now. The point is simply to try and bridge the 
difference between the two sides on the whole idea of how best to give 
a meaningful stimulus to business to take advantage of this accelerated 
depreciation, this bonus depreciation over a period of time that on the 
one hand will stimulate in a timely way the economy and in another way 
will help the States to be able to afford this action.
  I believe the Baucus-Smith amendment is the compromise that will 
provide real stimulus to the underlying package that is offered by the 
majority which, I respectfully say again, is just simply too short a 
period of time to be meaningful to our economy.
  The point was made that my amendment over 3 years was too much time. 
Then surely 2 years is enough. I believe Senator Baucus and I have 
provided a compromise that will give business people time sufficient--I 
wish it were more--to be able to buy the equipment, do the planning, do 
the environmental studies, and make the investments that will allow 
employers to call employees back to work.
  In addition, we are doing something that is very much needed by the 
States. That is, we will provide an increase in the Federal Medical 
Assistance Percentage known as FMAP. Most States, mine included, are 
struggling with how to continue to provide the resources for Medicaid. 
I understand that very well in my own State. Our State has a budget 
shortfall that approaches $1 billion. I have been reminded by people in 
my State that accelerated or bonus depreciation would only make that 
situation worse. I am not unmindful of that, and Senator Baucus and I 
have a way in this amendment to fix that, not just for my State but for 
every State.
  Senator Harkin's amendment was just defeated. I suggest that what 
Senator Baucus and I are proposing is in the same spirit of that but 
within the realm of financial responsibility. It is the moderate view 
that I believe will find over 60 votes in the Senate. I certainly hope 
it will.
  What this does specifically, the FMAP increase will provide immediate 
fiscal relief to States such as Oregon which are increasingly cash 
strapped in the current recession as the demand for State social 
services rises but State revenues drop.
  For example, this provision would bring an additional $97 million to 
Oregon in the first year. Depending on certain factors, they may get in 
excess of an additional $105 million in the following year, for a 2-
year total of more than $205 million.
  I can imagine that my State, as well as the State of the Presiding 
Officer, could use that assistance in this time of recession. Again, I 
remind both sides that whether it is former Treasury Secretary Robert 
Rubin or Chairman Greenspan, they have both said this will be helpful 
to stimulate the economy. It doesn't go too far. It is not too long. I 
think for business people who are on their toes and trying to make 
plans, it will be enough time to have the economic incentives to 
improve our Nation's economy.
  America, moreover, is hungering for a sense that the Senate can get 
something done. Our proposal is that middle ground that allows us to 
make progress and to go to the State of the Union tonight well on the 
way to passing a stimulus package. There is something for both sides. 
But more importantly, there is something for the American people that 
provides real health care dollars to people in need in States with 
shortfalls and real business stimulus to employers so that the best 
social welfare we could possibly foster will be available, and that is 
a private sector family wage job.
  Again, I believe Senator Baucus and I have come upon the right 
formula to make better the underlying proposal and to find the 
bipartisan support which will ultimately be essential if we are to get 
beyond 60 votes and get something to conference and then to the desk of 
the President. The American people deserve that. We should do no less.
  I yield back my time to the manager of this bill.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, this is a good example of how we should 
pass legislation; that is, working together. Senator Smith from Oregon 
and I have come together and crafted an amendment which directly meets 
concerns of Senators. We have done it together. Is it perfect in the 
minds of everyone on one side of the aisle? No. Is it perfect in the 
minds of all Senators on the other side of the aisle? No. But is it 
good? Is it basically a good idea? I believe the answer is yes.
  Essentially, we are going to provide for bonus depreciation for 
capital investment at 30 percent over a period of 2 years. The big 
question, I remind the Chair, is, should it be 1 year, 2 years, or 3 
years? We have agreed on 30 percent for all intents and purposes. 
During private conversation on the floor on both sides of the aisle, 
somewhat presumptuously I will say that I heard, I believe, it should 
be 2 years. That is

