[Congressional Record (Bound Edition), Volume 151 (2005), Part 2]
[Senate]
[Pages 1848-1864]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. AKAKA (for himself, Mr. Bingaman, Mr. Sarbanes, Mr. 
        Dayton, and Mr. Durbin):
  S. 324. A bill to provide additional protections for recipients of 
the earned income tax credit; to the Committee on Finance.
  Mr. AKAKA. Mr. President, I rise to introduce the Taxpayer Abuse 
Prevention Act. Earned income tax credit, EITC, benefits intended for 
working families are significantly reduced by the use of refund 
anticipation loans, RALs, which typically carry triple digit interest 
rates.
  According to the Brookings Institution, an estimated $1.9 billion 
intended to assist low-income families was received by commercial tax 
preparers and affiliated national banks to pay for tax assistance, 
electronic filing of returns, and high-cost refund loans in 2002. 
Fifty-seven percent of consumers who received RALs in 2003 earned the 
EITC. The Children's Defense Fund recently conducted a review of EITC 
refunds in eight states and the District of Columbia. In Texas, it is 
estimated that EITC families lost an estimated $251 million in tax 
preparation fees and high interest loans. EITC families had an 
estimated $82.6 million diverted to tax preparers in Ohio.
  The interest rates and fees charged on RALs are not justified because 
of the short length of time that these loans are outstanding and the 
minimal risk they present. These loans carry little risk because of the 
Debt Indicator program.
  The Debt Indicator, DI, is a service provided by the Internal Revenue 
Service, IRS, that informs the lender whether or not an applicant owes 
Federal or state taxes, child support, student loans, or other 
Government obligations, which assists the tax preparer in ascertaining 
the applicant's ability to obtain their full refund so that the RAL is 
repaid. The Department of the Treasury should not be facilitating these 
predatory loans that allow tax preparers to reap outrageous profits by 
exploiting working families.
  Unfortunately too many working families are susceptible to predatory 
lending because they are left out of the financial mainstream. Between 
25 and 56 million adults are unbanked, or not using mainstream, insured 
financial institutions. The unbanked rely on alternative financial 
service providers to obtain cash from checks, pay bills, send 
remittances, utilize payday loans, and obtain credit. Many of the 
unbanked are low- and moderate-income families that can ill afford to 
have their earnings unnecessarily diminished by their reliance on these 
high-cost and often predatory financial services. In addition, the 
unbanked are unable to save securely to prepare for the loss of a job, 
a family illness, a

[[Page 1849]]

down payment on a first home, or education expenses.
  My bill will protect consumers against predatory loans, reduce the 
involvement of the Department of the Treasury in facilitating the 
exploitation of taxpayers, and expand access to opportunities for 
saving and lending at mainstream financial services.
  My bill prohibits refund anticipation loans that utilize EITC 
benefits. Other Federal benefits, such as Social Security, have similar 
restrictions to ensure that the beneficiaries receive the intended 
benefit.
  My bill also limits several of the objectionable practices of RAL 
providers. It will prohibit lenders from using tax refunds to collect 
outstanding obligations for previous RALs. In addition, mandatory 
arbitration clauses for RALs that utilize Federal tax refunds would be 
prohibited to ensure that consumers have the ability to take future 
legal action if necessary.
  I am deeply troubled that the Department of the Treasury plays such a 
prominent role in the facilitation and subsequent promotion of refund 
anticipation loans. In 1995, the use of the DI was suspended because of 
massive fraud in e-filed returns with RALs. After the program was 
discontinued, RAL participation declined. The use of the DI was 
reinstated in 1999, according to H&R Block, to ``assist with screening 
for electronic filing fraud and is also expected to substantially 
reduce refund anticipation loan pricing.'' Although RAL prices were 
expected to go down as a result of the reinstatement of the DI, this 
has not occurred. Use of the Debt Indicator should once again be 
stopped. The DI is helping tax preparers make excessive profits from 
low- and moderate-income taxpayers who utilize RALs. The IRS should not 
be aiding efforts that take the earned benefit away from low-income 
families and allow unscrupulous preparers to take advantage of low-
income taxpayers. My bill terminates the DI program. In addition, this 
bill removes the incentive to meet congressionally mandated electronic 
filing goals by facilitating the exploitation of taxpayers. My bill 
would exclude any electronically filed tax returns resulting in tax 
refunds distributed by refund anticipation loans from being counted 
towards the goal established by the IRS Restructuring and Reform Act of 
1998, which is to have at least 80 percent of all returns filed 
electronically by 2007.
  Mr. President, my bill also expands access to mainstream financial 
services. Electronic Transfer Accounts, ETA, are low-cost accounts at 
banks and credit unions intended for recipients of certain Federal 
benefit payments. Currently, ETAs are provided for recipients of other 
Federal benefits such as Social Security payments. My bill expands the 
eligibility for ETAs to include EITC benefits. These accounts will 
allow taxpayers to receive direct deposit refunds into an account 
without the need for a refund anticipation loan.
  Furthermore, my bill would mandate that low- and moderate-income 
taxpayers be provided opportunities to open low-cost accounts at 
federally insured banks or credit unions via appropriate tax forms. 
Providing taxpayers with the option of opening a bank or credit union 
account through the use of tax forms provides an alternative to RALs 
and immediate access to financial opportunities found at banks and 
credit unions.
  I thank my colleagues, Senators Bingaman, Sarbanes, Dayton, and 
Durbin for cosponsoring this legislation. I also thank Representative 
Jan Schakowsky for introducing the companion legislation in the other 
body.
  I ask unanimous consent that the text of the Taxpayer Abuse 
Prevention Act, support letters and an accompanying fact sheet from the 
Association of Community Organizations for Reform, the Children's 
Defense Fund, the Consumer Federation of America, Consumers Union, the 
National Consumer Law Center, the Center for Responsible Lending, and 
the text of the national summary of the refund anticipation studies 
done by the Children's Defense Fund be printed in the Record.
  I urge my colleagues to support this important legislation that will 
restrict predatory RALs and expand access to mainstream financial 
services.

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

                                 S. 324

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Taxpayer Abuse Prevention 
     Act''.

     SEC. 2. PREVENTION OF DIVERSION OF EARNED INCOME TAX CREDIT 
                   BENEFITS.

       (a) In General.--Section 32 of the Internal Revenue Code of 
     1986 (relating to earned income tax credit) is amended by 
     adding at the end the following new subsection:
       ``(n) Prevention of Diversion of Credit Benefits.--The 
     right of any individual to any future payment of the credit 
     under this section shall not be transferable or assignable, 
     at law or in equity, and such right or any moneys paid or 
     payable under this section shall not be subject to any 
     execution, levy, attachment, garnishment, offset, or other 
     legal process except for any outstanding Federal obligation. 
     Any waiver of the protections of this subsection shall be 
     deemed null, void, and of no effect.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 3. PROHIBITION ON DEBT COLLECTION OFFSET.

       (a) In General.--No person shall, directly or indirectly, 
     individually or in conjunction or in cooperation with another 
     person, engage in the collection of an outstanding or 
     delinquent debt for any creditor or assignee by means of 
     soliciting the execution of, processing, receiving, or 
     accepting an application or agreement for a refund 
     anticipation loan or refund anticipation check that contains 
     a provision permitting the creditor to repay, by offset or 
     other means, an outstanding or delinquent debt for that 
     creditor from the proceeds of the debtor's Federal tax 
     refund.
       (b) Refund Anticipation Loan.--For purposes of subsection 
     (a), the term ``refund anticipation loan'' means a loan of 
     money or of any other thing of value to a taxpayer because of 
     the taxpayer's anticipated receipt of a Federal tax refund.
       (c) Effective Date.--This section shall take effect on the 
     date of the enactment of this Act.

     SEC. 4. PROHIBITION OF MANDATORY ARBITRATION.

       (a) In General.--Any person that provides a loan to a 
     taxpayer that is linked to or in anticipation of a Federal 
     tax refund for the taxpayer may not include mandatory 
     arbitration of disputes as a condition for providing such a 
     loan.
       (b) Effective Date.--This section shall apply to loans made 
     after the date of the enactment of this Act.

     SEC. 5. TERMINATION OF DEBT INDICATOR PROGRAM.

       The Secretary of the Treasury shall terminate the Debt 
     Indicator program announced in Internal Revenue Service 
     Notice 99-58.

     SEC. 6. DETERMINATION OF ELECTRONIC FILING GOALS.

       (a) In General.--Any electronically filed Federal tax 
     returns, that result in Federal tax refunds that are 
     distributed by refund anticipation loans, shall not be taken 
     into account in determining if the goals required under 
     section 2001(a)(2) of the Restructuring and Reform Act of 
     1998 that the Internal Revenue Service have at least 80 
     percent of all such returns filed electronically by 2007 are 
     achieved.
       (b) Refund Anticipation Loan.--For purposes of subsection 
     (a), the term ``refund anticipation loan'' means a loan of 
     money or of any other thing of value to a taxpayer because of 
     the taxpayer's anticipated receipt of a Federal tax refund.

     SEC. 7. EXPANSION OF ELIGIBILITY FOR ELECTRONIC TRANSFER 
                   ACCOUNTS.

       (a) In General.--The last sentence of section 3332(j) of 
     title 31, United States Code, is amended by inserting ``other 
     than any payment under section 32 of such Code'' after 
     ``1986''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to payments made after the date of the enactment 
     of this Act.

     SEC. 8. PROGRAM TO ENCOURAGE THE USE OF THE ADVANCE EARNED 
                   INCOME TAX CREDIT.

       (a) In General.--Not later than 6 months after the date of 
     the enactment of this Act, the Secretary of the Treasury 
     shall, after consultation with such private, nonprofit, and 
     governmental entities as the Secretary determines 
     appropriate, develop and implement a program to encourage the 
     greater utilization of the advance earned income tax credit.
       (b) Reports.--Not later than the date of the implementation 
     of the program described in subsection (a), and annually 
     thereafter, the Secretary of the Treasury shall report to the 
     Committee on Finance of the Senate and the Committee on Ways 
     and Means of the House of Representatives on the elements of 
     such program and progress achieved under such program.
       (c) Authorization of Appropriations.--There is authorized 
     to be appropriated such

[[Page 1850]]

     sums as are necessary to carry out the program described in 
     this section. Any sums so appropriated shall remain available 
     until expended.

     SEC. 9. PROGRAM TO LINK TAXPAYERS WITH DIRECT DEPOSIT 
                   ACCOUNTS AT FEDERALLY INSURED DEPOSITORY 
                   INSTITUTIONS.

       (a) Establishment of Program.--Not later than 1 year after 
     the date of the enactment of this Act, the Secretary of the 
     Treasury shall enter into cooperative agreements with 
     federally insured depository institutions to provide low- and 
     moderate-income taxpayers with the option of establishing 
     low-cost direct deposit accounts through the use of 
     appropriate tax forms.
       (b) Federally Insured Depository Institution.--For purposes 
     of this section, the term ``federally insured depository 
     institution'' means any insured depository institution (as 
     defined in section 3 of the Federal Deposit Insurance Act (12 
     U.S.C. 1813)) and any insured credit union (as defined in 
     section 101 of the Federal Credit Union Act (12 U.S.C. 
     1752)).
       (c) Operation of Program.--In providing for the operation 
     of the program described in subsection (a), the Secretary of 
     the Treasury is authorized--
       (1) to consult with such private and nonprofit 
     organizations and Federal, State, and local agencies as 
     determined appropriate by the Secretary, and
       (2) to promulgate such regulations as necessary to 
     administer such program.
       (d) Authorization of Appropriations.--There is authorized 
     to be appropriated such sums as are necessary to carry out 
     the program described in this section. Any sums so 
     appropriated shall remain available until expended.
                                  ____



                             National Consumer Law Center Inc,

                                     Boston, MA, February 7, 2005.
     Hon. Daniel K. Akaka,
     U.S. Senate,
     Washington, DC.
       Dear Senator Akaka: The Association of Community 
     Organizations for Reform Now (ACORN), Center for Responsible 
     Lending, Children's Defense Fund, Consumer Federation of 
     America, Consumers Union, and National Consumer Law Center 
     (on behalf of its low-income clients), write to support your 
     bill, the ``Taxpayer Abuse Prevention Act.'' By prohibiting 
     lenders from making loans against the Earned Income Tax 
     Credit, this bill would greatly reduce the scope of abuses 
     caused by refund anticipation loans (RALs), which carry 
     effective annualized interest rates of about 40% to over 
     700%.
       According to IRS data, 57% of consumers who received RALs 
     in 2003 were beneficiaries of the Earned Income Tax Credit. 
     These EITC recipients paid about $740 million in loan and 
     ``administrative'' fees for RALs. These fees divert hundreds 
     of millions of EITC dollars, paid out of the U.S. Treasury, 
     into the coffers of multimillion dollar commercial 
     preparation chains and big banks. It's time to stop lenders 
     from making high cost, abusive loans using the precious 
     dollars intended to support working poor families.
       Furthermore, we support the ``Taxpayer Abuse Prevention 
     Act'' for its provisions that halt several of the most 
     egregious practices of RAL lenders, such as seizing 
     taxpayers' tax refunds as a form of debt collection and 
     slipping in mandatory arbitration clauses, which leave RAL 
     consumers without their day in court. Moreover, we appreciate 
     the termination of the IRS Debt Indicator program, which 
     would stop the IRS's practice of sharing taxpayer's personal 
     financial information in order to make RALs more profitable 
     for lenders. Finally, we applaud the provisions of the bill 
     that support linking unbanked taxpayers with bank accounts, 
     such as the provision to permit them to open Electronic 
     Transaction Accounts to receive federal tax refunds.
       Thank you again for all your efforts to combat taxpayer 
     abuse by the RAL industry.
           Sincerely,
         Maude Hurd, National President Association of Community 
           Organizations for Reform Now; Jean Ann Fox, Director of 
           Consumer Protection, Consumer Federation of America; 
           Chi Chi Wu, Staff Attorney, National Consumer Law 
           Center; Deborah Cutler-Ortiz, Director of Family 
           Income, Children's Defense Fund; Susanna Montezemolo, 
           Legislative Representative, Consumers Union; Yolanda 
           McGill, Senior Policy Counsel, Center for Responsible 
           Lending.
                                  ____


  How the Taxpayer Abuse Prevention Act Addresses the Worst Aspect of 
                       Refund Anticipation Loans

     What are Refund Anticipation Loans (RALs)?
       Refund anticipation loans (RALs) are high cost short-term 
     loans secured by taxpayers' expected tax refunds. To get a 
     RAL, consumers pay:
       A loan fee to the lender, ranging from about $30 to $115 in 
     2005.
       A fee for commercial tax preparation, typically around 
     $120;
       In some cases, a fee to the commercial preparer to process 
     the RAL, sometimes called a ``administrative'', 
     ``application'', or ``document preparation'' fee, around $30;
     Who gets RALs?
       Over 12 million taxpayers got RALs in 2003, according to 
     the latest available data from IRS, costing taxpayers an 
     estimated $1.4 billion dollars. Nearly 80% of these taxpayers 
     are low-income, making less than $35,000 per year. Over half 
     taxpayers who get RALs receive the Earned Income Tax Credit 
     (EITC). The EITC is a tax benefit for working people who earn 
     low or moderate incomes. It reduces the tax burden on these 
     working families, boosting millions of households out of 
     poverty. EITC recipients are disproportionately represented 
     in the ranks of those who get RALs, since these taxpayers 
     make up just 17% of the taxpayer population. RALs cost EITC 
     recipients $740 million in loan and application/
     administrative fees, plus these EITC recipients paid nearly 
     an estimated $1 billion in tax preparation and check cashing 
     fees.
     What are some of the problems with RALs?
       RALs drain hundreds of millions in EITC benefits, and 
     diminish the EITC's poverty-fighting power.
       The Taxpayer Abuse Prevention Act prohibits RALs made 
     against EITC funds. RAL contracts permit a lender to grab a 
     taxpayer' refund to repay any outstanding RAL debt, even if 
     the debt was to another lender.
       The Taxpayer Abuse Prevention Act prohibits debt collection 
     from a taxpayer's refund. RAL contracts contain anti-consumer 
     mandatory arbitration clauses that deprive taxpayers of their 
     day in court if they have a problem with their RALs.
       The Taxpayer Abuse Prevention Act prohibits mandatory 
     arbitration clauses in RAL contracts. The IRS helps increase 
     profits for RAL lenders by sharing taxpayer's personal 
     financial information in the form of the Debt Indicator, 
     which tells tax preparers and RAL lenders when a tax refund 
     offset exists.
       The Taxpayer Abuse Prevention Act terminates the Debt 
     Indicator program, ensuring that IRS resources are not used 
     to help the bottom line of RAL lenders.
     Isn't this denying EITC taxpayers an option to get their 
         refund money at tax time?
       RALs cost an enormous amount for what is essentially a loan 
     of less than two weeks, draining billions for a mostly 
     useless product. Because they are such short term loans, the 
     RAL loan fee translates into effective annualized interest 
     rates of about 40% to over 700%, or 70% to over 1700% if 
     administrative fees are included. If the taxpayer's refund is 
     reduced or denied by the IRS, the taxpayer is on the hook to 
     repay the loan--a tough task for the low-income taxpayers who 
     mostly get RALs.
       The EITC is money paid out of the federal Treasury to make 
     sure working families are lifted out of poverty. Other 
     similar government programs have longstanding similar 
     prohibitions against making a loan against those benefits. 
     For example, the Social Security Act, 42 U.S.C. 407(a), 
     prohibits lenders from seizing, garnishing, attaching, taking 
     an assignment in or securing a loan against Social Security 
     benefits. The Taxpayer Abuse Prevention Act prohibition's 
     against RALs secured by the EITC was modeled on this 
     provision of the Social Security Act, with the addition of a 
     prohibition against offsets of EITC benefits.
                                  ____



                                      Children's Defense Fund,

                                   Washington, DC, February, 2005.

