[Congressional Record (Bound Edition), Volume 153 (2007), Part 2]
[Senate]
[Pages 2944-2968]
[From the U.S. Government Publishing Office, www.gpo.gov]




                FAIR MINIMUM WAGE ACT OF 2007--Continued

  Mr. HARKIN. Madam President, I rise to discuss an amendment I have 
filed to eliminate a provision that was added to the minimum wage bill 
regarding employee leasing firms, also known as professional employer 
organizations, or PEOs.
  I have fought for a clean minimum wage bill, on the grounds that 
workers have been waiting 10 long years for this raise. During that 
time, businesses have seen record profits and productivity--and that 
has been equally the case in States and regions that have raised the 
minimum wage. Yet now we are being asked to include this aggressively 
anti-worker PEO provision in order to pass a minimum wage increase in 
the Senate.
  For my colleagues and others who may not know what a PEO is, let me 
explain. It is an organization that handles administrative details for 
workers who actually do work for another company. For example, I might 
technically be employed by Tristate PEO, but I actually show up to work 
every day at Main Street Construction Company. Companies use PEOs so 
they don't have to handle the tax-and-benefits paperwork for many of 
their workers.
  The language in the PEO provision, however, seeks to make these PEOs 
the ``employer of record'' for tax purposes. PEOs have sought to become 
the ``employer of record'' under various laws because they would like 
to be able to tell employers that the PEOs can independently take care 
of payroll taxes, workers' compensation, unemployment insurance, and 
the like. However, in the past, PEOs have misrepresented what jobs are 
covered by workman's compensation--for instance, by characterizing 
construction workers as clerical. Under current law, legal 
responsibility for employer obligations typically remains partly or 
wholly with the worksite employer.
  Making a PEO the sole employer makes the evasion of labor and 
employment standards much easier. The National Employment Law Project 
and other worker-rights advocates have concluded that the language now 
in the bill would make it harder for employees to go to an arbiter and 
get unpaid overtime, unemployment insurance benefits, or workman's 
compensation benefits if the PEO collapses. And this is by no means 
hypothetical. Such collapses have happened not just with small, fly-by-
night operations, but with large PEOs like Administaff and Simplified 
Employment Services, SES.
  For example, when SES allowed health insurance premiums to go unpaid 
and then went bankrupt, it left employees like Melanie Martin out in 
the cold. She said ``We trusted him to pay our insurance premiums, and 
now I'm stuck with a $7,000 surgery bill. Every time I think about 
this, I cry.''
  In 2004, when MidAtlantic Postal Express in Roanoke, VA, went 
bankrupt, the U.S. Treasury wasn't the only one left holding the bag. 
Employees were left wondering where to turn for thousands of dollars in 
back pay. Victory Compensation Services was the PEO handling the 
workers' pay and benefits, and admitted that workers had no workman's 
compensation coverage even though MidAtlantic had paid Victory 
premiums. But Victory blamed MidAtlantic for the unpaid payroll.
  Now, let's say that you are newly unemployed trucker who is owed 
$7,000 in back pay. This is a complicated mess for a worker to try to 
navigate just to get a paycheck that he or she is owed.
  This is part of a larger, systemic problem. Working people in the 
United States feel less and less empowered in our you're-on-your-own 
society. Seventy percent of families are headed by either dual-income 
couples or a single parent. The housing bubble is bursting. 
Globalization is sending American jobs overseas. Pensions are being 
frozen at an unprecedented pace. The national savings rate has actually 
gone into negative figures. Women are working an average of 500 more 
hours more per year than in 1979. But productivity has increased 70 
percent since then. People are working harder and getting paid less.
  In this context of economic anxiety, we shouldn't be making it even 
harder for workers to organize, negotiate or enforce contracts, or 
fight for their rights under law. But that will be the sure-fire result 
if the final bill has this PEO provision in it.
  I urge my colleagues to strip this provision from the bill. We must 
not sacrifice worker rights in exchange for this modest and long-
overdue increase in the wages for those at the lowest rungs of the 
economic ladder.
  Mr. LEVIN. Madam President, I have long supported an increase in the 
minimum wage. I am pleased that, with the leadership of the new 
majority in Congress, this minimum wage increase will be passed by a 
bipartisan majority.
  In 1996 Congress raised the minimum wage by 90 cents an hour in two 
steps to $5.15 an hour. That increase was enacted more than 10 years 
ago. Since then, the real value of that wage has eroded by 21 percent 
and the nearly 5.5 million workers earning the minimum wage have 
already lost all of the gains from the 1996-1997 increase. Since then, 
Gallup polls have shown that 86 percent of small business owners do not 
think that the minimum wage affects their business, and nearly half of 
small business owners think that the minimum wage should be increased. 
Since then, 29 States, including Michigan, as well as the District of 
Columbia have recognized the importance of keeping our working families 
out of poverty by increasing State minimum wages.
  Unfortunately, since the 1970s, poverty has increased by 50 percent 
among full-time, year-round workers. Currently, 37 million Americans, 
including 13 million children, live in poverty. As the most prosperous 
nation in the world, our minimum wage should be a living wage, and it 
is not. When a father or mother works full time, 40 hours a week, year-
round, they should be able to lift their family out of poverty. A full-
time minimum wage laborer working 40 hours a week for 52 weeks earns 
$10,700 per year--more than $6,000 below the Federal poverty guidelines 
for a family of three.
  I believe that a full-time minimum wage job should provide a minimum 
standard of living in addition to giving workers the dignity that comes 
with a paycheck. These lower paid workers, many of whom have entered 
the workforce due to the welfare reform, should be rewarded for 
entering the workforce, not penalized by a poverty wage. A higher 
minimum wage has the potential to ensure that lower paid workers will 
be protected from falling into poverty and possibly back on the welfare 
rolls. The minimum wage increase during the recession in 1991 provided 
much needed income to poor people and

[[Page 2945]]

helped to increase spending in the economy. 58 percent of the benefit 
of the 1996 increase went to families in the bottom 40 percent of 
income groups. Over one-third of the benefit went to the poorest 
families--those in the bottom 20 percent of income groups.
  Today the real value of the minimum wage is $4.00 below what it was 
in 1968. To have the purchasing power it had in 1968, the minimum wage 
would have to be at least $9.37 an hour today, not $5.15. According to 
the United States Department of Labor, over 60 percent of minimum wage 
earners are women; almost 40 percent are minorities, and nearly 80 
percent are adults. These hardworking Americans deserve a fair deal.
  In addition to the long overdue minimum wage provision, this bill 
contains a package of tax provisions. I am pleased that these include a 
number of measures to crack down on abusive tax dodges, including an 
improvement to current law to end the tax benefits received by 
companies that reincorporate and set up shell headquarters in offshore 
tax havens.
  I am also pleased that the bill extends the work opportunity tax 
credit, which allows employers credit against wages for hiring workers 
from targeted groups such as recipients of public assistance, qualified 
veterans, and ``high risk'' youth. I have heard from a number of 
Michigan companies that the WOTC program is important to them in their 
hiring members of these targeted groups, and I am pleased that this 
provision will be extended through the end of 2012.
  I am also pleased that the tax provisions would put in place a limit 
on the amount that corporate executives and other highly paid employees 
can place tax-free into deferred compensation plans. Under current law, 
public companies cannot deduct more than $1 million per year for 
compensation paid to their top officers. However, compensation that is 
``deferred,'' meaning the employee doesn't have immediate access to it, 
is not subject to this $1 million limit; so deferred compensation 
packages have become a main way that company executives can get multi-
million dollar compensation packages while their companies continue to 
take a tax write-off.
  We have seen these excessive packages time and again in recent 
stories about runaway executive compensation totaling tens of millions 
of dollars. Tens and even hundreds of millions of dollars have been 
salted away in this fashion for corporate executives, and companies 
have simply found another way to game the system by excluding this 
``deferred compensation'' from those individuals' income for the year. 
It is more than time for Congress to put an end to this game which has 
fueled excessive executive pay.
  This bill would set a limit on the amount of compensation that could 
receive tax deferral at the lower of $1 million annually or the average 
of the previous 5 years compensation. The ability of corporate 
executives to defer tax on up to $1 million in compensation is still a 
significant benefit that stands in stark contrast to the minimum wage 
we are attempting to raise for those at the lowest end of the pay 
scale.
  It is only right that those who are at the low end of the pay scale 
who work hard should receive a fair wage and be able to support their 
families. These people do not always have the leverage to negotiate a 
fair salary. This bill to increase the minimum wage will help to move 
them to a more livable wage.
  Mr. INHOFE. Madam President, I will unavoidably miss the final vote 
on the minimum wage bill but I come down here now to ask unanimous 
consent that the Record reflect, immediately after the vote, my 
announcement that I would have voted against this bill.
  In so doing, I remain consistent on the issue. Government is best 
when it is does not pick winners and losers--when it does not 
competitively advantage one group of people over another or one set of 
States over another.
  Senator DeMint offered an amendment to equally and fairly increase 
the minimum wage by $2.10 for each State over what the wage is today.
  The fact that the liberals voted against the DeMint amendment is 
proof that their bill as now constituted is really about damaging the 
competitiveness of middle America--the so-called red States, 
disparagingly called ``fly-over country'' by liberals--compared to the 
liberal fringe States.
  Without this amendment, the underlying legislation would partially 
exempt minimum wage workers in higher-cost States that already have 
State minimum wage rates greater than the Federal level of $5.15 an 
hour, and completely exempt minimum wage workers in highest-cost States 
that have State minimum wage rates near $7.25 an hour.
  The DeMint amendment would increase the Federal minimum wage equally 
for workers in all States at the same rate as H.R. 2 would increase the 
minimum wage from the current Federal minimum wage rate.
  Senator Kennedy's arguments against this amendment have been both 
confusing and contradictory. On the one hand, he said that we need a 
one-size-fits-all mandate, and then he said that Massachusetts has a 
higher cost of living.
  I will not stand for people in Washington, DC, damaging the 
competitiveness of Oklahoma against other States. If Oklahomans vote to 
change our own laws, that is one thing, but we are not going to buckle 
under to DC and the liberal fringe States.
  Thus I would vote nay.
  I ask unanimous consent that the following chart be printed in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