[[Page 363]]

what it should be. We debated 3 years. That did not pass. We, in 
effect, debated 1 year. It did not quite reach fruition, but that 
certainly is not going to pass.
  The PRESIDING OFFICER. The time controlled by the majority has 
expired.
  Mr. BAUCUS. I thank the Chair. Might I ask who controls the remaining 
time?
  The PRESIDING OFFICER. The Senator from Virginia or his designee.
  Mr. GRASSLEY. Mr. President, I grant the Senator from Montana 2 more 
minutes.
  The PRESIDING OFFICER. The Senator from Colorado.
  Mr. ALLARD. Mr. President, I have about 4 minutes to comment on 
Senator McCain's amendment. I was giving a speech and I could not be 
here when he brought it up. I would like to be able to use that time, 
if you don't need all the time. Otherwise, I will wait.
  Mr. BAUCUS. That would be fine. I just have 2 minutes. That would be 
fine with me.
  Mr. ALLARD. I would like to have 4 minutes whenever it works out.
  Mr. BAUCUS. Mr. President, again, to remind all Senators, this is a 
compromise. It is an effort on the part of Senator Smith of Oregon and 
myself to find the proper number of years of bonus depreciation. It is 
an effort to find the proper amount of reimbursement to States for lost 
Medicaid dollars. All Senators agree this is not only in the ballpark, 
it is probably so close to filling up the ballpark that it really 
cannot be improved upon a heck of a lot. I think it is a good 
amendment.
  Further, I remind my colleagues, with the split in this body 
basically 50-50, this is the only way we are going to accomplish 
anything of consequence. That is, by sitting down and not engaging in 
rhetoric and preaching to people through the cameras, making them feel 
good, but, rather, working together to pass legislation that makes 
people's lives better and significantly better. That is what we are 
charged to do.
  If you were to ask voters, do you want your Senator to make speeches 
just for the sake of making speeches or do you want your Senator to get 
something done that really makes sense for us in the State, it may not 
be all we want but he has done a pretty good job, clearly the answer is 
the latter. They want us to do something that makes sense. That is what 
the Senator from Oregon and I are doing.
  I strongly urge my colleagues to take a good, strong look at it. It 
is a bipartisan amendment. It has bipartisan support. More than that, 
it has the support of the people of the country.
  I yield back the remainder of my time.
  Mr. HATCH. I rise in support of this amendment, recognizing the need 
for Congress to undertake immediate corrective measures to help those 
who have suffered the adverse effects of the recent economic downturn. 
And while I do support this amendment, there are issues associated with 
it that are of serious concern, issues which I hope will be addressed 
in conference.
  As we have heard throughout this debate, most states are experiencing 
serious budget shortfalls. In fact, in my own state of Utah, many vital 
state programs are slated for reductions this year. I am very concerned 
about that situation, and sympathetic to the need to work with the 
States to alleviate these concerns where we are able.
  But it is also true that the Federal budget is under severe pressure 
because of the economic slowdown, and we must be very careful when we 
move to authorize what amounts to new spending, especially in an 
entitlement program.
  Obviously, we must carefully examine our budget constraints and 
balance the need to address the economy with the need to restrain the 
growth of spending.
  But as I have said, I share the States' concern about the budgetary 
impact of the economic downturn. Many important programs are being cut-
back, a serious concern to those of us who have worked so hard to weave 
a strong safety net.
  In fact, the Utah CHIP program is no longer enrolling new children 
because it is running out of money. I cannot tell you how disappointed 
I am about this situation. Seeing the CHIP program become federal law 
in 1997 was probably one of my proudest accomplishments as a U.S. 
Senator.
  And, as one of the principal authors of CHIP, it has been my hope 
that we can expand the program, not scale it back. However, my 
discussions with our Governor, Mike Leavitt, have made it perfectly 
clear that the State feels it has no alternative, and I respect that 
decision, however painful. But, perhaps if we are giving additional 
funds to the States to assist with the health care needs of the low 
income, those funds would be better used if they were provided to the 
CHIP program as well, or instead, since in many cases a CHIP dollar can 
go so much further than a Medicaid dollar.
  I would also point out that increasing the Federal matching 
percentage for Medicaid is only a short-term solution to a long-term 
problem. Again, I heartily support efforts to provide greater 
assistance to families, especially low-income families, who are feeling 
the ill effects of the economic downturn. That being said, I do 
question whether expanding this entitlement program is absolutely the 
best way to address the health care needs of people who have been hurt 
by the economy. There are literally millions of persons who have no 
access to health care at all, and their needs must also be factored in 
to our overall spending plans.
  Let me take a moment to address the FMAP funding formula itself.
  The FMAP formula is an attempt to direct Federal resources to the 
States based on their populations in need. It is not a perfect formula, 
as many of us have widely acknowledged. These structural flaws must be 
addressed by Congress, and I would not like to see action today which 
would lock into concrete, in reality or politically, a formula which 
needs to be reexamined.
  As a related issue, we need to look at the effect of providing a 1\1/
2\-percent across the board FMAP increase to States for a program which 
is certain to have a disproportionate impact in the various States 
given their differing matching percentages. For example, some States 
have a Federal matching percentage which is relatively high, as high as 
76 percent. Others have a percentage as low as 50 percent. Obviously, a 
1.5 percent increase is a substantially greater proportion of the 24 
percent a State with the highest FMAP has to contribute, compared to 
1.5 percent of the 50 percent a ``richer'' State must contribute.
  The GAO has produced several reports which make recommendations on 
how this formula may be improved. Therefore, I believe that it would be 
prudent for Congress to carefully review the recommendations of the GAO 
before taking any final actions affecting FMAP policy.
  In fact, I believe it might be prudent for the Finance Committee to 
hold a hearing on this important issue, and I would hope that the 
chairman might schedule one in the near future.
  In addition, while I have not seen any figures on areas which are the 
most hard hit by the recession, I want to make certain that the areas 
in which we are targeting the greatest assistance under this amendment 
are the areas of greatest need during the downturn. Because of the way 
the formula is structured, these additional FMAP dollars may not be 
targeted to those whose access to health care was affected by the 
recession and the events of September 11.
  Finally, it is my hope that this amendment does not follow the long 
tradition whereby Congress authorizes an extension for an entitlement 
program which for all intents and purposes becomes permanent. I 
certainly support the intention of this amendment, which is to provide 
temporary assistance to those who have suffered great hardships due to 
the recession and the terrorist attacks of last September. However, 
making these FMAP increases permanent would be a terrible mistake, 
especially since I believe that we would be, in essence, taking away 
dollars from other deserving Federal programs.
  The PRESIDING OFFICER. The Senator from Colorado is recognized.