     Keeping What They've Earned: Working Families and Tax Credits

       As the height of tax-filing season approaches, Americans 
     are being bombarded with advertisements from commercial tax 
     preparers on high-cost options for getting their taxes 
     prepared. Many of these commercial tax preparers focus on 
     low-income neighborhoods and lure their clients with the 
     promise of ``Fast Money,'' Money Now'' or ``Rapid Refunds.''
       Two out of every three people nationwide who claim the 
     Earned Income Tax Credit (EITC) use commercial tax preparers 
     to prepare their returns. These low-income families end up 
     paying high preparation fees and many of them take out high-
     interest loans against their expected refund. Unfortunately, 
     many of these low- to moderate-income working Americans are 
     unaware of other options--including free tax preparation 
     through Volunteer Income Tax Assistance sites.
       Enacted in 1975, the EITC is our nation's largest and most 
     effective anti-poverty program, generating billions of 
     dollars to help families meet their most basic needs. 
     Research shows families use their refunds to pay bills such 
     as utilities and rent, to purchase basic household 
     commodities and clothing, to cover the costs of tuition, and 
     some even reserve parts of their EITC for savings. In sum, 
     EITC helps low- to moderate-income families make ends meet 
     while stimulating the local economy.


     THE FULL VALUE OF THE PROGRAM IS NOT REACHING WORKING FAMILIES

       Unfortunately, low-income taxpayers lost over $690 million 
     in loan charges in 2003 and a total of $2.3 billion if the 
     cost of commercial tax preparation is included. These costs 
     can include tax preparation, documentation preparation or 
     application handling fees, electronic filing fees and a 
     Refund Anticipation Loan (RALs). The RALs are loans secured 
     by tax-payer's tax refund, including the EITC.
       In middle and upper income communities, consumers have 
     access to loans and credit

[[Page 1851]]

     cards at competitive rates, and branch offices of mainstream 
     banks and savings and loans offer a full array of banking 
     services. Low-income consumers are forced to patronize fringe 
     financial service providers that charge exorbitant rates for 
     personal loans and limited banking services.


                     RALS TARGET HIGH POVERTY AREAS

       Recent research has shown that low-income taxpayers who 
     claim the EITC represent the majority of the marketplace for 
     RALs. The product's popularity varies substantially across 
     the U.S., but the most recent Internal Revenue Service 
     figures indicate that 79 percent of RAL recipients in 2003 
     had adjusted gross incomes of $35,000 or less. Minority 
     consumers are heavier RAL users. Twenty-eight percent of 
     African Americans and 21 percent of Latino taxpayers told 
     surveyors they received RALs compared with 17 percent of 
     White consumers.
       The Children's Defense Fund's review of eight states and 
     the District of Columbia reveals that almost $960 million 
     dollars has been siphoned away from low-income tax payers in 
     these states, because of tax preparation and high interest 
     loan fees.
       California lost an estimated $236.5 million.
       Minnesota lost and estimated 5.1 million.
       Mississippi lost an estimated $54 million.
       New York lost an estimated $182 million.
       Ohio lost an estimated $82.6 million.
       South Carolina lost an estimated $57 million.
       Tennessee lost an estimated $57 million.
       Texas lost an estimated $251 million.
       Washington D.C. lost an estimated $5.8 million.


           THE APPEAL OF RALS AND WHAT TAXPAYERS AREN'T TOLD

       Many low-income families may feel they have little choice 
     but to take out a RAL. First, many are unlikely to have $100 
     on hand to pay for tax preparation fees. In setting up the 
     loan, the commercial tax preparers deduct these fees first, 
     relieving the families from the need to find alternative 
     resources. Second, and probably more significantly, RALs 
     enable families to access the amount of money they expect 
     from their refunds within 48 hours, rather than having to 
     wait for the IRS to process their returns. This wait could 
     last 6-8 weeks if the family does not file electronically and 
     does not have a bank account to accept an electronic transfer 
     of the refund. Indeed, many low-income families lack bank 
     accounts. According to the Federal Reserve, one out of four 
     families with incomes less than $25,000 does not have a bank 
     account of any kind.


                            RECOMMENDATIONS

       1. Simplify the rules and process. Working families should 
     be able to complete their own taxes, without having to pay 
     for professional assistance. Federal and state laws, 
     especially those that govern working families income taxes, 
     need to be simplified and federal and state tax credit 
     programs need to be coordinated.
       2. Ensure that free tax assistance for EITC families is 
     available, accessible and well-publicized. Very few people 
     know that free tax assistance for low-income families is 
     available at Volunteer Income Tax Assistance sites, Tax 
     Counseling for the Elderly, AARP and other free tax 
     preparation sites in many communities, but very few people 
     know this. The community groups and nonprofit organizations 
     that operate many of these sites need help. Different levels 
     of government, employers, foundations, churches and other 
     community groups can all provide financial assistance, make 
     site locations available, donate computers for electronic 
     filing, help recruit volunteers and conduct outreach with 
     potential EITC families. EITC families should also be made 
     aware that there are free or low-cost tax filing websites 
     available that they can access through the IRS and other 
     websites.
       3. Strengthen consumer protection and education. There is 
     little regulation of tax preparers even though they are 
     entrusted with personal information and expected to stay 
     abreast of many complex tax laws. The federal and state 
     governments could do more to regulate and monitor the 
     practices of paid preparers as well as the national banks 
     with which they partner to offer RALs. Families need to 
     understand what they can expect of their tax preparer, as 
     well as the drawbacks and hidden costs of RALs. On the 
     federal level, the Taxpayer Abuse Prevention Act (TAPA) 
     legislation introduced by Senators Akaka (D-HI) and Bingaman 
     (D-NM) and Representative Schakowsky (DIL) would prohibit the 
     use of RALs against the EITC.
       4. Connect more low-income families with fmancial 
     institutions and increase their financial literacy. Having a 
     tax refund electronically deposited directly into a bank 
     account speeds up the turnaround time significantly, but one 
     out of four families with incomes less than $25,000 does not 
     have a bank account. Recent efforts to partner free tax 
     assistance with financial institutions have been successful.


  CHILDREN NEED ADEQUATE FAMILY INCOME IF THEY ARE TO MEET THEIR MOST 
 BASIC NEEDS, FROM DIAPERS To DOCTORS To HEALTHY FOOD AND SAFE HOUSING

       Whether a child will flounder or flourish can hinge on 
     things that money buys: good quality child care, eyeglasses 
     to read the chalkboard, a little league fee, a musical 
     instrument, or simply the peace of mind that lets parents 
     create a warm and nurturing family life free from worries 
     about eviction or hunger.
       Yet almost 13 million children are poor and millions more 
     live in struggling families with incomes just above the 
     official poverty line. Giving children economic security 
     means providing stronger tax credits for low-paid working 
     families and a more reliable safety net when jobs fall short. 
     It also means making more effective use of available programs 
     and ensuring that families have access to the tax credits and 
     food, health, and other benefits that already exist.
       The millions of dollars lost by working families to 
     commercial tax preparers is money that could have been used 
     to help provide their children with a safe home, nutritious 
     meals and a good education.
       These hardworking families are trying to lift themselves 
     out of poverty but are falling victim to targeted marketing 
     tactics that are taking their hard-earned money. The 
     Children's Defense Fund's efforts to educate and assist 
     families that may otherwise, fall prey to these 
     unconscionable sales tactics can make a difference in the 
     lives of the working poor.
                                 ______
                                 
      By Mr. SANTORUM (for himself and Mrs. Lincoln):
  S. 327. A bill to amend the Internal Revenue Code of 1986 to expand 
the tip credit to certain employers and to promote tax compliance; to 
the Committee on Finance.
  Mr. SANTORUM. Mr. President, I would like to introduce, along with my 
colleague, Senator Lincoln of Arkansas, the Small Business Tax 
Equalization and Compliance Act of 2005, which would amend the tax code 
to expand the tip credit to certain employers and to promote tax 
compliance.
  This bill addresses an unfair aspect of our current tax code that 
adversely affects tens of thousands of small businesses across the 
country. Under current law, certain small business owners are required 
to pay Social Security and Medicare (FICA) taxes on tips their 
employees earn, despite having no control over or share of the tip 
earnings. This legislation will allow these small business owners to 
claim a tax credit against their income taxes for their share of the 
FICA tax paid on their employees' tips. The Small Business Tax 
Equalization and Compliance Act would place cosmetology service owners 
on equal footing with other similarly tip-intensive businesses such as 
the restaurant and food delivery industries that already benefit from a 
similar tax credit.
  I ask unanimous consent that the text of the bill be printed in the 
Record, and am hopeful my colleagues will join me in support of this 
legislation.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 327

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Small Business Tax 
     Equalization and Compliance Act of 2005''.

     SEC. 2. EXPANSION OF CREDIT FOR PORTION OF SOCIAL SECURITY 
                   TAXES PAID WITH RESPECT TO EMPLOYEE TIPS.

       (a) Expansion of Credit to Other Lines of Business.--
     Paragraph (2) of section 45B(b) of the Internal Revenue Code 
     of 1986 is amended to read as follows:
       ``(2) Application only to certain lines of business.--In 
     applying paragraph (1), there shall be taken into account 
     only tips received from customers or clients in connection 
     with--
       ``(A) the providing, delivering, or serving of food or 
     beverages for consumption if the tipping of employees 
     delivering or serving food or beverages by customers is 
     customary, or
       ``(B) the providing of any cosmetology service for 
     customers or clients at a facility licensed to provide such 
     service if the tipping of employees providing such service is 
     customary.''.
       (b) Definition of Cosmetology Service.--Section 45B of such 
     Code is amended by redesignating subsections (c) and (d) as 
     subsections (d) and (e), respectively, and by inserting after 
     subsection (b) the following new subsection:
       ``(c) Cosmetology Service.--For purposes of this section, 
     the term `cosmetology service' means--
       ``(1) hairdressing,
       ``(2) haircutting,
       ``(3) manicures and pedicures,
       ``(4) body waxing, facials, mud packs, wraps, and other 
     similar skin treatments, and
       ``(5) any other beauty related service provided at a 
     facility at which a majority of the services provided (as 
     determined on the basis

[[Page 1852]]

     of gross revenue) are described in paragraphs (1) through 
     (4).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to tips received for services performed after 
     December 31, 2004.

     SEC. 3. INFORMATION REPORTING AND TAXPAYER EDUCATION FOR 
                   PROVIDERS OF COSMETOLOGY SERVICES.

       (a) In General.--Subpart B of part III of subchapter A of 
     chapter 61 of the Internal Revenue Code of 1986 is amended by 
     inserting after section 6050T the following new section:

     ``SEC. 6050U. RETURNS RELATING TO COSMETOLOGY SERVICES AND 
                   INFORMATION TO BE PROVIDED TO COSMETOLOGISTS.

       ``(a) In General.--Every person (referred to in this 
     section as a `reporting person') who--
       ``(1) employs 1 or more cosmetologists to provide any 
     cosmetology service,
       ``(2) rents a chair to 1 or more cosmetologists to provide 
     any cosmetology service on at least 5 calendar days during a 
     calendar year, or
       ``(3) in connection with its trade or business or rental 
     activity, otherwise receives compensation from, or pays 
     compensation to, 1 or more cosmetologists for the right to 
     provide cosmetology services to, or for cosmetology services 
     provided to, third-party patrons, shall comply with the 
     return requirements of subsection (b) and the taxpayer 
     education requirements of subsection (c).
       ``(b) Return Requirements.--The return requirements of this 
     subsection are met by a reporting person if the requirements 
     of each of the following paragraphs applicable to such person 
     are met.
       ``(1) Employees.--In the case of a reporting person who 
     employs 1 or more cosmetologists to provide cosmetology 
     services, the requirements of this paragraph are met if such 
     person meets the requirements of sections 6051 (relating to 
     receipts for employees) and 6053(b) (relating to tip 
     reporting) with respect to each such employee.
       ``(2) Independent contractors.--In the case of a reporting 
     person who pays compensation to 1 or more cosmetologists 
     (other than as employees) for cosmetology services provided 
     to third-party patrons, the requirements of this paragraph 
     are met if such person meets the applicable requirements of 
     section 6041 (relating to returns filed by persons making 
     payments of $600 or more in the course of a trade or 
     business), section 6041A (relating to returns to be filed by 
     service-recipients who pay more than $600 in a calendar year 
     for services from a service provider), and each other 
     provision of this subpart that may be applicable to such 
     compensation.
       ``(3) Chair renters.--
       ``(A) In general.--In the case of a reporting person who 
     receives rent or other fees or compensation from 1 or more 
     cosmetologists for use of a chair or for rights to provide 
     any cosmetology service at a salon or other similar facility 
     for more than 5 days in a calendar year, the requirements of 
     this paragraph are met if such person--
       ``(i) makes a return, according to the forms or regulations 
     prescribed by the Secretary, setting forth the name, address, 
     and TIN of each such cosmetologist and the amount received 
     from each such cosmetologist, and
       ``(ii) furnishes to each cosmetologist whose name is 
     required to be set forth on such return a written statement 
     showing--

       ``(I) the name, address, and phone number of the 
     information contact of the reporting person,
       ``(II) the amount received from such cosmetologist, and
       ``(III) a statement informing such cosmetologist that (as 
     required by this section), the reporting person has advised 
     the Internal Revenue Service that the cosmetologist provided 
     cosmetology services during the calendar year to which the 
     statement relates.

