[Congressional Record (Bound Edition), Volume 150 (2004), Part 14]
[Senate]
[Pages 19244-19265]
[From the U.S. Government Publishing Office, www.gpo.gov]




       WORKING FAMILIES TAX RELIEF ACT OF 2004--CONFERENCE REPORT

  Mr. McCONNELL. Mr. President, I ask unanimous consent that following 
the granting of this request, the official Senate copy of the 
conference report to accompany H.R. 1308, the Relief for Working 
Families Tax Act, having been presented to the desk, the Senate proceed 
to 2 hours for debate, with 2 hours equally divided between the 
chairman and ranking member of the committee; provided that following 
that time, the Senate proceed to a vote on adoption of the conference 
report with no intervening action or debate and points of order waived; 
provided further that when the Senate receives the official papers from 
the House, the vote on passage appear at the appropriate place in the 
Record following the receipt of those papers; and finally, this 
agreement is null and void if the House does not agree to the 
conference report.

[[Page 19245]]

  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will report.
  The legislative clerk read as follows:

       The Committee of Conference on the disagreeing votes of the 
     two Houses on the amendments of the House to the bill (H.R. 
     1308), to amend the Internal Revenue Code of 1986 to 
     accelerate the increase in the refundability of the child tax 
     credit, and for other purposes, having met, have agreed that 
     the Senate recede from its disagreement to the amendment of 
     the House to the amendment of the Senate to the text of the 
     bill, and agree to the same with an amendment, signed by a 
     majority of the conferees on the part of both Houses.

  The PRESIDING OFFICER. The Senate will proceed to the consideration 
of the conference report.
  Mr. McCONNELL. Mr. President, momentarily we expect to turn to the 
family-friendly tax package. I understand the chairman of the Finance 
Committee is on the way. Pending his arrival, I suggest the absence of 
a quorum.
  Mr. REID. I would amend that by asking that the time run on the 2 
hours even though we are in a quorum call.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will call the roll.
  The senior assistant bill clerk proceeded to call the roll.
  Mr. HATCH. 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the quorum call be rescinded.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. HATCH. Mr. President, I ask unanimous consent to deliver my 
remarks as in morning business.
  Mr. GRASSLEY. I yield 5 minutes to the Senator from Utah for that 
purpose.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Utah is recognized.
  (The remarks of Mr. Hatch are printed in today's Record under 
``Morning Business.'')
  The PRESIDING OFFICER. The Senator from Iowa is recognized.
  Mr. GRASSLEY. I yield myself such time as I might consume.
  The conference on H.R. 1308 brings to the Senate for consideration 
the Working Families Tax Relief Act of 2004. This is a product of the 
cooperative efforts that Senator Baucus and I have had on a lot of 
legislation, and even though there were some differences of opinion 
within the conference, for the most part, many parts of this bill are 
things on which we mutually agree. There are some parts included that 
we might not agree on, but it doesn't keep us from getting it to 
finality.
  I thank Senator Baucus for his cooperation as the leader of the 
Democrats on the Finance Committee and helping us get this bill to 
where it is.
  First, we are here in a great part as well due to a determination of 
the President of the United States and his enunciation of a very clear 
tax policy that goes back to the year 2001. In fact, it goes back to 
probably before he was sworn in as President of the United States. This 
President saw that the economy was in an economic free fall in 2000. As 
you recall, in March of 2000, the NASDAQ started to lose half of its 
value, which it did. You also will remember that during that year the 
manufacturing sector started a 44-month slide.
  The President knew these things were going on, so even before he was 
sworn in as President of the United States, he had a tax policy that 
was ready to go to stimulate the economy. So we passed that in 2001.
  We added to it and sped it up a little bit in 2003 to bring about the 
rejuvenation of the economy that we now have. As an example, we have 
had 13 months of economic growth in employment, with 1.7 million new 
jobs created, and I think it will go on. So we are seeing the impact of 
the President's tax policies going back to that particular time.
  What we are dealing with here is a conference committee report that 
will ensure that the tax reductions made in 2001 and 2003 stay as tax 
cuts, and that the benefit that working men and women get from that and 
the benefit that the economy has gotten from that by being rejuvenated 
with enhanced employment will not turn sour and our working men and 
women have to pay higher taxes starting next year because provisions of 
the Tax Code sunset.
  Under that scenario, a sunset of tax legislation means there would 
otherwise be a big increase in taxes to working men and women starting 
automatically on January 1 of next year, hence, this legislation, to 
make sure those sunsets do not occur, and we do not have automatic 
increases without a vote of Congress on the working men and women.
  Those tax increases would be an unacceptable position to take, plus 
there is the injustice to working men and women, and we might be 
pulling the plug on the revival of the economy that the tax reductions 
of 2001 and 2003 brought to the economy.
  Raising a family is always a struggle, and the last thing they need 
to do is to send more money to Washington. That money can certainly be 
better spent by mothers and fathers closer to home for lots of 
purposes. It could be helping educate a child, buying a better health 
insurance program, or allowing a parent to spend more time with their 
son or daughter at home instead of having to work an extra shift.
  This basic package from the conference contains several key elements. 
One is extending the child tax credit and the marriage penalty relief 
for the 10-percent and 15-percent bracket. These provisions will now be 
in effect through the year 2010, accelerating the 15-percent 
refundability for low-income families starting this tax year. This is 
of particular importance to low-income families. Without doing this, 
there would be some disincentive to work.
  Our policy in this country since 1996 has been to move people from 
welfare to work because people on welfare are in a lifetime of poverty, 
and the only way to move them from that situation is to encourage them 
into the world of work, and being in the world of work, they have an 
opportunity to move up the economic ladder. But there are some tax 
policies that discriminate against that. One of those is the 
regressivity of the payroll tax and even the hindrance of childcare, as 
an example.
  What we do is reduce, not eliminate, the regressivity of the payroll 
tax so that is not a disincentive for people to go to work; that they 
know if they go to work, they are going to have more in the world of 
work than they may in some other lifestyle.
  We also do an important simplification in the administration of the 
uniform definition of a child. Prior to this conference report, the Tax 
Code would have several different definitions of a child. Not only 
doesn't that make good legal and public sense, but it is also 
complicated. We bring uniformity to public policy, but we also bring 
some simplification to the Tax Code.
  Then we also expand the earned-income tax credit and the child credit 
benefits for military serving in combat zones. We provide alternative 
minimum tax relief for millions of Americans in the year 2005. These 
are people who would be hit by the AMT who were never intended to be 
affected by the AMT. In fact, already there are more people hit by the 
alternative minimum tax than was ever intended when it was instituted 
in 1969.
  Remember, in 1969, it was instituted to make sure that some 
Americans, high-income Americans, and maybe also wealthy Americans who 
took advantage of every tax loophole they could take advantage of to 
wipe out any payment of any tax whatsoever, would make some 
contribution based on their success to the Federal Treasury so that 
everybody in our society was manning an oar in this effort to make our 
economy and our Government go.
  Mr. President, do you know what is happening with AMT because it was 
not indexed back in 1969? It is beginning to hit a lot more wealthy 
people than it was ever intended to hit, hitting people who do not take 
advantage of every tax loophole and are still paying a lot of tax and 
being hit by the alternative minimum tax.
  We are not doing a heck of a lot to help those people who have 
already been hit, but we are setting up a situation so that situation 
does not get worse. But to some extent we are putting off the 
inevitable. If we do not do

[[Page 19246]]

something about this--and I take some responsibility for not doing 
enough, although I do remind people who are watching, and my 
colleagues, that in 1998, I did vote for a bill that did away with the 
alternative minimum tax totally. It went to President Clinton, and 
President Clinton vetoed the bill.
  At that time, it would have been the ideal time to take care of it. 
But soon, instead of hitting 3 or 4 million Americans, it is going to 
be hitting 20 to 30 million Americans, and pretty soon it is going to 
be hitting the middle class, and it is going to be punitive to the 
middle class. Somewhere along the line, we have to adopt a policy that 
realizes that the consequences of our tax policies are hurting people 
we never intended to hurt, and if we want a stable society, we never 
want to hurt the middle class.
  I know there are a lot of people in this body who believe if we make 
any changes in tax policy whatsoever, we have to offset it dollar for 
dollar. For every reduction we make, there is a $1 increase in somebody 
else's taxes to make it up.
  It is almost impossible to do that with the alternative minimum tax. 
We ought to decide sometime that something has gone wrong and correct 
the wrong, save the middle class, and not worry about offsets because 
people who will be paying the tax were never intended to pay the tax, 
and it does not make sense to tax them. But that is happening through 
the alternative minimum tax.
  What do we do in this bill? We delay for 1 year finding a permanent 
fix to this situation. By doing it, we are not hurting any more people 
at least.
  Finally, there is a provision in this bill to extend current law on 
several expiring tax provisions. In regard to these retiring tax 
provisions, I know there is frustration for some of my colleagues, 
particularly in the area of expanding the R&D tax credit. In order to 
reach agreement, my counterparts on the Ways and Means Committee and I 
agreed that these extenders should be a clean 1-year extension. This 
had the solution of making no one happy, either in the Congress or in 
the economic sectors that are impacted by these tax provisions.
  The House of Representatives had to accept extenders they did not 
want, as did we in this body, but it resolved the issue and allowed us 
to go forward.
  I want my colleagues to know that I am committed to working with them 
on this issue and on other extender-related issues in the JOBS bill 
that hopefully now will go to conference.
  We are going to be able to turn our full attention to the issue of 
the JOBS bill, which passed this body 3 or 4 months ago by 92 to 5. 
With the conclusion of this legislation, we are going to be able to 
work on that and hopefully complete it prior to leaving this October.
  This bill provides great tax relief to millions of working families, 
and I commend President Bush for his leadership in making these 
proposals a reality.
  One thing I need to explain to my colleagues, the President was 
hoping to get this done in July. Way back in the early winter, I 
decided the best time to take up this tax bill was now in September. I 
thought it would be easier to do, and I think the way it is working out 
it is easier to do.
  I tried to respond to the President's inquiries to me about moving 
this in July, and I came up at that point not with a 5-year extension 
but with a 2-year extension because at that point we could get 
bipartisan movement and move it through. The White House did not want 
just a 2-year; they wanted the 5-year. I could not get the 5-year in 
July. So we dropped everything and then went home for our summer break 
during August and the two political party conventions and now we are 
back doing this.
  Senator Frist and I were called down to the White House in July to 
visit with the President about this issue. We had a meeting with the 
President, the Vice President, the chief of staff, and the chief 
congressional liaison. We discussed all these issues, and I presented 
the view to the President that I wanted to do this in September. He 
made the point he wanted to do it in July. I said I will try to do it 
in July, but, I said: Mr. President, there is also another issue 
connected as well, and that other issue is the JOBS bill. The JOBS bill 
is to create jobs in manufacturing. It also corrects a decision that 
the World Trade Organization made about our export tax laws. Everybody 
understands we have to do this.
  I was presenting to the President at that particular meeting in July 
the necessity of getting this bill passed and how important it was, but 
that we had not heard a whole lot out of the White House about the JOBS 
bill. The President told me in July: Get this extension for me and then 
we will concentrate on the JOBS bill. We referred to it as FSC/ETI and 
he referred to it as FSC/ETI as well.
  So I hope now that we are delivering on this bill the President asked 
for, albeit 2 months late, that the President will keep his commitment 
to me to get the White House behind our JOBS bill, the FSC/ETI bill. 
That is what I heard him say. I think the President will keep his word 
to me and we will maybe now hear from the White House on the importance 
of the JOBS bill.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Coleman). The Senator from Montana.
  Mr. BAUCUS. Mr. President, I yield myself such time as I might 
consume.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BAUCUS. Mr. President, I am pleased to be a part of this effort 
to improve significant tax relief for America's working families. I 
very much want to thank my good friend and colleague Chairman Chuck 
Grassley. As usual, he did a great job in the conference. He conducted 
an open and transparent conference at all times. He was very decent, 
very courteous, very fair. Sometimes it was difficult.
  Senator Lincoln and I were able to present some amendments and some 
ideas in an effort to improve the legislation. There was no resistance 
at all from the chairman. He was, again, gracious, top notch, 
transparent, very helpful, and I commend him.
  Mr. GRASSLEY. I am sorry. I was not paying any attention.
  Mr. BAUCUS. I sing the chairman's praises so often he is probably 
getting used to it, but I was telling everyone what a great job the 
chairman did last night.
  Mr. GRASSLEY. I thank the Senator. I think we did what conference 
committees are supposed to do. If the Senator would let me interrupt, I 
think we do what conference committees are supposed to do. They 
conference and every idea people wanted to bring up was presented and 
debated.
  Mr. BAUCUS. Mr. President, I totally agree. He said it much more 
directly, as he customarily does. I was a little more oblique and 
indirect, as I sometimes am. Chuck Grassley is basic good Chuck 
Grassley representing the State of Iowa in a very thoughtful and great 
way.
  Mr. President, I will say a few words about this bill. First, it 
provides meaningful tax relief. It will clearly benefit millions of 
middle-income Americans. It largely is made up of extensions, basically 
provisions, for which I and many of our colleagues worked hard when 
Congress enacted them in the first place.
  The package we consider today is also far better targeted than the 
package Congress enacted last year. What we are passing today includes 
provisions that are very important, more specifically to everyday 
people, to Montanans and to Minnesotans, to people all across the 
country.
  That is not to say that this legislation, in my judgment, is perfect. 
It is not. I think it has some quite significant shortcomings, but we 
are here today and this is a vote on the conference report. It is all 
or nothing and I frankly believe that the good in this bill 
significantly outweighs the bad. If I were drafting it, it would be 
quite a bit different than this legislation. But this is America, this 
is the legislative process, and it is a step forward and I will urge my 
colleagues to support it.
  The legislation the Senate passed to begin this conference provided 
refundable child tax credits to low-income working families. That was 
the original bill. This was a $3 billion to $4 billion problem. Last 
June, the Senate responded and paid for it. This week, 15

[[Page 19247]]