----------------------------------------------------------------------------------------------------------------
                                 Current       Kennedy Proposal                    DeMint Proposal
                                 MinWage ---------------------------  $ Wage ---------------------------  $ Wage
             State                 In       2007     2008     2009     Hike     2007     2008     2009     Hike
                                 Effect    $5.85    $6.55    $7.25             $0.70    $1.40    $2.10
----------------------------------------------------------------------------------------------------------------
Alabama.......................     $5.15    $5.85    $6.55    $7.25    $2.10    $5.85    $6.55    $7.25    $2.10
Alaska........................      7.15     7.15     7.15     7.25     0.10     7.85     8.55     9.25     2.10
Arizona.......................      6.75     6.75     6.75     7.25     0.50     7.45     8.15     8.85     2.10
Arkansas......................      6.25     6.25     6.55     7.25     1.00     6.95     7.65     8.35     2.10
California....................      7.50     7.50     8.00     8.00     0.50     8.20     8.90     9.60     2.10
Colorado......................      6.85     6.85     6.85     7.25     0.40     7.55     8.25     8.95     2.10
Connecticut...................      7.65     7.65     7.65     7.65       --     8.39     9.10     9.80     2.15
Delaware......................      6.65     6.65     7.15     7.25     0.60     7.35     8.05     8.75     2.10
District of Columbia..........      7.00     7.00     7.55     8.25     1.25     8.70     9.40    10.10     3.10
Florida.......................      6.67     6.67     6.67     7.25     0.58     7.37     8.07     8.77     2.10
Georgia.......................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Hawaii........................      7.25     7.25     7.25     7.25       --     7.95     8.65     9.35     2.10
Idaho.........................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Illinois......................      6.50     7.50     7.75     8.00     1.50     7.20     7.90     8.60     2.10
Indiana.......................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Iowa..........................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Kansas........................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Kentucky......................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Louisiana.....................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Maine.........................      6.75     7.00     7.00     7.25     0.50     7.45     8.15     8.85     2.10
Maryland......................      6.15     6.15     6.55     7.25     1.10     6.85     7.55     8.25     2.10
Massachusetts.................      7.50     7.50     8.00     8.00     0.50     8.30     9.00     9.70     2.10
Michigan......................      6.95     7.15     7.40     7.40     0.45     7.65     8.35     9.05     2.10
Minnesota.....................      6.15     6.15     6.55     7.25     1.10     6.85     7.55     8.25     2.10
Mississippi...................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Missouri......................      6.50     6.50     6.55     7.25     0.75     7.20     7.90     8.60     2.10
Montana.......................      6.15     6.15     6.55     7.25     1.10     6.85     7.55     8.25     2.10
Nebraska......................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10

[[Page 2946]]

 
Nevada........................      6.15     6.85     7.65     8.25     2.10     7.85     8.55     9.25     2.10
New Hampshire.................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
New Jersey....................      7.15     7.15     7.15     7.25     0.10     7.85     8.55     9.25     2.10
New Mexico....................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
New York......................      7.15     7.15     7.15     7.25     0.10     7.85     8.55     9.25     2.10
North Carolina................      6.15     6.15     6.55     7.25     1.10     6.85     7.55     8.25     2.10
North Dakota..................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Ohio..........................      6.85     6.85     6.85     7.25     0.40     7.55     8.25     8.95     2.10
Oklahoma......................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Oregon........................      7.80     7.80     7.80     7.80       --     8.50     9.20     9.90     2.10
Pennsylvania..................      6.25     6.25     6.55     7.25     1.00     6.95     7.65     8.35     2.10
Rhode Island..................      7.40     7.40     7.40     7.40       --     8.10     8.80     9.50     2.10
South Carolina................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
South Dakota..................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Tennessee.....................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Texas.........................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Utah..........................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Vermont.......................      7.53     7.53     7.53     7.53       --     8.23     8.93     9.63     2.10
Virginia......................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Washington....................      7.93     7.93     7.93     7.93       --     8.63     9.33    10.03     2.10
West Virginia.................      5.85     5.85     6.55     7.25     1.40     6.55     7.25     7.95     2.10
Wisconsin.....................      6.50     6.50     6.55     7.25     0.75     7.20     7.90     8.60     2.10
Wyoming.......................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
----------------------------------------------------------------------------------------------------------------
22 States--Fully Impacted.
18 States--Partially Impacted.
10 States--Not Impacted.

  Mr. FEINGOLD. Madam President, I speak today in support of passage of 
H.R. 2, the Fair Minimum Wage Act of 2007. The Federal minimum wage has 
not been increased in almost 10 years and an increase is long overdue. 
I have been a strong supporter of an increase in the Federal minimum 
wage for many years and I am delighted the Senate is finally about to 
vote for an increase in the Federal minimum wage.
  This much-needed increase is projected to benefit close to 13 million 
Americans either with a direct increase in their minimum wage or 
indirectly by promoting higher wages for other working Americans 
earning more than the minimum wage. This increase is sorely needed 
because the current minimum wage cannot adequately support workers as 
its value has eroded significantly since the last increase in 1997. 
Furthermore, the Center on Budget and Policy Priorities notes that 
after adjusting for inflation, the value of the minimum wage is at its 
lowest level since 1955. As the costs of housing, health care, energy, 
and education continue to skyrocket, we must raise the minimum wage to 
provide millions of hard-working Americans the respect and dignity 
their work demands.
  More and more of these working Americans find themselves mired in 
poverty or living on the cusp of poverty. Right now, there are 37 
million Americans living in poverty, including 13 million children. 
Since the 1970s, poverty has increased by 50 percent for full-time, 
year-round workers. Minimum wage workers who work full time earn 
$10,700 a year, which is almost $6,000 below the Federal poverty 
guidelines for a family of three. No American should work full-time, 
year- round, and still live in poverty. While this modest increase in 
the Federal minimum wage will not eliminate poverty, it will provide 
hard-working Americans with a well-deserved increase in their wages. 
This increase will provide more money for workers to purchase 
prescription drugs, to pay utilities and rent, to provide child care 
for their children, and to invest in higher education opportunities. 
This increase is needed because the majority of the low income people 
in our country are working and are holding down low-paying jobs with 
stagnant wages that do not allow them to break free from poverty.
  Even with this increase in the Federal minimum wage, workers in 
Wisconsin and throughout the country will still struggle to afford 
housing. The National Low Income Housing Coalition estimates that the 
fair market rent for a two-bedroom apartment in Wisconsin is $666 a 
month and calculates that a worker in Wisconsin needs to make $12.80 an 
hour to avoid paying more than 30 percent of his or her income on 
housing. According to NLIHC data, a full-time minimum wage employee 
earning the current $5.15 an hour needs to work 79 hours a week, 52 
weeks a year to afford a two-bedroom apartment. Madam President, 79 
hours a week is almost the equivalent of two full-time minimum wage 
workers and the number of hours of work required to cover the costs of 
an apartment are even higher in States with higher housing costs. It is 
a disgrace that in many cases, minimum wage workers working full time 
cannot afford adequate housing or are forced to pay a huge share of 
their income to cover housing costs. While this increase will alleviate 
some of the housing affordability burdens facing workers, more needs to 
be done this year to promote affordable housing, including expanding 
rental assistance and affordable housing production.
  Unfortunately hunger and food insecurity are also a reality for far 
too many minimum wage workers. Even in a State known for its diverse 
agricultural production, many Wisconsinites periodically face hunger. 
Food Stamps, or FoodShare as it is known in Wisconsin, serves over 25 
million nationwide and 329,000 Wisconsinites. Even with this and other 
Federal nutrition assistance programs combined with the dedicated work 
of food pantries, soup kitchens and even many religious organizations, 
9 percent--or 1 out of 11 of households in Wisconsin lack sufficient 
food. Many of these food assistance recipients are working at low-wage 
jobs, so increasing the minimum age is an important step. But even with 
this improvement, it will not fully solve this problem and I will 
continue to work to provide improved Federal support in the Farm Bill 
and elsewhere to reduce hunger.
  Housing costs are not the only necessity of life that minimum wage 
workers have to provide for themselves and their families. They also 
have to purchase groceries, provide health care, pay for higher 
education, pay for increasingly expensive gas and electric costs, and 
provide child care for their children. Some Americans may think that 
the majority of minimum wage workers are teenagers in the first job; 
that perception is incorrect. The Economic Policy Institute notes that 
over 70 percent of minimum wage workers are adults and in Wisconsin, 
over 80 percent of minimum wage workers are adults. Moreover, of these 
adult minimum wage workers, over 30 percent are the sole breadwinners 
of their families.
  I think it is unconscionable that in the almost 10 years that we have 
not raised the minimum wage, Congress has voted to increase its own pay 
by $31,600. People in Wisconsin find it hard to understand why Members 
of Congress received substantial pay raises at a time when the real 
value of the minimum wage has eroded by 20 percent since 1997. As my 
colleagues know, I have long fought against automatic congressional pay 
increases and will continue to do so. I have introduced legislation 
that would put an end to automatic cost-of-living adjustments for 
congressional pay. Mr. President,