       ``(B) Method and time for providing statement.--The written 
     statement required by clause (ii) of subparagraph (A) shall 
     be furnished (either in person or by first-class mail which 
     includes adequate notice that the statement or information is 
     enclosed) to the person on or before January 31 of the year 
     following the calendar year for which the return under clause 
     (i) of subparagraph (A) is to be made.
       ``(c) Taxpayer Education Requirements.--In the case of a 
     reporting person who is required to provide a statement 
     pursuant to subsection (b), the requirements of this 
     subsection are met if such person provides to each such 
     cosmetologist annually a publication, as designated by the 
     Secretary, describing--
       ``(1) in the case of an employee, the tax and tip reporting 
     obligations of employees, and
       ``(2) in the case of a cosmetologist who is not an employee 
     of the reporting person, the tax obligations of independent 
     contractors or proprietorships.
     The publications shall be furnished either in person or by 
     first-class mail which includes adequate notice that the 
     publication is enclosed.
       ``(d) Definitions.--For purposes of this section--
       ``(1) Cosmetologist.--
       ``(A) In general.--The term `cosmetologist' means an 
     individual who provides any cosmetology service.
       ``(B) Anti-avoidance rule.--The Secretary may by regulation 
     or ruling expand the term `cosmetologist' to include any 
     entity or arrangement if the Secretary determines that 
     entities are being formed to circumvent the reporting 
     requirements of this section.
       ``(2) Cosmetology service.--The term `cosmetology service' 
     has the meaning given to such term by section 45B(c).
       ``(3) Chair.--The term `chair' includes a chair, booth, or 
     other furniture or equipment from which an individual 
     provides a cosmetology service (determined without regard to 
     whether the cosmetologist is entitled to use a specific 
     chair, booth, or other similar furniture or equipment or has 
     an exclusive right to use any such chair, booth, or other 
     similar furniture or equipment).
       ``(e) Exceptions for Certain Employees.--Subsection (c) 
     shall not apply to a reporting person with respect to an 
     employee who is employed in a capacity for which tipping (or 
     sharing tips) is not customary.''.
       (b) Conforming Amendments.--
       (1) Section 6724(d)(1)(B) of such Code (relating to the 
     definition of information returns) is amended by 
     redesignating clauses (xiii) through (xviii) as clauses (xiv) 
     through (xix), respectively and by inserting after clause 
     (xii) the following new clause:
       ``(xiii) section 6050U(a) (relating to returns by 
     cosmetology service providers).''.
       (2) Section 6724(d)(2) of such Code is amended--
       (A) by striking ``or'' at the end of subparagraph (AA),
       (B) by striking the period at the end of subparagraph (BB) 
     and inserting ``, or'', and
       (C) by inserting after subparagraph (BB) the following new 
     subparagraph:
       ``(CC) subsections (b)(3)(A)(ii) and (c) of section 6050U 
     (relating to cosmetology service providers) even if the 
     recipient is not a payee.''.
       (3) The table of sections for subpart B of part III of 
     subchapter A of chapter 61 of the Internal Revenue Code of 
     1986 is amended by adding after section 6050T the following 
     new item:

``Sec. 6050U. Returns relating to cosmetology services and information 
              to be provided to cosmetologists.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to calendar years after 2004.
                                 ______
                                 
      By Mr. ROCKEFELLER (for himself and Mr. Leahy):
  S. 329. A bill to amend title 11, United States Code, to increase the 
amount of unsecured claims for salaries and wages given priority in 
bankruptcy, to provide for cash payments to retirees to compensate for 
lost health insurance benefits resulting from the bankruptcy of their 
former employer, and for other purposes; to the Committee on the 
Judiciary.
  Mr. ROCKEFELLER. Mr. President, over the last several years as the 
economy came down from the high of the 1990s, we have seen how 
devastating it can be for workers when their companies declare 
bankruptcy. From the enormous Enron bankruptcy at the end of 2001 to 
the bankruptcies of Wheeling-Pitt and then Weirton Steel in my own home 
State, every bankruptcy has brought heartache for workers who had 
dedicated themselves to their employers. In many cases, employees and 
retirees have very limited ability to recover the wages, severance, or 
benefits they are due when their companies seek protection from 
creditors.
  Workers deserve better. So today I am introducing the Bankruptcy 
Fairness Act to strengthen workers' rights in bankruptcy and to provide 
greater authority to bankruptcy courts to ensure a fair distribution of 
assets. I am very pleased that Senator Leahy, the distinguished ranking 
Democrat on the Senate Judiciary Committee is an original cosponsor of 
this bill.
  Specifically, the bill will do three things. It will ensure that 
retirees whose promised health insurance is taken away receive at least 
some compensation for their lost benefits. Second, my legislation would 
allow employees to recover more of the back-pay or other compensation 
that is owed to them at the time of the bankruptcy. And lastly, it 
would provide bankruptcy courts the authority to recover company assets 
in cases where company managers flagrantly paid excessive compensation 
to favored employees just before declaring bankruptcy.
  I first introduced this legislation in the 108th Congress. I am 
reintroducing it because this issue is as important in West Virginia 
today as it has ever been. I am hopeful that as Congress considers any 
changes to bankruptcy law we will debate how we can better protect 
workers whose companies file

[[Page 1853]]

for bankruptcy. I do not pretend to have all the answers. But I do know 
that we must do a better job of easing the burden that bankruptcy 
imposes on employees and retirees. And I believe that we can do so in 
creative ways that do not make it more difficult for companies to 
successfully reorganize and emerge from bankruptcy. I look forward to 
the ideas and suggestions of my colleagues.
  In the simplest economic terms, employees sell their labor to their 
companies. They toil away in offices, plants, factories, mills, and 
mines, because they are promised that at the end of the day they will 
receive certain compensation. One of the most important types of 
compensation that workers earn is the right to enjoy certain benefits 
when they retire. Pensions, life insurance, or health care coverage are 
earned by workers in addition to their weekly paychecks. Yet, sadly we 
have seen many companies in the last few years abandon these promises 
when they declare bankruptcy.
  More and more we see companies taking the easy road to profitability 
by abandoning commitments that they made to workers. For retirees who 
have planned for their golden years based on the benefits they have 
earned, losing health insurance can be a devastating blow. Retirees 
must have the right to reasonable compensation if the company seeks to 
break its promise to provide health insurance. Under current law, these 
retirees receive what is called a general unsecured claim for the value 
of the benefits they lost. As any creditor will tell you, a general 
unsecured claim is essentially worthless in most bankruptcies. It means 
you are at the end of the line, and there are not enough assets to go 
around. This law allows companies to essentially rescind compensation 
that retirees have earned with virtually no cost to the company. Of 
course that is a great deal for the company, but it is spectacularly 
unfair to the retirees.
  Recognizing that so-called legacy costs are often an impossible 
burden for a company that is trying to emerge from bankruptcy, my 
legislation would still allow companies in some circumstances to alter 
the health coverage offered to retirees. However, it would require that 
the company pay a minimum level of compensation to retirees. Under this 
bill, each retiree would be entitled to a payment equal to the cost of 
purchasing comparable health insurance for a period of 18 months. Of 
course, 18 months of health insurance coverage is a lot less than many 
of these retirees are losing, but it can ease the transition as 
retirees make alternative plans, and it will discourage companies from 
thinking that terminating retiree health coverage is an easy solution. 
The retirees would still be entitled to a general unsecured claim for 
the value of the benefits lost in excess of this one time payment. This 
change would ensure that retirees, while still not being made whole on 
lost benefits, will at least receive some compensation for the broken 
promises.
  Many active workers, too, have a difficult time recovering what is 
owed to them by their employer when the company files bankruptcy. Under 
current law, employees are entitled to a priority claim of up to 
$4,925. But that figure is usually not enough to cover the back-wages, 
vacation time, severance pay, or benefit payments that the employees 
are owed for work done prior to the bankruptcy. Congress needs to 
update the amount of the priority claim to ensure that more workers are 
able to receive what is rightfully theirs. The Bankruptcy Fairness Act 
would establish a priority claim for the first $15,000 of compensation 
owed to an employee.
  In most cases, employees have been working their hardest to help the 
company avoid the nightmare of bankruptcy, only to find that they will 
not be compensated for their services as promised. As we saw so clearly 
with the Enron case, employees are often left holding the bag when 
their company declares bankruptcy. In that case, employees were owed an 
average of $35,000 in back-wages, severance, and other promised 
compensation. They deserved to recover more than a mere $4,925 of what 
was owed them. Let me be clear, this bill does not establish any new 
obligation for a company to pay severance or other compensation to 
employees caught up in a company's bankruptcy. It merely ensures that 
employees can recover more of what is already owed to them through the 
bankruptcy process.
  I understand that many creditors or investors are not able to recover 
what is rightfully owed to them in bankruptcy, but employees deserve 
protection that recognizes the unique nature of their dependence on 
their employer. Any smart investor diversifies his or her portfolio so 
that a bankruptcy at one company does not bankrupt the investor. 
Likewise, suppliers and creditors that do business with a company 
typically have many other clients. This is not the case with workers. 
They cannot diversify away the risk of working for a bankrupt company, 
and the financial hardship a bankruptcy brings is more devastating to 
the average worker than the average creditor or supplier.
  Now, I know that some of my colleagues listening to this may be 
worrying that this legislation is insensitive to the needs of companies 
that are trying to reorganize in order to emerge from bankruptcy and go 
forward as successful businesses. I am fully aware that sometimes, too 
often in the real world, the bankruptcy process can help companies stay 
open and maintain jobs by restructuring obligations to creditors. Too 
many companies in West Virginia have had to go through the painful 
process of Chapter 11 reorganization. I completely understand the need 
to keep the factories open. And I have always worked side by side with 
companies to help them recover.
  I will continue that important work, and I have included a provision 
in this bill to help bankrupt companies that are struggling to survive 
to recover assets that have been pilfered from the corporate coffers. 
In too many cases, company executives reward themselves even as their 
companies careen toward bankruptcy. The most egregious recent example 
is at Enron in 2001. In the days and weeks leading up to the bankruptcy 
filing, executives granted large bonuses to themselves and their 
favored employees. Millions of dollars were paid to a select group of 
employees just before the company declared bankruptcy. It is 
unconscionable that executives would grant themselves undeserved 
bonuses and then weeks later claim that the company did not have the 
resources to pay its rank and file employees.
  My legislation provides bankruptcy courts greater authority to 
recover excessive compensation that was paid just prior to the 
bankruptcy filing. If the court finds that compensation was out of the 
ordinary course of business or was unjust enrichment, the court can 
recover those assets for the bankrupt company, ensuring that more 
creditors, employees, and retirees can receive what is rightfully owed 
to them by the company.
  The reforms I have outlined are modest. They will not take the sting 
out of bankruptcy. By definition a bankruptcy is a failure, and it is 
painful for the company's employees, retirees, and business partners. 
But the Bankruptcy Fairness Act I am introducing today would make 
progress toward ensuring that bankruptcies are more fair to the workers 
who gave their time and energy and sweat to the company in exchange for 
certain promised compensation. And by helping a company recover assets 
that should not have been paid out as undeserved bonuses just before 
bankruptcy the bill ensures that more of a company's assets are paid to 
the employees, retirees, and creditors who are rightfully owed.
  It is my hope that this legislation will receive serious 
consideration from my colleagues, and that this can open an important 
debate about how workers and retirees can be better protected from the 
ugly side of prolonged economic downturns. I ask unanimous consent that 
the text of the legislation be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 329

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

[[Page 1854]]



     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Bankruptcy Fairness Act''.

     SEC. 2. FAIR TREATMENT OF COMPENSATION IN BANKRUPTCY.

       (a) Increased Priority Claim Amount for Employee Wages and 
     Benefits.--Section 507(a) of title 11, United States Code, is 
     amended--
       (1) in paragraph (3)--
       (A) by striking ``$4,925'' and inserting ``$15,000''; and
       (B) by striking ``within 90 days''; and
       (2) in paragraph (4)(B)(i), by striking ``$4,925'' and 
     inserting ``$15,000''.
       (b) Recovery of Excessive Compensation.--Section 547 of 
     title 11, United States Code, is amended by adding at the end 
     the following:
       ``(h) The court, on motion of a party of interest, may 
     avoid any transfer of compensation made to a present or 
     former employee, officer, or member of the board of directors 
     of the debtor on or within 90 days before the date of the 
     filing of the petition that the court finds, after notice and 
     a hearing, to be--
       ``(1) out of the ordinary course of business; or
       ``(2) unjust enrichment.''.

     SEC. 3. PAYMENT OF INSURANCE BENEFITS OF RETIREES.

       (a) In General.--Section 1114(j) of title 11, United States 
     Code, is amended to read as follows:
       ``(j)(1) No claim for retiree benefits shall be limited by 
     section 502(b)(7).
       ``(2)(A) Each retiree whose benefits are modified pursuant 
     to subsection (e)(1) or (g) shall have a claim in an amount 
     equal to the value of the benefits lost as a result of such 
     modification. Such claim shall be reduced by the amount paid 
     by the debtor under subparagraph (B).
       ``(B)(i) In accordance with section 1129(a)(13)(B), the 
     debtor shall pay the retiree with a claim under subparagraph 
     (A) an amount equal to the cost of 18 months of premiums on 
     behalf of the retiree and the dependents of the retiree under 
     section 602(3) of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1162(3)), which amount shall not exceed 
     the amount of the claim under subparagraph (A).
       ``(ii) If a retiree under clause (i) is not eligible for 
     continuation coverage (as defined in section 602 of the 
     Employee Retirement Income Security Act of 1974), the 
     Secretary of Labor shall determine the amount to be paid by 
     the debtor to the retiree based on the 18-month cost of a 
     comparable health insurance plan.
       ``(C) Any amount of the claim under subparagraph (A) that 
     is not paid under subparagraph (B) shall be a general 
     unsecured claim.''.
       (b) Confirmation of Plan.--Section 1129(a)(13) of title 11, 
     United States Code, is amended to read as follows:
       ``(13) The plan provides--
       ``(A) for the continuation after its effective date of the 
     payment of all retiree benefits (as defined in section 1114), 
     at the level established pursuant to subsection (e)(1) or (g) 
     of section 1114, at any time before the confirmation of the 
     plan, for the duration of the period the debtor has obligated 
     itself to provide such benefits; and
       ``(B) that the holder of a claim under section 
     1114(j)(2)(A) shall receive from the debtor, on the effective 
     date of the plan, cash equal to the amount calculated under 
     section 1114(j)(2)(B).''.
       (c) Rulemaking.--The Secretary of Labor shall promulgate 
     rules and regulations to carry out the amendments made by 
     this section.
                                 ______
                                 
      By Mr. ENSIGN (for himself, Mr. Reid, Mr. Burns, Mrs. Feinstein, 
        Mr. Nelson of Florida, Mr. Chafee, Mr. Sununu, Mr. Durbin, and 
        Mr. Dayton):
  S. 330. A bill to amend the Help America Vote Act of 2002 to require 
a voter-verified permanent record or hardcopy under title III of such 
Act, and for other purposes; to the Committee on Rules and 
Administration.
  Mr. ENSIGN. Mr. President, in the November 2004 elections, Nevadans 
entered a new frontier for casting their votes. We became the first 
state in the nation to require that voter-verified paper audit trail 
printers be used with touch-screen voting machines.
  Not only did our election go off without a hitch, but voters across 
Nevada left the polls with the knowledge that their vote would be 
counted and that their vote would be counted accurately.
  I understand better than most the importance of the integrity of the 
ballot box. I was at the mercy of a paperless-machine election in my 
1998 race for the U.S. Senate. When the votes were tallied with a 
difference of only a few hundred, I asked for a recount in Clark 
County, the only county at the time using electronic voting machines. 
The result of the recount was identical to the first count. That is 
because there was nothing to recount. After rerunning a computer 
program, the computer predictably produced the same exact tally.
  I conceded that race and was elected to Nevada's other Senate seat in 
2000. But that experience made me realize the importance of ensuring 
Americans that their votes will count--it is absolutely fundamental to 
our democracy.
  That is why I led the fight for voter verification paper trails in 
the Help America Vote Act (HAVA) that President Bush signed into law in 
2002. A voter-verified paper trail would allow voters to review a 
physical printout of their ballot and correct any errors before leaving 
the voting booth. This printout would be preserved at the polling place 
for use in any recounts. This is exactly what Nevadans experienced when 
they voted in November.
  Unfortunately, the language that is contained in HAVA has not 
resolved this issue for most other states. Now, I am working to ensure 
voting integrity across the country. By introducing the Voting 
Integrity and Verification Act, I want to ensure that HAVA is clear--
voters must be assured that their votes will be accurate and will be 
counted properly. A paper trail provides just such an assurance.
  Technology has transformed the way we do many things--including 
voting. But we cannot simply sit on the sidelines and assume that our 
democracy will withstand such changes. We recently witnessed the birth 
of democracy in Afghanistan and Iraq and watched as citizens risked 
their lives to cast their votes. Our continued work to ensure that each 
vote counts here in the United States underscores the idea that we must 
always be vigilant in protecting democracy--whether it is brand new or 
more than 200 years old. The Voting Integrity and Verification Act 
protects democracy by protecting the sanctity of our vote.
                                 ______
                                 