months later, the conference committee produced a $150 billion solution 
for that $3 billion problem and the conference committee chose not to 
pay for that $150 billion.
  I am concerned. The Congress appears incapable of enacting reasonable 
tax cuts without adding to the deficit. Higher deficits will hurt the 
very families whom we have set out to help. They are the ones acutely 
harmed by higher interest rates that huge deficits cause. It will be 
the children of middle-income American families, those we are directly 
helping today, who will pay for that deficit with higher taxes 
throughout their lifetime. That is the underlying problem with this 
legislation.
  Using this conference on a narrow, $3 billion problem to move a broad 
$150 billion tax bill is also an abuse of the Senate rules. Rule 28--
and this may be a little bit inside baseball but it is very important 
to achieve comity and to get legislation passed here--is a rule which 
may still appear in the printed rule book but the conference report 
makes clear that for all intents and purposes rule 28 regarding the 
scope of conference is now dead. The majority plainly observes rule 28 
only in the breach.
  Let me take a moment to recount the history of this bill. It all 
started last year when the 2003 tax bill left out additional child tax 
credit payments for most low-income families with children. Last year's 
increase in the child tax credit left out fully one-quarter of 
Montana's children. It must be proportionately true in other parts of 
the country.
  In the weeks that followed passage of that bill, Senators Lincoln and 
Snowe championed efforts to provide relief for these hard-working 
families. Today, more than a year too late, we finally followed through 
on their efforts to provide additional child tax credit relief to those 
families who were left out. Again, a quarter of the children in my 
State were left out, and I bet that is about true around the country.
  Families who could only get a 10-percent refund can now get a 15-
percent refund, as we have accelerated the increased child tax credit 
in this bill.
  The conference agreement makes another significant change benefiting 
families of military personnel serving in harm's way. Under current 
law, pay earned by our military in a combat zone does not count for 
purposes of calculating the earned income tax credit or the child tax 
credit. That is obviously an imperfection, to say the least, in the 
law. It is wrong. Our service men and women who are in harm's way 
should clearly not be discriminated against just because they happen to 
be fighting a war on our behalf. That is the case in the law and this 
bill partially but not entirely addresses it. It is the part that it 
does not fix that I will address later which I have a particular 
problem with.
  Last year, I joined my friend Senator Pryor in requesting a study to 
detail how this oversight affects our men and women in the military who 
are serving in some of the most dangerous locations in the world. What 
did the GAO find? It found that as many as 10,000 military personnel in 
combat zones will see a reduction or elimination of their child credit 
or earned-income tax credit. Why? Simply because they are serving 
abroad, in harm's way. I joined Senator Pryor in introducing 
legislation which is part of the agreement today essentially to correct 
that inequity.
  Unfortunately, the proposal today will still allow military families 
with combat pay to receive the earned-income tax credit for only 2 
years, and then it goes away. Why? Why should that not be permanent? We 
tried last night to make it permanent, but unfortunately the conference 
would not agree.
  During conference negotiations--and I take my hat off to Senator 
Lincoln of Arkansas--Senator Lincoln offered an amendment with my 
support to make this provision permanent. Again, the conference 
committee rejected it on a party-line vote. I don't know why the 
conference committee chose to penalize those military personnel who are 
serving in Afghanistan, serving in Iraq, in other dangerous parts of 
the world. We should make sure they are not discriminated against. I do 
not understand it. It is the least, the very least we could do for 
them. We should correct this entirely, and we should take care of those 
soldiers and sailors who are taking care of us.
  I think we also all agree on our support for extending tax relief for 
middle-income taxpayers. That is clear. That is the basic reason I 
support the bill. The conference report does extend those tax 
provisions to the end of the decade. Basically there are three popular 
tax cuts on which many American families have come to rely: the $1,000 
child tax credit, marriage penalty relief, and the 10-percent income 
tax bracket.
  The conference report also, I might add, extends for another year 
protection from the heinous alternative minimum tax, otherwise known as 
AMT. What is it? It is basically the provision in the Code that says 
after you go through all your calculations and it turns out that you 
pay a very low income tax, American taxpayers--corporate taxpayers, 
too--have to go through another set of calculations that are a bit more 
onerous. Under the second, if the tax charge is higher than it would be 
in the regular calculations, they have to pay the higher amount. That 
is the AMT. It is beginning to kick in, as many Americans are beginning 
to realize, and it is going to be a much more difficult burden in the 
next couple or 3 years.
  Not next year, however. This bill extends relief from the AMT for 
next year. Without this, millions of middle-income taxpayers who 
thought they would be recipients of the benefits of these tax cuts 
would lose them. Why? Because of the AMT. We give with one hand tax 
relief in the 10-percent bracket and from the marriage penalty, but it 
would be taken away with the imposition of the AMT. So we say let's not 
let AMT do that for another year.
  Many of my colleagues also agree with me that we should not borrow to 
pay for these tax cuts, especially when other more fiscally responsible 
options are available. What are those? We now have a $300 billion tax 
gap based on 2001 figures. That is the latest date for which the IRS 
has made an honest, responsible calculation. What is the tax gap? That 
is the $311 billion in money that American taxpayers owe. It is due, 
but they are not paying it--$300 billion. That is the tax gap. It is 
huge. Just think how much easier it would be for this country to pay 
its bills, provide for the wars in Afghanistan and Iraq, homeland 
security, education, if every American paid his or her legitimate taxes 
that are owed and due.
  The IRS, unfortunately, does not have the personnel to solve this. 
There are lots of provisions in the law which allow, regrettably, 
taxpayers to take advantage of the Code. Clearly we should do something 
about that. I must say, I pressed the IRS in the committee, and I hope 
we finally get something done in the next couple of years. However, we 
have passed provisions several times which do address this tax gap. 
What are they? Anti tax shelter provisions. These are provisions 
suggested to the committee by the Joint Tax Committee on a bipartisan 
basis. They say, particularly to corporate taxpayers, if you do certain 
transactions, itemize these transactions, you have to list them on your 
return. You have to tell us you are doing these kinds of transactions 
so they are flagged and the IRS can better look at them.
  In addition, we say there should be an economic substance doctrine. 
That should be enacted. What is that? That is basically the doctrine 
that says to a judge, if you look at this, if the IRS looks at this and 
if a taxpayer, corporate taxpayer, is being hyper-
technical following the law, but still it is clear there is no economic 
substance here, the IRS can then find the taxpayer should pay taxes on 
that transaction.
  There are certain Enron related tax provisions that this Senate has 
also passed. I asked those to be on this bill because they can pay for 
part of the extension of the middle-income tax cuts. They are good in 
their own right. These are loophole closers. These are

[[Page 19248]]

provisions to close corporate loopholes, to somewhat significantly 
reduce that $300 billion tax gap. Yet that amendment was rejected by 
the conference committee, and I have no understanding why. I do not 
know why. I have just been told it can't be done. There is no 
legitimate reason. I challenged the committee for legitimate reasons. 
There were none. Yet we in the Congress today are adding to the 
deficit, we are adding to the debt with the passage of this legislation 
when we could have been at the same time enacting provisions to close 
corporate tax loopholes, loopholes that everybody agrees are loopholes. 
Joint Tax says it is a loophole. All commentators who look at this say 
it is a loophole. Yet this conference committee would not do something 
that is clearly the right thing to do.
  We should close those loopholes, reduce that tax gap, and reduce the 
deficit. This conference committee doesn't do that. It says: Oh, no, we 
should not close corporate loopholes. It says: Oh, no, we should not 
reduce the deficit. It says: Oh, no. Why? Don't know. There were no 
reasons given. Clearly, it is the wrong thing to do to not enact the 
provisions. I suggested that have already passed this Senate. They have 
already passed this Senate by a large margin, and still the conference 
says: No, we are not going to close corporate loopholes. That is wrong.
  I might add a further part of what I believe is good about this 
conference report. There is a simplification provision here that does 
simplify provisions of the Code. I don't have to tell you just how 
complicated the Code is. We all know. How does it simplify the Code? I 
will give one idea. It creates a uniform definition of a child in the 
Code. Today there are five separate definitions of a child in the Tax 
Code. They are all different. It just makes eminent sense that there 
will be one provision.
  It is a start. I am not standing here to say that we have 
significantly simplified the Tax Code. We are making a start here with 
a single, uniform definition of a child. If we could take a step 
forward, even--no pun intended; maybe a ``minor'' pun--even if it is a 
baby step forward, certainly we should take it.
  Another provision here, we also were able to continue certain 
provisions of the Tax Code which would otherwise expire. In the 
parlance here, they are called extenders. But for those who don't know 
what extenders are who may be listening, there are certain provisions 
in the Code which would expire, and most people agree they should not 
expire. So we say, OK, we are going to continue them. One of the most 
popular is the R&D tax credit. Frankly, it is foolish to extend that. I 
think it should be permanent. We should not be back year after year 
revisiting this issue. It is nuts. It is ridiculous.
  I also offered an amendment for a more expanded, a more realistic, a 
more honest research and development tax credit. What is that? 
Basically the provision we are extending is dated. It is based on data 
from 10 or 15 years ago. So companies today which have increased 
revenues but, say, 10 or 15 years ago were at a certain level of R&D 
expenditures now can't get the benefit of the R&D tax credit even if 
their sales are going up because their credit is based on the R&D they 
performed many years earlier.
  I am saying let's bring it up today so American companies can perform 
the research and invest in the research we need to do to compete with 
countries around the world. It could be a modest increase in this bill. 
It is very small--I think it is about $1 billion--not much at all, over 
10 years, but that, too, was rejected for basically no reason. I didn't 
hear a reason. We have an obligation to start and continue to make 
America even more competitive. So many other countries give such a 
break to their companies for research and development in their own 
countries.
  Canada, for example, has a 20-percent credit. Other countries have 
much more than we have. We are just kind of sitting here as a Congress 
and not really getting off the dime, getting off the ball to address 
this issue. I am sorry that was not added in the conference report.
  Finally, the conference report does take what are called the 
technical corrections. Those are a long-overdue set of provisions. They 
are what they are described to be, dotting the i's and crossing the t's 
to correct minor mistakes, to simplify the Code by enacting 
corrections.
  Finally, I want to say I support the bill. It will make life better 
for millions of hard-working American families. That is the bottom 
line. But, also, I might add it continues to ignore our continuing and 
dire budget deficit. We may turn a blind eye to that problem today, but 
that deficit is going to haunt us in years to come. Mark my words.
  I urge my colleagues to support the bill. But I also strongly urge my 
colleagues to renew our resolve to address the budget failure that 
threatens our Nation. That is a challenge we can no longer simply 
avoid.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, I yield the Senator from Texas 5 
minutes.
  The PRESIDING OFFICER. The Senator from Texas.
  Mrs. HUTCHISON. Mr. President, I thank the distinguished chairman and 
ranking member of the Finance Committee for getting this bill through. 
These family tax breaks are very important. The most time I have spent 
on anything in my time in the Senate has been for family tax relief, 
and particularly marriage penalty relief.
  The first bill I introduced on this subject was several years ago to 
try to stop the penalty that people get when there are two working 
individuals and they get married because then they go into a higher tax 
bracket, and they get taxed more than if they had stayed single. That 
is the worst thing we could do in our society because, of course, we 
know that marriage is very helpful to family stability. It has been 
shown that children in families where there is a husband and a wife are 
less likely to suffer child abuse and more likely to do well in school. 
It has been shown time and time again that families do better in the 
area of raising their children when there are two parents in the 
household. But we have had a Tax Code that has discriminated against 
marriage. That is absolutely ludicrous.
  Last year, with my colleagues and President Bush, we passed a $350 
billion tax cut. This is an economic growth package that is working. We 
have seen the fruits of our labor. The economy is coming back. The 
stock market has stabilized. Jobs are being created. So we have freed 
the economic engines of our economy by keeping more money in small 
business and more money in the pocketbooks of families.
  One of the most important provisions provided immediate marriage 
penalty relief, making the standard deduction double that of single 
people and enlarging the 15-percent tax bracket for married joint 
filers to twice that of single filers. This provision saved 52 million 
married couples, 3.6 million of whom are in Texas, up to $600 on their 
2003 tax bills.
  Enacting the marriage penalty relief was a giant step toward tax 
fairness. But the bill before us tonight is necessary to keep those tax 
cuts in place. Since the size of the bill was restricted to $350 
billion last year, the marriage penalty relief provision is only 
effective for 2 years. So if we do not act on the bill tonight, and 
pass it, marriage could be a taxable event once again in 2005. Without 
relief, 48 percent of married couples would lose the tax relief they 
have gained in the last 2 years.
  Besides lower taxes, the other thing that is so important for our Tax 
Code is to have predictable taxes so a family can plan on what they are 
going to have in their budgets. That is why I hope eventually we will 
be able to make these tax cuts permanent. But at least today we are 
going to take a major step in the right direction for predictability of 
the tax cuts.
  Marriage penalty relief will now be able to be counted on from today 
through 2010, if we pass the bill before us tonight. I think that is a 
major step in the right direction. Hopefully, between now and 2010 
Congress will see

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fit, working with President Bush, to make this relief permanent. Then 
our families will know exactly what they are going to have to spend, 
and they will have more in their pocketbooks as well.
  I think it is very important to say this is not something that was 
easy. We know it was not. There are people who wanted to take the tax 
cuts away, so acting was very necessary to keep the child tax credit, 
to keep marriage penalty relief, and to give the overall relief to 
families in our country. But you can tell it has taken until the last 
month of this session to do it because many people wanted to put these 
tax cuts into other spending priorities.
  I cannot think of anything better than having the money go back in 
the pocketbooks of those who earn it so they can spend it for their 
families the way they want to.
  Mr. President, I know my time is expiring, but I just urge my 
colleagues to pass this bill. I thank the distinguished chairman and 
ranking member for making sure that marriage penalty relief is in the 
bill before us tonight so that we can count on now through 2010 that 
this will be available for people getting married in our country, to 
raise their families in the way they choose to do it.
  Thank you, Mr. President. I yield the floor.
  The PRESIDING OFFICER. The Senator's time has expired.
  The Senator from Montana.
  Mr. BAUCUS. Mr. President, before I yield to my very good friend from 
Arkansas, Senator Lincoln, I would like to tell the Senate and those 
listening what a great job she has done, particularly in standing up 
for our military personnel overseas who have children and who are 
working men and women but whose incomes might not be as high as some 
others.
  She is a tiger. She is a stalwart. She is there. And because of her 
efforts, this bill is a lot further along in a way that does help 
military personnel, maybe not as much as we would like yet, but she is 
to be highly commended for her work.
  Mr. President, I yield 15 minutes to the Senator from Arkansas.
  The PRESIDING OFFICER. The Senator from Arkansas.
  Mrs. LINCOLN. Thank you, Mr. President, and a special thanks to my 
colleague, Senator Baucus, who has been a great mentor and great friend 
to me on the Senate Finance Committee, and a special thanks to our 
chairman, Senator Grassley, for his transparency and his willingness to 
work with us always. We are very grateful for that. I think the 
conference we held under his leadership was certainly a conference 
where people were able to offer their ideas, bring their ideas and 
their passions to the table and express them. There are a few we were 
disappointed in not being able to succeed with, but I know the chairman 
knows I will be back at that another day, as I usually am, to try and 
see if we cannot move some of those things along. But I appreciate his 
graciousness and certainly his willingness to work with all of us. And, 
again, I thank Senator Baucus for all of his hard work and gracious 
support of me.
  I rise today in support of the Working Families Tax Relief Act that 
is before the Senate today because it does provide tax relief to low- 
and middle-income families who are struggling to make ends meet by 
making this child tax credit fully refundable beginning this year. If 
there is anything I noticed in the time I spent in Arkansas, in my home 
State, over the month of August, it was the unbelievable stress that 
working families in this great country find themselves under.
  Workers are concerned about their job, whether they are going to keep 
their job. Maybe they have lost their job. Workers are certainly 
looking at what they are responsible for, such as can they pay for what 
their children's needs are, the taxes, the cost of gasoline, the 
expensive cost of health care. They are concerned about the 
availability of health care, access to it. They are looking at all of 
those concerns, including the unbelievable increase they have seen in 
higher education. Are their children going to be able to go to college? 
Can they put aside enough money for that? Will there be the resources 
they need?
  Our working families are under unbelievable stress. If we want to 
strengthen families and, in turn, strengthen the fabric of our Nation, 
we have to work together to relieve some of that stress through the Tax 
Code, through lowering the tax responsibility of low- and middle-income 
working people and giving them the same ability to utilize the Tax Code 
for the benefit of supporting their families. We see a lot of upper 
income people who can use the Tax Code for that purpose, whether it is 
mortgage deductions or the fact they have more expendable income that 
they can set aside in an IRA or a 401(k), or using that Tax Code to 
help them support their families and the dreams they have for their 
families and their children. Giving that same capability to low- and 
middle-income working people is essential for all Americans to reach 
their potential and to at least have a shot at the American dream.
  This bill is a huge step in bringing relief to working families who 
are putting so much of their resources into the economy. As my 
colleagues may recall, the conference report we are debating today is 
the byproduct of legislation I spearheaded in the Senate over a year 
ago. I compliment my colleague Senator Olympia Snowe. Olympia and I 
worked very hard together on this issue, along with Senator Baucus and 
Chairman Grassley. It was approved by an overwhelming vote in the 
Senate, 94 to 2. The Senate believed it was important enough to provide 
for low-income working families to take care of their children. Yet it 
has taken us this long to get to this point.
  I don't want to sound ungrateful because I am tremendously grateful 
that we are here today to address this issue. But I hope as we look at 
the issues still before us, the ones we did not address in this bill, 
that it won't take us that long again to make the commonsense decisions 
that are required to reinforce the heartland of America and the working 
families who make up this great Nation.
  We introduced back then and pushed passage of that proposal to ensure 
that working parents who were left out of the 2003 tax bill were able 
to fully benefit from tax provisions Congress had enacted to help 
families meet the demands of raising children. I have a Cub Scout 
meeting in about an hour and a half. I may not make it. But there are 
multiple demands on working families. Whether it is time, resources, 
our ability to give our children all of the things that we know, both 
as parents and having been children ourselves, they are critical in 
making the kind of people we want to be the leaders of tomorrow. And a 
huge part of that is having the resources to provide to your children 
just the basics.
  Specifically, the tax package before us will restore provisions that 
were stripped from the 2003 bill that I had fought to include to allow 
working families to fully benefit from a $400 increase in the child tax 
credit. This legislation will also extend critical tax provisions set 
to expire for married couples, which Senator Hutchison has talked 
about, and for all taxpayers who will benefit from the 10-percent 
bracket--again, putting resources back into the working families who 
are the stability of this country.
  I stress that low-income working parents who benefit from the 
refundable child tax credit included in this bill must have earned 
income to qualify. This is not welfare. You sit down at the kitchen 
table with any of these families who are working and let me tell you, 
if you are working 5 days a week, 52 weeks out of the year, and you are 
making the minimum wage, you are making a little over $10,000, you are 
working hard. This is not welfare. It is your Government and your 
Nation reinforcing who you are and what you stand for; that is, that 
you would use whatever your talents happen to be. They may not be as 
much as somebody else's, but you have talents, too. And you are using 
those talents to put back into this Nation and back into this economy.
  It is so important for our colleagues to understand, because some of 
our colleagues have suggested that we should