[[Page 2947]]

we have Americans who are working full time, 52 weeks a year and they 
cannot afford health care, housing, and child care. They don't have the 
power to automatically raise their pay--they are dependent on Congress 
to raise the Federal minimum wage. But instead of working to raise the 
minimum wage during the past 10 years, we in Congress worked to protect 
our automatic pay raises.
  Opponents of increasing the minimum wage argue that it hurts the 
economy and job growth, but past increases in the minimum wage do not 
support that argument. In the 4 years after the previous minimum wage 
increase, nearly 12 million new jobs were created. A 1998 Economic 
Policy Institute study did not find significant job loss associated 
with the 1997 minimum wage increase. Additionally, the Center on 
Wisconsin Strategy examined job growth after the June 2005 increase in 
Wisconsin's minimum wage and found that Wisconsin had an average growth 
of 30,000 more jobs, not a job loss.
  This increase is a great start, but more needs to be done for the 
American worker. I am pleased an amendment I offered was accepted into 
the underlying package that seeks to support American manufacturers. I 
thank my colleague, Senator Kennedy, for his leadership in moving this 
bill through the Senate and both he and his staff for their assistance 
in getting my Buy American reporting requirement amendment accepted 
into the Senate package. This amendment is based on past Buy American 
reporting requirements that I have been successful in getting enacted 
in various appropriations bills from fiscal year 2004 through fiscal 
year 2006.
  This Buy American reporting requirement requires Federal agencies to 
submit annual reports that include the following information: (a) the 
dollar value of any articles, materials, or supplies purchased that 
were manufactured outside of the United States; (b) an itemized list of 
all waivers of the Buy American Act granted with respect to such 
articles, materials, or supplies, and a citation to the treaty, 
international agreement, or other law under which each waiver was 
granted; (c) if any articles, materials, or supplies were acquired from 
entities that manufacture articles, materials, or supplies outside the 
United States, the specific exemption under the Buy American Act that 
was used to purchase such articles, materials, or supplies; and (d) a 
summary of total procurement funds spent on goods manufactured in the 
United States versus funds spent on goods manufactured outside of the 
United States.
  The amendment also requires that these reports should be made 
publicly available to the maximum extent possible and contains a common 
sense exception for members of the intelligence community.
  I have long believed that an important way Congress can support 
American manufacturers and workers is to ensure that the Federal 
Government buys American-made goods whenever reasonably possible. 
Congress enacted such a policy when it passed the Buy American Act of 
1933. That act requires government agencies to purchase American-made 
goods but allows these requirements to be waived in certain specified 
cases. I am concerned that those waivers may be being used excessively. 
Unfortunately, right now, only the Department of Defense is required to 
permanently report on its use of waivers of domestic procurement laws. 
I hope that this Buy American reporting language can help ensure that 
the entire government buys American-made goods in every possible 
circumstance, and is able to explain its reasons when it does not do 
so. This is a straightforward way to help ensure that the Federal 
Government--and American taxpayer dollars--support American workers.
  My State has suffered a huge loss of manufacturing jobs over the past 
6 fyears. According to statistics from the Department of Labor, 
Wisconsin lost over 90,000 manufacturing jobs between January 2000 and 
November 2006. Unfortunately, many other manufacturing states around 
the country are facing similarly tough times. The Economic Policy 
Institute reported that the August 2006 level of manufacturing 
employment is ``at near lows not seen since the 1950s.'' The continued 
loss of high-paying manufacturing jobs underscores the need for the 
Federal Government to support American workers and businesses by buying 
American-made goods.
  American workers need our support on a range of issues, whether it is 
by increasing the minimum wage, fighting against bad trade policies, or 
encouraging the purchase of American-made goods. The Senate took a good 
first step with the passage of this legislation. I was proud to vote 
for the 1996-1997 increase bringing the minimum wage to its current 
level of $5.15 an hour and I am pleased to now support the increase in 
the Federal minimum wage from $5.15 to $7.25.
  When the minimum wage was established in 1938, its purpose was to 
ensure that American workers were fairly compensated for a day's work. 
Despite the passage of this increase, far more work needs to be done to 
support hard-working American families. I look forward to working with 
my colleagues in this new Congress to promote housing, education, and 
health care policies that support the working men and women of this 
country. This is a great victory for families in Wisconsin and 
throughout the Nation and it is my hope that this first step paves the 
way for additional legislative victories for working Americans this 
year.
  Mr. DOMENICI. Madam President, I rise today in support of the Fair 
Minimum Wage Act of 2007, H.R. 2.
  It has been 10 years since Congress last voted to raise the minimum 
wage. In the meantime, our cost of living has increased annually and 
working families have struggled to meet their most basic needs. The 
current Federal minimum wage just isn't sufficient. Now is the time to 
raise the minimum wage. It is time to give America's hard-working, low-
wage workers a raise.
  This bill will increase the Federal minimum wage by $2.10 an hour to 
$7.25 an hour. This increase will be done in three phases over a 26 
month period. The minimum wage has proven to be an important tool in 
fighting poverty in our country and I believe that this modest increase 
will help to improve the situation of low-wage workers and their 
families.
  The Fair Minimum Wage Act also contains several key tax credits. 
These tax credits will encourage small businesses to continue to 
explore new investments and make improvements to their business 
property. This bill will extend the tax credit provided to employers 
who hire workers who have experienced barriers to entering the 
workforce, such as low-income workers welfare and food stamp 
recipients, and high-risk youth. The work opportunity tax credit will 
also apply to the hiring of veterans disabled after the September 11, 
2001, attacks. I believe that these tax credits will be of benefit to 
our small businesses owners and I hope that my colleagues will support 
this package.
  Mr. SMITH. Madam President, I rise today to support the Fair Minimum 
Wage Act of 2007 to increase the Federal minimum wage.
  The Fair Minimum Wage Act of 2007 will increase the Federal minimum 
wage by $2.10 to $7.25. Oregon's minimum wage, which is $7.80 and 
adjusted annually for inflation, will not be impacted by this boost. 
Nevertheless, I support the increase of the Federal minimum wage for 
our Nation's employees. I also support the inclusion of the small 
business tax relief in the legislation. I believe this is a valuable 
legislative package, helping both our Nation's employees and small 
businesses and strengthening America's workforce and economy.
  The bill before us today will have a positive impact on our low-
income workers. An estimated 14 million workers will receive a pay 
increase if the minimum wage were raised from $5.15 to $7.25. There are 
roughly 3.9 million families with children under 18 that will benefit 
from this minimum wage increase, including 1.4 million single parents.
  I am proud that we had this debate on the Senate floor. By engaging 
in this bipartisan discussion, we were able to reach a compromise that 
benefits

[[Page 2948]]