      By Mr. DOMENICI (for himself and Mr. Bingaman):
  S. 332. A bill to prohibit the retirement of F-117 Nighthawk stealth 
attack aircraft during fiscal year 2006; to the Committee on Armed 
Services.
  Mr. DOMENICI. Mr. President, I rise to introduce a bill prohibiting 
retirement of F-117 stealth fighter aircraft during fiscal year 2006. I 
am also pleased my colleague, Senator Bingaman, has joined me as a 
cosponsor. The Department of Defense budget proposed for next year 
reduces operations and maintenance funds for the stealth fighter. As a 
result, ten aircraft would be retired. I believe this would be 
detrimental to our national security and so I offer a very simple bill 
to maintain the current F-117 force structure.
  The mission of the stealth fighter is to strike highly important, 
highly defended enemy targets. Pilots from Holloman Air Force Base, NM 
have flown thousands of successful sorties while evading heavy air 
defenses because of the F-117's stealth capability. As I think most 
know, F-117s played a key role during operations in Serbia, in 
Operation Iraqi Freedom and in other dangerous theaters around the 
world. The F-117 has been this nation's preeminent first strike 
platform. And I would submit, that retiring nearly 20 percent of our 
proven stealth fighter fleet before new planes such as the F-22 and the 
Joint Strike Fighter enter the force is not prudent.
  Last year, a similar budget request was made to reduce the F-117 
fleet. I recommended that the Department of Defense delay such a 
decision until new stealth platforms enter the fleet. Both the Armed 
Services committee and the Defense Appropriations subcommittee agreed 
with my assessment and included language in their bills prohibiting the 
retirement. For fiscal year 2006 my goal remains the same: to retain 
the vital first-strike capability this Nation has come to rely upon for 
the immediate future.
  I recognize that this is a time when our military forces are 
transforming to a different kind of force--one that is more agile. I 
also recognize that this will require new kinds of platforms and 
different force structures. But at a time when the world presents a 
number of challenges that may require use of stealth capability, I am 
committed to maintaining the current configuration

[[Page 1855]]

of the F-117 fleet and I urge my colleagues to support this bill.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 332

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. PROHIBITION ON RETIREMENT OF F-117 NIGHTHAWK 
                   STEALTH ATTACK AIRCRAFT.

       No F-117 Nighthawk stealth attack aircraft in use by the 
     Air Force during fiscal year 2005 may be retired during 
     fiscal year 2006.
                                 ______
                                 
      By Mr. DORGAN (for himself, Ms. Snowe, Mr. Grassley, Mr. Kennedy, 
        Mr. McCain, Ms. Stabenow, Mr. Chafee, Mr. Jeffords, Mr. Lott, 
        Mr. Dayton, Mrs. Clinton, Mr. Bingaman, Mrs. Boxer, Mr. Conrad, 
        Mr. Durbin, Mr. Feingold, Mrs. Feinstein, Mr. Inouye, Mr. 
        Johnson, Mr. Kohl, Mr. Leahy, Mr. Levin, Mr. Nelson of Florida, 
        Mr. Obama, Mr. Pryor, Mr. Salazar, Mr. Sarbanes, Mr. Schumer, 
        and Ms. Collins):
  S. 334. A bill to amend the Federal Food, Drug, and Cosmetic Act with 
respect to the importation of prescription drugs, and for other 
purposes; to the Committee on Health, Education, Labor, and Pensions.
  Mr. DORGAN. Mr. President, today, I am introducing my bipartisan 
prescription drug importation legislation, the Pharmaceutical Market 
Access and Drug Safety Act, along with Senators Snowe, Grassley, 
Kennedy, McCain, Stabenow, Jeffords and many others. In all, the bill 
has 28 cosponsors, and I expect we will add more cosponsors in the 
coming weeks and months.
  I am particularly pleased that Finance Committee Chairman Charles 
Grassley has joined forces with us on this year's bill. Chairman 
Grassley has made a significant contribution to the drug importation 
debate and has provided invaluable assistance in ensuring that our bill 
complies with our country's trade obligations. Chairman Grassley's 
support also helps to demonstrate the growing momentum in the Senate 
for a vote on our bipartisan drug importation legislation.
  I am also glad that, in addition to being tri-partisan, this year's 
bill is also bicameral. Congresswoman JoAnn Emerson and Congressman 
Sherrod Brown are introducing the companion to my bill in the House of 
Representatives today.
  This is an issue whose time has come. By now, it is well-documented 
that American consumers pay by far the highest prices in the world for 
prescription medicines, and our citizens are desperate for relief. 
Earlier this month, we learned that prices on 31 of the top-50 
bestselling drugs went up during the last two-month period. For 
instance, the price of the top-selling drug Lipitor has gone up 5 
percent--double the inflation rate for all of 2004--in just the two 
months since November, 2004. Lipitor costs the American consumer nearly 
twice as much per pill as the Canadian consumer.
  These recent price increases come at the expense of American 
consumers--especially those seniors and uninsured Americans who do not 
have health insurance coverage for prescription drugs. The 
Pharmaceutical Market Access and Drug Safety Act is a step that the 
Congress can take to put downward pressure on drug prices in our 
country. By some estimates, U.S. consumers could save up to $38 billion 
if they could purchase prescription medicines at the Canadian prices.
  This year's bill is substantially similar to the bill that Senator 
Snowe and I introduced last year but it has been refined in response to 
technical assistance we have received from various stakeholders. We 
have thoroughly and pro-actively addressed all of the safety issues 
that some have raised with respect to drug importation. The fact is 
that a system of drug importation, called parallel trade, has 
flourished with no safety problems within the European Union for the 
last two decades. I am convinced that if the Europeans can safely trade 
pharmaceuticals within Europe, the United States can safely do so, and 
our bill gives the Food and Drug Administration the authority and 
resources it needs to oversee such a system.
  We simply cannot continue on our current course of inaction, and I 
want to put my colleagues on notice that I am determined to get a vote 
on this legislation this year on the Senate floor. The agreement that 
Senator Snowe and I reached earlier this month with Majority Leader 
Frist and new Health, Education, Labor, and Pensions Committee Chairman 
Enzi to hold a hearing specifically on the Dorgan-Snowe bill is a step 
in the right direction.
  I am convinced that if the full Senate is given the opportunity to 
vote on our bill, it will pass with overwhelming bipartisan support. I 
look forward to continuing to work with my colleagues to get this 
legislation passed by Congress and sent to the President for his 
signature.
                                 ______
                                 
      By Mr. SARBANES (for himself, Mr. Warner, Mr. Allen, and Ms. 
        Mikulski):
  S. 336. A bill to direct the Secretary of the Interior to carry out a 
study of the feasibility of designating the Captain John Smith 
Chesapeake National Historic Watertrail as a national historic trail; 
to the Committee on Energy and Natural Resources.
  Mr. SARBANES. Mr. President, today I am introducing legislation to 
initiate a study of the feasibility of designating the route of Captain 
John Smith's exploration of the Chesapeake Bay and its tributaries as a 
National Historic Trail. Joining me in sponsoring this legislation are 
my colleagues Senators Warner, Allen and Mikulski.
  Our system of National Historic Trails, NHTs, commemorate major 
routes of historic travel and mark major events which shaped American 
history. To date, 13 National Historic Trails have been established in 
the National Park Service including the Lewis and Clark, the Pony 
Express, Selma to Montgomery, and Trail of Tears National Historic 
Trails. To be designated as a National Historic Trail, a trail must 
meet three basic criteria: it must be nationally significant, have a 
documented route through maps or journals, and provide for recreational 
opportunities. In my judgment, the proposed Captain John Smith 
Chesapeake National Historic Watertrail meets all three criteria.
  Captain John Smith was one of America's earliest explorers. His role 
in the founding of Jamestown, VA--the first permanent English 
settlement in North America--and in exploring the Chesapeake Bay region 
during the years 1607 to 1609 marks a defining period in the history of 
our Nation. His contemporaries and historians alike credit Smith's 
strong leadership with ensuring the survival of the fledgling colony 
and laying the foundation for the future establishment of our nation.
  With a dozen men in a 30-foot open boat, Smith's expeditions in 
search of food for the new colony and the fabled Northwest Passage took 
him nearly 3,000 miles around the Chesapeake Bay and its tributaries 
from the Virginia capes to the mouth of the Susquehanna. On his voyages 
and as President of the Jamestown Colony, Captain Smith became the 
first point of contact for scores of Native American leaders from 
around the Bay region. His relationship with Pocahontas is now an 
important part of American folklore. Smith's notes describing the 
indigenous people he met and the Chesapeake Bay ecosystem are still 
widely studied by historians, environmental scientists, and 
anthropologists.
  The remarkably accurate maps and charts that Smith made of his 
voyages into the Chesapeake Bay and its tributaries served as the 
definitive map of the region for nearly a century. His voyages, as 
chronicled in his journals, ignited the imagination of the Old World, 
and helped launch an era of adventure and discovery in the New World. 
Hundreds, and then thousands of people aspired to settle in what Smith 
described as one of `` the most pleasant places known, for large and 
pleasant navigable rivers, heaven and

[[Page 1856]]

earth never agreed better to frame a place for man's habitation.'' Even 
today, his vivid descriptions of the Bay's abundance still serve as a 
benchmark for the health and productivity of the Bay.
  With the 400th anniversary of the founding of Jamestown quickly 
approaching, the designation of this route as a national historic trail 
would be a tremendous way to celebrate an important part of our 
nation's story and serve as a reminder of John Smith's role in 
establishing the colony and opening the way for later settlements in 
the New World. It would also give recognition to the Native American 
settlements, culture and natural history of the 17th century 
Chesapeake. Similar in historic importance to the Lewis and Clark 
National Trail, this new historic watertrail will inspire generations 
of Americans and visitors to follow Smith's journeys, to learn about 
the roots of our nation and to better understand the contributions of 
the Native Americans who lived within the Bay region.
  Equally important, the Captain John Smith Chesapeake National 
Watertrail can serve as a national outdoor resource by providing rich 
opportunities for education, recreation, and heritage tourism not only 
for more than 16 million Americans living in the Bay's watershed, but 
for visitors to this area. The water trail would be the first National 
Watertrail established in the United States and would allow voyagers in 
small boats, cruising boats, kayaks and canoes to travel from the 
distant headwaters to the open Bay--an accomplishment that would 
inspire today's explorers and would generate national and international 
attention and participation. The Trail would complement the Chesapeake 
Bay Gateways and Watertrails Initiative and help highlight the Bay's 
remarkable maritime history, its unique watermen and their culture, the 
diversity of its peoples, its historical settlements and our current 
efforts to restore and sustain the world's most productive estuary.
  This legislation enjoys strong bipartisan support in the Congress and 
in the States through which the trail passes. The legislation has been 
endorsed by the Governors of Virginia, Pennsylvania, Delaware and 
Maryland. The measure is also strongly supported by The Conservation 
Fund, Izaak Walton League, the Chesapeake Bay Foundation and the 
Chesapeake Bay Commission. I ask unanimous consent that letters from 
the latter two organizations expressing support for the legislation be 
printed in the Record. I want to commend Pat Noonan, Chairman Emeritus 
of The Conservation Fund, for his vision in conceiving this trail and 
urge that the legislation be quickly enacted.
  As John Smith wrote four centuries ago and as many Americans today 
agree, ``no place is more convenient for pleasure, profit and man's 
sustenance'' than the Chesapeake Bay.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                    Chesapeake Bay Foundation,

                                  Annapolis, MD, February 3, 2005.
     Hon. Paul S. Sarbanes,
     Hart Senate Office Building,
     U.S. Senate, Washington, DC.
     Hon. John W. Warner
     Russell Senate Office Building,
     U.S. Senate, Washington, DC.
       Dear Senator Sarbanes and Senator Warner: John Smith's 
     1607-9 exploration of the Chesapeake was a monumental and 
     historic achievement, shaping the boundaries, character and 
     future of America. His courageous crew traveled almost 3,000 
     miles along the Chesapeake exploring the rivers and making 
     contact with American Indian tribes from what today is known 
     as Maryland, Virginia, Washington D.C., Pennsylvania, and 
     Delaware.
       In honor of the 400th anniversary of the founding of 
     Jamestown in 1607 and the voyages of exploration in the 
     Chesapeake Bay, the Chesapeake Bay Foundation heartily 
     supports the establishment of the Capt. John Smith Chesapeake 
     National Historic Watertrai1. We also see the Trail as a 
     vital complement to a strong Chesapeake Bay Gateways Network 
     and believe that valuable synergy can result from the 
     combination.
       Accordingly, we wish to express our support for the 
     bipartisan legislation you are introducing to authorize the 
     National Park Service to study the national significance of 
     Smith's voyages of exploration and the feasibility of 
     estabIihing a watertrail to commemorate the voyage.
       We believe that the Capt. John Smith Chesapeake National 
     Historic Watertrail would provide invaluable assistance in 
     meeting the goals of the Chesapeake 2000 Agreement, our 
     blueprint for restoring and sustaining the Bay's ecosystem, 
     which has been badly damaged over the past 400 years by the 
     heavy footprints of our large and still-growing presence in 
     its watershed.
       By focusing national attention upon the inherent beauty and 
     abundance of the Bay and its rich cultural and historic 
     values, America's first national watertrail would educate and 
     inspire visitors to explore, restore, and protect this unique 
     resource. The watertrail would provide exceptional 
     interpretation and stewardship opportunities, promote habitat 
     restoration and protection, and provide unparalleled 
     recreational and eco-heritage experiences--all in a cost-
     efficient and low-impact manner.
       Involving Communities, non-governmental organizations 
     public agencies, businesses, and private landowners in 
     establishing the Capt. John Smith Chesapeake National 
     Historic Watertrail would demonstrate a new model for public-
     private partnerships that will form the basis of how we care 
     for our national treasures in the 21st century.
       Nearly 400 years ago Smith sailed the Chesapeake and saw 
     the promise of a nation built on exploration, discovery and 
     partnership. America's first national watertrail will 
     celebrate the waters that once captured America's imagination 
     and instill awe and the, spirit of discovery in future 
     explorers, while it motivates them to take up active roles in 
     restoring its health.
       Your support of the study is critical to recognize this 
     magnificent national resource.
           Respectfully,
                                                 William C. Baker,
     President.
                                  ____



                                    Chesapeake Bay Commission,

                                  Annapolis, MD, February 1, 2005.
     Hon. Paul S. Sarbanes,
     Hart Senate Office Building,
     U.S. Senate, Washington, DC.
     Hon. John W. Warner,
     Russell Senate Office Building,
     U.S. Senate, Washington, DC.
       Dear Senator Sarbanes and Senator Warner: John Smith's 
     1607-9 exploration of the Chesapeake was a monumental 
     historic achievement, shaping the boundaries, character and 
     future of America. His courageous crew traveled almost three 
     thousand miles along the Chesapeake exploring the rivers and 
     making contact with American Indian tribes from what today is 
     known as Maryland, Virginia, Washington D.C., Pennsylvania 
     and Delaware.
       In honor of the 400th anniversary of the founding of 
     Jamestown in 1607 and the voyages of exploration in the 
     Chesapeake Bay, we support the establishment of the Capt. 
     John Smith Chesapeake National Water Trail. The Trail would 
     be a vital complement to the existing Chesapeake Bay Gateways 
     Network.
       Accordingly, we wish to express our support for the 
     bipartisan legislation you are introducing to authorize the 
     National Park Service to study the national significance of 
     Smith's voyages of exploration and the feasibility of 
     establishing a water trail to commemorate the voyages.
       We believe that the Capt. John Smith Chesapeake National 
     Water Trail would provide invaluable assistance in meeting 
     the goals of the Chesapeake 2000 Agreement, our blueprint for 
     restoring and sustaining the bay's ecosystem.
       By focusing national attention upon the inherent beauty and 
     abundance of the Bay and its rich cultural and historic 
     values, America's first national water trail would educate 
     and inspire visitors to explore and protect this unique 
     resource. The trail would provide exceptional interpretation 
     and stewardship opportunities, promote habitat restoration 
     and protection and provide unparalleled recreational and eco-
     heritage experiences--all in a cost-efficient and low-impact 
     manner.
       Involving communities, non-governmental organization, 
     public agencies, business and private landowners in 
     establishing the Water Trail would demonstrate a new model 
     for public-private partnerships that will form the basis of 
     how we care for our national treasures in the 21st century.
       Nearly 400 years ago Smith sailed the Chesapeake and saw 
     the promise of a nation built on exploration, discovery and 
     partnership. America's first national water trail will 
     celebrate the waters that once captured America's imagination 
     and instill awe and the spirit of discovery in future 
     explorers.
       Your support of the study is critical to recognize this 
     magnificent national resource.
           Respectfully,
                                               Senator Mike Waugh,
                                                         Chairman.