[[Page 19250]]

not expand eligibility for the child tax credit for lower income 
workers because they don't pay Federal income tax. These individuals 
work hard, and they do pay taxes. They pay sales taxes. They pay excise 
taxes. They pay property taxes, gas taxes, and payroll taxes on every 
one of those dollars they earn. They should benefit from the tax relief 
that we pass in Congress because they suffer from all of the taxes that 
continue to increase, but they hardly ever benefit from the tax cuts 
that we produce here in Washington.
  Are these families any different? They also struggle to meet the 
demands of providing for their children, just as others do--more than 
most, actually. I am confident this is the right thing to do for our 
Nation and its children.
  As I said, we are talking about families who work hard and play by 
the rules. When they buy their blue jeans for school and their tennis 
shoes, their tires, their washing powder, it doesn't cost them any less 
than it costs us. Think about it, a family making $20,000 a year 
doesn't get a special bargain at the store anymore so than the family 
making $100,000.
  While this tax relief package achieves fairness for millions of 
families with children who would otherwise be left behind, it doesn't 
include everything that I fought for during the negotiations in the 
conference committee this week.
  Once again, I appreciate the chairman allowing me to offer my 
amendments and come before the conference committee and express my 
desires.
  First, I believe we can and should have paid for this bill by 
eliminating tax shelters and loopholes. Why would we wait until 
tomorrow to do something constructive that we could do today? Why 
wouldn't we pay off part of our note today instead of continuing to 
accrue the interest on the debt that is about to swallow us up? For the 
life of me, I don't understand why some of my colleagues think that it 
is important to pay for the JOBS bill we hope to complete this year--I 
certainly do; it affects my State as much, if not more than any--but 
not this bill. Why is this bill not important to pay for? I think we 
should pay for both of them.
  I supported an amendment in conference that was offered by my good 
friend and colleague Senator Baucus to pay for the tax provisions we 
are debating today. Unfortunately, it was defeated on party lines. Even 
though we were not successful in that attempt, I will renew my efforts 
to restore fiscal discipline next year by working with like-minded 
Members in a new Congress and hopefully with an administration that 
will take deficits seriously as well as their serious effect on our 
children.
  It is critical that we look at the good policy of closing these 
loopholes and make certain the confidence of the American people in the 
economy of this country and the way we deal with those who choose to 
abuse the Tax Code.
  Another issue I don't think we resolved appropriately involves the 
tax treatment of military families. Senator Baucus mentioned it. Last 
night, I offered an amendment to make sure that we take care of the men 
and women in the military who we depend on to take care of us. These 
are people who put their families on hold. They put their life in 
harm's way.
  You might think there are not a lot of people out there who fall into 
this category, in the low-income category, of needing the ability to 
choose where to put their combat pay for the purposes of calculating 
EITC. But there are more than 10,000. These are infantrymen, troops, 
members of our Armed Forces who could benefit greatly if given the 
opportunity as to whether they want to choose to put their combat pay 
into their taxable income for the purposes of EITC.
  The conference report, in effect, imposes a tax increase on military 
personnel in the year 2006 and beyond because it only excludes combat 
pay in the calculation of the earned-income tax credit for low-income 
soldiers for only 2 years, 2004 and 2005.
  These brave men and women who risk their lives to defend our freedom 
are the last people we should burden with uncertainty in the Tax Code. 
My colleague from Texas talked about the uncertainty and what it does 
to families if they cannot depend on the Tax Code to give them the 
relief and continue to do that. How do they plan? It is unbelievable to 
me that in 2006--and we don't know where we will be in our conflict in 
Iraq in 2006--we would give certainty to every other category in here. 
Yet we would not give that certainty to the military men and women 
serving this country. I think it is wrong, and I will be working very 
hard with Senators Pryor and Baucus and others on legislation that will 
fix it, and fix it in a timely way.
  I also offered an amendment to address an inequity in the refundable 
portion of the child tax credit. Under current law, the threshold to be 
eligible for the child tax credit is $10,750, and it increases annually 
based on inflation. Unfortunately, for many low-income families, wages 
and income are not increasing. They are not keeping pace with 
inflation, and they will be unfairly denied tax relief under this 
approach in the years ahead.
  Again, you might think this is just a small number of people, but the 
fact is that it is 4 million low-income people. Thirty million get the 
child tax credit in this country--30 million families. Eleven million 
of those are refundable. So 4 million of those 11 million families will 
not be able to access the full benefit of this child tax credit because 
we have not adjusted what we set into place.
  My amendment would have returned the eligibility threshold to 
$10,000, which is where it started when originally enacted in 2001 and 
would have removed the annual inflationary increase. What we have seen 
is that we have indexed that base, and we continue to see it increase 
so those who make below that are not eligible for that full benefit. 
Why would we not want to take it back to the original $10,000 and take 
away that index and give the benefit to the very families who are 
working hard, who are not seeing any increase in their wages or in 
their income, to make sure they have that same ability to take care of 
their children?
  The taxpayers who are most at risk of losing this benefit are the 
very ones who need it the most. I hope we will reconsider this issue in 
the near future.
  Even though this bill doesn't include everything, I think it should 
and I would like to amend certain provisions. I believe, on balance, it 
is an achievement for low- and middle-income families who need economic 
relief today. We made several attempts to try to make better those 
provisions that we were offering.
  I also offered an amendment of the President's EITC simplification, 
which was in the President's budget, hoping that maybe that, coupled 
with what we were asking, would make Members feel comfortable that we, 
too, wanted to eliminate the fraud and abuse that existed to make sure 
we could reassure the American people that those who are working hard 
to earn their income would see the benefits that their Government could 
provide them, just as the higher income people could use that Tax Code 
to help them care for their families.
  We also worked hard and I was pleased to see included the 
simplification or uniform definition of a child. I worked with Senator 
Hatch in committee very early on with that. We wanted to see more 
simplification of the Tax Code. It is amazing to think a child could be 
designated six or seven different ways under the Tax Code. Here, we 
realize that a child is a child, and I think that simplification was 
very important.
  I am grateful for all the work that has gone into it. I thank again 
Chairman Grassley, Senator Baucus, Senator Snowe, and others for 
working with me to advance the provisions that I have fought for 
throughout my term in the Senate to strengthen families and children in 
Arkansas and across this Nation.
  Before I yield the floor, I would be remiss if I didn't also thank my 
tax counsel, Mac Campbell, for his invaluable assistance, as well as 
the wonderful staff of both the minority and the

[[Page 19251]]

majority of the Senate Finance Committee. These are unbelievably 
brilliant people who work hard day in and day out. I am appreciative of 
the hard work they put in and grateful for their help. I am grateful 
for this day and that we have come to the point where we can provide 
relief for working families.
  I strongly believe that as we move forward in strengthening our 
Nation, we must begin with the fabric of our families and giving our 
families the means to strengthen themselves, looking at ways we can 
relieve the stress that they find themselves under every day. This bill 
will go a long way toward doing that.
  I yield the floor.
  Mr. GRASSLEY. Mr. President, I yield the Senator from Arizona 10 
minutes.
  Mr. McCAIN. Mr. President, today we will be voting on a conference 
report to extend several very important middle class tax provisions 
through 2010.
  Throughout the Senate's budget debates this year, I have consistently 
supported the extension of the marriage penalty relief and the child 
tax credit, and expansion of the 10 percent income tax bracket. The 
conference report before us extends these family tax relief provisions 
through 2010, and I will vote to support its passage. But I cannot cast 
this vote without also expressing my grave concerns over the very 
serious financial situation facing our country. We have got to start 
making some tough choices around here.
  The cost of the measure before us today is estimated to be $146 
billion and it is not offset. Again, I support extending this tax 
relief to American families, but we have got to wake up and take a long 
hard look at how we are going to pay for all of this. As the saying 
goes, the future is now. We face a $422 billion deficit, yet we 
continue to approve legislation containing billions and billions of 
dollars in unrequested and unauthorized pork barrel projects. In fact, 
according to the Congressional Research Service, the number of 
congressional earmarks found in the 13 annual appropriations bills only 
continue to grow. In 1994, the year the Republicans gained control of 
Congress, there were 4,126 earmarks. In 2004, there were 14,040! How 
can we defend that track record to the taxpayer?
  It is unfortunate, although not surprising, that this conference 
report includes a number of special interest tax provisions. We would 
be doing a far better service to the American taxpayers if we were 
simply acting on the three family tax provisions I mentioned earlier.
  Let me briefly discuss just one of these ad-ons. Nestled within this 
conference report is a provision to continue one of the most ironic and 
bizarre U.S. policies to be considered, not to mention enacted. Under 
the false guise of exploring environmentally-friendly alternative 
energy sources, this conference report extends a subsidy offered to 
facilities that burn animal droppings--or as it is coined in this 
report, ``poultry litter.'' We have all heard of ``litter bugs'' and 
now we have ``litter chickens.'' I raised similar objections to a 
related provision when it was included in the FSC/ETC bill debated 
earlier this year.
  I don't want to go into the poultry manure and by-product of 
droppings, but the fact is that no less green an organization than 
``Friends of the Earth'' opposes burning these droppings as an energy 
source because the process, and I quote, ``cause[s] serious 
environmental and community health problems.'' Moreover, EPA studies 
have suggested that these facilities have the potential to cause more 
air pollution than a coal plant. On top of all this, these facilities 
drive up prices on natural fertilizers used on American farms, actually 
detracting from an environmentally-friendly farming process that 
requires no government subsidy.
  Why on earth are we wasting valuable money on such a subsidy, 
especially when such dire financial and energy needs are facing this 
country today? We have limited resources to devote to serious renewable 
energy sources such as solar, wind, geothermal, and sound biomass 
renewables. Subsidizing the burning of animal droppings does a 
disservice to worthy renewable energy programs.
  Again, we must not continue to view spending in a vacuum or as 
piecemeal. The effects of our spending are cumulative, and the day is 
fast approaching when we will be forced to reap what we have sown. 
Earlier this year, we passed a so-called jobs bill estimated to cost 
$180 billion, chock full of billions of dollars in tax breaks for 
wealthy oil and gas companies and other special interests.
  On top of all this, last year we expanded Medicare, an already ailing 
entitlement program, by adding a costly prescription drug benefit. At 
the time, I spoke at length about my concerns that such an expansion 
would be detrimental to the future solvency of our Nation and leave 
future generations with a reckless and unjust financial burden.
  Sure enough, that law's price tag grew from an estimated $400 billion 
when it was passed by Congress to $534 billion just 3 months later. Not 
surprisingly, this past Sunday, the Washington Post reported that the 
program is estimated to cost an additional $42 billion, bringing it to 
a total of $576 billion. I wonder what the next estimate will bring.
  The prescription drug benefit represented the single largest 
expansion of Medicare since its creation, offering enormous profits and 
protections for a few of the country's most powerful interest groups: 
the pharmaceutical companies. That is who made out on this bill, Mr. 
President, not our seniors who do not understand it and do not get it. 
But the pharmaceutical companies did just fine.
  When will we begin to make wiser and more fiscally responsible policy 
decisions? What is the result of all this? Everything has consequences. 
In March, it was reported that Medicare will face insolvency by 2019--
by 2019. Because of the swelling cost of the program associated with 
the prescription drug benefit, Medicare will become insolvent 7 years 
sooner than previous estimates. An August 17 editorial in the 
Washington Post stated that ``in 2004, the combined cost of Medicare 
and the Federal portion of Medicaid comes to 3.8 percent of GDP; by 
2040, it will be 10.1 percent . . . the projected increase in health 
spending is nearly three times bigger than the projected increase in 
Social Security costs.'' What will it take to give Congress the wakeup 
call it needs? Again, we have to start addressing the serious fiscal 
realities of our future. We have to make some tough decisions.
  Let's not forget we are at war. To date, we spent over $100 billion 
for our operations in Iraq alone. That cost will escalate. I know--I 
don't guess--I know we are going to be in Iraq for a long time, and it 
is going to be very expensive. I will continue to support whatever is 
necessary to ensure that our brave men and women defending freedom 
around the world have everything they need to succeed and to come home 
safely. It appears that our commitments in Iraq and Afghanistan will 
last well into the future.
  While doing these things, we need to be thinking about the future of 
America and the future generations that are going to be paying the tab 
for our outrageous, continued spending. It is not fiscally responsible 
for us to continue to spend and spend and spend without cutting 
spending elsewhere. We have had ample opportunities to tighten our 
belts in this town in recent years, and we have taken a pass each and 
every time.
  According to the GAO, the unfunded Federal financial burden, such as 
public debt, future Social Security, Medicare, and Medicaid payments, 
totals more than $40 trillion, or $140,000 per man, woman, and child. 
To put this in perspective, the average mortgage, which is often a 
family's largest liability, is only $124,000.
  In a joint statement, the Committee for Economic Development, the 
Concord Coalition, and the Center on Budget and Policy Priorities 
stated:

       Without a change in current (fiscal) policies, the Federal 
     Government can expect to run a cumulative deficit of $5 
     trillion over the next 10 years.

  These figures are shameful and frightening. We are supposed to be

[[Page 19252]]

helping out middle-income and low-income people with this tax cut 
today. Who suffers the most when interest rates go up and inflation 
goes up? People on fixed income and middle-income Americans.
  We are mortgaging our children's and our grandchildren's futures. Did 
anybody have an idea that maybe we could cut some spending somewhere to 
maybe make up for a little bit of this generous tax cut? I never saw it 
proposed.
  The Congressional Budget Office has issued warnings about the dangers 
that lie ahead if we continue to spend in this manner. In a report 
issued at the beginning of the year, CBO stated that because of rising 
health care costs and an aging population, ``spending on entitlement 
programs--especially Medicare, Medicaid, and Social Security--will 
claim a sharply increasing share of the Nation's economic output over 
the coming decades.''
  The report went on to say:

       Unless taxation reaches levels that are unprecedented in 
     the United States, current spending policies will probably be 
     financially unsustainable over the next 50 years. An ever-
     growing burden of Federal debt held by the public would have 
     a corrosive effect on the economy.

  Additionally, CBO has projected a 10-year deficit of $4.4 trillion.
  Who are we hurting here by this continued spending that is going on? 
We are hurting our kids and our grandkids. I will probably be OK. We 
have a very generous retirement plan for Members of Congress, probably 
the most generous in the world. I would like to know what we are 
expecting to do for our kids and grandkids every time we add several 
billions of dollars.
  One additional point, Mr. President. We added $2.9 billion for 
drought conditions to a hurricane disaster bill. I see the Senator from 
South Dakota on the floor. I supported it. Did we try to offset it with 
any cut in spending anywhere? Maybe the chicken litter program, maybe 
the $2 million we are spending this year to study the DNA of bears in 
Montana? No, we do not do any of that.
  Our earmarks have gone up to 14,000 earmarks in the last 10 years, 
from 4,000. We are doing bad things, and we better stop doing it.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time? The Democratic leader.
  Mr. DASCHLE. Mr. President, I commend the Senator from Arizona for 
his strong and powerful statement with regard to fiscal responsibility. 
We need to find offsets. Many of us have shared the sentiment expressed 
by the Senator from Arizona on several occasions, and he is absolutely 
right. I am very concerned, as he has expressed, about the 
repercussions this is going to have not for this year but for years in 
the future.
  We hear a lot about taxes. I think we ought to be concerned about 
what I call the birth tax. The birth tax is the tax every child pays or 
at least is responsible for when he or she is born. It is now $26,000. 
Every child in America has a birth tax of $26,000. That is his or her 
share of the Federal debt. And unless we address it, it is going to get 
worse. We ought to be embarrassed by the irresponsibility of doing 
things that are not properly offset and paid for.
  This bill presents a dilemma for many of us because we have expressed 
great need for this Congress and this Senate in particular to address 
tax cuts with offsets. We have proposed, as the Senator from Arizona 
has noted, on several occasions ways to have done that. This bill could 
have been offset as well. It is not, and that is regrettable, but it is 
also a bill which recognizes that it is imperative that we continue to 
find ways with which to deal with the pressures, economically and 
financially, the middle-class families are feeling today.
  Over the course of the last 4 years, the income for a typical 
American family has actually been reduced by $1,500 in purchasing 
power, and yet the prices families today experience have gone up 
dramatically. Health costs have now exceeded 50 percent in those 4 
years. Tuition costs have exceeded 28 percent. Gasoline prices have 
gone up 21 percent. Grocery prices overall have gone up 18 percent.
  So while middle income has declined, the prices those middle-income 
families are feeling has gone up. And that is why this middle-class 
squeeze becomes more and more of a concern to families. Household 
incomes are down and expenses families face go up.
  People I talk to in South Dakota are determined to try to find a way 
to make a better tomorrow for themselves and their families. As they 
continue to be frustrated by their inability to make ends meet, it is 
matters such as this that can make a difference.
  That is why we are on the verge of doing right by these families by 
providing for tax relief that for a typical family could mean $700 in 
savings. Yes, I wish it were offset. Yes, we should have done the 
responsible thing and found ways with which to ensure these cuts are 
paid for.
  We have been trying to find ways to provide that middle-class relief 
now for years. Many of us were hoping we could have done it earlier 
this year, but because the administration balked at finding ways to 
resolve the differences that existed months ago, we find ourselves 
today in a situation where we finally can address what has been an 
unsatisfactory solution to the offsets but a widespread recognition 
that we have to address these tax cuts in a meaningful way before the 
end of this Congress.
  So this bill first provides, as others have said, the child tax 
credit, which is designed to make it easier for families to make ends 
meet, to pay those bills, to recognize their income has declined. The 
tax credit was scheduled to fall to a maximum of $700. With this 
legislation, 70,000 families in South Dakota will benefit from this 
$1,000-per-child tax credit.
  I am particularly proud that this group includes 15,000 South Dakota 
families, including many military families we had fought to include in 
the initial tax cut in 2001 who had received no tax credit under the 
initial plan that was produced as we considered this legislation now a 
couple of years ago.
  We also ensure that getting married does not mean paying higher 
taxes. The marriage penalty relief is a matter of fairness for about 
90,000 married couples in South Dakota, and we extend, of course, the 
10-percent tax bracket that would have expired had this legislation not 
been agreed to. That ensures that 245,000 South Dakotans continue to 
benefit from the full 10-percent bracket.
  For a typical South Dakota family of four making $30,000, this 
legislation delivers a tax cut of more than $725. That is real money. 
It can make a real difference in the lives of families I have talked 
to, and it is exactly the kind of tax cut we ought to be supporting 
more regularly, not those at the very top who with billions of dollars 
do not need the tax relief, but families who need the help, who cannot 
make ends meet, who are having trouble paying their bills. They will 
welcome this relief. I am very pleased that, at long last, we can 
provide it.
  There are other components of the bill that are also good for America 
and good for places like South Dakota. It extends the tax credit to 
encourage investments in wind energy. South Dakota has the potential to 
become a national leader in the production of wind-generated 
facilities. In fact, in both North and South Dakota alone, they could 
supply over two-thirds of the entire electricity needed for our Nation 
if we fully develop capacity to generate power from this renewable 
resource.
  The conference report provides energy companies with a 1.8-cent tax 
credit for every kilowatt hour of electricity produced by wind energy. 
The extension of the producers tax credit which expired at the end of 
2003 will guarantee investment in this industry and will hopefully lead 
not just to greater energy independence but jobs and economic growth as 
well.
  The bill also includes two important provisions affecting Native 
Americans. The Indian employment tax credit encourages businesses to 
hire Native Americans by providing a tax credit to those providing 
employment, and the accelerated appreciation for business property on 
Indian reservations provides for faster tax writeoffs on certain