low-income American workers. After 10 years, hard-working Americans, 
many of whom are working full-time jobs, will be in a better position 
to pay their bills, take care of their families, and reinvest in the 
economy.
  I also support the tax relief included in this bill for our Nation's 
small businesses. As a small business owner, I know first hand what it 
takes to meet a payroll and to sign the front of a paycheck. Small 
businesses are the backbone of the American economy, employing more 
than half of all private sector employees and generating 60 to 80 
percent of net new jobs annually. Targeted tax and regulatory relief is 
vital to helping these businesses continue to create new jobs, stay 
competitive, and keep our economy growing.
  I applaud the Senate leadership for bringing forth the minimum wage 
bill to help our Nation's workers. I am honored to support the Fair 
Minimum Wage Act of 2007.
  Mr. GRASSLEY. Madam President, I wish to speak briefly on a revenue 
provision contained in the minimum wage bill. Senator Baucus and I 
worked closely on the tax bill, both on the provisions providing relief 
to small businesses affected by the minimum wage but also the offsets 
that made sure the package was in balance.
  One of the offsets, that dealing with limiting the amounts of annual 
deferrals under nonqualified deferred compensation plans, has attracted 
some concern and raised some questions.
  I thought it would be useful to my colleagues for me to provide a 
brief sketch of where we have been on this issue. The issue of 
nonqualified deferred compensation came to the attention of the Finance 
Committee in response to the Joint Committee on Taxation's 
investigation into Enron--done at the request of the Finance Committee. 
The Enron report highlighted a number of abuses by top executives 
involving nonqualified deferred compensation.
  In the American Jobs Creation Act that Congress passed in 2004, there 
were included provisions that limited deferred nonqualified 
compensation plans. In brief, the legislation limited when and under 
what circumstances distributions could be made.
  More recently, in the Pension bill passed last year, Congress 
restricted funding of nonqualified deferred compensation plans if the 
employer had underfunded certain other retirement plans.
  In addition, the Finance Committee last September had a hearing that 
looked closely at executive compensation that covered a wide range of 
pay issues involving top employees.
  As my colleagues can see, the issue of executive compensation and 
particularly nonqualified deferred compensation has been of long-
standing interest for the Finance Committee. I expect that these 
matters will continue to command the attention of the committee this 
Congress.
  The majority of concerns that have been raised about this most recent 
provision contained in the minimum wage bill is its possible impact on 
middle management. I appreciate those calling for caution. The Finance 
Committee's Republican staff is reviewing the legislation and seeking 
to get more and better numbers about who is affected by this 
legislation. In addition, there have been bipartisan discussions at the 
staff level.
  In discussions with Joint Committee on Taxation I have asked them 
what would be the impact of eliminating the 5-year average compensation 
limitation so that the aggregate amounts deferred under a nonqualified 
deferred compensation plan would be limited to $1 million annually.
  JCT informs me that this would reduce the current $806 million score 
by less than $100 million--so it would only be a small shave off the 
score. This suggests to me, that the vast majority of individuals--90 
percent--who would be affected by this reform are among the 
wealthiest--i.e., those individuals receiving more than $1 million 
annually in nonqualified deferrals. I hope this information will help 
inform members as we discuss this matter in the near future.
  Finally, I think it is important for members to bear in mind that 
ERISA does not apply to so-called ``top hat'' plans, these top hat 
plans being those for top management. There is a concern that if a 
nonqualified plan is widely applicable, as widely applicable as some of 
the opponents of this provision contend, it raises other red flags.
  The issue raised is the fact that a widely applicable plan should be 
treated as an ERISA plan. If these widely applicable nonqualified 
deferred compensation plans are actually ERISA plans, they then should 
come under the protections that Congress has put in place under ERISA 
to provide workers retirement security.
  I will continue to look at this provision and bear in mind the issues 
raised by my colleagues.
  Madam President, we are finishing up debate on the Senate minimum 
wage/small business tax relief bill.
  The Senate invoked cloture on the Baucus substitute amendment. It 
contained two basic components. The first one is the proposed increase 
in the Federal minimum wage. The second component is tax incentives to 
assist workers and businesses burdened by the increased Federal minimum 
wage. That part of the package was approved, on a bipartisan basis, by 
the Finance Committee late last month.
  Now, by approving the Baucus substitute on an overwhelmingly 
bipartisan vote, the Senate has made its will clear: a minimum wage 
increase must be linked to small business tax relief package.
  In the normal course of events, after Senate passage, the amended 
House bill would either go into conference or go back to the House as 
amended. We call the latter procedure ``pingpong.''
  Since tax matters were linked and the House bill doesn't have tax 
provisions, the House Democratic leadership and tax writers have 
threatened to send the Senate bill back to the Senate. They will claim 
that they are protecting prerogatives of the House.
  We find ourselves stuck on minimum wage because the House Democrats 
have threatened to use the ``blue slip'' procedure.
  So, no one should be mistaken. It is House Democrats, not Senate 
Republicans, who are delaying passage of the minimum wage.
  If House Democrats send us a suitable revenue bill, Senate 
Republicans will be ready to move expeditiously to the next step. Right 
now, we can not move.
  Now, if the House Democrats send us a minimum wage-related revenue 
bill, what happens next?
  That is up to our Democratic and Republican leaders.
  There are two basic avenues to take. One is a conference. The other 
is to amend the House revenue bill back with the Senate-passed bill and 
send it to the House.
  On tax bills, we have used both approaches over the last few years. 
For instance, the Hurricane Katrina tax relief measures never went to 
conference. On the other hand, we had conferences on the tax relief 
reconciliation bill and the pension bill.
  Still another approach would be for the House to combine its minimum 
wage bill with the Senate tax relief package and send it over here. 
That route, though unusual, has also worked.
  In this case, I have indicated to my Republican leadership that I am 
wary about the conference option.
  The Senate Democratic leadership only came to linking minimum wage 
with small business tax relief after Chairman Baucus relayed the 
Republican position to them. It took a cloture vote to prove Chairman 
Baucus right.
  So, if we go to conference, the Senate Democratic leadership and 
House Democratic leadership might be perfectly willing to scrap the 
Senate's position.
  Apparently, at a pen and pad session with reporters today, the 
majority leader indicated as much. He told reporters he wanted a 
``clean'' minimum wage bill to come out of conference. Now, I am told 
the majority leader's press operation has attempted to change the 
impression those remarks left.
  Let's just say I am reasonably suspicious of those kinds of 
``clarifications.'' Apparently, the majority leader

[[Page 2949]]

also said he would be prepared to dare Republicans to filibuster a 
clean minimum wage conference report. By ``clean,'' he appears to be 
referring to the term used by House and Senate Democratic leadership to 
mean no linked small business tax relief.
  Make no mistake--the easiest and quickest way to send a minimum wage 
bill to the President would be for the House to send the Senate a bill 
identical to the Senate-passed bill.
  An alternative quick option would be for the House to send us a 
revenue bill and the Senate would amend the bill and send it to the 
House. The House could then send the bill to the President's desk.
  The conference option could be troublesome. It could be drawn out. 
Or, it could be a way for the House and Senate Democratic leadership to 
subvert the Senate position. That would not be a good way to start out 
the new session. In a conference setting, it would mean the Senate 
Democratic leadership acting in a manner that is at odds with how it 
said it was going to conduct business.
  I counsel my leadership and the Democratic leadership to consider my 
concerns about the next step.
  Mr. BAUCUS. Madam President, I am grateful to the people of Montana 
for sending me to Washington as their Senator. I never forget whom I am 
here to represent.
  That is why my staff and I continually meet and talk with small 
business owners and CPAs from across the State. In anticipation of 
legislation to increase the minimum wage, I wanted to know how 
Montana's small businesses would be affected, I wanted to know what tax 
benefits would help small businesses, and I wanted to make sure that 
the Senate substitute to H.R. 2 would benefit Montanans.
  In particular, I thank James McHugh of Hammer Jack's in Missoula; 
Robert Walter of Walter's IGA and ACE in Sheridan; James Whaley of 
Whaley & Associates in Missoula; Ken Walsh of Ruby Valley National Bank 
in Twin Bridges; Micki Frederikson of Bingham, Campbell, Amrine, and 
Nolan in Missoula; Dan Vuckovich of Hamilton Misfeldt & Company in 
Great Falls; Ronald Yates, Jr. of Eide Bailly in Billings; David 
Johnson of Anderson Zurmuehlen & Co. in Helena; and Leslee Tschida of 
M.A.R.S. Stout in Missoula.
  I thank the men and women of Montana for their hard work, for their 
input into the formulation of this legislation, for their dedication to 
grow their companies, and for their confidence in me to deliver for 
Montana.
  Madam President, today the Senate will increase the minimum wage and 
provide tax relief to the Nation's small businesses. This important 
legislation will help millions of working Americans and those who 
employ them. It has been a decade since the last minimum wage increase. 
It is long overdue.
  I am very pleased we added a package of tax incentives for small 
businesses because many worry that a minimum wage increase will place a 
burden on small businesses. I want to take a moment to thank the 
individuals who worked so hard on the tax package.
  First, I want to thank my good friend Senator Grassley, the chairman 
of the Finance Committee, for his leadership on this bill. I also 
appreciate the hard work and cooperation of his staff, especially Kolan 
Davis, Mark Prater, Dean Zerbe, Elizabeth Paris, Chris Javens, Cathy 
Barre, Anne Freeman, Grant Menke, Stanford Swinton and Nick Wyatt.
  Second, I thank the staff of the Joint Committee on Taxation and 
Senate Legislative Counsel for their service. I also want to recognize 
two staff members of the Joint Committee on Taxation who are leaving 
Congress, Patricia McDermott and Gray Fontenot.
  Patricia McDermott will be retiring from her position as legislation 
counsel with the Joint Committee of Taxation and moving to the private 
sector. Tricia was qualified plans branch chief in the Office of 
Associate Chief Counsel at IRS before she came to Joint Tax as a 
detailee in July of 2000. She joined the JCT staff when the detail 
ended in 2001. Tricia has advised us on many projects, but I especially 
want to thank her for the expertise and tireless effort she brought to 
our work on the Pension Protection Act of 2006. Tricia's knowledge--and 
her patience--were invaluable and will not be easily replaced.
  And we bid farewell to Gray Fontenot, an accountant with the Joint 
Tax Committee, who will be leaving this week to head to the private 
sector. Gray has been an essential adviser, particularly on the Katrina 
tax relief bills. As a native of New Orleans, whose extended family was 
personally affected by the hurricane, he truly understood the needs of 
the Gulf Zone, and his expertise was greatly appreciated by the members 
and staff of the Finance Committee.
  Finally, I thank my staff for their tireless effort and dedication, 
including Russ Sullivan, Bill Dauster, Pat Heck, Rebecca Baxter, 
Melissa Mueller, Judy Miller, Pat Bousliman, Ryan Abraham, Carol 
Guthrie, and Erin Shields.
  I also thank our dedicated fellows, Mary Baker, Thomas Louthan, and 
Sara Shepherd, and our talented interns, David Ashner, Larry Boyd, 
Sarah Butler, Gretchen Hector, Molly Keenan, and Ryan Majerus.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KENNEDY. Madam President, as I have said during the course of the 
last 9 days, on this side of the aisle we are prepared to go ahead and 
vote. We have been prepared to vote since the first day we were on this 
legislation. It only took 4 hours for the House of Representatives to 
debate this issue and then to proceed to a vote. We have been on this 
for 9 days. We have debated an increase to the minimum wage 16 other 
days since the last increase. Twenty-five days of debate about the 
increase in the minimum wage. Imagine that, 25 days taking up the time 
of the United States Senate.
  With all the challenges we face in education, in energy, in health, 
and jobs, all the challenges we are facing in terms of environmental 
issues and foreign policy issues, we have spent 25 days on whether we 
are going to increase the minimum wage. Twenty-five days during this 
period of time. On this side, we are prepared to move ahead. We are 
prepared to move ahead.
  The President of the United States made this talk yesterday on Wall 
Street, and it was well received and cheered on Wall Street, as he 
talked about how well the economy has been proceeding. Well, I took a 
few moments earlier in the day to talk about the increase in the number 
of families who are living in poverty. We have close to 2 million more 
children living in poverty today than we had 5 years ago. Two million 
more families living in poverty than we had 5 years ago. That is 
according to the census. That is not some speech writer's concept, 
those are hard facts.
  President John Adams, one of our great Founders, said facts are 
stubborn things. Those numbers are stubborn things. Facts speak. 
Increased numbers of Americans have gone into poverty over the last 5 
years, with an increase in the number of children who have gone into 
poverty.
  Other countries have addressed the problems of poverty and have 
lifted children out of poverty, lifted families out of poverty, and 
most of them have used an increase in the minimum wage to do it. You 
have to understand the problem in order to address it, and this 
President, evidently, doesn't understand the kinds of pressures that 
are on working families and middle-income families.
  Members of some of our great churches in this country have strongly 
supported the increase in the minimum wage. We have over 1,000 
different organizations that have supported the increase in the minimum 
wage. I have included most of their letters of support in the Record.
  Here is one from the Urban League:

       Passing this wage hike represents a small but necessary 
     step to help lift America's working poor out of the ditches 
     of poverty and onto the road toward economic prosperity and 
     will narrow the financial gap between Americans of color and 
     whites.