  Mr. WARNER. Mr. President, come 2007, Virginia, along with the rest 
of our great Nation, will celebrate the 400th anniversary of the 
historic founding of Jamestown, the first permanent English settlement 
in the New World. At this site, back in 1607, an adventurous band of 
Englishmen, led by Captain John Smith, pitched down their stakes on the 
shores of the Chesapeake Bay, tired from a long journey across the blue 
ocean, but full of hope for the

[[Page 1857]]

possibilities that lay ahead. And although they primarily came in 
search of economic gain, they brought with them many of the principles 
that were integral to the formation of our American Democracy. Free 
enterprise, the entrepreneurial spirit, and respect for the principles 
of representative government and the rights of man would guide these 
settlers through the trials and tribulations of those tough, early 
years.
  As we Virginians know, nobody was more influential in this founding 
endeavor, than their leader: Captain John Smith. Captain Smith was not 
just the man famously saved from death by Pocahontas, and he was more 
than the mere commander of a small group of pioneers. John Smith, as 
Virginians learn at a young age, was the first ambassador to the native 
peoples of the Chesapeake, exchanging cultural customs, trading goods 
necessary for the fledgling colonists survival. John Smith was also the 
first English explorer of the many creeks and rivers that populate the 
Maryland and Virginia of today. From 1607 to 1609, Captain Smith plied 
the briny Bay waters, recording history and surveying the land, even 
this patch of Earth where our Nation's Capitol stands today. In honor 
of Captain Smith's historic 3,000 mile journey through the choppy 
Chesapeake's main stem and tributaries, I rise today, joined by Senator 
Sarbanes and my colleagues from the Bay States, to propose a bill 
authorizing the study of the feasibility of designating the Captain 
John Smith Chesapeake National Historic Watertrail.
  What would this trail accomplish? What would be its purpose? Outside 
of the obvious tourism it would bring to the region, and besides the 
fact that its creation would complement the existing Chesapeake 
Gateways Network, the Watertrail would educate Americans on the perils 
of our first English settlers, on their interaction with the numerous 
Native tribes, on the voyages they undertook to better understand the 
New World they had come to inhabit. First hand, students and seniors, 
parents and children, would be able to retrace the paddle strokes and 
footsteps of Captain John Smith, to see what he saw, to learn what he 
learned, to know what he meant when he wrote in his diary that 
``oysters lay thick as stones'' and fish could be caught ``with frying 
pan(s).''
  Ultimately, this trail would allow for a deeper appreciation for the 
Chesapeake, for a better understanding of the settlers hardships, and 
for the distinct cultures, English and Indian, that came to pass, in 
that historic era, at this historic place. Today I rise to celebrate 
Captain Smith's foresight, to celebrate the founding steps of America, 
and to celebrate the bounty of the Bay. I urge my colleagues to join me 
in supporting this feasibility study for the Captain John Smith 
Chesapeake National Historic Watertrail.
                                 ______
                                 
      By Mr. SMITH (for himself, Mr. Bingaman, Ms. Snowe, Mr. Jeffords, 
        Mr. Santorum, Mr. Kerry, Mr. DeWine, Mr. Durbin, Mr. Chafee, 
        Mrs. Lincoln, Ms. Collins, Mr. Nelson of Nebraska, Mr. 
        Voinovich, Mr. Corzine, and Mr. Coleman):
  S. 338. A bill to provide for the establishment of a Bipartisan 
Commission on Medicaid; to the Committee on Finance.
  Mr. SMITH. Mr. President, first, let me thank the twenty-or-so 
organizations that have offered their support for our bill which 
creates a Medicaid Commission. I ask unanimous consent that the full 
list of groups and their letters of support be printed in the Record. 
The importance of this bill, I believe, is demonstrated by the 
outpouring of support expressed by such a diverse group of people 
representing state and local elected officials, providers and 
advocates. It is truly impressive.
  With the debate growing over the President's budget proposal for the 
Medicaid program, Senator Bingaman and I are joining together with many 
of our colleagues to introduce this bill that calls for the creation of 
a Medicaid Commission. We are joined by Senators Snowe, Lincoln, 
Santorum, Ben Nelson, DeWine, Jeffords, Collins, Durbin, Chafee and 
Kerry in introducing the bill today.
  For too long Medicaid has gone unnoticed by policy makers. Over the 
past few decades Congress has spent a great deal of time and effort 
modernizing the Medicare program, developing ideas to fund Social 
Security, reforming our intelligence gathering apparatus, and enacting 
legislation that stimulates the economy. Yet, through it all Medicaid 
has gone unnoticed, even though it recently became the nation's largest 
health care program.
  As the former President of the Oregon Senate, I have long championed 
Medicaid and worked to protect the vulnerable populations who are 
helped by it. As a new member of the Finance Committee in 2003, I 
helped lead the effort to provide $20 billion in short-term fiscal 
assistance. However, since that time it has become clear that Medicaid 
requires more than band-aide fixes.
  Medicaid requires a thorough review that should be performed by all 
key stakeholders working together to evaluate the program. We need to 
consider its pluses and minuses, and then chart a new path for the 
future. Our proposed Medicaid Commission will do just that.
  As I have discussed with Governors, Secretary Leavitt and 
Administrator McClellan, we have a unique opportunity in the history of 
the Medicaid program. For once, everyone seems to be focused on 
protecting and improving the program. The challenge lies in bringing 
everyone together.
  It certainly won't be easy, but accomplishing great things never is. 
It will require both parties to work together. It will require Congress 
to reach out to the Administration, Governors, State Legislators, 
providers and advocates to determine how best to improve such a vital 
program.
  And it will require advocates and providers to be willing to listen 
to new ideas that may help improve the program by creating 
efficiencies, improving quality and expanding access to care. This 
can't be accomplished working against each other or only with select 
partners--it can only be accomplished when everyone works together.
  I have never argued that this Commission is necessary because 
Medicaid is broken. I truly believe in this program because I have seen 
the difference it makes in Americans' lives. It helps support poor 
children so they can go to school healthy and ready to learn.
  It helps a poor expectant-mother receive the prenatal care necessary 
for her new child to be born healthy and able to live a fulfilling 
life, it helps a family manage the care of a disabled child, and it 
helps an elderly person spend their last few years living with dignity. 
However, this program is not perfect; improvements can and should be 
made.
  I don't have to look any further than my home State of Oregon to see 
that change can be beneficial. In Oregon, most people who live with a 
disability or who are elderly are served in their home or community. It 
seems appropriate that this would happen, but Oregon actually had to 
apply for a waiver to care for people in this way. That's because under 
Medicaid States receive incentives to care for people in nursing homes, 
it's called an institutional bias.
  On the other hand, extreme reforms should be instituted simply to 
save money. Medicaid is expensive, but so is private health care 
coverage in this country. And in comparison, Medicaid is a pretty good 
deal.
  On a per-capita basis, Medicaid has only grown at a little more than 
four percent while private sector health care costs have grown at over 
12 percent. The problem with Medicaid is that enrollment is growing and 
a lot more money is being spent on long-term care compared to years 
past.
  Much work is ahead of us. And one of the best ways to keep Medicaid 
on the right path and ensure its long-term sustainability is to enact 
this bill right now. If this Commission were made law today, we could 
have its recommendations in time to inform Congress' deliberations next 
year. We have a short window of opportunity before us. I urge my 
colleagues, the President and all supporters to embrace this bill today

[[Page 1858]]

and call for its passage so the Medicaid Commission can get to work.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

 Organizations Supporting the Bipartisan Commission on Medicaid Act of 
                                  2005

       National Alliance for the Mentally Ill (NAMI); National 
     Association of Public Hospitals & Health Systems (NAPH); 
     American Hospitals Association (AHA); National Association of 
     Community Health Centers (NACHC); National Association of 
     Children's Hospitals (NACH); AIDS Institute; National Rural 
     Health Association; Catholic Health Association of the United 
     States; National Conference on Aging (NCOA); Conference of 
     State Legislatures (NCSL); National Hispanic Medical 
     Association (NHMA); The American Academy of HIV Medicine; 
     American Association of Family Physicians (AAFP); Association 
     for Community Affiliated Plans (ACAP); American Health Care 
     Association (AHCA); National Association of Counties (NACo); 
     American College of Obstetricians & Gynecologists (ACOG); 
     American Dental Association (ADA); American Psychiatric 
     Association; Alliance for Quality Nursing Home Care; American 
     Geriatrics Society.
                                  ____



                             American Health Care Association,

                                 Washington, DC, February 7, 2005.
     Hon. Gordon Smith,
     U.S. Senate, Russell Senate Office Building, Washington, DC.
     Hon. Jeff Bingaman,
     U.S. Senate, Hart Senate Office Building, Washington, DC.
       Dear Senators Smith and Bingaman: I am writing on behalf of 
     the American Health Care Association and the National Center 
     for Assisted Living, the nation's leading long term care 
     organizations. AHCA/NCAL represent more than 10,000 non-
     profit and proprietary facilities dedicated to continuous 
     improvement in the delivery of professional and compassionate 
     care for our nation's frail, elderly and disabled citizens 
     who live in nursing facilities, assisted living residences, 
     subacute centers and homes for persons with mental 
     retardation and developmental disabilities. AHCA/NCAL and 
     their membership are committed to performance excellence and 
     Quality First, a covenant for healthy, affordable and ethical 
     long term care.
       We review with great interest your draft legislation that 
     would establish a Bipartisan Commission on Medicaid and the 
     Medically Underserved. We welcome focus on the Medicaid 
     program from a population and a payment perspective. Long 
     term care is unique in that the government is the purchaser 
     of almost all nursing home services. The government demands 
     that quality be first rate--as it should--yet the payment 
     structure that would support greater quality is regulated in 
     silos, separate from each other. At a time when we as a 
     nation ought to be strengthening our long term care 
     infrastructure to prepare for the wave of baby-boom retirees 
     who will enter the system, we are, instead, allowing the 
     infrastructure to deteriorate.
       Heretofore, Congress has focused on Medicare primarily for 
     the long term care sector, yet Medicare is a small albeit 
     significant portion of our patient population. lt is becoming 
     a better known fact that the Medicaid program funds the 
     majority of the care for people in nursing homes. 
     Approximately 67% of the average nursing home patient 
     population relies on Medicaid to pay their bill. And, 
     approximately 50% of the average nursing home's revenues come 
     from Medicaid.
       This is why we find it illogical that the Medicare Payment 
     Advisory Commission (MEDPAC) continues to focus solely on the 
     sector's Medicare-only issues--without also looking at 
     Medicaid. When it comes to making important public policy 
     recommendations that truly impact people's lives, it is 
     inconceivable that data used to reach conclusions about the 
     sufficiency of Medicare funding fails to look collectively at 
     the real, and growing, interdependence between Medicare and 
     Medicaid.
       We must take steps to begin to reform the long term care 
     system in terms of its reliance on the Medicaid program. Yet, 
     reform does not happen in a vacuum and we must have a debate 
     of ideas. We know a key stakeholder--the National Governors 
     Association--has placed this issue high on their list of 
     priorities. We are also beginning to see this issue raised 
     within the Social Security debate.
       We support your legislation but do so with some 
     recommendations. First, we recommend that your legislation 
     consider the entire long term sector in terms of our payment 
     structure. Second, time is running out for reform and so we 
     believe the Commission should be vested with adequate power 
     and authority that its recommendations make a significant 
     impact on the policymaking process. We are not sure if the 
     Commission in its current form has enough force to really be 
     the catalyst for new ideas for reform.
       We wholeheartedly believe that a far more holistic 
     evaluation is called for at this critical point in time, so 
     that beneficiaries will not fall through the cracks due to an 
     incomplete data picture and a short-sighted policy. Again, 
     thank you for the opportunity to review your legislation and 
     I look forward to working with you on Medicaid issues this 
     year.
           Sincerely,
                                                         Hal Daub,
     CEO and President.
                                  ____



                                           The AIDS Institute,

                                 Washington, DC, January 24, 2005.
     Re Bipartisan Commission on Medicaid and the Medically 
         Underserved Act of 2005.