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business property on reservations. This encourages much needed 
investment.
  For obvious reasons, this bill is far from where it ought to be. We 
had bipartisan support for a proposal sponsored by Senator McCain to 
crack down on corporate tax cheaters as a way to help offset the cost 
of this legislation. Unfortunately, some in the Republican leadership 
opposed outlawing those tax shelters. I wish we had been able to make 
this bill a win/win by providing tax relief for middle-class families 
while cracking down on corporate tax cheaters. Had we done that, we 
would have significantly reduced the cost of this bill to the deficit. 
But I do not believe it would be fair to penalize middle-class families 
simply because someone blocked this provision to prevent corporations 
from cheating on their taxes.
  We have not given up on this effort to close those loopholes, nor 
have we given up on the effort to correct an error in the Tax Code that 
actually penalizes soldiers in combat by making it harder for them to 
receive the earned-income tax credit. Senator Pryor has long advanced 
this idea. Senators Lincoln and Baucus proposed this change in the 
conference committee and were rebuffed. For the life of me, I cannot 
understand why anyone would want to penalize our soldiers. If there is 
one group in America we should be doing all we can do to help, it is 
our soldiers fighting in combat.
  In the final analysis, this is the kind of tax cut that will help 
America, that rewards work and not wealth, that strengthens the middle 
class and provides America with so much of its strength. In spite of 
its flaws, it deserves our support, and I am hopeful that we will pass 
it this evening.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Oklahoma.
  Mr. NICKLES. Mr. President, I am going to assume the Senator from 
Iowa is going to yield me 10 minutes.
  Mr. GRASSLEY. Ten minutes, yes.
  Mr. NICKLES. I want to compliment my colleague, Senator Grassley from 
Iowa, and also Senator Baucus from Montana. I want to thank them for 
their leadership. I also want to thank every Senator who voted for the 
2001 tax cut and for the 2003 tax cut.
  I especially want to thank and acknowledge the work of my colleague 
and friend who is retiring from the Senate, Senator Zell Miller, 
because if he had not been courageous, particularly in 2003 when he 
cosponsored the bill we are extending today, we would not be here and 
families would not have had the tax relief.
  I also want to compliment President Bush because he pushed for it and 
he got it. He pushed for it in 2001. We got part of it in 2001 but not 
much of it. We basically completed it in 2003, and American families 
got real tax relief. Now we are extending it.
  I heard one of my colleagues just say: Well, this is worth $600 for 
an average American family. Let me just give the facts. For a family 
who has taxable income of $58,000, this is real relief. If they have 
$58,000 and most of it is taxable income--most of us consider that 
middle income--and I have heard a lot of rhetoric: Well, those Bush tax 
cuts are only for the wealthy, they only benefited the fat cats. Let me 
just give the facts. I love facts.
  If they have taxable income of $58,000, if they have two kids, the 
bill we are going to pass tonight will save them $600 because the 
$1,000 tax credit which we passed in 2001, accelerated in 2003, would 
revert back to $700, a difference of $300 per child. So that is $300 
per child they will save. The $1,000 tax credit per child happened 
because we passed the tax bill in 2001 and in 2003. The marriage 
penalty relief for the couple who has taxable income of $58,000 will 
save $911. Why is that? Because we basically take the 15-percent 
bracket for individuals and we double that amount for couples. That 
means a couple who makes $58,000 will still be paying 15 percent. Above 
that amount, their taxable income, they pay 25 percent. If we do not 
pass this bill today, that amount they pay the higher bracket on is 
much lower. It is actually anything above $49,000. The delta of that is 
$9,000, a difference of 10 percent. So that is over $900 in marriage 
penalty relief for middle-income families.
  The 10-percent expansion expires, and we continue that. That is $100. 
If that is added together for the family of four, middle-income 
America, making $58,000 of taxable income, this bill will save them 
$1,611, to be exact. That is a big savings. That is a 26-percent tax 
increase if we do not pass this bill. We will save them $1,600 by 
passing this bill.
  Basically, by passing this bill we are confirming that the bill we 
passed last year worked and middle-income Americans do quite well by 
it. I hope a lot of our colleagues who voted against the bill in 2001 
or against the bill in 2003 will vote for the bill tonight because this 
confirms we are helping middle-income Americans. We are helping them a 
lot, not a couple of hundred dollars. I have heard some people say what 
we did for middle income was nothing, it was peanuts. This is not 
peanuts.
  This is $1,600 for a lot of families all across America. So I 
compliment President Bush, especially because I think that without his 
leadership, it would not have happened.
  I thank those colleagues of ours, Democrats and Republicans, who 
passed this bill in 2001. And particularly I want to thank Zell Miller 
because he was helpful in 2003 in passing this bill we are extending 
tonight. We passed that bill, if my colleagues will remember, with the 
Vice President breaking the tie. It was a very contentious, very 
difficult challenge. The President asked me to sponsor the bill and I 
was happy to do so. We did some other good things in that bill, such as 
reducing the tax on capital gains to 15 percent, reducing the tax on 
distributions from corporations to 15 percent because we taxed 
distributions from corporations higher than any other country in the 
world. We tied Japan with the highest ranking. We partially eliminated 
double taxation and made it much more reasonable and responsible, so 
that was positive.
  Incidentally, I might say when we introduced that bill in early 2003, 
the Dow Jones was 7700. Today the Dow Jones is over 10,000. The NASDAQ 
is up over 40 percent from when we started pushing this tax bill last 
year, so the tax bill has worked. There have been 1\1/2\ million new 
jobs created since we passed that bill. So we have had some positive, 
good signs.
  This is a positive, good bill. Some people have complained and said 
we didn't do enough. Oh, we shortchanged the military combat personnel.
  That is not correct. Some people want to greatly expand earned-income 
tax credits or expand refundability so the Government will write more 
checks. The earned-income tax program is a program that is one of the 
most error-prone programs in the Federal Government. It is over a $30 
billion program where we are writing checks--not a tax credit, we are 
writing checks in almost all cases--and there is a 30-percent error 
rate. Some people wanted to expand that and make more people eligible 
for more money, more refundability. That is, not only are we going to 
take care and make sure you get a credit so you pay less taxes, but we 
are going to write you a check for taxes you didn't pay.
  I don't agree with that. I oppose that. I don't think we should use 
the Tax Code for a welfare program. We have now a situation with the 
EIC where a person can get the Federal Government writing them a check 
for 40 percent of the money they are earning. To expand upon that and 
build that even more I think is irresponsible, when you have an error 
rate in the program of 30 percent. So that is the reason why there are 
some objections. I just mention that. The complicated--anyway, I don't 
need to go too much further.
  I am pleased we are here tonight. I am pleased we are passing this 
package. I think this confirms that what we did in 2001 and 2003 has 
worked. We have helped American families.
  One final comment. I have heard many comments that I wish we would 
pay for this program. I have heard several people say that. We are 
continuing the tax relief we gave last year. If we don't do that, there 
is going to be a tax increase. How many times do you hear the same 
colleagues say, when we want to continue to spend, Oh, wait a

[[Page 19254]]

minute, we want to pay for that? Pay for the same amount of spending? 
For new spending? Never. As a matter of fact, we stopped $1.7 trillion 
in new spending. Most of the people saying we have to pay for these tax 
cuts never want to pay for that new spending. They voted against 
amendments to stop that new spending, or they voted against budget 
points of order that did stop new spending.
  I find it kind of interesting they only want to pay for anything that 
is called tax cuts, but they never want to pay for spending increases. 
It is a little ironic, a little interesting. I happen to have the facts 
and the votes and I am happy to share that. I have votes on every 
Member, every vote people have cast on spending provisions over the 
last several years.
  The budget actually has worked. The budget we passed enabled us to 
have the tax cuts that enabled American families to keep more of their 
own money.
  I might say we do have good news on the budget. The deficit figures 
are coming down by over $100 billion, just by the last estimate. So we 
have made good progress. The economy is starting to work. I heard some 
people say incomes are down. Frankly, incomes are up. Jobs are up.
  Receipts are up. CBO has been underestimating revenues.
  Before, they were making mistakes where they were overestimating for 
a couple of years. Now they have been underestimating because the 
economy is growing faster. Corporate receipts are exceeding 
expectations. So the changes we made by reducing capital gains and 
dividend taxes are helping the economy grow.
  These family-friendly tax cuts are helping American families. We are 
giving tax relief to taxpayers and that is what we should be doing in 
this bill. We are also giving continued assistance for people who do 
not pay taxes. We still have a very extensive refund-
ability portion in this bill as well.
  I urge our colleagues to vote for this bill. It is good news for 
taxpayers. It means for the American family which has taxable income of 
$58,000, they are going to save $1,600 on their tax bill for next year. 
That is positive, good news for American families and American 
taxpayers.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, I would like to yield to the Senator from 
Arkansas, Mr. Pryor. He is a real leader in protecting our Armed 
Services personnel. In fact, it was he who asked for a GAO report a 
year or two ago that would highlight and identify the problem which has 
led to some constructive provisions in this bill. It is a great honor 
to yield 5 minutes to the Senator from Arkansas.
  Mr. PRYOR. Mr. President, I thank my colleague for those very kind 
words. Also, I would like to thank Senator Grassley. He knows I am a 
fan of his. We appreciate the good working relationship we have.
  It is time that we care for those who take care of us. What I am 
talking about here is, in the conference yesterday there was a 
provision that was separated out that deals with our men and women not 
just in uniform but in combat. They are not receiving, in my view, fair 
treatment under this tax proposal.
  Let me say, I am for this middle-class tax bill. I think it is a good 
piece of legislation. I commend the Finance Committee. They worked very 
hard on this. I appreciate all of their leadership. But when it comes 
time for the earned-income tax credit, I need to talk about that for a 
second because last year, in fact it was last March, I was in the Armed 
Services Committee and we were talking about the various benefit 
packages our men and women in uniform receive and it dawned on me that 
I am not sure anyone in our Government is connecting all the dots. So I 
approached Senator Grassley and Senator Baucus and asked them to ask 
the GAO to do a review of military tax issues.
  Sure enough, the GAO found a glitch, an oversight, an unintended 
consequence, as they call it, in the Tax Code, where if soldiers are 
trying to claim an earned-income tax credit and are also receiving 
combat pay, they actually get penalized under the Tax Code.
  I know Congress never intended this, but it is the way it is. There 
are about 10,000 of our men and women in uniform today who are actually 
losing money on their taxes because of this unintended consequence. The 
amount of tax dollars they are losing is anywhere from $335 per 
taxpayer to $4,534 per taxpayer.
  As I said, this affects around 10,000 of our soldiers. We focus on 
the ones in Iraq, and certainly our prayers go out for those brave men 
and women, those heroes, but this also impacts people in Afghanistan 
and Bosnia and Herzegovina and other places around the globe. The way I 
feel about it is that so far we have lost 1,039 soldiers in Iraq. In 
fact, there have been more than 4,000 who have been so injured that 
they will be unable to return to combat. They are in harm's way for us 
every single day. They are putting their lives on the line, and I feel 
strongly that while they are over there fighting for us, we in the 
Congress need to be here fighting for them and for their families.
  Also, when you look at this and you run the GAO numbers, this is 
peanuts in the grand scheme of things. It is only about $30 million--
that is million with an ``m.'' We don't talk about millions very much 
when we talk about the Tax Code. We usually talk about billions. This 
is not very much money to the Federal Government, but this is real 
money to these people.
  I believe strongly that they are in harm's way every single day, and 
the last thing they need to worry about is getting gypped on their 
taxes and having an unintended consequence like this.
  Now that Congress is aware of this through the GAO report, I think we 
need to address it. I am very disappointed that in the conference 
yesterday they only extended it by 2 years instead of 5 years. I think 
this should receive the exact same treatment everything else does and 
be extended to 5 years.
  Regardless of that, I still believe that is a good piece of 
legislation. I thank my colleague from Arkansas, Senator Lincoln. She 
has been a great leader on the Finance Committee. She has done so many 
great things. Certainly, Senator Baucus and all of the members, Senator 
Grassley and all these members of the Finance Committee have done great 
work.
  I yield the floor.
  Mr. NICKLES. Mr. President, will the Senator from Iowa yield 1 
minute?
  Mr. GRASSLEY. I yield 1 minute to the Senator from Oklahoma.
  Mr. NICKLES. Mr. President, I have heard some statements where people 
are insinuating that American combat personnel are getting gypped by 
this bill. That is false. We are giving them a benefit they didn't have 
before. We are saying they can use combat pay in computing their 
earned-income tax credit, or not. If it is to their advantage to use 
it, they can. If it is to their advantage not to use it, they can pass. 
This is a new provision. This is something they didn't have in the 
past. They have it now for 2 years.
  The Treasury advised against this because it is very complicated, 
very confusing, hard to monitor. I have already complained on the floor 
tonight about how complicated the EIT program is. It already has a 30-
percent error rate, and that is without this confusion. This was done 
previously. The Clinton administration said not to do it. We repealed 
it at their request. We are putting it back for 2 years. We are trying 
to see if we can make it work and be factually accurate in computing 
taxes. This is a new benefit for combat pay which, incidentally, is not 
taxed. It is a good deal for American soldiers. It is not a bad deal.
  I resent the statement implying that they are coming up short. This 
is a good new benefit for them, and we will see if it works.
  I thank my colleague from Iowa.
  Mr. BUNNING. Mr. President, I rise today to support the American 
family and extend important tax relief provisions. This is one of the 
most important bills we will consider this year on the floor of the 
Senate. If we do not