  That is the National Urban League president, President Morial.
  Here we have an extraordinary group of business owners and executives 
for a higher minimum wage. They are some

[[Page 2950]]

of the large companies in the country and some of the small companies. 
It is six pages long in terms of the companies themselves, ranging from 
Mr. Alex Von Bidder, president of the Four Seasons Restaurant in New 
York, a very high-cost restaurant, to some of the small mom-and-pop 
stores, but all of them expressing the view that:

       We expect an increased minimum wage to provide a boost to 
     local economies. Businesses and communities will benefit as 
     low-wage workers spend their much-needed pay raises at 
     businesses in the neighborhoods where they live and work. 
     Higher wages benefit business by increasing consumer 
     purchasing power, reducing costly employee turnover, raising 
     productivity, improving product quality, customer 
     satisfaction, and company reputation.

  In a recent National Consumers' League survey, 76 percent of American 
consumers said how well a company treats and pays its employees 
influences what they buy.
  I also have a letter from the president of Catholic Charities, Father 
Larry Snyder, and included in his letter are these words:

       Over the last several years, our agencies have been coping 
     with steady increases of 20 percent each year in requests for 
     emergency assistance because low-wage workers simply cannot 
     earn enough to cover rent, child care, food, utilities, and 
     clothing for their families. Many people served by Catholic 
     Charities agencies are poor despite full-time employment at 
     the bottom of the labor market: cleaning houses and office 
     buildings, harvesting and preparing food, watching over 
     children of working parents. They contribute to our Nation's 
     economic prosperity. Yet the current minimum wage leaves them 
     nearly $6,000 below the poverty line. People who work full 
     time should not live in poverty.

  Then he continues:

       Our Catholic tradition teaches that society, acting through 
     government, has a special obligation to consider first the 
     needs of the poor. Catholic social teaching tells us that a 
     just wage is not just an economic issue--it is a moral issue. 
     The United States Conference of Catholic Bishops stated in 
     its pastoral letter, Economic Justice for All, ``all economic 
     institutions must support the bonds of community and 
     solidarity that are essential to the dignity of persons.''

  The dignity of persons, that is what the increase in the minimum wage 
is about. It will help those 6 million children get a chance to maybe 
buy a book and read a little more, maybe even participate in a birthday 
party, maybe have a chance to spend a little more time with their 
parent because their parent will not have to have two or three jobs. 
Here they are talking about the importance of dignity, ``essential to 
the dignity of persons.'' That is what this debate is about, the 
dignity of persons.
  And the list goes on. Virtually all of the churches of faith have all 
recognized the importance of this issue, and interestingly, they have 
all pointed out what this letter says from Catholic Charities; that 
over the past several years their agencies have been coping with steady 
increases of 20 percent each year in requests for emergency assistance 
because low-income workers simply cannot afford the necessities.
  That is true about my food bank in Boston. I was there just a few 
weeks ago talking to those who run it. It is an extraordinary 
institution. They have the same kinds of demands. We hear it all over 
the country. Yet we have the President talking on Wall Street about 
everything is fine.
  So what are some of the facts? We are finding out what is happening. 
First of all, the Bush economy fails American families' wallets. This 
is the median household income: $47,599 in 2000 and $46,326 in 2005. 
These numbers are from the Bureau of the Census. Imagine people opening 
up their newspapers and seeing the pictures of the President being 
cheered on Wall Street talking about how well the economy is going.
  No one is doubting that the economy is working well for Wall Street. 
We are not talking about that. If you are asking the Census Bureau, not 
a speech writer but the Census Bureau, these are their figures, and 
this is what has been happening to the median household income. It has 
declined $1,273. That is from the Bureau of the Census. That is what 
has happened to the median household income across this country.
  We have those members of our various faiths talking about the 
increase in demand, the 20-percent increase in demand. Yet we are 
seeing these kinds of figures. We see this kind of drop in real income. 
Yet let's look at the cost of the things these individuals have to buy. 
We have the decline in the family income, but look at what has 
happened. Gas has gone up 36 percent; health insurance, 33 percent, 
which is a very modest estimate; nationwide college tuition, 35 
percent; housing, 38 percent. And I would say, for the most part, these 
are rather modest. They come from the Kaiser Family Foundation and the 
College Board's Annual Survey of Colleges.
  In my district, certainly in New England, those numbers are a great 
deal higher. But, nonetheless, it makes the point that real income has 
gone down and the cost of everything that a family has to buy, in terms 
of gasoline, health insurance for their family, college tuition, and 
housing has gone up. Look at the end of this chart. Wages stagnant 
across the way; up 1 percent. These are the figures. We haven't put the 
food in there, but these are strong indicators, and certainly food has 
gone up, although perhaps not as high as these indicators.
  Let's look at the other side and see what has been happening down 
there on Wall Street. My goodness, look at this chart. Look what has 
happened to corporate profits during this same time. While real family 
income has been going down, these corporate profits have grown by 80 
percent, 80 percent they have gone up. Eighty percent. Real income for 
the family has gone down over the last 5 years, but corporate profits 
have gone up 80 percent.
  No wonder the President was cheered on Wall Street. No wonder. And 
look on the bottom line. That is the minimum wage. It slows, the 
extraordinary explosion in corporate profits. Yet the minimum wage has 
not gone up because our Republican friends refuse to let it go up. This 
is not any mystery. The Democrats are ready to vote. We are ready to 
vote this afternoon. We were ready to vote when it first came up, or at 
any time, but we can't get an agreement to vote. We are going to have 
to get it because the time is going to run out sometime tonight.
  So these are the corporate profits that have gone up. Here is the 
minimum wage worker that has to work more than a day just to fill up 
his tank with gasoline. These are the kinds of things that they are 
faced with. And as we have pointed out earlier, more than a thousand 
Christian, Jewish, and Muslim faith leaders say that minimum wage 
workers deserve a prompt, clean, minimum wage increase, with no strings 
attached. This is Let Justice Roll, January of this year.
  I have given the statistics, the flow lines, the charts, and so, 
Madam President, let me wind up this part of my presentation by 
mentioning what it means in real people's terms.
  An increase in the minimum wage helps Constance Martin of Pittsburgh, 
PA. Constance used to have a good job that paid a decent wage. Then her 
son got cancer. She was forced to choose between that job and taking 
care of her child. So now she works for $5.50 an hour at Kentucky Fried 
Chicken. Her job has no health care or other health benefits. She can 
barely afford to pay the rent and utilities, much less to give her son 
the care he needs. When Pennsylvania raised its minimum wage at the 
State level last year, it was a help but still not enough to keep pace 
with the cost of living. A Federal raise would allow her to pay off her 
bills and provide for her son's future instead of living day to day and 
hand to mouth just to get by.
  A raise in the minimum wage would help Tonya Schmidt. Tonya is a 
single mother with two children, ages 8 and 11. She works at Little 
Caesar's pizza. It is hard work, but she likes her job and is good at 
it. Tonya talked about how hard it is for her to get by each month. Her 
family lives in a converted motel room, but she has trouble making 
rent. She doesn't have a car but relies on friends and family to take 
her to the grocery store to buy food for her children.
  Tonya can't afford the basic necessities for her children. She often 
cannot afford to buy her children the clothes they need to go to 
school.