     Senator Gordon Smith,
     U.S. Senate,
     Washington, DC.
     Senator Jeff Bingaman,
     U.S. Senate,
     Washington DC.
       Dear Senators Smith and Bingaman: As the single largest 
     source of federal financing of health care and treatment for 
     low income people with HIV/AIDS, the future viability of our 
     Nation's Medicaid program will have a direct bearing on the 
     health of hundreds of thousands of Americans living with HIV/
     AIDS. Since Medicaid provides access to healthcare for 55 
     percent of all people living with AIDS, 44 percent of people 
     with HIV, and 90 percent of all children living with AIDS, it 
     plays a critical role in providing access to life-saving 
     medications that prevent illness and disability, and allow 
     people to live longer, more productive lives.
       Because many people with HIV/AIDS are low income, or become 
     low income-and disabled, Medicaid is an important source of 
     coverage. In FY 2002, Medicaid spending on AIDS care totaled 
     $7.7 billion, including $4.2 billion in federal dollars and 
     $3.5 billion in state funds.
       Any radical change to the benefits provided by Medicaid or 
     its financing structure can have devastating impacts that can 
     seriously jeopardize access to HIV/AIDS care in the United 
     States. What is needed is a carefully crafted, long term 
     solution to the current challenges facing the Medicaid 
     program so that low income and disabled Americans, including 
     those living with HIV/AIDS, are provided the necessary 
     healthcare they require.
       The AIDS Institute applauds you on the introduction of the 
     ``Bipartisan Commission on Medicaid and the Medically 
     Underserved Act of 2005'', and looks forward to its passage 
     in the very near future. The Bipartisan Commission envisioned 
     by the bill would create the necessary careful review of the 
     Medicaid program in a truly bipartisan manner with the 
     expertise of representatives of the affected communities and 
     government entities. The AIDS Institute strongly believes 
     that such a review, as designed by your legislation, will 
     result in a process to conduct a thoughtful review of the 
     Medicaid program outside of the often partisan political 
     process.
       The AIDS Institute congratulates you on your leadership on 
     this program, which is critically important to so many people 
     living with HIV/AIDS, and the introduction of the 
     ``Bipartisan Commission on Medicaid and the Medically 
     Underserved Act of 2005''. We look forward to its enactment, 
     participating in the Commission activities, and the eventual 
     recommendations of its final report.
           Sincerely,
                                              Dr. A. Gene Copello,
     Executive Director.
                                  ____

                                           National Association of


                                         Children's Hospitals,

                                 Alexandria, VA, February 8, 2005.
     Hon. Gordon Smith,
     U.S. Senate,
     Washington, DC.
     Hon. Jeff Bingaman,
     U.S. Senate,
     Washington, DC.
       Dear Senator Smith and Senator Bingaman: On behalf of the 
     National Association of Children's Hospitals (N.A.C.H.) and 
     our more than 120 members nationwide, I thank you for your 
     leadership in introducing the ``Bipartisan Commission on 
     Medicaid Act of 2005.'' Medicaid's critical role in providing 
     health coverage to low-income children, as a major payer for 
     children's hospital services and the primary safety net in 
     the nation's pediatric health care infrastructure cannot be 
     overstated. We welcome a thoughtful review to strengthen and 
     secure this vital program for years to come.
       Medicaid is now the largest single source of health care 
     coverage for children in the nation. Half of its 53 million 
     enrollees are children and one in four children in the 
     country relies on Medicaid for health coverage. But children 
     account for only 22 percent of the costs, with the lion's 
     share of the costs attributable to people with significant 
     health and long term care needs such as the elderly and 
     people with disabilities.
       Medicaid and children's hospitals are partners in caring 
     for children. Our member hospitals are major providers of 
     both inpatient and outpatient care to children on Medicaid. 
     In fact, children on Medicaid represented 47 percent of all 
     discharges and 41 percent of all outpatient visits at 
     children's hospitals in FY 2003.
       And children's hospitals rely on Medicaid to serve all 
     children, not just low-income children. When provider 
     reimbursements are cut, or benefits and eligibility changes 
     are

[[Page 1859]]

     made, it affects children's hospitals' ability to provide a 
     wide range of services that all children rely upon.
       As the single largest payer of children's health care, 
     Medicaid's performance affects the health care of all 
     children. It's coverage of low income children has enabled 
     advancements in pediatric medicine that would not have been 
     otherwise possible. We need to sustain Medicaid's successes 
     and move forward to ensure that eligible children are 
     enrolled, with access to appropriate, effective and safe 
     care.
       Your legislation recognizes, as do our member hospitals, 
     that the future of Medicaid is not simply about cost. A hasty 
     move toward program reforms without a thorough review of the 
     program with input from those most closely associated with 
     the program would be irresponsible. The National Association 
     of Children's Hospitals applauds your efforts to direct 
     attention to how to improve service delivery and quality care 
     in Medicaid.
       We again congratulate you on your leadership in introducing 
     this important legislation and we look forward to working 
     toward its enactment.
           Sincerely,
     Lawrence A. McAndrews.
                                  ____

                                                   Association for


                                   Community Affiliated Plans,

                                 Washington, DC, February 8, 2005.
     Hon. Gordon Smith,
     Hon. Jeff Bingaman,
     U.S. Senate,
     Washington, DC.
       Dear Senators Smith and Bingaman: I write today on behalf 
     of the members of the Association for Community Affiliated 
     Plans (ACAP), an organization of Medicaid-focused community 
     affiliated health plans committed to improving the health of 
     vulnerable populations and the providers who serve them, to 
     express our support for your legislation, ``The Bipartisan 
     Commission on Medicaid Act of 2005.'' ACAP's Medicaid-focused 
     managed care plans serve over 1.7 million Medicaid 
     beneficiaries in states across the country.
       The demand for efficiency and quality in our nation's 
     health care system combined with the fiscal pressures on the 
     federal, state and local governments has spurred 
     consideration of a broad spectrum of proposals to reform the 
     Medicaid program. Like you, ACAP believes the forty year-old 
     program is in need of updating. However meaningful and 
     sustainable changes will only occur if federal and state 
     policymakers along with providers, health plans, consumers 
     and others undertake a comprehensive and forthright 
     examination of the Medicaid program.
       The purpose of such a review should be to improve the 
     efficiency of the Medicaid program based on historical 
     experiences and recent advances in health care while 
     preserving the fundamental purpose of the program--to serve 
     as the nation's health care safety net for the millions of 
     low income children, families, elderly, and disabled.
       ACAP believes that your legislation establishing a Medicaid 
     commission would move our nation's policymakers and health 
     care leaders in the right direction. The commission's work 
     would be instrumental in understanding the underlying 
     inefficiencies as well as the initiatives and programs that 
     have proven successful. In turn, the commission would direct 
     health care leaders to respond accordingly with improvements 
     that can and should be made to the Medicaid program.
       Should your legislation be enacted into law, we encourage 
     you to include a representative of the managed care plans on 
     the Commission. Medicaid managed care has been shown to 
     provide greater quality of care and access to providers at a 
     lower price than the traditional fee-for-service programs. As 
     such, it can serve as a model for reform of the Medicaid 
     program.
       Tens of millions of Americans rely on Medicaid to receive 
     health care services. ACAP believes your commission would 
     result in reform that will be thoughtfully considered in 
     light of the significant consequences for Medicaid enrollees 
     as well as the providers that deliver their care.
       Please do not hesitate to contact me if there is any way we 
     can contribute further to this effort.
           Sincerely,
                                               Margaret A. Murray,
     Executive Director.
                                  ____

                                           National Association of


                               Community Health Centers, Inc.,

                                 Washington, DC, February 7, 2005.
     Hon. Gordon Smith,
     Hon. Jeff Bingaman,
     U.S. Senate,
     Washington, DC.
       Dear Senators Smith and Bingaman: On behalf of the National 
     Association of Community Health Centers, the advocate voice 
     for our nation's Community, Migrant, Public Housing and 
     Homeless Health Centers, and the more than 15 million 
     underserved people cared for by them, I am writing to offer 
     our strong endorsement of your legislation to create a 
     bipartisan commission on Medicaid.
       Pressure undoubtedly is growing at the federal and state 
     levels to consider reforms to Medicaid, some of which could 
     dramatically alter its fundamental structure. The commission 
     envisioned by your legislation would provide the necessary 
     leadership and serve as a credible forum for developing 
     viable solutions to strengthen Medicaid's long-term financial 
     health and assure that it continues its crucial role as a 
     safety net for our nation's most vulnerable populations.
       Community health centers serve as a major provider of 
     primary and preventive care to nearly 6 million of the 
     estimated 51 million people served by Medicaid. Moreover, 
     studies continue to demonstrate that health centers save 
     Medicaid 30% in total health care costs compared to other 
     providers. Unfortunately, some reform proposals now being 
     discussed merely seek to cap spending or restrict Medicaid's 
     long-term cost, raising significant concerns about the 
     continued ability of health centers and other safety net 
     providers to provide quality health care to Medicaid 
     patients.
       Health centers believe efforts to improve Medicaid should 
     seek to preserve the federal guarantee of its coverage, and 
     not reduce or eliminate its services or consumer protections. 
     In addition, we also believe it is important that these 
     efforts recognize the critical role that health centers and 
     other safety net providers play as essential sources of care 
     for millions of Medicaid recipients and uninsured Americans.
       Medicaid is a health insurance program of critical 
     importance in this country, and finding solutions to its 
     current challenges can be daunting. However, lawmakers must 
     strive to forge a bipartisan consensus that aims to protect 
     the public's health, while ensuring that its benefits and 
     services remain a reality for low-income individuals. We 
     strongly believe that your commission is the appropriate 
     forum to achieve this goal. Therefore, we are proud to 
     endorse and offer our full support for your legislation, and 
     we stand ready to assist you in helping to achieve its 
     enactment.
       Please do not hesitate to contact me or Licy Do Canto, 
     Assistant Director of Health Care Financing Policy, if there 
     is any way we can contribute further to this effort.
           Sincerely,

                                       Daniel R. Hawkins, Jr.,

                                Vice President for Federal, State,
     and Public Affairs.
                                  ____


                    The Catholic Health Association,

                                 Washington, DC, February 8, 2005.
     Hon. Gordon Smith,
     Chairman, Special Committee on Aging, U.S. Senate, 
         Washington, DC.
       Dear Chairman Smith: On behalf of the Catholic Health 
     Association of the United States (CHA), the national 
     leadership organization of more than 2,000 Catholic health 
     care sponsors, systems, facilities, and related 
     organizations, I am writing to express our strong support for 
     the ``Bipartisan Commission on Medicaid Act of 2005.''
       As you know, Medicaid provides crucial services to over 50 
     million low-income children and pregnant women, the elderly, 
     and persons with disabilities. Many of these individuals 
     receive care in Catholic hospitals and Catholic long-term 
     care facilities. Without a strong and vibrant Medicaid 
     program, the number of uninsured individuals in the United 
     States would be dramatically worse. In light of the critical 
     role that Medicaid plays in the health of our nation, we 
     believe that it is important to undertake a comprehensive 
     review of the program before making any dramatic changes. To 
     do otherwise could further unravel an already frail health 
     care safety net.
       For that reason, we are pleased to offer our support for 
     your legislation. By assembling a 23-member commission to 
     undertake a thorough review of the Medicaid program, your 
     legislation can help ensure that Medicaid continues to play a 
     key role in the health care safety net for years to come. We 
     are particularly pleased that the commission would be 
     comprised in part from important stakeholders in the Medicaid 
     program, including representation from the health care 
     provider community and advocates for Medicaid beneficiaries.
       We are grateful for your continued efforts in support of 
     the Medicaid program. If we can be of further assistance, 
     please do not hesitate to contact me.
           Sincerely,
                                                  Michael Rodgers,
     Vice President, Advocacy and Public Policy.
                                  ____



                                National Association of Public

                                 Hospitals and Health Systems,

                                  Washington, DC February 8, 2005.
     Hon. Gordon Smith,
     Hon. Jeff Bingaman,
     U.S. Senate,
     Washington, DC.
       Dear Senators Smith and Bingaman: I am writing on behalf of 
     the National Association of Public Hospitals and Health 
     Systems (NAPH) to express our support for the Bipartisan 
     Commission on Medicaid Act of 2005. The legislation 
     recognizes Medicaid's critical role in supporting our 
     nation's safety net and emphasizes the need to carefully 
     consider any changes to the program in order to protect 
     Medicaid patients and the providers who serve them.
       NAPH represents more than 100 of America's metropolitan 
     area safety net hospitals and health systems. NAPH hospital 
     systems

[[Page 1860]]

     serve unique roles in their communities often as the largest 
     provider of inpatient and ambulatory care to Medicaid 
     patients and patients without insurance and as providers of 
     essential services needed by everyone in their communities, 
     such as trauma and burn care services. Medicaid is the 
     primary mechanism for ensuring the provision of access to 
     health care for low-income patients. It supports safety net 
     providers, including NAPH members, who dedicate themselves to 
     providing high quality care to anyone, regardless of their 
     ability to pay. Medicaid payments provide 49 percent of the 
     net patient care revenues of NAPH members and Medicaid 
     disproportionate share hospital (DSH) payments alone support 
     nearly 25 percent of the unreimbursed care provided by NAPH 
     members. Therefore, Medicaid payment issues are of critical 
     importance to NAPH members.
       The proposed Commission on Medicaid could play an important 
     role in protecting the future of Medicaid and in ensuring 
     that any changes to Medicaid account for the various roles 
     that the program currently serves. Promoting a thorough 
     discussion among representatives of various Medicaid 
     stakeholders to develop comprehensive recommendations is a 
     responsible approach to examining the program. Measured 
     consideration is especially important today as the number of 
     uninsured continues to rise and as state Medicaid budgets 
     experience increasing pressure. NAPH does not believe that 
     reductions in the rate of growth or caps on Medicaid spending 
     are necessary to achieve stability in the program.
       Thank you for your ongoing support of Medicaid and safety 
     net providers. We look forward to continuing to work with you 
     on finding sustainable ways to preserve and protect Medicaid.
           Sincerely,
                                                    Larry S. Gage,
     President.
                                  ____



                                                         NAMI,

                                  Arlington, VA, February 7, 2005.
     Hon. Gordon Smith,
     Hon. Jeff Bingaman,
     U.S. Senate,
     Washington, DC.
       Dear Senators Smith and Bingaman: On behalf of the 210,000 
     members and 1,200 affiliates of the National Alliance for the 
     Mentally III (NAMI), I am writing to express our strong 
     support for your legislation to form a bipartisan commission 
     to study the future of the Medicaid program. As the nation's 
     largest organization representing people with severe mental 
     illnesses and their families, NAMI is pleased to support this 
     important measure.
       As you know, Medicaid is now the dominant source of funding 
     for treatment and support services for both children and 
     adults living with severe mental illness--currently, Medicaid 
     comprises 50% of overall public mental health spending, a 
     figure that is expected to rise to 60% by 2010. More 
     importantly, Medicaid is a safety net program that is 
     intended to protect the most disabled and vulnerable children 
     and adults struggling with severe chronic illness and severe 
     disabilities such as mental illness.
       At the same time, Medicaid is facing enormous stress at the 
     state level and in 2005 we expect more and more states will 
     be seeking to curtail future spending. NAMI remains extremely 
     concerned that these cuts are being made at the state level 
     without any discussion about the long-term impact of the 
     program. It is critically important that this debate gets 
     beyond cost and considers reforms that can make the program 
     more effective in meeting the needs of individuals who depend 
     on Medicaid as a health care and community support safety 
     net.
       Your legislation to establish a bipartisan commission on 
     Medicaid is critically important step forward to helping the 
     federal government and the states consider and promote 
     policies that improve the program and maintain its role in 
     protecting the needs of low income people with severe 
     disabilities. NAMI thanks you for your leadership on this 
     important issue. We look forward to working with you to move 
     this important legislation forward in 2005.
           Sincerely,
                                   Michael J. Fitzpatrick, M.S.W.,
     Executive Director.
                                  ____



                            The National Council on the Aging,

                                 Washington, DC, February 8, 2005.
     Hon. Gordon Smith,
     Russell Office Building,
     Washington, DC.
       Dear Senator Smith: On behalf of the National Council on 
     the Aging (NCOA)--the first organization formed to represent 
     America's seniors and those who serve them--is grateful for 
     your leadership on Medicaid issues and supports your proposal 
     to establish a bipartisan Commission on Medicaid.
       Medicaid is the critical health care safety net for over 50 
     million of our nation's most vulnerable, poorest citizens. 
     Seniors who depend on Medicaid are our oldest and most frail.
       While Medicaid is an extremely important program, it is 
     also quite expensive. Some have gone so far as to question 
     our ability to continue to afford the essential services 
     provided under the program. We fear that some proposals to 
     reform Medicaid may be driven solely by budget concerns and 
     misplaced priorities, rather than what is best for our nation 
     and its citizens.
       Medicaid is also a very complex program. We fear that only 
     a small handful of members in the Congress and their staff 
     understand how the program works, who it serves and what it 
     covers.
       Largely due to our record federal budget deficit and 
     increasing budget challenges in the states, Medicaid this 
     year is being considered for significant spending reductions 
     and possible structural reforms. In our view, we should be 
     very cautious before moving forward with far-reaching changes 
     that could harm millions of Americans in need.
       With the aging of the baby boom generation, Medicaid will 
     face increasingly serious challenges in the future, not 
     unlike those under the Medicare and Social Security programs. 
     For those programs, Congress established bipartisan 
     Commissions to consider reforms to strengthen and improve 
     them as we begin to address demographic challenges. A similar 
     non-partisan analysis is desirable for Medicaid. Bringing 
     together experts and key stakeholders is a necessary 
     prerequisite to reforming the program. For example, we need 
     to be more creative about how to finance long-term care, 
     while promoting access to a broader range of home and 
     community services. We therefore support your proposal to 
     establish a bipartisan Commission on Medicaid and look 
     forward to working with you to enact legislation into law.
           Sincerely
                                                     James Firman,
     President and CEO.
                                  ____