[[Page 19255]]

pass this bill, the Americans that need tax relief the most will 
instead face a huge tax increase next year.
  I have consistently supported continuing the child tax credit, 
eliminating the marriage penalty, expanding the 10-percent tax bracket 
for the benefit of low- and middle-income taxpayers, and continuing 
alternative minimum tax relief. I introduced a bill with Senator Miller 
5 months ago, The Working Family Tax Relief Act of 2004, which made 
permanent most of these important provisions. I am pleased that my 
colleagues on the conference committee were able to find a vehicle to 
bring an extension of the important provisions found in the Bunning-
Miller tax bill before the entire Congress today.
  Tax relief has played a central role in fostering economic growth 
throughout our economy. The President's tax cuts and our votes here in 
the Senate helped to revive an economy that was stalling in 2000 and 
shocked by the tragedies of September 11, 2001. The Senate adopted a 
tax strategy in 2001 to help America's working families and our 
economy. In 2003, we voted to accelerate the effective date of some of 
this family tax relief in order to give these families help as quickly 
as possible. And as a result, every American family who paid any income 
taxes during 2003 saw a reduction in their taxes, including well over 
one million Kentuckians. These Kentuckians will enjoy those lower taxes 
for this year as well. However, if we fail to act this year, America's 
working families will face a tax increase next year. We cannot allow 
that to happen. We cannot take back these tax cuts and threaten the 
financial security of American families just as they are recovering 
from the turbulence of the last few years.
  Let me explain what is at stake here: If we do nothing, the child tax 
credit will be cut by 30 percent in 2005. Rather than let the credit 
revert to the old $700 level, this legislation will extend the credit 
at $1,000 for the next 5 years. There are over 350,000 taxpayers in 
Kentucky who count on the $1,000 child tax credit to help them provide 
for their families and I mean to do all I can to make sure they 
continue to receive it.
  The lowest-income Americans have benefited dramatically from the new 
10 percent tax bracket. The conference report before us today will 
extend this bracket through 2010. Today, thanks to this new bracket, 
working Americans are keeping more of their hard-earned paychecks. If 
we fail to pass this Conference Report, taxpayers with as little as 
$7,000 in taxable income could face a tax increase next year. I will 
not go home to the 1.2 million taxpayers in my state who benefit from 
the lowered 10 percent bracket without doing all I can do to help them 
avoid this tax increase.
  The accelerated marriage penalty relief will also lapse unless the 
Senate acts. I have worked for a long, long time to get rid of these 
stupid provisions of the tax law which discourage marriage. I was 
thrilled when we were finally able to fix this problem and it is vital 
to the future of almost one-half million Kentucky families that we do 
not allow this important legislation to backslide.
  There are many other important provisions in this bill. The bill 
contains fixes to make sure that military families with loved ones 
working abroad to protect us here at home are eligible to receive the 
child tax credit. It also continues a provision to assist America's 
teachers when they pay for classroom supplies out of their own pockets.
  This is vital legislation. Without it, we are telling the working 
families of America that we are no longer behind them and that we no 
longer want to stimulate economic expansion. The economy and job 
creation are both on an upswing, but we cannot become complacent. The 
people who benefit from these vital tax provisions are the backbone of 
our country and our economy. We cannot withdraw the support we promised 
working families in 2001 and again in 2003. I urge my colleagues to 
support this important legislation.
  Mr. WARNER. Mr. President, today, as part of the Working Families Tax 
Relief Act, the Senate will pass legislation that I authored to extend 
for another 2 years an important tax relief provision aimed at 
America's teachers. The teacher tax relief benefit in this legislation 
will provide almost a half a billion dollars worth of tax relief 
targeted directly at our Nation's teachers.
  Why do teachers need this kind of specific tax relief? It is 
estimated that the average teacher, who is already underpaid, is 
spending $521 out of their own pocket each year on classroom 
materials--materials such as pens, pencils and books. First-year 
teachers, who typically earn less than the average teacher, spend even 
more, averaging $701 a year on classroom expenses.
  Why do they do this? Simply because school budgets are not adequate 
to meet the costs of education. Our teachers are picking up the slack.
  The Teacher Tax Relief Act is a small, yet important sign of 
recognition by the Federal Government of the many sacrifices that our 
teachers make. Originally signed into law in 2002 by President Bush, 
this legislation, which was authored by Senator Collins and myself, 
allowed teachers to take up to a $250 above the line Federal deduction 
for classroom expenses. The deduction is available when teachers reach 
into their own pockets and take money out to buy simple things like 
pencils, erasers and books to help their students succeed in their 
education.
  As passed in 2002, the Teacher Tax Relief Act was a 2-year tax relief 
provision. Accordingly, without the extension provided in the Working 
Families Tax Relief Act, teachers would soon have faced a higher tax 
bill. With passage of today's legislation, teachers are guaranteed that 
they will be able to utilize this important tax benefit for at least 
the next 2 years. I remain committed to working to expand the Teacher 
Tax Relief Act and to make this important legislation a permanent part 
of our Tax Code.
  Mrs. FEINSTEIN. Mr. President, I rise today to offer my support for 
tax cuts for the American middle class.
  This bill will do the following: extend the $1,000 per child tax 
credit through 2010; eliminate the marriage penalty through 2010; 
extend the expanded 10 percent income tax bracket through 2010; provide 
one additional year of protection against the alternative minimum tax; 
and extend through 2005 business tax credits that recently expired or 
will soon expire.
  Although I am disappointed that we could not provide tax incentives 
to additional energy related industries, such as open-loop biomass, 
many of these expiring business tax credits will benefit California 
companies; such as the research and development tax credit and the tax 
credit for electricity produced from wind energy.
  But, the primary reason I support this bill is that it provides tax 
relief to the average American. These are the people who need the most 
relief. They are the ones most likely to spend their tax savings. And 
it is these expenditures that will assist in getting this economy off 
the ground.
  I am supporting this conference report with a mixture of relief--that 
we recognize that the middle class deserves continued tax relief--and 
with concern as well, since we are in effect borrowing the money from 
our children and grandchildren to provide the tax breaks.
  For the past 3 years this Government has gone on a fiscal spending 
spree of unprecedented proportions--cutting taxes and increasing 
spending at such a rate that we now see the largest deficits in this 
Nation's history.
  This year alone we are expecting a budget deficit of more than $420 
billion and a cumulative deficit of more than $2.3 trillion over the 
next ten years.
  In contrast, President Clinton left office with a $236 billion 
surplus and a projected cumulative surplus of $5.7 trillion from 2001-
2010. This year's deficit represents a $658 billion turnaround from 
2000.
  Last year, I introduced a bill that would rollback the President's 
2001 tax cut for those who earn more than $311,000. By rolling back the 
top income tax rate from 35 percent to 38.6 percent on income, capital 
gains and dividends, we would generate $107 billion over the

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next 5 years according to the Joint Committee on Taxation. And if we 
had adopted my proposal as an amendment to this legislation we would 
pay for more than 73 percent of this tax break.
  It is particularly distressing to me that this proposal, and others 
like it, have been defeated every time they have been offered.
  This Congress and President must restore fiscal sanity to our budget 
and that includes the need for every citizen to share the burden.
  Recent reports from the Congressional Budget Office, the Brookings 
Institute, and the Center on Budget and Policy Priorities have all 
described the bleak long-term budget outlook--one that this Congress 
cannot solve without taking decisive action to reduce our long term 
deficits.
  In a recent study from the Congressional Budget Office, the agency 
warns that the burden of the Federal debt will have a corrosive effect 
on the economy. The debt will slow the economy and is unlikely to bring 
the Nation's long-term fiscal position into balance.
  While I support this tax cut bill because it provides similar tax 
relief to the middle class that the President gave to the wealthiest 
American families in 2003, we need to take a very hard look at whether 
we can afford any additional tax cuts that are not supported by 
offsets.
  As we all know, for every dollar we borrow, we incur interest and 
last year we paid a lot of interest. In fiscal year 2003 we spent more 
than $318 billion in interest on the National debt. Every dollar spent 
to pay for interest is a dollar not spent to pay for education, 
defense, infrastructure improvements, job development, or homeland 
security.
  Additionally, the President's 2004 deficit will place us even further 
away from the important goal of addressing the looming crises in both 
Social Security and Medicare. And when the baby boomers begin to retire 
in 2010, we will be facing even more difficult fiscal times.
  In 2003, we spent $1.2 trillion on Medicare, Social Security, and 
other entitlement programs. By 2009, we will be spending $1.6 trillion, 
57 percent of the budget. And in 2014, we will be spending $2.1 
trillion or 59 percent.
  We have all heard Federal Reserve Chairman Alan Greenspan call on 
Congress to restrain the growth of the Federal budget deficit by 
adopting budget controls that would apply to new taxes as well as new 
spending. Mr. Greenspan has told the Senate Budget Committee that 
imposing such controls is ``an essential element to restoring fiscal 
sanity.''
  Let us remember, that in 1998, following nearly 30 years of deficits 
and a 17-fold increase in Federal debt from $365.8 billion to $6.4 
trillion, bipartisan cooperation brought the budget back into balance 
once again. For the first time in more than a generation, some of the 
funds which would have gone to pay interest on the debt were instead 
spent actually paying down the debt.
  Now, deficits and interest costs are growing once again.
  Finally, while I am supporting the tax cut legislation now before us 
because it recognizes the importance of helping the middle class, I 
believe it is critical that Congress restore fiscal discipline by 
paying for future spending increases and tax cuts.
  Mr. HARKIN. Mr. President, the tax conference report before us is a 
purposeful mix of good and bad. On one side we have the content of the 
bill that is broadly supported on both sides of the aisle. There are 
few who disagree with the considerable majority of the conference 
report's provisions. Increasing the child credit, reducing marriage 
penalty provisions and the extension of the child credit do help the 
middle class and those of modest means.
  I do think it was unfortunate that the measure did not adjust the 
child credit so more modest income working families could benefit more 
fully from the provision.
  We do need to fix the alternative minimum tax. This bill kicks the 
ball down the street for another year. The 2001 tax bill effectively 
doubled the number of taxpayers impacted by the tax once a short term 
band-aid expired. So, here we have another 1-year band-aid. This is a 
growing problem with growing cost estimates to fix it.
  The measure extends the R&D credit, the work opportunity tax credit, 
the wind and biomass credit, all of which I support. Clearly, these 
credits should be extended for longer periods of time. With this bill, 
they are only effective for another 14 months, until the end of next 
year. That is hardly good tax policy. Year after year, the Congress 
extends these provisions for a short time, not providing a longer term, 
which would allow business to plan.
  However, the biggest problem with this conference report is that it 
is not paid for: $146 billion in additional spending with no offsetting 
of that cost.
  This bill comes to the Senate in an abusive fashion. The majority 
decided to use a very narrow measure in conference and hijacked it to 
avoid the Senate floor on this far larger package of tax provisions. 
The majority knew that the provisions were very popular and would pass. 
But they also knew that there might be a majority in the Senate that 
would like to see the provisions paid for.
  By not paying for them, by using this conference mechanism, we add to 
the government's skyrocketing debt. This year we have a record $422 
billion deficit.
  The one word that describes the Bush tax policy of never wanting to 
offset the cost of tax cuts is reckless. When President Bush came into 
office we were on track to completely eliminate the publicly held debt 
by 2009. Now, by 2009, we expect--and I am using OMB's own figures--to 
pay the equivalent of about $1,000 in interest on the debt for every 
man, women and child in America. It is weakening America. It is making 
us less able to meet the needs of our growing elderly population and 
our children.
  Under a new CBO document released today, we see projections of 
deficits of more than $300 billion every year if we follow President 
Bush's policies, and we see deficits above the current levels a decade 
from now. Going into the future, with the retirement of the baby 
boomers, things only get worse.
  What we are seeing is a growing debt tax. The interest on those bonds 
must always be paid, paid by our children and grandchildren.
  One solution, I think we must consider is hard and fast paygo rules 
that were in effect through the 1990s that helped us to reduce the 
deficits. That is, simply, that if we lower taxes we need to pay for it 
by raising other taxes or cut spending. If we increase mandatory 
spending, we must cut other spending or raise taxes.
  If we do not have serious, enforceable paygo rules, given the abuse 
of the conference process we have just seen, we should not allow future 
Finance Committee measures to go to conference. The only exception 
should be where clear public agreements are reached that a conference 
report will be fully paid for.
  Mr. ROCKEFELLER. Mr. President, today the Senate is taking important 
action to protect working Americans from a tax increase at the end of 
the year. I am pleased to join my colleagues in voting for this bill 
and supporting middle class families. Of all the tax cuts enacted in 
recent years, these are the tax cuts that are most valuable and 
important for working families in West Virginia. These tax cuts should 
never have been set to expire at the end of the year, and I am relieved 
that we are putting to rest any worries about taxes increasing next 
year.
  The Working Families Tax Relief Act extends three critical tax cuts 
that Congress enacted last year. First, it will keep the child tax 
credit at $1,000. Second, this bill maintains the expanded 10 percent 
tax bracket, covering just over $7,000 in income for individuals or 
$14,000 for married couples. And third, it will provide marriage 
penalty relief. These provisions provide a benefit to virtually every 
American who pays income tax, and I have always believed that they 
ought to be the cornerstone of our tax relief efforts. I objected last 
year when Congress passed tax relief that provided middle class tax 
cuts for only 2 years while providing $150 billion worth of tax cuts 
for

[[Page 19257]]

dividends and capital gains over four years. I opposed last year's 
bill, because tax relief for families was shortchanged to provide more 
benefits to wealthy investors. The legislation I am supporting today is 
an important step toward fixing the bad bill passed last year.
  The legislation we will pass today also includes a critical increase 
in the child tax credit for low-income families. I have fought for a 
long time to increase the amount of the credit that could be refunded 
to families earning between about $10,000 and $25,000. These families 
are struggling to provide clothes, school supplies, and other 
necessities for their children. Today, Congress is recognizing how hard 
they work and increasing the value of the refundable child tax credit 
for them by as much as 50 percent. More than 55,000 West Virginia 
children will benefit from this improvement.
  I would also like to send word to all of our forces fighting in 
Afghanistan and Iraq that we appreciate the work they are doing and 
today we are fixing the tax code to be sure that it does not punish 
them for serving in a combat zone. Because combat pay is not subject to 
regular federal income tax, some service personnel have found 
themselves ineligible for the child tax credit or the earned income tax 
credit, EITC. This was certainly never the intent of making combat pay 
tax exempt. This legislation rectifies the situation, so that combat 
pay will be counted as earned income for purposes of calculating both 
the child credit and the EITC. I daresay that if any American anywhere 
is earning their income, it is the soldiers, sailors, airmen, and 
marines who are fighting in some of the most dangerous places on Earth.
  Unfortunately, this legislation still has some serious shortcomings. 
Perhaps the most appalling is that the provision to ensure that service 
personnel are able to count combat pay toward the earned income credit 
is set to expire after 2 years. As much as I would like to think that 
Americans will not be fighting in combat zones two years from now, I am 
not that naive, and the tax code should be fixed permanently. I am also 
disappointed that the child tax credit income threshold was not 
adjusted to protect some of our poorest working families. We know that 
low wages are not keeping pace with inflation, and because the child 
tax credit threshold increases with inflation more and more families 
will lose their child credit every year. I will continue to fight for 
those families.
  I also believe that this legislation irresponsibly and unnecessarily 
increases the federal deficit. Tax relief to working families should 
not be passed down as a bill to our children. But much to my 
disappointment the leaders on the other side of the aisle have rejected 
efforts to offset the cost of this legislation, at least in part by 
closing indefensible corporate tax loopholes. I will continue to fight 
to eliminate abusive tax shelters, and I hope that all of my colleagues 
will come to appreciate the need to do so.
  Mr. President, this is certainly not a perfect bill. But I have been 
in the Senate long enough to know how unlikely a perfect bill ever is. 
The Working Families Tax Relief Act will protect West Virginians from 
facing higher taxes next year, and I look forward to casting my vote in 
favor of it.
  Mr. FEINGOLD. Mr. President, I will support this conference report. I 
regret that the important tax cut extensions included in this measure 
have been used as a political device by the White House and 
Congressional leadership. We could have had a more fiscally 
responsible, fully offset package of middle class tax cuts, but the 
White House and Congressional leadership have blocked that.
  Instead, we are forced to choose between two bad options: failing to 
extend these needed tax breaks, and adding still more to the mountain 
of debt that has been piled up in the last 4 years.
  Let me note that the reason we must extend these important tax cuts, 
the reason they were not simply made a permanent part of tax law, was 
because of the choice made in 2001 and 2003 to use the reconciliation 
process to jam through a partisan tax agenda. Had leadership pursued 
the usual procedure for tax bills, bringing legislation to the floor 
subject to the normal amendment process, we would still have enacted 
significant tax relief, but they would have been permanent.
  But, the leadership chose to abuse the special reconciliation 
process, which was intended not to shelter a tax cut from amendment but 
to protect the difficult work of enacting deficit reduction packages. 
Reconciliation was used in order to push through a tax agenda that was 
skewed. And because they chose that process, they were forced to sunset 
the tax cuts. So instead of a sensible, and sustainable tax policy, we 
have this herky-jerky off-again on-again set of tax cuts. That's why we 
have to come back and extend them. It is why we have this bizarre 
estate tax policy which phases down the estate tax over several years, 
then eliminates it completely for a year, and then fully reinstates it 
back to pre-2001 levels.
  This is no way to craft tax policy, Mr. President. We should have 
reinstated the PAYGO rule earlier this year, as a bipartisan majority 
of this body went on record supporting. The PAYGO rule was instrumental 
in helping to reduce and finally eliminate annual budget deficits 
during the last decade. We need to bring it back.
  Mr. President, Congress could have fully offset the cost of this 
measure, but it was prevented from doing so for political reasons. I 
hope the next Congress will stop this nonsense, find sufficient offsets 
for this tax bill so that our children and grandchildren won't get 
stuck with the tab, and then reinstate the PAYGO rule that helped us 
reduce and finally eliminate annual budget deficits just a few years 
ago.
  Mr. KENNEDY. Mr. President, the legislation we are considering today 
should not be necessary. It is necessary only because the Republican 
leadership ignored the need of middle class families for meaningful tax 
relief when they were enacting $330 billion in new tax breaks that 
primarily benefit the wealthy last year. If you want to know whose side 
President Bush and Congressional Republicans are really on, you should 
look at their record.
  Just last year, the Republicans passed a major tax bill. In that 
bill, they dramatically cut the tax rate on dividend and capital gains 
income at a cost of $150 billion. They decided that the tax rate on a 
worker's hard-earned paycheck should be nearly double the tax rate on a 
wealthy person's investments. They considered tax breaks for wealthy 
investors to be a much higher priority than middle class tax relief.
  In that same legislation, they spent billions more making sure that 
upper income taxpayers would benefit from lower rates every year 
through 2010. And the rate to be paid by the richest 1 percent of 
taxpayers was reduced the most, with little regard to the cost.
  However, when it came to tax relief for middle class families--the 
$1,000 child credit, marriage penalty relief, and expansion of the 10 
percent tax bracket--the Republicans were far less generous. They voted 
to terminate the middle class tax benefits contained in the bill at the 
end of this year. Under the Republican plan passed last year, at the 
end of 2004--just 3 months from now--the child tax credit will shrink, 
the marriage penalty will return, and working families will pay higher 
taxes on their wages. Their Cinderella tax relief for the middle class 
will vanish at the stroke of midnight on New Year's Eve. What a farce!
  The Republican claim of concern for the middle class is laughable. 
Don't believe what they say. Look at what they do. When they had to 
choose between real tax relief for hard working families--relief that 
would not disappear overnight--and new tax boondoggles for their 
wealthy friends, President Bush and his allies in Congress chose their 
wealthy friends.
  Only now, 6 weeks before the election, when voters have figured out 
this Republican scam, do we see the President and the leaders of his 
party scurrying to extend the middle class tax cuts beyond the end of 
this year. Hard pressed working families deserve to be the first people 
whose needs are addressed, not the last.