[[Page 2951]]

Tonya says a higher minimum wage would help her provide her kids with 
these basic necessities, and it might help her get a few steps ahead to 
buy a used car or pay for car insurance so that she could go to the 
grocery store on her own.
  A raise in the minimum wage would help Gina Walter from Ohio. Gina, a 
44-year-old single mother, works in a retail job at a thrift store. 
Gina earns $6.25 an hour, just over $12,000 per year. She has no car or 
health insurance and hasn't taken a vacation in 6 years. It takes Gina 
2 full days of work just to pay her gas bill every month. She cuts her 
own hair because she can't afford to get a haircut. But Gina goes to 
work every day. She works hard and tries to build a better life for her 
family.
  That is the typical statement: working hard, trying to provide for 
their family.
  This bill will help Gina provide better opportunities for her 18-
year-old daughter. It will help pay her gas bill and be able to go get 
a haircut. It might even help her finally take that vacation she so 
richly deserves.
  Madam President, this is what we are talking about on the floor of 
the Senate. I will speak later about what I really think about this 
increase in the minimum wage in terms of it being the defining aspect 
of our country's humanity and a reflection of our sense of decency and 
our sense of fairness. But it is a scandal that we have not increased 
our minimum wage over a 10-year period. Hopefully we will have an 
opportunity to do it before the day is out.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  The PRESIDING OFFICER. The Chair recognizes the Senator from Wyoming.
  Mr. ENZI. Madam President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ENZI. Madam President, I rise today to speak in support of final 
passage of H.R. 2, as amended. I think it is a very exciting time. I 
appreciate the wise direction this body has decided upon with regard to 
the minimum wage. Yesterday, 88 Members of the Senate correctly 
concluded that raising the minimum wage, without providing relief for 
small business that must pay for that increase, is simply not an 
option. Rather the option we did strongly decide on included tax 
benefits to help offset the impact on small business.
  I wish to reiterate my hope that our colleagues in the House will not 
derail this bipartisan approach to offering real support and relief to 
the middle class and to the minimum wage earner. The minimum wage 
increase will shortly be in their hands. I hope they will be judicious 
and perhaps even forgo some of their jurisdictional concerns in order 
to see that this is done for the people of America.
  The Senate's reasonable approach recognizes that small businesses 
have been the steady engine of our growing economy and that they have 
been a source of new job creation, and a source of job training. People 
with no skills often go to work at minimum wage and get the training 
they need to advance to higher levels of pay and to other more skilled 
jobs. That is all training which is done for free by small business.
  The Senate's approach also recognizes that small businesses are 
middle-class families, too. I am proud that this body has chosen a path 
which attempts to preserve this segment of the economy, which employs 
so many working men and women. The Senate has acknowledged the simple 
fact that a raise in the minimum wage is of no benefit to a worker who 
doesn't have a job or a job seeker who doesn't have a prospect.
  As this Congress moves forward, we will need to confront a range of 
issues facing working families: the rising cost of health insurance and 
the availability of such insurance, the necessity and costs of 
education and job training, and the desire to achieve an appropriate 
balance between work and family life. The lessons we have learned in 
this debate should not be forgotten as we approach new and equally 
complex issues.
  In addressing minimum wage, we have rejected the notion that it will 
be a clean bill. Ultimately, we did so because it is not a clean issue, 
it is a very complicated issue, and around here, clean more often than 
not means ``do it my way'' and doesn't respect the democratic process 
of the Senate and allow the Senate to work its will.
  There were claims that no Democrats offered amendments to the bill. 
That is false. The chairman of the Committee on Small Business, Senator 
John Kerry, offered two amendments, and the Senator from Wisconsin, Mr. 
Feingold, offered an amendment on ``Buy American'' standards. In fact, 
it is my understanding that part of the delay we are experiencing on 
final passage is that a Democrat was trying to figure out a way to get 
a vote for a third cloture and a Republican is also trying to do 
something very similar. While I believe these have now been resolved, 
that is kind of what has been holding us up here in waiting for a final 
vote. Throughout this debate, Members on both sides of the aisle were 
not aiming to delay passage but were offering amendments to improve the 
bill.
  I remember when I first went into the Wyoming Legislature and 
presented my first bill, I thought it was a pretty simple bill. It only 
had three sentences in it. It dealt with unemployment insurance for 
business owners. Well, this little, simple, three-sentence bill, when 
it went to committee, got two amendments, and when it went to the 
floor, it got three more amendments. When it went to the Senate, it 
made it out of committee without any additional amendments but had two 
more added on the floor. However, what I realized through the process 
was we had all of these different people from different backgrounds 
looking at the same problem from different perspectives, and every one 
of those amendments improved the bill. They looked at the bill and saw 
things that I hadn't seen.
  Afterwards I hoped that in the future, as I went through the process 
of legislating, I would see those things and see bills from other 
people's perspective. But that is the beauty of the system we have 
here--100 Senators take a look at a bill and 435 people in the House 
take a look at a bill and that should result in some changes. No bill I 
have ever seen winds up the same as it started.
  Of course, sometimes the biggest animosity around here is between the 
House and the Senate, and that is true in State legislatures, too. I 
finally figured out the reason for that is we here in the Senate work 
on a bill, we make it perfect, we send it over there, and they decide 
something else has to be done to it. That creates animosity. And they 
do bills and send them here, and we decide there ought to be changes to 
them, and that creates animosity here. Fortunately, we have a 
conference committee process that is supposed to get the two sides 
together to work out the differences. That also works, although it 
takes more time. So we are not the fastest in governing, but I think we 
are the most inclusive in governing. I think this bill has gone through 
a very similar process.
  I am pleased we have proven to the American people that we can indeed 
work together and provide solutions to complex and difficult problems. 
The Senate chose the right course of coupling an increased minimum wage 
with provisions that will assist small business employers who will face 
the greatest difficulties in paying such increased costs. I hope we do 
not forget the wisdom of this approach as we address other workplace, 
economic, and social issues.
  It has been mentioned that 10 years ago when the last minimum wage 
raise was done, that was the first time there were things put on the 
bill to offset the impact on small businesses. I was running for office 
and in Washington at the time that bill was being conferenced and 
finally debated, and I was pleased to see the former Senator from 
Wyoming, Mr. Simpson, was the chair on the conference committee,

[[Page 2952]]

along with Senator Kennedy. The two of them worked out a package that 
had a raise in the minimum wage and some offsetting things for small 
business. When the bill was signed in the Rose Garden, then-President 
Clinton commented on what a great compromise it was that it would drive 
our economy. Senator Kennedy received a lot of the compliments for 
that, as he will this time. Senator Baucus and Senator Grassley will be 
complimented as well.
  I can't emphasize enough how pleased I am that the two of them worked 
together to put this tax package together. It is not an easy job. In 
fact, I think tax provisions are some of the most difficult and complex 
matters there are to work on. The Senator from Montana, Mr. Baucus, and 
the Senator from Iowa, Mr. Grassley, have worked together on most of 
the Finance Committee issues. I have noticed through the years that 
they are most successful when they work together.
  I tried to build on that knowledge when I became the chairman of the 
Health, Education, Labor, and Pensions Committee. It worked well for us 
for the last 2 years, to work in a very bipartisan way. Almost every 
issue the Committee had came through this body unanimously. Oh, we had 
the pension bill, which was a 980-page bill and very complicated and 
very difficult. And that one wasn't unanimous; it was only 98 to 2. I 
think my colleagues can see my point on this--that when we work 
together, we have amazing things happen in fairly short order. That 
bill took an hour of debate with two amendments and a final vote, and 
that was all agreed to before it was even brought to the floor. So when 
we work together, there can be good things, such as the bill we have 
right now.
  The Senate has chosen the right course of coupling an increased wage 
with provisions that will assist those small business employers who 
will face the greatest difficulty in paying those increased costs. I 
hope we don't forget the wisdom of that approach, as I mentioned 
before. I am also heartened that in the course of this debate, we have 
begun to recognize what I know from my own life to be true; that is, 
that working families are not only those who are employed by 
businesses, they are also those who own the businesses.
  I know from personal experience that all small businesses have two 
families--their own and the people who work for them. I also know that 
small business owners feel the pressure of rising costs, the dilemma of 
difficult options, and the uncomfortable squeeze of modern life in both 
of their families, as many workers do on their own. And I know that the 
smaller the business, the more likely it is that the employees and the 
employers recognize each other's difficulties and how interdependent 
and sometimes fragile their businesses and their jobs actually are. I 
think there is a greater tendency for them to work together under those 
circumstances.
  America has heard a lot of partisan rhetoric during the course of 
this debate, such as the talk of the so-called war on the middle class 
and the claim of leaving people out. I would like to note for the 
record that such rhetoric got us nowhere. There wasn't an attempt to 
leave anybody out. The middle class is actually made up of those small 
businessmen who we are trying to help, and in some cases the employees 
who are working for them.
  We didn't try to start a war over statistics, although we were 
tempted. I do have to mention there were some charts out here to show 
that wages used to be pretty close together, and the chart had five 
quintiles. I am more used to quartiles than quintiles, but this had 
five quintiles. So each 20 percent of the wage capability of the 
population was shown on the chart, and it showed that from 1943 until 
1980, the numbers were pretty close together. Then we saw another 
chart, and it had this bar on the end which extended far beyond any of 
the quintiles. I paid a little bit of attention to that chart. It 
didn't just have quintiles on it; it had quintiles, plus one. If you 
look at the quintiles, they were almost the same today as they were at 
the time of the 1943 chart. However this big bar graph at the end--made 
it look so skewed that it made people look really rich and I guess by 
association holding the rest of the people down.
  Well, instead of just having quintiles on there, the chart had 
quintiles plus the top 1 percent earners in the United States. I am 
pretty sure that if you go back to 1943 through whatever date you want 
and you take the top 1 percent earners in the United States, you will 
find that they earn drastically more than even the highest quintile. So 
the chart doesn't treat the wage data equally. I suspect that Bill 
Gates himself skewed that chart pretty badly. The top 1 percent always 
makes a lot more money than everybody else and I think that is pretty 
much the case through the history of the United States. So if we are 
going to talk about quintiles, we need to talk about the quintiles 
equally.
  That is just one example of how we could have spent more time 
concentrating on the charts and arguing back and forth. But our point 
wasn't whether to increase the minimum wage; our point was whether we 
could do it and keep the economy moving by eliminating some of the 
impact of the increase on the small businesses that employ those 
minimum wage workers.
  We are ending the consideration of this issue basically where it 
began and for many of us where we have been for the last few years--
with the majority of the Senate supporting a minimum wage increase as 
long as there are provisions to soften the impact of that increase on 
the small businesses which create minimum wage jobs. Every time I have 
had to debate this, I have had a bill that had an increase in the 
minimum wage and it also had some amendments that offset the impact. 
Now, I didn't take the Finance Committee offsets; I took some other 
offsets to do it.
  One of the things I have noticed around here is that if you ever do 
an amendment on a bill like this, it will be considered a poison pill, 
and the second time you try to do that bill, even if you have changed 
the wording, the arguments will be exactly the same as before you 
changed the wording. So we sometimes get locked into the concept and 
the history of what has gone on around here.
  We could have had this increase done earlier had there been some 
willingness to offset it with a package, as was done the last time the 
minimum wage was increased and as I suspect will happen every time in 
the future that the minimum wage is increased because a higher wage is 
of no use when the job itself is gone.
  The Senate chose to look at the whole picture this time around. The 
minimum wage could have been raised years ago had some on the other 
side been willing to accept the important role that working families 
and small businesses--those are a lot of the same people--play in 
providing employment in this country. Some people like to talk about 
two Americas. What the Senate is preparing to do today recognizes that 
there is one America. We are all in this together, and we don't need to 
do great injury to one group of Americans just to aid another. That 
kind of partisan rhetoric isn't accurate, and it is aimed at spreading 
a very skewed view of America. It is aimed to divide rather than unite 
Americans around the simple solution.
  Mandating the wage increase without proper relief to the working 
families who employee many of America's low-skilled workers is an 
assault on the middle class. Let's get our facts straight. Passing the 
Senate's bipartisan minimum wage and small business relief package is 
good for low-skilled workers and it is good for the middle class 
working families of America.
  It is time we did this. I hope we will have the vote soon. I look 
forward to the speeches we can do afterwards, thanking all of the 
people that have made this possible. I am very confident that is 
exactly what is going to happen.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.