                                American Hospital Association,

                                 Washington, DC, February 4, 2005.
     Hon. Gordon Smith,
     Hon. Jeff Bingaman,
     U.S. Senate,
     Washington, DC.
       Dear Senators Smith and Bingaman: On behalf of our 4,700 
     hospitals, health care systems, and other health care 
     provider members, and our 31,000 individual members, the 
     American Hospital Association (AHA) strongly supports your 
     legislation to create a bipartisan commission on Medicaid and 
     the uninsured. Pressure is mounting to reform Medicaid, our 
     nation's largest health care safety net program. Your 
     commission would provide the right setting to carefully 
     deliberate needed policy changes and ensure the long-term 
     financial stability of the program.
       Medicaid serves over 52 million people, surpassing the 
     number served by the Medicare program. Half of Medicaid's 
     beneficiaries are children and one-quarter are elderly and 
     disabled. It serves our nation's most vulnerable populations, 
     and provides half of all the dollars spent on long term care 
     in this country. Reform will have enormous consequences for 
     those Medicaid covers and the providers that deliver their 
     care. The blue ribbon panel you propose would be a 
     responsible approach to examining the program.
       The American Hospital Association does not believe that 
     reductions in the rate of growth or caps on spending for 
     Medicaid is needed to achieve positive, successful 
     modernizations. The AHA stands ready to assist you in 
     securing passage legislation for thoughtful, deliberate 
     change to protect our most vulnerable citizens.
           Sincerely,
                                                     Rick Pollack,
     Executive Vice President.
                                  ____



                             American Psychiatric Association,

                                  Arlington, VA, February 9, 2005.
     Hon. Gordon Smith,
     Chairman, Senate, Special Committee on Aging,
     Washington, DC.
     Hon. Jeff Bingaman,
     Senator,
     Washington, DC.
       Dear Chairman Smith and Senator Bingaman: The American 
     Psychiatric Association (APA), the nation's oldest medical 
     specialty society representing more than 35,000 psychiatric 
     physicians nationwide, is pleased to commend your legislation 
     to establish the Bipartisan Commission on Medicaid and the 
     Medically Underserved. The establishment of a Commission to 
     examine Medicaid and the medically underserved will help 
     identify Medicaid's current benefits and areas of needed 
     strengthening.
       For millions of Americans with mental illnesses, Medicaid 
     is a critical source of care. Medicaid is especially 
     important to states as they face deficits that threaten the 
     stability of Medicaid funding for patients. We are also 
     concerned about the possible consequences for those of our 
     dual eligible patients who face potential disruptions of 
     treatment as they shift from Medicaid to Medicare. This bears 
     close attention.
       Your leadership in calling for an assessment of Medicaid is 
     timely and appreciated. APA would be pleased to be a resource 
     of expertise in psychiatry and medicine with respect to 
     Medicaid.
       Thank you again for your leadership in assessing the needs 
     of the nation's medically underserved.
           Sincerely,
                                        James H. Scully Jr., M.D.,
                                                 Medical Director.

[[Page 1861]]

     
                                  ____
                                  American Dental Association,

                                 Washington, DC, February 8, 2005.
     Hon. Gordon Smith,
     Hon. Jeff Bingaman,
     U.S. Senate,
     Washington, DC.
       Dear Senators Smith and Bingaman: On behalf of the American 
     Dental Association (ADA), our 152,000 members and 597 state 
     and local dental societies, we would like to offer strong 
     support for your legislation to establish a bipartisan 
     commission on Medicaid and the uninsured. As Congress and 
     individual states begin to contemplate and propose Medicaid 
     reform options, it is critical to ensure an open dialogue 
     with all Medicaid stakeholders. Your commission would allow 
     policymakers, practitioners, provider institutions, patients 
     and others to work together to provide necessary reforms to 
     this important program.
       The ADA is particularly concerned with improving access to 
     oral health care for low-income children and adults served by 
     the Medicaid program. In the 2000 landmark report, Oral 
     Health in America, the Surgeon General concluded that dental 
     decay is the most prevalent childhood disease--five times as 
     common as asthma, particularly for this population. We know 
     that only one-in-four children enrolled in Medicaid receives 
     dental care and only eight states currently provide 
     comprehensive adult dental benefits. Cumbersome 
     administrative requirements, lack of case management and 
     inadequate payment rates affect dentist participation in the 
     program and utilization of dental services. More must be done 
     to improve the Medicaid program to ensure adequate access to 
     oral health services.
       The ADA looks forward to working with you to pass this 
     legislation and address ways to strengthen and improve the 
     dental Medicaid program, and the Medicaid program as a whole.
           Sincerely,
                                           Richard Haught, D.D.S.,
                                                        President.
                                         James B. Bramson, D.D.S.,
                                               Executive Director.

  Mr. BINGAMAN. Mr. President, Senator Smith and I have worked together 
successfully on several issues within the last year to defend and 
improve our Nation's health care safety, including on an amendment to 
the Medicare prescription drug bill addressing community health center 
payments within Medicare that passed by a vote of 94-1. However, none 
of these initiatives have been more important than the legislation that 
we are introducing together today, along with a list of 13 other 
senators--7 Republicans, 5 Democrats, and 1 Independent, 7 of which 
serve on the Senate Finance Committee--to create a Bipartisan 
Commission on Medicaid. Joining Senator Smith and I as original 
cosponsors are: Senators Snowe, Jeffords, Santorum, Kerry, DeWine, 
Durbin, Chafee, Lincoln, Collins, Nelson of Nebraska, Voinovich, 
Corzine, and Coleman.
  I will not go into the specifics of the legislation, as Senator Smith 
has explained how the Commission would be formed and would operate. 
Instead, I will take the time to explain why it is that the formation 
of commission is so important.
  Medicaid is a critically important health care safety net program 
that provides health care services to over 50 million low-income 
children, pregnant women, seniors, and people with disabilities.
  In New Mexico, Medicaid is the single largest payor for health care. 
All told, Medicaid covers the health care costs of more than 400,000 
New Mexicans--nearly one-quarter of our State's population.
  Although the least expensive to cover, those who benefit most from 
Medicaid are nearly 300,000 of New Mexico's children. Of the various 
populations covered, children represent almost two-thirds of all our 
State's beneficiaries, which is the highest ratio in the Nation 
according to data from the Kaiser Family Foundation.
  However, Medicaid is much more than just a safety net program for 
children from low-income families. It also serves low-income adults and 
pregnant women. It also serves senior citizens and people with 
disabilities who receive the bulk of their health care through Medicare 
but who still rely on Medicaid for a substantial share of their 
benefits and cost-sharing assistance. Medicaid also provides critically 
needed funding to support our Nation's safety net providers, including 
disproportionate share hospitals.
  In the President's budget that was just released, the administration 
has proposed cutting Medicaid by $60 billion over the next 10 years. 
Secretary Leavitt recently testified in the Senate Finance Committee 
that he believes ``Medicaid is flawed and inefficient.''
  There are others that believe Medicaid is not working and that costs 
are spiraling out of control and so the program needs dramatic 
overhaul.
  In contrast. there are also those that will attest that there is 
absolutely nothing wrong with Medicaid. I firmly believe neither point 
of view is correct.
  First, Medicaid is far from broken. The cost per person in Medicaid 
rose just 4.5 percent per year from 2000 to 2004. That compares to a 12 
percent rise in the annual cost of premiums in the private sector. If 
that is the comparison, Medicaid seems to be about the most efficient 
health care program around, even more so than Medicare.
  The overall cost of Medicaid is going up largely, not because the 
program is inefficient, but because more and more people find 
themselves depending on this safety net program for their health care 
during a recession. When nearly 5 million people lost employer coverage 
between 2000 and 2003, Medicaid added nearly 6 million to its program. 
Costs rose in Medicaid precisely because it is working--and working 
well--as our Nation's safety net program.
  Consequently, as noted previously, Medicaid now provides health care 
to over 50 million low-income Americans, including one-quarter of all 
New Mexicans.
  This is precisely why I so strongly oppose block grants or any 
arbitrary caps on Federal spending for Medicaid. If we had caps in 2000 
and Medicaid could not have responded to the economic downturn, we 
would have 50 million uninsured today. Medicaid is a Federal-State 
partnership and an arbitrary cap of the Federal share to States is 
nothing more than the Federal Government trying to shift all risk to 
States.
  On the other hand, it is also not true that Medicaid is not in need 
of improvement. The administration is rightly concerned about certain 
State efforts to provide ``enhanced payments'' to institutional 
providers as a significant factor in driving Medicaid costs. Secretary 
Leavitt, in a speech to the World Health Care Congress on February 1, 
2005, referred to State efforts to maximize Federal funding as ``the 
Seven Harmful Habits of Highly Desperate States.'' As a result, he 
called for ``an uncomfortable, but necessary, conversation with our 
funding partners, the States.''
  Unfortunately, Medicaid reform driven by a budget reconciliation 
process is not a dialogue or conversation. It is a one-way mechanism 
for the Federal Government to impose its will on the States. The 
administration's budget calls for $60 billion in cuts to Medicaid, 
including $40 billion that would directly harm States.
  Where is the conversation in that? In fact, the States have a fair 
amount of complaint with Federal cost shifting to the States. While I 
certainly do not speak for the National Governors' Association or 
National Conference of States Legislatures, some of those grievances 
are rather obvious and I share them.
  For example, according to data from Kaiser Family Foundation, 42 
percent of the costs in Medicaid are due to Medicare dual eligible 
beneficiaries. These dual eligibles are also a major driver of health 
costs in Medicare and this is a prime example of where better 
coordination between Medicare and Medicaid could improve both programs. 
States have been calling for better coordination for years to no avail.
  In the Medicare prescription drug bill that was passed by the 
Congress in 2003, the Federal Government imposed what is referred to as 
a ``clawback'' mechanism which forces the States to help pay for the 
Federally-passed Medicare prescription drug benefit. Although States 
will derive a financial windfall from moving dual eligibles from 
Medicaid coverage to Medicare, some of the States believe the 
``clawback'' will cost them more than if they continued to provide 
prescription drug coverage themselves.
  The prescription drug bill also impacted States financially in a host 
of

[[Page 1862]]

other ways that went largely unnoticed, including those that increased 
Medicaid costs for dual eligibles as a result of increases in the 
Medicare Part B deductible and increased payments to the new Medicare 
Advantage plans. The law also required States to help enroll low-income 
Medicare beneficiaries into the low-income drug benefit.
  In fact, the Congressional Budget Office, or CBO, estimated that 
States had $5.8 billion in added enrollment of dual eligibles in 
Medicaid due to what they refer to as a ``woodworking'' effect on dual 
eligibles trying to sign up for the low-income drug benefit discovering 
they are also eligible for Medicaid benefits. CBO further estimated 
that States had $3.1 billion in new administrative and other costs 
added by the prescription drug legislation.
  States had no ability to ``have a conversation'' with the Federal 
Government about the imposition of such costs on them when the Medicare 
prescription1rrug drug bill was passed, but they should have and will 
have in our Bipartisan Commission on Medicaid.
  Furthermore, due to a recent rebenchmarking done by the Department of 
Commerce's Bureau of Economic Affairs with respect to the calculation 
of per capita income in the States and the application of that data by 
the Centers for Medicare and Medicaid Services, or CMS, the Medicaid 
Federal Medical Assistance Percentage, or FMAP, many States, including 
New Mexico, will see a rather dramatic decline in their Federal 
Medicaid matching percentage. In fact, due to the rebenchmarking and 
other factors, 29 states will lose Medicaid funding in 2006 by an 
amount of in excess of $800 million. Again, this occurred with no 
dialogue or conversation.
  Mr. President, I agree with Secretary Leavitt that there should be a 
conversation among all the stakeholders about the future of Medicaid 
and about what are the fair division of responsibilities between the 
Federal Government, States, local governments, providers, and the over 
50 million people served by Medicaid. It is for this reason that the 
Bipartisan Commission on Medicaid includes all of those stakeholders at 
the table to have a full discussion and debate about the future of 
Medicaid.
  It is our intent that the recommendations would not be focused on 
cutting costs but about improving health care delivery to our Nation's 
most vulnerable citizens. However, they are not mutually exclusive. In 
fact, both can and should be done.
  There are those that will argue that a commission may not reach a 
consensus to make recommendations to improve the Medicaid program and 
so is not worth the effort. I would strongly disagree and point to the 
fact that the National Academy for State Health Policy recently 
convened a workgroup they called Making Medicaid Work for the 21st 
Century that included many of the Medicaid stakeholders and came forth 
with a 78-page report with numerous recommendations with respect to 
eligibility, benefits, and financing. According to the report entitled 
Improving Health and Long-Term Care Coverage for Low-Income Americans, 
the workgroup attempted to ``assess areas where it would be most 
productive to focus on improvement in the program, and to develop 
consensus around recommendations for reform.'' I would underscore the 
emphasis of the workgroup on ``improving'' Medicaid and health 
coverage. This should be the primary and overriding goal of the 
Bipartisan Commission on Medicaid that we are introducing today.
  Before closing, I once again thank Senator Smith, the other 12 Senate 
cosponsors, and the various stakeholders--State and local governments, 
providers, and consumers that have endorsed this legislation--in an 
effort, not to cut Medicaid, but to make it more efficient and 
effective in the delivery of care to our Nation's most vulnerable 
citizens.
  I ask unanimous consent to have a copy of the Fact Sheet accompanying 
this legislation printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                               Fact Sheet


                   BIPARTISAN COMMISSION ON MEDICAID

       Senators Gordon Smith (R-OR), Jeff Bingaman (D-NM), Olympia 
     Snowe (R-ME), Jim Jeffords (I-VT), Rick Santorum (R-PA), John 
     Kerry (D-MA), Mike DeWine (R-OH), Richard J. Durbin (D-IL), 
     Lincoln D. Chafee (R-RI) Blanche L. Lincoln (D-AR), Susan 
     Collins (R-ME), Ben Nelson (D-NE), George Voinovich (R-OH), 
     Jon S. Corzine (D-NJ), and Norm Coleman (R-MN) are 
     introducing legislation that calls for the creation of a 
     Bipartisan Commission on Medicaid.
       Just as the Balanced Budget Act of 1997 called for the 
     creation of the Bipartisan Commission on the Future of 
     Medicare, the Medicaid program should also undergo a 
     comprehensive and thorough review of what is and is not 
     working and how to improve service delivery and quality in 
     the most cost-effective way possible.
       This legislation recognizes that determining the future of 
     Medicaid is not simply about cost. While Medicaid is 
     estimated to cost the federal government $188 billion in FY 
     2005, attention also should be given to the diverse 
     population served. Over 50 million people receive care 
     through Medicaid, including low-income seniors, people with 
     disabilities, children, and pregnant women. Further, it is 
     important to note that while costs are increasing, Medicaid 
     is growing at a slower per capita rate than either Medicare 
     or the private sector.
       The Medicaid Commission would be charged with a number of 
     duties, including reviewing and making recommendations with 
     respect to the long-term goals, populations served, financial 
     sustainability (federal and state responsibility), 
     interaction with Medicare and the uninsured, and the quality 
     of care provided.
       Medicaid is a critically important program helping meet the 
     health care needs of a diverse population through four 
     different programs by serving as:
       (1) a source of traditional insurance for poor children and 
     some of their parents;
       (2) a payer for a complex range of acute and long term care 
     services for the frail elderly and people with disabi1ities;
       (3) a source of wrap-around coverage or assistance for low-
     income seniors and people with disabilities on Medicare, 
     including coverage of additional benefits and assistance with 
     Medicare premiums and copayments; and,
       (4) the primary source of funding to safety net providers 
     that serve both Medicaid patients and the 45 million 
     uninsured.
       In recognition of this diversity, the bill's Medicaid 
     Commission would be comprised of 23 members that reflect all 
     the stakeholders and components in the Medicaid program. 
     Those members include the following: One Member appointed by 
     the President; Two House members (current or former) 
     appointed by the Speaker and Minority Leader; Two Senators 
     (current or former) appointed by the Majority and Minority 
     Leader; Two Governors designated by NGA; Two Legislators 
     designated by NCSL; Two state Medicaid directors designated 
     by NASMD; Two local elected officials appointed by NACo; Four 
     consumer advocates appointed by congressional leadership; 
     Four providers appointed by congressional leadership; Two 
     program experts appointed by Comptroller General.
       The Commission has just one year to hold public hearings, 
     conduct its evaluations and deliberations, and issue its 
     report and recommendations to the President, the Congress, 
     and the public.