[[Page 19258]]

  There is a fundamental difference between the way Democrats and 
Republicans view tax fairness. Democrats believe in providing tax 
relief from the bottom up, and Republicans dispense tax breaks from the 
top down. The record of President Bush and Congressional Republicans 
shows their indifference to the needs of struggling middle class 
families. For them, middle class tax relief is nothing more than an 
election year afterthought.
  Even now, as Congress prepares to extend the $1,000 child credit 
beyond this year, the Republicans are once more refusing to help those 
families most in need of relief. Many families struggling to survive on 
the income from a minimum wage job will not get the benefit of the 
larger child credit. In fact, some may be denied any child credit at 
all.
  The earnings threshold for the child tax credit is indexed to 
inflation. Each year, the amount of income a family needs to qualify 
for the credit goes up. Unfortunately, we all know that the wages of 
low income workers have not been going up, not keeping pace with the 
cost of living. Even though minimum wage workers have not received an 
increase for 7 years, the Republican leadership has repeatedly refused 
to consider legislation giving them a raise. A full-time, year-round 
minimum wage worker makes about $10,700 annually. By next year, that 
will not be enough to qualify for the child tax credit.
  What could be more unfair? Congress increases the child tax credit to 
help working families, but denies the credit to those low-income 
working families who need help the most.
  It is truly outrageous! If Congress does not correct this injustice, 
more than four million families with nine million children will see 
their child credit shrink or disappear entirely next year. These are 
families that are already struggling to survive. How would you survive 
as a single parent trying to raise two kids on $10,700 a year?
  Congress could easily correct this arbitrary cut-off. All we need to 
do is maintain the threshold at $10,000 rather than automatically 
increasing it every year. However, when Senator Lincoln offered an 
amendment to make that simple fix, all but one of the Republican 
conferees voted no--killing her amendment. And President Bush, by his 
silence, is an accomplice to this outrage. Nine million children in 
low-income families get left behind--again.
  Once more, this Republican Congress has turned a deaf ear to those 
most in need. First, they refuse to increase the minimum wage for 
working families. Then, they cut overtime pay for millions of workers. 
And now, they deny those families the benefit of the child tax credit 
because their wages have not kept pace with the cost-of-living.
  The American people are a fair and compassionate people. They will be 
as outraged as I am when they learn of this injustice. They will have 
an opportunity to voice their outrage in just 6 weeks.
  Mr. LEVIN. Mr. President, I will vote for this conference report 
because in this sluggish economy, average American families need all 
the help they can get. Just a few weeks ago the Census Bureau released 
new national figures showing that for the third year in a row poverty 
has risen and incomes have fallen. In fact, the typical family has seen 
its income fall by more than $1,500. Employer-sponsored health 
insurance coverage has continued its decline and there are a whopping 
45 million Americans who are uninsured. Extending these tax cuts that 
are aimed at helping families by expanding the child tax credit and the 
10 percent income tax bracket in addition to marriage penalty and AMT 
relief is an important part of any economic plan.
  I would have much preferred to vote for a conference report that paid 
for the extension of these cuts. They could and should have been paid 
for. Continuing to deepen our extraordinary deficit ditch will 
ultimately hurt the very same lower and middle class families that this 
legislation aims to help.
  Earlier this year I supported, and the Senate passed, PAYGO, which 
would have required that in addition to paying for all spending, we 
would have to pay for all tax cuts as well. This concept is common 
sense for most families, who work to live within their means by 
balancing what goes out with what comes in. Unfortunately, PAYGO was 
rejected by the House Republican leadership, so we do not have to 
offset the cost of these or any tax cuts. Now that these cuts are going 
to be extended through 2010, I hope there will be a renewed support for 
PAYGO.
  But PAYGO or not, there was no good reason for those who put together 
this conference report not to offset these tax cuts. The estimated 10-
year cost of these extensions is $146 billion. There are a number of 
possible offsets available. In May the Senate passed the FSC/ETI bill 
with $170 billion worth of them. Numerous times now the Senate has 
passed legislation that raises revenue by curbing tax abuses. 
Unfortunately, each time the House Republican leadership has blocked 
these provisions, so they have not yet become law. There is no good 
reason to let tax dodgers continue to abuse the system while our 
deficit skyrockets. If the drafters of this conference report could not 
find acceptable ways to pay for a lengthy extension, then the extension 
should have been shorter. It is too bad that the pay-for proposals 
Senator Baucus made in the conference committee were defeated.
  As Alan Greenspan has said, ``You should not be borrowing for your 
tax cuts.'' I am concerned that over the long term, many middle-class 
families will end up worse off from the fiscally irresponsible tax cuts 
this Congress has enacted since 2001. That is because paying for the 
debt we are racking up will eventually require either massive tax 
increases or program cuts, or likely both. We all know that our fiscal 
outlook is grim. The Federal Government is expected to borrow about one 
of every five dollars it spends this year. CBO projects the deficit 
this year will be $422 billion. Most analysts agree the budget picture 
will worsen considerably within the coming decade, as the huge baby-
boom generation will begin relying increasingly on Social Security and 
Medicare, driving those programs' costs upward.
  In addition to raising the likelihood of cuts in important domestic 
programs, a bigger deficit makes it more likely we will face rising 
long-term interest rates. That would mean it will be more expensive to 
buy a house, pay for college or pay off credit card debt. As Senators 
Conrad and Dodd said on the floor yesterday, our enormous and growing 
debt means average consumers could see interest rate hikes that will 
dwarf any tax cut they may get. Especially when so many Americans have 
variable-rate mortgages, car loans and other debts, the rising interest 
rates that are predicted to accompany swelling deficits will have a 
very real and immediate impact on many American families. That's not 
what Americans need.
  I also want to express my disappointment that the conferees rejected 
Senator Lincoln's worthy amendments to prevent the refundable child tax 
credit floor of $10,000 from being indexed to $11,000. This means a 
full-time minimum wage earning parent will receive no benefit from the 
tax credit because her income of $10,300 falls short of the $11,000 
floor. If the purpose of this bill is truly to help those in the lower 
and middle income ranges, this should have been one of the first items 
to be included. It would have helped 9.2 million children in 4.3 
million families gain an increased portion of the credit.
  This conference report also plays games with the timing of one of its 
most important pieces. Under a glitch in current law, many men and 
women in our armed services are denied their earned income tax credit 
and child tax credit because combat pay is excluded from the definition 
of earned income for the purpose of calculating these tax provisions. 
This conference report fixes the glitch with respect to the child tax 
credit, but only fixes the EITC glitch for two years. So in 2006, taxes 
will be raised on thousands of the men and women in our military who 
put their lives on the line for our nation.
  I think it is of the utmost importance that our service members are 
adequately compensated for their duties, and that we offer them a 
quality of life that will enable them to continue to serve and to live 
comfortably.

[[Page 19259]]

Service families deserve a quality of life comparable to that of their 
civilian counterparts. Quality of life for our service members is 
particularly important now when the extensive commitments of our 
military forces are pushing our military families to the limit.
  Yet as this legislation extends tax breaks for millions of American 
families through 2010, it takes away tax benefits during that same time 
for service members and their families who have the lowest levels of 
income. There is no reason why a reservist who would otherwise get the 
full EITC should be forced to lose part of it if he or she is called up 
and sent into a combat zone. But that is what this legislation will do.
  Making this provision permanent would have been a very small part of 
the cost of this $146 billion bill. I understand it is approximately 
$30 million over 10 years. Yet it was not done that way, despite the 
direct effect on those service members who we have sent to the most 
dangerous corners of the world Iraq and Afghanistan for example. These 
brave soldiers do not deserve to have their tax benefits taken away. 
But that is exactly what today's conference report does.
  I wish this conference report didn't create this problem, but I am 
hopeful that with the leadership of Senators Pryor and Lincoln, who 
have put lots of hard work into this issue already, we can soon fix 
this timing issue and end the glitch permanently. It is the least we 
can do for those who put their lives on the line for our country.
  Ms. SNOWE. Mr. President, I rise today regarding the tax bill before 
the Senate that would extend certain tax provisions set to expire this 
year.
  Let me say that I support the policy underlying the tax measures 
contained in this conference report. What I find regrettable, however, 
is that we are even at this juncture where we are faced essentially 
with a choice between these tax reductions and fiscal responsibility--
when, in fact, we could have achieved both.
  Instead, we have before us a tax package that will directly add $146 
billion to the Federal deficit. Why? Because the 2003 tax package 
sunset after one year rightfully popular measures of benefit to middle-
class and lower income Americans--that also provided short term 
economic stimulus--this year, in order to pay for other tax reductions 
over 5 years that are not geared toward short-term stimulus. As a 
result, here we are, about to enact 5 years of $146 billion in tax 
reductions over and above the $350 billion we passed last year--when we 
could have provided for 5 years of these same, worthy tax cut measures 
with last year's $350 billion package.
  I supported the $1.35 trillion, 10-year tax relief plan of 2001 
because, at that time, the tax burden was the highest it had been since 
World War II--and also to provide an ``insurance policy,'' to 
paraphrase Chairman Greenspan, against a more prolonged economic 
recession that we now know began six months before President Bush took 
office.
  Then, in 2003, an effort was made to accelerate some of the tax 
relief from the 2001 bill--specifically, lower marginal tax rates, 
marriage penalty relief, and the $1,000 child tax credit. Indeed, over 
a year ago, Senator Lincoln and I--along with others on the Senate 
Finance Committee--worked to correct a glaring flaw in the 2003 tax 
bill.
  Specifically, while the 2003 tax bill accelerated the phase-in of 
lower marginal rates, the $1,000 child tax credit and other provisions, 
it did not accelerate a scheduled increase in the percentage amount of 
the child tax credit that is refundable for lower-income workers. The 
motivating force behind the vehicle before us was to accelerate an 
increase in the portion of the child tax credit for lower-income 
families that were left behind in the final 2003 tax bill.
  I would very much have preferred to have been able to vote to have 
those accelerations in place without a sunset in last year's tax 
package conference report. And, again, I would very much like to vote 
this year to extend these three tax cuts as prescribed by this 
conference report.
  Indeed, last year during Finance Committee markup of the bill, I 
developed a means by which we could pass these tax cut accelerations 
through 2010 while limiting the total impact to the amount agreed to in 
the budget resolution. Regrettably, however, while we were successful 
last year in the Finance Committee in passing these three tax 
reductions as part of the $350 billion package I supported in 
committee, the responsible path was ultimately not taken in the 
conference report.
  Unfortunately, the final 2003 tax bill scaled back the tax relief for 
working families by imposing a sunset on the most popular tax cuts, 
forcing them to expire at the end of this year. Moreover, the 1-year 
sunset of these incentives was done solely to allow for a larger tax 
cut on dividend income within the $350 billion cost of the package. I 
said at the time that the action Congress inevitably will take on the 
popular tax cuts after that year elapses will result in a true cost of 
the 2003 tax bill far in excess of $350 billion and closer to an 
estimated trillion dollars. Today, Congress is in fact about to 
increasse that cost to $496 billion.
  It could have been otherwise--and indeed, I have offered several 
alternatives this year. In July, I joined a bipartisan group of 
Senators in putting forward a plan to extend these middle-class tax 
provisions with no net cost to the Government. The revenue offsets that 
we put forward are ones that both the Senate and the House have passed 
previously. Regrettably, that approach has been rejected in favor of 
the view that any provision that increases revenues, even if it 
improves the efficiency of the Tax Code, cannot be acceptable.
  Fiscal responsibility and reducing taxes do not have to be mutually 
exclusive goals. Yet, unfortunately, what is before us today is a $146 
billion bill--none of which is paid for. Again, I support these tax 
provisions, but I cannot vote for a proposal that rejects the 
available, responsible alternatives.
  I yield the floor.
  Ms. MIKULSKI. Mr. President, I rise today in support of the Working 
Families Tax Relief Act of 2004.
  Working families deserve tax relief because the middle class is being 
squeezed from all directions. Our middle-class families are stressed 
and stretched. Families in my State of Maryland are worried. They are 
worried about their jobs. They are terrified of losing their 
healthcare, as health care costs keep ballooning. Many are holding down 
more than one job to make ends meet. They are racing from carpools to 
work and back again. And they want to know what we in the Senate are 
doing to help them.
  That is why I support a family friendly tax code. A tax code that 
helps families send their children to college. A tax code that helps 
families to care for their loved ones and helps small businesses 
provide health care for their employees. That is what I am going to 
keep standing up for in the U.S. Senate.
  The criteria I use for evaluating tax cuts is simple. Tax cuts should 
be targeted, temporary, and do not add to the deficit.
  This bill meets some of my criteria. It is targeted to the middle-
class and that is why I will vote for it. It is temporary. This bill 
gives the middle-class immediate help, but only extends the middle-
class tax cuts through 2010. I hope that when we come back to these tax 
cuts, we find a way to pay for them.
  This bill would provide much needed tax relief to working American 
families caught in the middle-class squeeze. There are three provisions 
to this bill that will most help alleviate the stress and strain on the 
middle class.
  This bill would extend the $1,000 per child tax credit for 5 years. 
If the child tax credit is not extended, families will only receive a 
credit of $700 per child in 2005, and the credit would not reach $1,000 
again until 2010.
  Next, this bill would extend the marriage penalty relief passed in 
2003 by making the standard deduction for married couples double the 
amount for individuals. That just makes sense. This bill also expands 
the 10 percent and 15 percent tax brackets, so that married couples can 
make more money

[[Page 19260]]