[[Page 2953]]


  Mr. REID. Madam President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. Madam President, I ask unanimous consent that the time 
until 5 p.m. today be equally divided and controlled between Senators 
Kennedy and Enzi or their designees; that at 5 p.m., all time 
postcloture be considered yielded back; and without further intervening 
action or debate, the Senate proceed to vote on passage of H.R. 2, the 
minimum wage bill, as amended; that upon passage of the bill, the 
motion to reconsider be laid upon the table; that there then be 4 
minutes of debate, equally divided and controlled between the two 
leaders or their designees, prior to a vote on the motion to invoke 
cloture on the motion to proceed to S. Con. Res. 2.
  I would say to all Senators, prior to the Chair considering the 
unanimous-consent request, that we may not have the second vote. Unless 
there is unanimous consent that we not have it, we will have it. We 
will make that decision during the vote that takes place beginning at 5 
o'clock.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The Chair recognizes the Republican leader.
  Mr. McCONNELL. Madam President, let me just echo the remarks of the 
majority leader. We are continuing to discuss the consent request under 
which we would consider various options for our Iraq debate beginning 
next week. We are making substantial progress and, hopefully, we will 
have something soon to announce on that issue.
  The PRESIDING OFFICER. The majority leader is recognized.
  Mr. REID. Madam President, I want to say, Senator Kennedy is not 
here, and I am sorry that is the case. But he spent the last week or 
two on the Senate floor. I want to express how much I appreciate the 
attitude and demonstration of bipartisanship shown by Senator Kennedy 
and Senator Enzi. I have said before they are an example of how people 
with different political philosophies can do things constructive in 
nature to get us to a point where we are today. They are both 
outstanding legislators, and they are very fine individuals, as 
indicated by their ability to get along on the most contentious issues.
  A person does not have to be disagreeable to disagree. And these two 
gentlemen certainly epitomize, in my estimation, how we should all work 
together in spite of our political differences, to work toward a common 
good to do things that are good for the American people.
  So, Senator Enzi, who is here, thank you very much.
  Senator Kennedy, who is not here, I appreciate very much his work.
  The PRESIDING OFFICER. The Republican leader is recognized.
  Mr. McCONNELL. Madam President, I, too, commend the distinguished 
Senator from Wyoming for an outstanding job in helping to craft this 
bill and representing our side very skillfully in putting together this 
package.
  I also want to extend my thanks on behalf of all of our colleagues to 
Senator Grassley, the ranking member of the Finance Committee, for his 
important contribution to this bill that we think made it significantly 
better than it might otherwise have been.
  So I commend them both for their outstanding work.
  I yield the floor.
  The PRESIDING OFFICER. The majority leader is recognized.
  Mr. REID. Madam President, Senator McConnell certainly jogs my memory 
that I should have mentioned my friend Senator Baucus. He and Senator 
Grassley also have an exemplary relationship. This bill is half from 
the HELP Committee and half from the Finance Committee, and Senator 
Baucus certainly has lifted a big load for us over here.
  The PRESIDING OFFICER. The Senator from Wyoming is recognized.
  Mr. ENZI. Madam President, I would like to thank both the leaders for 
their kind words. I thank them on behalf of both Senator Kennedy and 
myself. We do have a philosophy of working together, and it does work. 
I am pleased we are at this point today. The bill the Senate has 
crafted is the right approach to take on this issue. The approach is 
combining an increase in the minimum wage with provisions that will 
assist those small business employers who face the greatest 
difficulties in paying such increased costs. The Senate has not 
forgotten that while we may be able to mandate a wage, we cannot 
mandate the existence of a job. I hope our colleagues in the House will 
not forget that either.
  In legislating, it is often important to find a third way. The third 
way is represented by the substitute amendment that was the product of 
extensive bipartisan cooperation. Democrats and Republicans working 
together acknowledged the fact that mandated cost increases can have 
negative economic effects, and together we developed a means of 
addressing those concerns in the form of the bipartisan substitute 
amendment. It will affect millions of Americans. I am glad we are at 
this point.
  I would like to thank all of the staffs who have been involved in 
this issue, doing research and getting information that will help us to 
be as sure as we can be that we have made the right decisions on the 
best information possible.
  From my staff, that includes my staff director, Katherine McGuire, 
and Brian Hayes, Kyle Hicks, Ilyse Schuman, Amy Shank, Shana Christrup, 
Andrew Patzman, Randi Reid, Tara Ord, Greg Dean, Craig Orfield, and 
Michael Mahaffey. That is a lot of people, but it takes a lot of people 
to do something like the tax package and the bill we have before us, 
plus all of the other things that were considered during the process.
  From the Republican leader's office, I thank Mike Solon, Malloy 
McDaniel, and Rohit Kumar. I also thank Ed Egee with Senator Isakson. 
From the Finance committee, I thank Russ Sullivan and Mark Prater; and 
from the Republican whip's office, Manny Rossman and John O'Neill.
  But I would be very remiss if I did not thank those in Senator 
Kennedy's office and his staff: Michael Myers, Holly Fechner, Portia 
Wu, Missy Rohrbach, and Lauren McGarity. They have done just an 
outstanding job of keeping us on track and also searching through all 
of the different things we have had to consider, even those that nobody 
ever saw discussed here on the Senate floor. It was tireless work, 
which often goes on late into the nights, well beyond the time Senators 
are around here--of course, I do not want to give you the impression 
that Senators are necessarily going home. Sometimes they are working 
late as well, just in a different building. We get to spend our days 
here and our nights in our office building. But without the help of all 
of those people, this bill would not be at the point it is now. We 
really appreciate their work.
  I yield the floor and suggest the absence of a quorum, with the time 
equally divided.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. KENNEDY. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KENNEDY. Madam President, in just a few moments the Senate will 
vote on the issue of increasing the minimum wage. We have been debating 
this issue for some time. At the final moments here, I, first of all, 
thank my friend and colleague from Wyoming, Senator Enzi, for his 
willingness to work together. We do not always agree, but we agree more 
often than one might expect, and we have gotten good things done in our 
committee.
  I always enjoy working with him. We have had some differences on this 
issue, but we always know we have a good deal of respect for each 
other; I certainly for him. I know it is not appropriate to make 
personal comments on the floor of the Senate, but I am, in any event. 
It is Senator Enzi's birthday

[[Page 2954]]