  Ms. SNOWE. Mr. President, I am pleased to join with a number of my 
colleagues in cosponsoring the Bipartisan Commission on Medicaid and 
the Medically Underserved Act of 2005, which Senator Smith and Senator 
Bingaman are introducing today.
  The Medicaid program provides essential medical services to low-
income and uninsured children and their families, pregnant women, 
senior citizens, individuals with disabilities, and others. Last year, 
nearly 55 million Americans were enrolled in Medicaid, including more 
than 300,000 in Maine where one in five people now receive health care 
services through MaineCare, our State's Medicaid program.
  Individuals who rely upon Medicaid-funded health services have no 
other option. Without Medicaid, they would join the ever growing ranks 
of the uninsured in this country, which now numbers an all-time high of 
more than 45 million Americans who lacked health coverage at some point 
last year. These two groups represent a total of 100 million Americans 
who would have no health insurance were it not for Medicaid coverage 
which reaches just over half of them. And to the extent that the 
Federal Government reduces its support for Medicaid funding, the 
numbers of uninsured Americans will rise at an even faster rate.
  As Congress begins to consider the administration's Fiscal Year 2006 
Budget, I believe we must take a balanced

[[Page 1863]]

approach that is both fiscally responsible and reflects our long-
standing commitments to provide health care for many of the low-income 
and uninsured through the Medicaid program. Although we face growing 
budget deficits and ever tightening Federal budgets, the Federal 
Government cannot simply abandon its responsibility to help states 
provide health care access to our most vulnerable citizens.
  Today, Medicaid is the fastest growing component of State budgets, 
according to the most recent survey of the National Governors 
Association. Total Medicaid spending nationwide now averages 22 percent 
of State budgets, while State spending on all healthcare functions is 
approximately 31 percent. However, although its costs are increasing, 
the annual growth in Medicaid spending on a per capita basis is growing 
more slowly, at 4.5 percent a year, than the private sector where 
health insurance premiums have increased an average of 12.5 percent a 
year for the last 3 years.
  The economic downturn which State economies experienced several years 
ago, and from which many States are only now emerging, has continued to 
leave many families jobless and without health insurance, forcing them 
to turn to Medicaid. This has put an enormous strain on the states 
already strapped with budget scarcities. Many States reduced Medicaid 
benefits last year and even more restricted Medicaid eligibility in an 
effort to satisfy their budgetary obligations.
  In fact, the Chairman of the National Governors Association, Governor 
Warner of Virginia, and the Vice Chairman, Governor Huckabee of 
Arkansas, recently warned Congress that if Federal spending for 
Medicaid were capped and the number of Medicaid recipients increased 
sharply, States would face dire fiscal consequences. According to the 
Governors, total costs for State Medicaid programs are growing at an 
annual rate of 12 percent, and total Medicaid expenditures now exceed 
that of Medicare, due primarily to factors beyond States' control, 
especially the costs of long-term care: Medicaid now accounts for 50 
percent of all State long-term care spending and pays for the care of 
70 percent of those in nursing homes.
  At this time, therefore, it is crucial that we continue to provide 
sufficient Federal funding for Medicaid, which has worked so well since 
it began providing care for some of our most vulnerable populations 40 
years ago. We must proceed cautiously before making any significant 
changes in the program, and the Medicaid Commission established by this 
bill will ensure that necessary deliberative approach.
  The concept of a commission to undertake a comprehensive review of 
the Medicaid program and recommend possible changes is similar to the 
commission which Congress established in the late 1990s, the Bipartisan 
Commission on the Future of Medicare. That commission examined various 
aspects of the Medicare program to determine areas that should be 
modernized and later recommended a number of changes, including a 
prescription drug benefit. Those recommendations initiated the process 
of congressional debate and consideration of reforming the Medicare 
program, culminating in the Medicare Prescription Drug, Improvement, 
and Modernization Act which passed in 2003 and, among other reforms, 
included the new prescription drug benefit for seniors which will take 
effect next year.
  The new Medicare prescription drug benefit will have a major impact 
on Medicaid since it will shift Federal expenditures for drug benefits 
currently provided by Medicaid for the ``dual eligible'' population--
those who are eligible for both Medicaid and Medicare--to Medicare. 
However, this will not lift most of the financial responsibility and 
burden of prescription drug costs from the States. Recent estimates by 
the National Governors Association show that currently 42 percent of 
all Medicaid dollars are spent on ``dual eligible'' Medicare 
beneficiaries, although they comprise only a small percentage of 
Medicaid cases, and they are covered by Medicare for other services.
  The new prescription drug program includes a provision known as the 
``claw-back'' which will require States to remit funds to the Federal 
Government, based on their inflation-adjusted 2003 per person Medicaid 
expenditures for prescription drugs for these beneficiaries. Although 
the percentage share of drug costs that States must pay for the dual 
eligibles will decline over time, from 90 percent to 75 percent, States 
will continue to pay the lion's share of dual eligibles' prescription 
drug costs. Many States are just now recognizing this fact and are 
looking for ways to accommodate these ongoing costs.
  Unanswered questions like these remain concerning the ultimate impact 
of the Medicare drug program on State budgets and Medicaid programs. 
One of the primary duties of the Medicaid Commission would be to review 
and make recommendations on the interaction of Medicaid with Medicare 
and other Federal health programs.
  Moreover, the formula for calculating the Federal matching rate, 
known as the Federal Medical Assistance Percentage, FMAP, which 
determines the Federal Government's share of a State's expenditures for 
Medicaid each year, has also contributed to the Medicaid problems that 
States are facing. The FMAP formula is designed so that the Federal 
Government pays a larger portion of Medicaid costs in States with a per 
capita income lower than the national average. However, the formula 
looks back 3 years, to points in time that are not necessarily 
reflective of a State's current financial situation.
  In fiscal year 2003, for example, the FMAP for that year was 
calculated in 2001 for the fiscal year beginning October 2002. The FMAP 
for FY 2003 was determined on the basis of State per capita income over 
the 3-year period of 1998 through 2000, when State economies were 
growing significantly. Yet in 2003, when this matching rate was in 
effect, a serious economic downturn was affecting many State budgets, 
and that downturn has contributed greatly to the growth of Medicaid for 
several years now.
  We recognized this situation in the last Congress and provided for 
State fiscal relief by providing a temporary increase in the Federal 
Medicaid matching rate, which provided $10 billion in fiscal relief to 
States during fiscal 2003 and 2004, when we passed the Jobs and Growth 
Tax Relief Reconciliation Act of 2003. But that fiscal relief has 
sunset.
  One of the duties of the Medicaid Commission would be to make 
recommendations on how to make Federal matching payments more equitable 
with respect to the States and the populations they serve, as well as 
how to make them more responsive to changes in States' economic 
conditions.
  The fact is, Medicaid and Medicare have complex responsibilities, 
financing, and interrelationships and that is why a Medicaid Commission 
is vital for the future state budgets and the Medicaid program as a 
whole.
  I urge my colleagues to join us supporting this legislation to help 
sustain and improve this critical health care safety net for our most 
vulnerable Americans.
                                 ______
                                 
      By Mr. REID (for himself, Mr. Baucus, Mr. Stevens, Mr. Nelson of 
        Nebraska, and Mr. Ensign):
  S. 339. A bill to reaffirm the authority of States to regulate 
certain hunting and fishing activities; to the Committee on the 
Judiciary.
  Mr. REID. Mr. President, today I am introducing the ``Reaffirmation 
of State Regulation of Resident and Nonresident Hunting and Fishing Act 
of 2005.'' This legislation explicitly reaffirms each State's right to 
regulate hunting and fishing. I am pleased that Senators Ben Nelson, 
John Ensign, Max Baucus, and Ted Stevens are joining me in sponsoring 
this important bill.
  This is a Nevada issue, but it also is a national issue, as a recent 
Federal circuit court ruling undermines traditional hunting and fishing 
laws. In Conservation Force v. Dennis Manning, the Ninth Circuit Court 
of Appeals ruled that State laws that distinguish

[[Page 1864]]

between State residents and non-residents for the purpose of affording 
hunting and related privileges are constitutionally suspect.
  This threatens the conservation of wildlife resources and 
recreational opportunities. Although the Ninth Circuit found the 
purposes of such regulation to be sound, the court questioned the 
validity of tag limits for non-resident hunters.
  I respect the authority of States to enact laws to protect their 
legitimate interests in conserving fish and game, as well as providing 
opportunities for in-State and out-of-State residents to hunt and fish. 
That's what this legislation says--we respect that State right.
  Sportsmen are ardent conservationists. They support wildlife 
conservation not only through the payment of State and local taxes and 
other fees, but also through local non-profit conservation efforts and 
by volunteering their time.
  For example, in Nevada there are great groups such as Nevada Bighorns 
Unlimited and the Fraternity of Desert Bighorn. These are dedicated 
sportsmen who spend countless hours and much of their own money 
building ``guzzlers'' in the desert, which help provide a reliable 
source of water for bighorn sheep and other wildlife. Without these 
efforts it would be extremely hard for bighorn sheep to survive in much 
of their historic range in Nevada because much of their historic range 
has been fragmented by development. Today, Southern Nevada is in the 
midst of a very difficult 500-year drought, and the work of the 
conservation groups has saved thousands of our bighorn sheep.
  The deep involvement of local sportsmen in protecting and conserving 
wildlife is one important justification for the traditional resident/
non-resident distinctions, and provides the motivation for our 
legislation. The regulation of wildlife is traditionally within a 
State's purview, and this legislation simply affirms the traditional 
role of States in the regulation of fish and game.
  This bill is time sensitive. The out-of-State hunters that brought 
the suit in the 9th Circuit are now threatening to get a restraining 
order from the Federal court to delay the opening of the big game 
season in Nevada this year. This threat itself is causing great damage 
to conservation and fish and game management in Nevada.
  According to The Las Vegas Sun, Nevada's Wildlife Department has 
already borrowed $3 million to get through the fiscal year, eliminated 
three positions, and has plans to eliminate five more. Delaying hunting 
seasons while the courts resolve this issue could cause the Department 
to literally shut down.
  Uncertainty with regard to hunting and fishing regulations is bad for 
the conservation of Nevada's resources. This bill needs to pass now. I 
look forward to working with my colleagues to expedite passage of this 
important legislation. I ask unanimous consent that the text of this 
bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 339

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Reaffirmation of State 
     Regulation of Resident and Nonresident Hunting and Fishing 
     Act of 2005''.

     SEC. 2. DECLARATION OF POLICY AND CONSTRUCTION OF 
                   CONGRESSIONAL SILENCE.

       (a) In General.--It is the policy of Congress that it is in 
     the public interest for each State to continue to regulate 
     the taking for any purpose of fish and wildlife within its 
     boundaries, including by means of laws or regulations that 
     differentiate between residents and nonresidents of such 
     State with respect to the availability of licenses or permits 
     for taking of particular species of fish or wildlife, the 
     kind and numbers of fish and wildlife that may be taken, or 
     the fees charged in connection with issuance of licenses or 
     permits for hunting or fishing.
       (b) Construction of Congressional Silence.--Silence on the 
     part of Congress shall not be construed to impose any barrier 
     under clause 3 of Section 8 of Article I of the Constitution 
     (commonly referred to as the ``commerce clause'') to the 
     regulation of hunting or fishing by a State or Indian tribe.

     SEC. 3. LIMITATIONS.

       Nothing in this Act shall be construed--
       (1) to limit the applicability or effect of any Federal law 
     related to the protection or management of fish or wildlife 
     or to the regulation of commerce;
       (2) to limit the authority of the United States to prohibit 
     hunting or fishing on any portion of the lands owned by the 
     United States; or
       (3) to abrogate, abridge, affect, modify, supersede or 
     alter any treaty-reserved right or other right of any Indian 
     tribe as recognized by any other means, including, but not 
     limited to, agreements with the United States, Executive 
     Orders, statutes, and judicial decrees, and by Federal law.

     SEC. 4. STATE DEFINED.

       For purposes of this Act, the term ``State'' includes the 
     several States, the District of Columbia, the Commonwealth of 
     Puerto Rico, Guam, the Virgin Islands, American Samoa, and 
     the Commonwealth of the Northern Mariana Islands.
                                 ______
                                 
      By Mr. LUGAR:
  S. 340. A bill to maintain the free flow of information to the public 
by providing conditions for the federally compelled disclosure of 
information by certain persons connected with the news media; to the 
Committee on the Judiciary.
  Mr. LUGAR. Mr. President, I rise today to introduce the Free Flow of 
Information Act of 2005. This bill was originally introduced in the 
House of Representatives by my friend and colleague, Congressman Mike 
Pence. I applaud the initiative by my colleague to address this 
important issue and I am pleased to have this opportunity to be the 
Senate sponsor.
  Last year, Congress passed legislation I proposed that directed the 
State Department to increase and add greater focus to international 
initiatives to support the development of free, fair, legally protected 
and sustainable media in developing countries.
  I am pleased to announce that the State Department and the National 
Endowment for Democracy have embraced this initiative and are now 
proceeding with implementing this initiative.
  Our Founders understood that free press is a cornerstone of 
democracy. To embrace and implement President Bush's bold and visionary 
call for the spread of democracy and freedom in the world, it is 
incumbent upon us to ensure that foreign assistance programs focus on 
the development of all the institutions that help democracies work and 
protect basic human rights.
  While we focus on those needs abroad, we cannot let those basic 
freedoms erode at home. The Constitution makes very clear that freedom 
of the press should not be infringed. A cornerstone of our society is 
the open market of information which can be shared through ever 
expanding mediums. The media serves as a conduit of information between 
our governments and communities across the country.
  It is important that we ensure reporters certain rights and abilities 
to seek sources and report appropriate information without fear of 
intimidation or imprisonment. This includes the right to refuse to 
reveal confidential sources. Without such protection, many 
whistleblowers will refuse to step forward and reporters will be 
disinclined to provide our constituents with the information that they 
have a right to know. Promises of confidentiality are essential to the 
flow of information the public needs about its government.
  The Free Flow of Information Act closely follows existing Department 
of Justice guidelines for issuing subpoenas to members of the news 
media. These guidelines were adopted in 1973 and have been in 
continuous operation for more than 30 years. The legislation codifies 
the conditions that must be met by the government to compel the 
identity of confidential sources.
  I am hopeful that my colleagues will give careful consideration to 
the merits of this legislation. It provides an appropriate approach and 
careful balance to protect our freedom of information while still 
enabling legitimate law enforcement access to information.

                          ____________________