and not be penalized with higher taxes. Unless the marriage penalty 
relief is extended, married couples could see their tax bill rise by as 
much as $1,165 in 2005. When so many Americans are feeling stretched 
and stressed, I think that is wrong.
  Lastly, this bill would extend the expanded 10 percent bracket which 
provides tax relief to millions of taxpayers. The 10 percent tax 
bracket was increased temporarily to give people a short term economic 
stimulus, but, if the middle class tax cuts are not extended, taxes for 
many will increase taxes by $50 per year for singles, and $100 for 
couples.
  But this bill also has major problems.
  This bill fails our military families by raising taxes in 2006 on 
active duty military, reservists, and National Guardsmen who have been 
deployed in combat. This bill provides tax cuts for middle class 
families for the next 5 years and I support that. But this bill only 
provides 2 years of tax relief for our lowest paid combat military 
personnel. Just as the War on Terror is ongoing, so must our support be 
for our troops. This bill only fixes this problem for two years. I 
support fixing this problem permanently. That is why I will work with 
my colleagues on a bill to fix this problem.
  This bill also fails one of my criteria for tax cuts. This bill would 
add nearly $150 billion to the deficit. We can have strong economic 
growth, low inflation, and low unemployment, but we must do so in a 
fiscally responsible way. I hope that next time we consider tax 
provisions to help our working families we get it right and find a way 
to pay for them.
  I will vote for this bill, but I do so with warning lights. I am 
concerned about the effect deficits will have on our ability to meet 
the promises of Social Security and Medicare. I am concerned about its 
impact on military families.
  The job of Congress is not only to provide tax relief for working 
families, but also to make sure that we pay for those tax cuts. Through 
fiscal responsibility, Congress can take care of working families today 
and in the future when they retire.
  Mr. HATCH. Mr. President, I rise to express my support for the 
conference report now before the Senate, which will save millions of 
American taxpayers from suffering a tax increase on New Years Day 2005.
  I want to congratulate Chairman Grassley, who chaired this 
conference, as well as the other Senate and House conferees, for their 
perseverance in finishing this tax bill, which has presented 
challenges.
  The individual tax cuts Congress passed in 2001 and 2003 have been 
instrumental in the turnaround of our economy from stagnation to 
healthy growth. For various reasons, when passing these bills we were 
not able to make the provisions of those tax cuts permanent, and some 
key elements of them are scheduled to expire on the last day of this 
year. The conference report before us extends three of these provisions 
for 5 years: the marriage penalty relief in the standard deduction and 
in the 15 percent bracket; the new 10 percent bracket; and the $1,000 
per child tax credit. In addition, the legislation extends the higher 
thresholds for the individual alternative minimum tax for another year.
  This last provision is very important to an increasing number of 
families in my home State of Utah, who are unfairly being thrown into 
the AMT regime simply because they have large families. And while this 
provision does not permanently fix the AMT problem, it does give 
temporary relief for millions of Americans who would otherwise be 
joining the unlucky ranks of alternative minimum tax filers.
  While I would prefer to see these provisions, along with all the 
other parts of the 2001 and 2003 tax cuts made permanent, a five-year 
extension is a very good step. The provisions being extended by this 
legislation will now be set to expire at the same time the remainder of 
the tax cuts run out, December 31, 2010. Thus, they can hopefully all 
be made permanent at the same time, which would ideally be well before 
that time.
  I am particularly pleased to see that the conferees decided to 
include in the conference report the extension of a set of very 
important expiring business tax provisions, along with the individual 
ones. These include the research credit, of which I have long been an 
advocate. This tax credit expired on this past June 30.
  As I think most of my colleagues will agree, tax provisions that are 
temporary add confusion, complexity, and uncertainty to our tax system. 
These problems are made worse when worthy provisions, such as the 
research credit, are allowed to expire and are then later reinstated. A 
permanent research credit would have been greatly preferred to our bad 
habit of routinely allowing vitally important tax provisions to expire 
and then reinstating them, sometimes months after their expiration. 
Such actions are often done in the name of revenue savings to the 
Treasury, but this is a false argument. A series of shorter-term 
extensions of these provisions costs no more than does a permanent 
extension. What this practice does, however, is contribute to the lack 
of confidence that taxpayers feel in our tax system, so it a corrosive 
thing to do.
  Moreover, I am disappointed that the legislation before us does not 
include the Senate language that expands the research credit. The 
Senate version of the research credit was based on a bill authored by 
the Senator from Montana, Mr. Baucus, and this senator, which would 
have dealt with a very serious shortcoming with the current research 
credit. Essentially, this shortcoming prevents thousands of research-
intensive firms, many in my home State of Utah, from being able to take 
full advantage of the incentive the research credit is supposed to 
provide.
  Nevertheless, it is a very positive thing to have this conference 
report include the extension of the research credit and several other 
provisions that are important to American businesses and their 
employees and customers. This includes the work opportunity tax credit 
and the welfare to work credit, both of which make a difference in 
hiring disadvantaged workers.
  I am also very pleased to see the inclusion of provisions to help 
military families. These brave men and women and their families who are 
sacrificing so much deserve to have tax provisions that at least do not 
penalize them for their service.
  This conference report deserves the support of all of our colleagues. 
Is it the best tax bill we could pass? Of course not. But, given the 
difficulties of passing any legislation this late in the congressional 
session in an election year, it is quite an achievement. I again 
congratulate the conferees for their hard work, and I especially 
commend the chairman and ranking Democrat on the Finance Committee for 
their leadership.
  Mr. BYRD. Mr. President, Plato began ``Book Three'' of The Republic 
by posing the following question: Have we come here looking for genuine 
discourse or fool's gold?
  It is hard to believe Senators are here today looking for genuine 
discourse.
  The legislation before the Senate was packaged into a conference 
report to prevent Senators from offering amendments, even though the 
Senate never considered legislation to extend these tax cuts. The 
Senate Finance Committee never reported legislation to extend these tax 
cuts. This legislation has been rushed to the Senate floor, prohibiting 
any kind of meaningful debate.
  I don't deny the allure of tax cuts. A $1,000 child credit for a 
family of four can provide some benefit for families. Likewise, the 
elimination of marriage tax penalties can serve a valuable social 
purpose. I have cosponsored legislation both to eliminate marriage 
penalties and to expand the child credit.
  But to promise tax cuts to a worker whose job has been lost overseas, 
to promise tax cuts to a family that is without health insurance, to 
promise tax cuts to retirees whose pensions have been lost, and to 
pretend that a tax cut will address the plight of these working 
Americans, is to promise fool's gold.
  The Bush administration has exhausted trillions of dollars on a 
failed

[[Page 19261]]

fiscal policy that advocates tax cuts for wealthy above everything 
else--tax cuts before jobs, tax cuts before health care, tax cuts 
before pensions, tax cuts before securing out homeland, tax cuts before 
the needs of working American families.
  American workers continue to wait for the return of the 3 million 
jobs lost during the Bush presidency. Unemployed workers whose jobs 
have been lost overseas are forced to accept low-wage positions without 
benefits.
  Today, 45 million Americans lack health insurance. Health care costs 
have spiraled to prohibitive levels, and those lacking insurance are 
forced to do without adequate medical care. Even those with insurance 
are seeing their health care costs increase as employers shift the 
burden of higher insurance premiums to their employees.
  Today, workers and retirees counting on the pension benefits promised 
by their employer must watch helplessly as those promised benefits are 
cut.
  These are real issues, and, while a tax cut may put some extra money 
in taxpayers' pockets, it won't replace a job lost overseas, it won't 
replace the loss of health insurance, it won't make America safer, and 
it won't protect against the loss of a pension.
  Nevertheless, I recognize that, while doing little to address these 
underlying economic concerns, it will, at least, provide some relief to 
working American families. Further, it will preserve scarce resources 
for working families and prevent those resources from being siphoned 
away to finance tax cuts for the wealthiest Americans.
  I will vote for this legislation, but I caution workers not to be 
fooled by the rhetoric that will accompany its passage.
  This administration, this Congress is no friend of the working man.
  Whatever dollars you receive from these tax cuts, they will not 
offset the wages that this administration has taken from you by denying 
you overtime pay, by blocking an increase in the minimum wage, and by 
refusing unemployment benefits for jobless workers.
  The Bush administration's fiscal policies have squandered the limited 
opportunities available to help American families find work, to provide 
American families with health care, to protect the pensions of 
retirees.
  This legislation is throwing a bone to the middle-class after 3 years 
of tax cuts for the wealthiest Americans. It is something, but it is 
far, far less than what is needed and suggests only the callous 
indifference of this President and this Congress to the needs of 
working American families.
  Mr. DODD. Mr. President, I rise today to talk about the extension of 
the middle-class tax cuts that the Senate will pass shortly.
  While the conference report to accompany H.R. 1308, the Working 
Families Tax Relief Act of 2004, is not perfect, I do plan to support 
this initiative because I feel strongly that we should provide tax 
relief to working families.
  These are families that work hard and play by the rules. Over the 
past 3\1/2\ years, they are also families who, as a group, have 
suffered the most from the economic slowdown. In general, they are 
working harder, earning less, and paying more for the necessities of 
life. The least we can do for these families is provide them with some 
measure of tax relief to make their financial burden a bit lighter. Tax 
bills enacted in the previous 3\1/2\ years primarily benefitted the 
very most affluent. The conference agreement we consider today benefits 
those who truly need tax relief.
  This conference report extends four important middle-class tax cuts 
that are set to expire at the end of this year. These are: first, the 
$1,000 child tax credit, which has been scheduled to fall to $700 next 
year; second, the current 10-percent income tax bracket; third, a set 
of tax measures to offset the marriage penalty; and fourth relief from 
the alternative minimum tax, which without action, would unfairly force 
more middle income families into paying higher taxes totaling $23 
billion over the next 10 years.
  The conference report also provides assistance to military families 
in combat zones by increasing the Earned Income Tax Credit, EITC, and 
the child credit for military families in 2004 and 2005 by giving them 
the option to include combat pay in their calculations. This provides 
an additional $199 million of assistance to military families in combat 
zones since under current law many soldiers are denied their rightful 
EITC and child credit because combat pay is excluded. While this is 
just a two-year fix, I look forward to working with my colleagues to 
ensure that Congress take action to permanently fix this glitch in the 
law.
  I was pleased that the conference report also includes several 
provisions that are vital to education, environmental protection, and 
job growth. These include the teacher expense deduction, which allows 
teachers to deduct up to $250 annually for their classroom expenses; 
expensing of brown-
fields environmental remediation costs; tax credits for electricity 
produced from certain renewable resources; and the extension of the 
research and development tax credit, which has done much to create jobs 
and enhance our Nation's competitiveness.
  However, while I will support this conference report, it is at best 
incomplete legislation for two reasons. First, because it fails to pay 
for the more than $145 billion in tax cuts that it contains.
  I am very concerned with the shocking deterioration in fiscal 
discipline by the administration and congressional leadership. When 
President Bush took office in January 2001, the Congressional Budget 
Office projected a Federal budget surplus of $5.6 trillion by 2011. 
Today, that projected record surplus has turned into a record deficit 
that is expected to total $4.4 trillion over the next 10 years.
  Regrettably, efforts to make this package a more fiscally responsible 
one has been blocked and rebuffed by the leaders of this Congress, 
including the efforts by members of the leadership's own party. Just 2 
months ago, several Members from both sides of the aisle proposed a 
package which would have ensured that not a penny would have been added 
to the deficit. But the proposal was rejected by the administration and 
Republican congressional leadership.
  According to an address this week by Rodrigo de Rato, the President 
of the International Monetary Fund, budget and trade deficits in the 
United States are a large and growing threat. He stated, ``We believe 
that such a large imbalance is a risk not only to the United States 
economy, but to the world economy.''
  We know only too well from past instances that if deficits are left 
unchecked, they will exert an enormous upward pressure on interest 
rates and in so doing will increase the cost of homes, cars, higher 
education, and establishing and running a small business. These 
increased costs have the potential to dwarf any relief provided by a 
bill such as the one now before the Senate.
  I also find it lamentable that the Senate was not provided with an 
opportunity to consider this legislation in its entirety since what has 
been brought before us is a conference report most of whose provisions 
were never brought before the Senate for full consideration. Had it 
been fully debated in the Senate under normal procedures, Senators 
might have been able to make this legislation more fiscally 
responsible. But because of the procedural tactics of Republican 
Congressional leadership, Senators never had a chance to do that.
  The second reason why this legislation is at best incomplete is that 
it fails to lower the income threshold for the refundable child tax 
credit. By not including this important provision, 4.3 million hard-
working families will see the value of their child tax credit 
significantly diminished. That is unfair to those men and women working 
to lift themselves up economically and provide a decent life for their 
children.
  And so while I am going to support this legislation, I would like to 
make it very clear to this body that I do not think that our efforts to 
help working families are adequately discharged by this legislation.

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  There is much work to be done to give poor and working people 
meaningful opportunity to achieve secure lives for themselves and their 
children now and for generations to come.
  I yield the floor.
  Mr. FRIST. Mr. President, in 1969, Congress passed the alternative 
minimum tax. It had come to light that a small group of wealthy 
individuals were using exemptions in the tax code to evade paying any 
taxes at all. Congress passed the minimum tax law so that high income 
earners would be obligated to pay a minimum amount in taxes no matter 
what.
  That was then.
  Today, the minimum tax has grown to penalize middle class families 
and small business owners. There are a number of reasons. One is that 
the alternative tax brackets have never been indexed to inflation. We 
all know that a dollar in 1969 went a lot further than it does today. 
But the minimum tax doesn't take this into account. And today's middle 
class families are getting hit with higher tax bills.
  Consider if you are married, filing a joint return, and your family 
makes more than $58,000 a year, you may be liable under the alternative 
minimum tax to owe additional Federal income tax.
  If you are a single mother who makes $35,000 a year and gets a little 
over $5,000 in alimony payments, you could owe more taxes.
  Standard deductions that the Congress has passed to help support 
families, encourage homeownership, allow for taxable State and local 
refunds, can actually force middle class families to pay more in 
Federal taxes.
  The national taxpayer advocate, the person responsible inside the IRS 
to look after the taxpayer's interests, says the alternative minimum 
tax is the number one problem facing American taxpayers. A law that was 
only supposed to apply to 155 super wealthy taxpayers in 1969 will hit 
more than 30 million taxpayers by 2010.
  Clearly that is not what Congress intended. And clearly it is not 
fair. Middle class families should not be punished by a law that was 
never intended for folks at their actual income level.
  That is why we must take a serious look at repealing the minimum tax 
law for individuals. Some people call the AMT the Government's ATM. It 
collects billions of dollars for the Government coffers. And some 
people do not want to let that money go. But that money is the 
taxpayer's money. Rather than resist reform, we should look at the 
overall tax code and consider options for fundamental tax reform.
  In 1986, under President Reagan's leadership, we dramatically 
simplified the tax code. Ever since then, and especially in the 1990s, 
we have layered the tax code with all sorts of special exclusions that 
have very little to do with making taxes fairer, simpler and more 
equitable. Ask any family trying to fill out their tax forms each year: 
we have reached a point where the code is becoming complicated than it 
was in 1985.
  I urge my colleagues to look at this issue closely. It's a matter of 
fairness, and for millions of American families, a matter of money, 
money that could be sued to ease the grocery bill, buy a new washing 
machine, or take the family on a weekend road trip.
  While I am talking about tax reform, I had like to highlight some of 
the tax reforms we are working on right now. We are extending a number 
of crucial family tax breaks which expired at the end of last year. For 
example, we are working to extend the welfare-to-work credit, the work 
opportunity tax credit and many other important expired measures.
  These provisions have already passed the house and the Senate as a 
part of the FSC/ETI JOBS bill.
  By moving this package of extenders, which include middle class tax 
relief, we will facilitate a speedy conclusion to the JOBS bill which 
is critical to growing jobs in the manufacturing sector.
  Reforming the minimum tax, extending child tax credits, all of these 
initiatives are to help hard working Americans meet their needs and 
obligations.
  Thanks to the President's 2001 and 2003 tax relief, 14 million low 
income families will receive tax refunds under the refundable child 
credit in 2004, compared to only 1.6 million had the President's tax 
relief not been enacted.
  Combined with the earned income tax credit, 24 million low-income 
families will receive direct assistance this year through the tax code.
  The legislation before the House and Senate will benefit 6.8 million 
low-income families by increasing their tax refunds in 2004.
  For example, a single mother in Tennessee with two children who earns 
$20,000 would get a refund of $1,388 in this year, $463 more than under 
current law, and $1,388 more than pre-2001 law.
  This refund is entirely due to tax relief signed into law by the 
President since 2001, and is in addition to the $3,025 refund she gets 
under the EITC. Her total refund in 2004 will be $4,413.
  As I have said, and many of my colleagues have said time and again, 
our job is to put more money back into the budgets of America's 
families. They know better than the Government how to spend their hard-
earned dollars.
  Mr. BAUCUS. Mr. President, I yield 2 minutes to the Senator from 
Minnesota.
  The PRESIDING OFFICER. The Senator from Minnesota is recognized for 2 
minutes.
  Mr. DAYTON. Mr. President, I am delighted to rise in support of the 
tax bill which I believe will pass on an overwhelmingly bipartisan 
basis. I commend the chairman of the Finance Committee and the ranking 
member for a bill that I will be proud to vote for and one that I, 
frankly, wish had passed in 2001, 2002, and 2003--the kind of bill that 
I voted for back then as a substitute amendment that didn't pass. This 
bill is truly targeted toward middle-income taxpayers, largely and 
predominantly so.
  As my colleague from Arkansas pointed out, there are some provisions 
that I wish were included, and I am sure others as well.
  But overall, this is a very good, targeted middle-income tax cut bill 
that will put money into the pockets of working families, working 
single individuals. It ought to be our policy in the future to keep our 
tax measures targeted toward those who pay the bills and those who are 
in greatest need of earned-income tax relief.
  I point out if we had kept the focus on this kind of tax relief in 
the past, we wouldn't have the kind of deficits we face today. We 
wouldn't be passing on the new bills to our children and grandchildren 
who are going to have to face up to it eventually.
  But I support those who have said tonight that regardless of that 
situation, this is much needed and it will be well used and, hopefully, 
we will continue the recovery from the serious recession that we 
suffered over the last few years.
  I am a little leery of those who say these tax measures are the cure-
all for what has occurred because they continually refer back to points 
in time that are rather selective. If we go back to the beginning of 
the Bush administration, we are looking at a serious jobs deficit. We 
are still suffering a loss of over 3 million manufacturing jobs since 
that time.
  I wish these tax measures and those that preceded them were the cures 
for the economic ills. I fear they are not in isolation.
  I commend the architects of this measure, and I urge my colleagues to 
join with me in supporting and passing it tonight.
  Mr. GRASSLEY. Mr. President, I yield myself such time as I might 
consume. I will take a few minutes in closing this debate to thank some 
folks who made this tax relief possible.
  First of all, as I said in my opening remarks, President Bush made 
middle-income tax relief a priority. He pursued this package with 
focus, with determination, and with good humor.
  The bottom line is, we wouldn't be here today without the leadership 
of our President.
  Next, I would like to thank our majority leader, Senator Frist. Like 
the President, Leader Frist made this bill a priority. His patience and 
dedication in backing me as we moved through the conference process was 
very important.