[[Page 364]]




                           amendment no. 2700

  Mr. ALLARD. Mr. President, I am pleased to join Senator John McCain 
in sponsoring amendment No. 2700, the military homeowners tax equity 
amendment, to H.R. 622. This amendment will correct a serious, 
inadvertent oversight in the Taxpayer Relief Act of 1997 and provide 
much needed tax equity to our members of the uniformed services and the 
Foreign Service. The content of this amendment is the exact language as 
S. 1678, which Senator McCain and I introduced last year.
  The Taxpayer Relief Act of 1997 exempted up to $250,000-$500,000 per 
couple in capital gains from federal income taxes for homes occupied as 
a principal residence for at least 2 of the last 5 years. 
Unfortunately, Uniformed and Foreign Service members may have 
difficulty meeting the 2 year requirement. Service members are directed 
to move to meet the needs of the U.S. Government and may be directed to 
move prior to owning a residence for 2 full years. Many service members 
keep their homes while reassigned overseas or elsewhere in hopes of 
returning to their residence. On occasions when this proves impossible, 
the members are subjected to substantial tax liabilities.
  Prior to the 1997 law, service members who were assigned overseas or 
otherwise away from their principal residence on military orders for an 
extended period of time had a special provision that allowed them to 
``rollover'' capital gains. The 1997 Taxpayer Relief Act made many 
improvements to the tax code by replacing the capital gain ``rollover'' 
rules with the tax exclusion, but failed to provide for those on 
military orders. This amendment will correct this oversight by 
providing that absences from the principal residence due to serving on 
a qualified official duty as a member of a uniformed service or the 
Foreign Service be treated as using the residence in determining the 
exclusion of gain from the sale of such residence.
  In 1999 both the House and Senate passed the Taxpayer Refund and 
Relief Act which included language to correct this oversight, but that 
act was vetoed by then-President Clinton.
  S. 1678, which as I stated earlier mirrors our amendment, has support 
from all four service chiefs, the Chairman of the Joint Chiefs of 
Staff, the 31 organization members of the Military Coalition, the 
American Bar Association, the American Foreign Service Association.
  Our service men and women face enough challenges today. They should 
not have to face additional tax liabilities in return for serving their 
country.
  Mr. GRASSLEY. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. Without objection, the clerk will call the 
roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. ALLEN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                       Vote on Amendment No. 2702

  Mr. ALLEN. Mr. President, I yield back whatever time remains so we 
can proceed with the vote on amendment No. 2702.
  The PRESIDING OFFICER. The question is on agreeing to amendment No. 
2702. The yeas and nays have been ordered. The clerk will call the 
roll.
  The assistant legislative clerk called the roll.
  Mr. REID. I announce that the Senator from Hawaii (Mr. Akaka), the 
Senator from Connecticut (Mr. Dodd), and the Senator from New Jersey 
(Mr. Torricelli,) are necessarily absent.
  Mr. NICKLES. I announce that the Senator from New Hampshire (Mr. 
Gregg), the Senator from Nevada (Mr. Ensign), and the Senator from 
Montana (Mr. Burns) are necessarily absent.
  I further announce that if present and voting the Senator from 
Montana (Mr. Burns) would vote ``yea.''
  The PRESIDING OFFICER (Mr. Dayton). Are there any other Senators in 
the Chamber desiring to vote?
  The result was announced--yeas 92, nays 2, as follows:

                       [Rollcall Vote No. 9 Leg.]