[[Page 19263]]

  Then I would like to thank for the second time, and not too many 
times can I do that because not enough times make up for the 
cooperation I have received, my friend and colleague, Senator Baucus, 
the ranking member on the Democratic side in the Finance Committee. We 
didn't agree on all points, as he stated, but we agreed on most of the 
substance of the bill and the direction of the policy. Senator Baucus 
and other conferees, including Senators Lott, Nickles, and Lincoln--
each of the conferees brought strong views to the process. Sometimes 
those views differed sharply.
  For instance, as you have seen in tonight's debate, Senator Lincoln 
and Senator Nickles also do not agree on refundable tax credits. Both 
of them made principled reasons for their views. They are passionate.
  The conference agreement reflects a fair balance of those sharply 
divided positions.
  This bill would not have come to the floor without the work of staff. 
I thank them very much. I would like to thank Senate Finance Republican 
staff, Kolan Davis, staff director; Mark Prater, chief tax counsel; Ed 
McClennan; Elizabeth Paris Dean Zerbe, whom we also refer to around 
here on the floor as ``the white tornado.'' We also thank Christy 
Mistr. She happens to be a brandnew mom. She came back early to help us 
get this bill worked out. We thank also John O'Neill, a new addition to 
our staff; Adam Freed, graduate of the fine school known as the 
University of Northern Iowa where I graduated; also, our press team of 
Jill Kozeny and Jim Gerber. They helped our committee get the word out.
  Then, on the Senate Democratic staff, obviously, very good staff, 
very professional: Russ Sullivan, staff director; Bill Dauster; Patrick 
Heck; Melissa Mueller; Matt Jones; Anita Horn Rizek; Jon Selib; Judy 
Miller; Matt Grenasci; Matt Stokes; and Ryan Abraham; Senate 
legislative counsel: Jim Fransen, Mark Mathiesen, and Mark McMonagle.
  And then we have on the Joint Tax Committee: George Yin, Tom 
Barthold, and their entire crew.
  And then we have the GOP leadership staff: Lee Rawls, Eric Ueland, 
and Rohit Kumar all helping.
  With Senator Lincoln's staff, Mac Campbell; Senator Nickles' staff: 
Rachel Jones, and Hazen Marshall.
  Mr. President, I would like to sum up what this bill is all about.
  As the bill title says, it is about America's families. It is about 
providing tax relief to hard-working men and women in America. When I 
think about it, I consider the families on the farms back home. In the 
fields of Iowa, folks are starting the harvest. In the factories of 
Davenport, IA, and in the offices in Des Moines, great insurance 
companies, people are working hard to raise their kids, and this bill 
will help them.
  Let me take some time here to correct what have been very troubling 
statements about the Working Families Tax Relief Act and its benefits 
for low-income working families.
  Let's be clear--this bill provides enormous benefits to working 
families and especially to low-income families.
  Let me remind my colleagues of where we have been on this bill. The 
Senate passed legislation in 2003 that called for accelerating the 
refundability of the child credit from 10 percent to 15 percent, 
providing for a uniform definition of a child, and including combat pay 
for purposes of calculating the child tax credit. That was what the 
Senate passed in 2003. At the same time, the other body passed 
legislation that also accelerated the refundability but the other body 
did not include the uniform definition of a child and did not include 
the combat pay provisions as it relates to the child tax credit.
  We then went to conference and thanks to President Bush's leadership 
we have been successful in reaching an agreement.
  What does our conference bill do in regards to the Senate-passed 
legislation affecting low-income families? The conference report agrees 
with every single one of them. Let me repeat that, the conference 
report accepted every single provision in the Senate-passed bill that 
was directed to helping low-income families.
  The conference made the uniform definition of a child permanent. This 
is an extremely important simplification effort that creates a uniform 
definition of a child for the dependency exemption, child credit, the 
Earned Income Credit, the dependent care credit, and head-of-household 
filing status. This long-overdue simplification makes many more 
taxpayers--especially low-income taxpayers--eligible for a child-
related benefit. This is at a cost of over $1.5 billion over 10 years 
and is the only substantive tax provision in this bill that is made 
permanent.
  The conference agreed to accelerate refundability and also the combat 
pay provisions in the Senate-passed legislation. These two provisions 
provide over $2 billion in benefits.
  So again, as people wring their hands, lets remember that the 
conference agreed to every single tax provision in the Senate-passed 
bill targeted for low-income families. In fact, there was only one 
provision in the Senate bill that was targeted to help families making 
over $100,000--the elimination of the marriage penalty of the child 
credit. What happened that provision? It was dropped in conference.
  But the conference did not stop with just accepting all the Senate 
provisions that help low-income families. The conference added to the 
provisions that will help low-income families.
  First, the conference provided expanded benefits for our men and 
women in uniform receiving combat pay. They will now also be able to 
get expanded benefits under the earned income credit. While combat pay 
is excluded for income purposes, our soldiers, sailors and airmen can 
elect to include combat pay if it will assist them in getting an 
increase in the earned income credit.
  This is a new provision that helps low-income military families. It 
was not included in the Senate proposal. This, combined with other 
provisions in the bill means that targeted relief for low-income 
military families receiving combat pay is increased in this conference 
report by nearly six times over what was provided in the Senate 
proposal. Let me repeat that, the conference report provides almost six 
times greater targeted relief for military families receiving combat 
pay then was included in the Senate proposal.
  Turning to the other items that assist low-income families: Second, 
the conference increases the child credit to $1,000 and extends it 
through 2010. This will benefit low and middle-income families.
  Third, we extend the lowest tax-bracket, the 10 percent tax bracket, 
which at its core benefits low-income families.
  Fourth, we extend marriage penalty relief which helps low-income 
taxpayers along with all taxpayers.
  There is over $23 billion in outlays contained in this bill--that 
reflects primarily the extension of the child credit, the lowering of 
the rates and refundability portions. Thus, of a $145 billion tax cut, 
over $23 billion of it is targeted to low-income families who have 
little to no federal income tax liability.
  So lets put this to rest. The conference report is better then what 
the Senate proposed for low-income families and better then what the 
Senate proposed to help military families.
  Now, let me turn to another chestnut that has been put out. That 
chestnut is that the tax laws will harm 4 million low-income families. 
This is a bait and switch focusing on one issue and ignores the overall 
tax code and all the tax legislation contained in this bill.
  The threshold for the refundable child tax credit--included in the 
2001 bill--is that for those who do not pay taxes should still benefit 
from the child tax credit beginning at $10,000 in income--and that was 
indexed for inflation. This was agreed to by the supporters of this 
provision in 2001 and eliminating the index was not included in the 
Senate proposal last year.
  Unfortunately we are now hearing from those who don't want to be 
reminded of these facts.
  I am saddened by those who want to muddy all the tremendous work we

[[Page 19264]]

have accomplished for working families in this bill. To argue that we 
are raising taxes on those making less than $11,000 or less is 
completely and utterly wrong. First, it is current law that requires 
indexing, there is nothing in this bill that requires indexing. Second, 
these are families who do not have a federal income tax liability. They 
pay no taxes. So it is wrong to say that they are having an increase in 
taxes.
  Third, the naysayers completely ignore the benefits being provided in 
this bill when they pull numbers from thin air. For example, the 
indexing of the $10,000 next year provided in the 2001 bill will mean 
that a family making $18,000 with a child will lose approximately $40 
in child credit benefits, but that same family--because of this bill--
will see their child credit benefit increase by $300 because of the 
accelerated refundability and making the child credit $1000.
  The naysayers want to just pick and choose the provisions and not 
look at the whole package. When you look at the overall package the 
vast majority of the families they talk about being harmed by the 2001 
agreement to index the refundable credit will actually be benefiting 
from the overall package.
  And finally for those families--far, far fewer than the number of 4 
million thrown around--that may see no child credit because of 
indexing, we must bear in mind the EIC benefits that are also indexed. 
Indexing of the refundable child tax credit must be understood in 
conjunction with the EIC benefit, and cannot be looked at in a vacuum.
  For example, in 2001 a single parent making $10,500 and with two 
children had no federal income tax liability and received the maximum 
earned income credit of $4008. In 2003, that same parent, still making 
$10,500, will now receive a nearly $200 increase in her earned income 
credit and receive a check for $4,204.
  It is accurate that because of indexing the family will not receive 
the $50 previously provided under the refundable child credit, but it 
is important to understand it in the context of the overall benefits 
provided in the tax code.
  I recognize that for a low-income family even $50 is important and 
that is why in conference I supported an amendment to end indexing 
inflation of the refundable portion. But I encourage Senators to keep 
their feet on the ground when discussing this and instead reflect on 
the enormous benefits this bill provides to low-income families who do 
not have a federal income tax liability--nearly $24 billion--and to 
also keep in mind the other very beneficial provisions that are in the 
tax code already that assist low income families.
  We have done very right by low-income families and especially 
military families in this bill and in the overall tax code.
  I know as Senators and the American people examine this matter 
closely they will see the enormous good that is in this bill and not be 
swayed by the naysayers.
  This bill will provide great benefit to low-income families and 
military families and that is a credit to President Bush and Senators 
on both sides of the aisle, and it is why we will see this legislation 
receive overwhelmingly support in the Senate.
  Just to be clear, what we are talking about here is not whether to 
provide a certain EIC benefit but whether or not to review 
administration of that tax benefit in two years as we do with other 
expiring tax provisions. There are several administrative reasons why 
that may be appropriate in this circumstance.
  In general, changes to the earned income credit should be studied 
carefully in light of the current error rate in the program's 
administration which exceeds 30 percent and results in nearly $10 
billion of erroneous payments annually. Many are working to reform 
these problems and we don't want to work against their efforts.
  With respect to the combat zone proposal itself, the IRS has 
indicated that the proposal--which allows taxpayers to elect into the 
provision--will increase complexity of the EIC and make administration 
of the provision harder.
  For these reasons, we should review the effectiveness of the 
provision in two years and make any necessary adjustments to the 
provision at that time.
  In addition, the preponderance of the bill benefits working families 
including military families.
  With the exception of a clean extension of expiring tax provisions 
and certain technical corrections, this bill focuses 100 percent on 
providing tax relief to working families including those serving in the 
military.
  In particular, the bill ensures that parents serving in the military 
receive an income tax credit of $1,000 per child each year. For 
military families at the lowest levels of income, the refundability 
provisions of the child tax credit have also been enhanced beginning in 
2004.
  This legislation further provides that military wages earned by 
parents in a combat zone will be treated as earned income for purposes 
of the child credit. This ensures that families whose only income 
consists of combat zone wages will be eligible for the refundable child 
credit.
  One very important provision of the bill may provide economic and 
mental relief to working families. For the most part, we have provided 
a single definition of a ``child'' for tax purposes. For some, this 
will mean additional family tax benefits; for everyone, the bill gives 
needed simplification for working families filing the most basic of tax 
returns.
  Finally, the bill provides permanent tax relief to the first $14,000 
of all dual family taxable wages.
  In conclusion, this legislation would ensure that a single mom in the 
military with 2 kids making $25,000 would save 5 percent on the entire 
amount of her first $14,000 of wages. It would ensure that she gets two 
child tax credits of $1,000 per child so that her federal income tax 
liability, to the extent she has any, would be reduced dollar-for-
dollar by that $2,000 credit amount. If she does not have any federal 
income tax liability already--which is very possible--further 
enhancements to the refundability provisions of the bill ensure that 
she could receive a check for the full amount of her child credits 
totaling $2,000. Finally, if she works in a designated ``combat zone,'' 
the bill treats her combat zone wages as earned income to give her the 
full benefit of the child credit and the combat zone exclusion.
  So you see, this bill provides significant tax relief to military 
families.
  Let me make one more critical point about the issue of earned income 
credit and combat pay. We should all remember that at one time we did 
have combat pay included for purposes of the earned income credit. Then 
in the 2001 budget proposal, the Clinton administration requested the 
Congress to exclude from the EIC calculations all income excluded from 
gross income--including combat pay--for the purposes of determining the 
EIC. This request was made because of concerns of simplification and 
administration.
  So it was the Clinton administration that proposed this change 
regarding exclusion of combat pay from EIC--a change that this bill 
today reverses.
  I make this point not to cast a shadow over the Clinton 
administration's proposal but to highlight--as Senators raise their 
voices about the EIC combat provision being only a two year proposal--
that it was the Clinton administration itself that first raised the 
concerns about the difficulty of administering combat pay and EIC 
benefits and asked that the code be changed.
  We need to get this right. A confusing and unworkable tax provision 
will do more harm than good as military families unnecessarily find 
themselves crossways of the IRS.
  We need to ensure that we are giving our military families a tax 
benefit that will do the job right.
  Senator McCain criticized the extension of section 45. It is a 
renewable energy production credit. It is current law. The bottom line 
is the expiring tax provisions were treated similarly. All expiring tax 
provisions were extended through December 31, 2005.
  Everyone agrees we need to reduce America's dependence on imported 
oil.

[[Page 19265]]

The renewable energy production credit is one incentive that will help 
move America to energy independence. To let this incentive lapse would 
be to send the wrong signal to America's alternative energy producers. 
More dependence on Middle East oil is the wrong answer.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, this legislation would not have been 
possible without the help of many.
  I appreciate the cooperation we received from the Republican staff, 
especially Kolan Davis, Mark Prater, Dean Zerbe, Ed McClellan, 
Elizabeth Paris, Christy Mistr, John O'Neill and Adam Freed.
  I thank the staff of the Joint Committee on Taxation for their 
service.
  I also thank my staff for their tireless effort and dedication, 
including Russ Sullivan, Patrick Heck, Bill Dauster, Matt Stokes, Matt 
Jones, Melissa Mueller, Matt Genasci, Anita Horn Rizek, Judy Miller, 
Jonathan Selib, Ryan Abraham and Wendy Carey. I also thank our 
dedicated fellows, Cuong Huynh, Scott Landes and Jeremy Sylestine.
  Finally, I thank our hardworking interns: Kelsie Eggensperger, Paige 
Lester, Priya Mahanti, Brittney McClary, Audrey Schultz and Mary 
Tuckerman.
  Mr. President, the real thanks here, frankly, goes to a lot of 
Montanans who I have consulted with on this bill, CPAs and tax 
practitioners with whom I have been talking, acting as a sounding board 
as to which provisions should be changed, for example, to make them 
work better. They have been invaluable assistants to me. I am very 
appreciative to know I can just pick up the phone and ask, What do you 
think of this? What do you think of that? Montana business men and 
women, other taxpayers and practitioners, I very much thank them for 
their great help.
  Real thanks really to the working men and women in my State and 
across the Nation. It is through their work and determination that our 
Nation has prospered. Of course, the group includes the wonderful men 
and women who serve in the military because they are the people who put 
their lives on the line. I am very grateful to them and am very humbled 
to be working for them.
  Mr. President, I yield back the remainder of my time and ask for the 
yeas and nays on the conference report.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The majority whip.
  Mr. McCONNELL. Mr. President, let me just indicate for all of our 
Members that we are going to the Foreign Operations bill after this. We 
believe we are down to just a couple of amendments, and we are working 
on making them go away. Our goal is to pass it tonight. If we have the 
kind of cooperation we anticipate having, that will be possible. If 
not, we will have to stack the amendments and vote in the morning.
  But I urge everyone to cooperate, and let's try to finish this up 
tonight. That is what the majority leader would like to do. That is 
where we will go next.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, I yield back the remainder of my time.
  The PRESIDING OFFICER. All time has expired.
  The question is on agreeing to the conference report. The yeas and 
nays have been ordered. The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. REID. I announce that the Senator from Hawaii (Mr. Akaka), the 
Senator from North Carolina (Mr. Edwards), the Senator from Hawaii (Mr. 
Inouye), the Senator from Massachusetts (Mr. Kennedy), and the Senator 
from Massachusetts (Mr. Kerry) are necessarily absent.
  I further announce that, if present and voting, the Senator from 
Massachusetts (Mr. Kennedy) would vote ``yea.''
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 92, nays 3, as follows:

                      [Rollcall Vote No. 188 Leg.]

                                YEAS--92

     Alexander
     Allard
     Allen
     Baucus
     Bayh
     Bennett
     Biden
     Bingaman
     Bond
     Boxer
     Breaux
     Brownback
     Bunning
     Burns
     Byrd
     Campbell
     Cantwell
     Carper
     Chambliss
     Clinton
     Cochran
     Coleman
     Collins
     Conrad
     Cornyn
     Corzine
     Craig
     Crapo
     Daschle
     Dayton
     DeWine
     Dodd
     Dole
     Domenici
     Dorgan
     Durbin
     Ensign
     Enzi
     Feingold
     Feinstein
     Fitzgerald
     Frist
     Graham (FL)
     Graham (SC)
     Grassley
     Gregg
     Hagel
     Harkin
     Hatch
     Hutchison
     Inhofe
     Jeffords
     Johnson
     Kohl
     Kyl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Lott
     Lugar
     McCain
     McConnell
     Mikulski
     Miller
     Murkowski
     Murray
     Nelson (FL)
     Nelson (NE)
     Nickles
     Pryor
     Reed
     Reid
     Roberts
     Rockefeller
     Santorum
     Sarbanes
     Schumer
     Sessions
     Shelby
     Smith
     Specter
     Stabenow
     Stevens
     Sununu
     Talent
     Thomas
     Voinovich
     Warner
     Wyden

                                NAYS--3

     Chafee
     Hollings
     Snowe

                             NOT VOTING--5

     Akaka
     Edwards
     Inouye
     Kennedy
     Kerry
  The conference report was agreed to.

                          ____________________