                                YEAS--92

     Allard
     Allen
     Baucus
     Bayh
     Bennett
     Biden
     Bingaman
     Bond
     Boxer
     Breaux
     Brownback
     Bunning
     Byrd
     Campbell
     Cantwell
     Carnahan
     Carper
     Cleland
     Clinton
     Cochran
     Collins
     Conrad
     Corzine
     Craig
     Crapo
     Daschle
     Dayton
     DeWine
     Domenici
     Dorgan
     Durbin
     Edwards
     Enzi
     Feingold
     Feinstein
     Fitzgerald
     Frist
     Graham
     Gramm
     Grassley
     Hagel
     Harkin
     Hatch
     Helms
     Hollings
     Hutchinson
     Hutchison
     Inhofe
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Kyl
     Landrieu
     Leahy
     Levin
     Lieberman
     Lincoln
     Lott
     Lugar
     McCain
     McConnell
     Mikulski
     Miller
     Murkowski
     Murray
     Nelson (FL)
     Nelson (NE)
     Nickles
     Reed
     Reid
     Roberts
     Rockefeller
     Santorum
     Sarbanes
     Schumer
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stabenow
     Stevens
     Thomas
     Thurmond
     Voinovich
     Warner
     Wellstone
     Wyden

                                NAYS--2

     Chafee
     Thompson
       

                             NOT VOTING--6

     Akaka
     Burns
     Dodd
     Ensign
     Gregg
     Torricelli
  The amendment (No. 2702) was agreed to.
  Mr. ALLEN. Mr. President, I thank my colleagues for their support of 
the amendment. I ask unanimous consent that Senators Collins, Helms, 
and John Warner be added as cosponsors.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 2718

  The PRESIDING OFFICER. There are now 4 minutes equally divided prior 
to a vote in relation to amendment No. 2718. Who yields time? The 
Senator from North Dakota.
  Mr. CONRAD. Mr. President, could I have order in the Chamber?
  The PRESIDING OFFICER. The Senate will be in order. The Senator from 
North Dakota.
  Mr. CONRAD. Mr. President, I support bonus depreciation. I support 
Medicaid assistance to the States. But I do not support 2 years of 
bonus depreciation. I do not support 2 years of additional spending on 
Medicaid for the States.
  The reason is very simple. On the question of bonus depreciation, the 
whole purpose of this package is to encourage economic recovery, 
additional economic activity now. A 2-year provision reduces the 
stimulus, reduces the incentive to act now. That is not only my 
opinion, that is the opinion of the Congressional Budget Office that 
examined the various options before us and said: Don't do multiple 
years; you reduce the incentive to act now. This is the time we need 
additional economic activity.
  Second, the history of fiscal stimulus is always that we have acted 
too late. We are on the brink of doing that again. A 2-year provision 
falls right into that trap.
  The cost of this provision is $45 billion this year; $37 billion next 
year. That is digging the hole deeper when we have just been informed 
by the Congressional Budget Office that every penny of these resources 
will come out of the Social Security trust fund. For that reason, I 
will raise a budget point of order against this provision.
  The PRESIDING OFFICER. Who yields time? The Senator from Montana.
  Mr. BAUCUS. Mr. President, on behalf of myself and also Senator Smith 
of Oregon, let me make a couple of quick points.
  No. 1, we know our country needs a boost, a shot in the arm. It is 
not totally clear, but it is far better to provide a little insurance 
because the economy might go south in the next couple of months or 
years--more than it has now. Various companies are going bankrupt. We 
all know about Enron, Kmart, and there will be other companies down the 
road. Many people are being laid off, particularly in the financial 
services industry, which we are going to find out about in February 
because they have 2- or 3-month contracts and they will be laid off a 
lot later. This is very important.
  Second, many States are losing revenue because their economies are

[[Page 365]]

down. They will also lose more revenue as a consequence of the 2-year 
bonus depreciation. It is only proper with the passage of the Medicaid 
reimbursement amendment States are made whole so they do not have to 
cut Medicaid payments, so they do not have to cut payments to 
hospitals, to providers.
  This amendment will allow States to refrain from making those cuts to 
doctors, to hospitals, other providers, and to Medicaid beneficiaries, 
and also prevent them from having to otherwise cut their budgets.
  At the same time, we get a 2-year shot in the arm with bonus 
depreciation. It is a very modest provision. We all know bonus 
depreciation should be somewhere between 1 year and 3 years. This is 
where we all know it makes the most sense, 2 years. It should 
definitely be enacted.
  I yield the remainder of my time to my friend from Oregon.
  The PRESIDING OFFICER. The Senator has 11 seconds.
  Mr. SMITH of Oregon. I am proud to cosponsor this legislation. If you 
want the middle ground, we are talking about it right now. This 
actually does stimulate the economy; it is insurance.
  The chair of the Budget Committee, my friend, clearly is concerned 
about the budget. But if you want to help the budget get back into 
surplus, let's get our economy going. That is the most sure way to make 
this happen. What Senator Baucus and I have done is make sure that we 
do not leave the States high and dry.
  The PRESIDING OFFICER. The time of the Senator is exhausted; 22 
seconds remain.
  Mr. NICKLES. I yield my colleague the remainder of my time, the 22 
seconds in opposition to the amendment.
  Mr. SMITH of Oregon. My last point was you can make these arguments 
against any expenditure. The point is, we can't leave the States high 
and dry as we try to stimulate the economy.
  This is about real people needing jobs and health care. It is a win-
win for Republicans and for Democrats. I urge the overwhelming passage 
of the amendment.
  Mr. NICKLES. I compliment my colleague for making the point of order, 
and I wish to join him in that point.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. REID. Mr. President, Senator Daschle has asked me to announce to 
the Membership that this will be the last vote of the evening prior to 
the State of the Union Message.
  The leader has indicated there will be votes next Monday.
  Mr. CONRAD. Mr. President, I raise a point of order that the pending 
amendment violates section 311(a)(2)(B) of the Congressional Budget Act 
of 1974, and I ask for the yeas and nays.
  Mr. BAUCUS. Mr. President, on behalf of myself and Senator Smith of 
Oregon, pursuant to section 904 of the Congressional Budget Office Act 
of 1974, I move to waive the applicable sections of the act for the 
purposes of the pending amendment, 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 
the roll.
  The legislative clerk called the roll.
  Mr. REID. I announce that the Senator from Hawaii (Mr. Akaka) and the 
Senator from Connecticut (Mr. Dodd) are necessarily absent.
  Mr. NICKLES. I announce that the Senator from New Hampshire (Mr. 
Gregg), the Senator from Nevada (Mr. Ensign), and the Senator from 
Nebraska (Mr. Hagel) and are necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The yeas and nays resulted as follows--yeas 62, nays 33.

                      [Rollcall Vote No. 10 Leg.]

                                YEAS--62

     Allen
     Baucus
     Bayh
     Bennett
     Biden
     Breaux
     Brownback
     Burns
     Cantwell
     Carnahan
     Carper
     Cleland
     Clinton
     Cochran
     Collins
     Corzine
     Craig
     Crapo
     Daschle
     DeWine
     Domenici
     Durbin
     Edwards
     Feinstein
     Fitzgerald
     Grassley
     Harkin
     Hatch
     Hollings
     Hutchinson
     Hutchison
     Inouye
     Jeffords
     Johnson
     Kerry
     Kohl
     Landrieu
     Lincoln
     Lugar
     McCain
     Mikulski
     Miller
     Murkowski
     Murray
     Nelson (FL)
     Nelson (NE)
     Reid
     Roberts
     Rockefeller
     Schumer
     Sessions
     Shelby
     Smith (OR)
     Snowe
     Specter
     Stabenow
     Stevens
     Torricelli
     Voinovich
     Warner
     Wellstone
     Wyden

                                NAYS--33

     Allard
     Bingaman
     Bond
     Boxer
     Bunning
     Byrd
     Campbell
     Chafee
     Conrad
     Dayton
     Dorgan
     Enzi
     Feingold
     Frist
     Graham
     Gramm
     Helms
     Inhofe
     Kennedy
     Kyl
     Leahy
     Levin
     Lieberman
     Lott
     McConnell
     Nickles
     Reed
     Santorum
     Sarbanes
     Smith (NH)
     Thomas
     Thompson
     Thurmond

                             NOT VOTING--5

     Akaka
     Dodd
     Ensign
     Gregg
     Hagel
  The PRESIDING OFFICER. On this vote, the yeas are 62, the nays are 
33. Three-fifths of the Senators duly chosen and sworn having voted in 
the affirmative, the motion is agreed to. The point of order falls.
  The question is on agreeing to amendment No. 2718, as modified.
  The amendment (No. 2718), as modified, was agreed to.
  Mr. BAUCUS. 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.
  The PRESIDING OFFICER. The Senator from South Carolina.

                          ____________________