today, and we wish him the very best on this particular occasion.
  Mr. ENZI. Thank you.
  Mr. KENNEDY. Just finally, I think those of us who are in this 
Chamber understand we want to be one country with one history and one 
destiny. We want to make sure that for all people, in all parts of our 
Nation, they are going to have a part of the American dream. We, as a 
nation, do not want to have a subclass, a subclass of workers who 
cannot emerge out of a minimum wage for themselves or for their 
families. We recognize that work has to pay.
  What we are trying to do with the increase in the minimum wage is to 
say to men and women of dignity--primarily to women because women are 
the greatest recipients of the minimum wage, to their families and 
their children, to men and women of color--that we understand if you 
work hard in the country that has the strongest economy in the world, 
you should not have to live in poverty. You should not have to live in 
poverty. And raising the minimum wage is going to help to make sure 
that particularly those children--those 6 million children--are going 
to have a more hopeful future.
  Additionally, we want to send a very important message to all of 
those children. This is really just the beginning. We have a change in 
direction in this country, as we have seen in the House of 
Representatives and here in the Senate. And we want to give assurances 
to those families that hopefully are going to get some boost in the 
minimum wage that we are going to work on the education for those 
children. We are going to work to make sure they are going to get the 
kind of help and assistance so that education is going to be available 
to them. We are going to work to make sure we get a reauthorization of 
the SCHIP program, an expansion of the Medicaid Programs, because we 
want to make sure they are going to be healthy, they are going to have 
the opportunities for education. We are going to make sure as well, to 
the extent we can, they are going to be able to live in safe and secure 
neighborhoods.
  We have a responsibility in this country of ours to make sure--
particularly for children in this Nation, but for workers in this 
country--that their work is going to be recognized, respected, and they 
are going to be treated justly and fairly. That is what the minimum 
wage is all about. It is a moral issue, as the members of the church 
have all told us about. And we, hopefully, will get a resounding vote 
of support for a long-awaited increase in the minimum wage.
  Mr. KENNEDY. Madam President, we have now spent 8 long days debating 
whether to raise the minimum wage by $2.10 per hour. During this time, 
we have had quite a bit to say about quite a variety of issues. We have 
talked about education. We have talked about heath care. We have talked 
about tax policy and immigration policy. We have actually talked very 
little about raising the minimum wage.
  We have not had nearly enough debate about what this bill would 
actually do, so I can honestly say that I am pleased when my colleagues 
on the other side of the aisle come down the floor with the intent of 
actually talking about the Fair Minimum Wage Act.
  Unfortunately, while I applaud them for addressing the issue at hand, 
their criticisms of the Fair Minimum Wage Act are woefully misplaced. 
My Republican colleagues are perpetuating some of the most common 
misconceptions about raising the minimum wage, and it is important to 
set the record straight.
  My colleague from Tennessee, Senator Alexander, raised concerns about 
the private sector costs of raising the minimum wage. He argued that an 
increase will prove detrimental to the economy in general, or to the 
business community in specific. He is correct that the Congressional 
Budget Office has estimated that the bill will cost the private sector 
more than $10 billion over 5 years. However, this is a mere drop in the 
bucket of the national payroll. All Americans combined earn $5.4 
trillion a year. A minimum wage increase to $7.25 would be less than 
one-fifth of 1 percent of this national payroll--far too trivial to 
cause inflation or other economic harm.
  The simple fact is that employers can afford to increase wages in the 
current economy. Workers are producing more, but earning less. 
Productivity has increased by 31 percent since 1997, yet minimum-wage 
workers have not received a raise. This increase ensures that minimum-
wage workers, not just employers, benefit from the fruits of their 
labor.
  Now Senator Alexander also suggests that we shouldn't interfere with 
the market forces that set wages for low-wage workers. But we need to 
intervene when there's a market failure that needs correcting, and 
that's clearly the case with our stagnant minimum wage. Low-skilled 
workers, unlike high-skilled workers, do not generally have the 
bargaining power to demand wage increases. Even if they work harder, 
all their extra efforts are going into profits. Corporate profits have 
grown by 80 percent since Bush took office, while wages are stagnant. 
We need to act to make sure minimum wage workers don't get left behind.
  My colleague also expresses concern about the effect of a minimum 
wage on small business. He claims that the majority of minimum wage 
workers are employed by small businesses, and that small businesses 
will suffer if the minimum wage is raised.
  But the small business community doesn't agree. A recent Gallup poll 
found that 80 percent of small business owners do not think that the 
minimum wage affects their business, and three out of four small 
businesses said that a 10 percent increase in the minimum wage would 
have no effect on their company. Additionally, nearly half of small 
business owners think that the minimum wage should be increased, and 
only 16 percent of owners think the minimum wage should be reduced or 
eliminated entirely.
  In fact, historical evidence suggests that a minimum wage increase 
can actually be beneficial to small business. A 2005 study by the 
Fiscal Policy Institute found States with minimum wages above the 
Federal level are generating more small businesses than states with a 
minimum wage at the Federal level. Between 1998 and 2003, the number of 
small businesses rose 5.4 percent in the ten States, including at had a 
minimum wage higher than the Federal level, compared to 4.2 percent in 
the other 40 States. The number of small retail businesses also grew 
faster in these States.
  I appreciate Senator Alexander's concerns about the economic impacts 
of a minimum wage raise, those concerns are misguided. The economic 
doomsday scenario that Senator Alexander predicts simply will not 
materialize from this long-overdue increase in the minimum wage. The 
Senator doesn't have to take my word for it--over 650 prominent 
economists, including 5 Nobel Prize winners, agree that a modest 
increase in the minimum wage--like the one proposed in the Fair Minimum 
Wage Act--``can significantly improve the lives of low-income workers 
and their families, without the adverse effects that critics have 
claimed.''
  In addition to arguing about the economic impacts this bill, several 
of my colleagues have argued that raising the minimum wage is not an 
effective anti-poverty program, but instead will benefit primarily 
secondary earners and families well above the poverty line. This 
counterintuitive assertion is not borne out by the facts. The vast 
majority of minimum wage workers are hard-working Americans struggling 
to get by on what the minimum wage pays them for their contribution to 
our economy. And that is not easy.
  A minimum wage increase benefits poor American families. According to 
the Economic Policy Institute, almost 70 percent of those who would 
benefit are adult workers, not teenagers seeking pocket change. Nearly 
half of these adults are sole breadwinners for their families. Nearly 
40 percent of the benefits from a minimum wage increase would go to 
households with an average annual income of less than $17,000.
  It is important to remember that those earning the minimum wage are 
not just starting out in the workforce. Many hardworking people become

[[Page 2955]]

trapped in low-paying jobs and have trouble getting ahead. A report 
from the Center for Economic Policy Research shows a third of minimum 
wage earners from ages 25 and 54 will still be earning the minimum wage 
three years later. Only 40 percent of them will have moved out of the 
low-wage workforce 3 years later.
  Certainly raising the minimum wage is only one of many steps that we 
should take to address the problem of poverty in this nation. Several 
of my Republican colleagues have suggested that we should examine ways 
to improve the Earned Income Tax Credit, and I look forward to working 
with them on this issue.
  But none of this changes the fundamental fact that the Federal 
minimum wage is at its lowest real value in 50 years and continues to 
fall further and further behind each day. Minimum wage workers have 
been waiting longer than ever before in history for an increase, and a 
raise is long-overdue.
  Now, my colleague from South Carolina, Senator DeMint, went so far as 
to suggest that raising the minimum wage will actually harm poor 
workers, because it will cause them to lose other government benefits. 
That's just not the case.
  The Fair Minimum Wage Act will bring working families out of poverty. 
The minimum wage increase--plus food stamps and the earned income tax 
credit--brings a family of four with one minimum wage earner from 11 
percent below the poverty line to 5 percent above the poverty line.
  Now it's true that some minimum wage workers may lose a portion of 
their food stamp benefits, but their increased earnings and the 
increased benefits they receive through the earned income tax credit 
will more than offset any loss of benefits and provide them with 
additional flexibility to meet their family's needs. They will also 
remain eligible for housing assistance and other essential government 
programs.
  Minimum wage workers will also benefit from a raise in the long run. 
They will be earning higher wages, paying more into Social Security, 
and ultimately receiving more in retirement and disability benefits.
  Finally, I'd like to address some comments made just this morning by 
my colleague from Iowa, Senator Grassley. Now as Senator Grassley 
knows, I have always taken the position that we should do this minimum 
wage bill ``clean''--without any add-ons or tax giveaways. Because it's 
just a myth that minimum wage increases hurt the business community, 
there is certainly no need to pay off the business community when we 
give minimum wage workers a raise. We've raised the minimum wage nine 
times since the Fair Minimum Wage act was enacted in 1938, and only 
once have we included a tax package for business. That was during the 
Clinton administration--an era when we had substantial government 
surpluses, not the dramatic deficits we're facing now. It's just not 
responsible to pass unnecessary tax giveaways in the current fiscal 
environment. Democrats are united in this position. While Senator 
Grassley suggested this morning that Democrats wanted taxes added to 
this bill, I remind him that every Democrat in the Senate voted for 
cloture on the underlying bill--a clean increase in the minimum wage 
with no tax giveaways.
  I admit that the tax package contained in the Baucus substitute is 
not particularly large or offensive, and I understand that it's 
something we'll likely have to take to get this bill done. But I don't 
support it, and I certainly don't support any additional tax giveaways 
being added to this bill.
  Senator Grassley suggested this morning that tax breaks are a 
necessary part of any increase in the minimum wage. I would remind the 
Senator that an overwhelming bipartisan majority in both Houses of the 
Iowa State Legislature just voted to increase the Iowa state minimum 
wage to $7.25--the same level provided in this bill--with no tax breaks 
included. The Senator's State leaders hold the same views as a majority 
of the U.S. Congress--that minimum wage workers deserve an immediate 
raise, with no strings attached.
  I hope that these comments lay to rest the fears of my Republican 
colleagues. I hope that they can join me in supporting a fair increase 
in the minimum wage for hardworking Americans across the country.
  Madam President, I understand the time has expired. Is it necessary 
to ask for the yeas and nays?
  It is necessary.
  The PRESIDING OFFICER. The yeas and nays have not been ordered.
  Mr. KENNEDY. Madam President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. One minute remains on the Republican side.
  Mr. ENZI. Madam President, I yield back.
  The PRESIDING OFFICER. All time has been yielded back.
  The question is on the engrossment of the amendment and third reading 
of the bill.
  The amendment was ordered to be engrossed and the bill to be read a 
third time.
  The bill was read the third time.
  The PRESIDING OFFICER. The bill having been read the third time, the 
question is, Shall the bill pass?
  The yeas and nays have been ordered.
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. DURBIN. I announce that the Senator from South Dakota (Mr. 
Johnson) and the Senator from New York (Mr. Schumer) are necessarily 
absent.
  Mr. LOTT. The following Senator was necessarily absent: the Senator 
from Oklahoma (Mr. Inhofe).
  Further, if present and voting, the Senator from Oklahoma (Mr. 
Inhofe) would have voted ``nay.''
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 94, nays 3, as follows:

                      [Rollcall Vote No. 42 Leg.]

                                YEAS--94

     Akaka
     Alexander
     Allard
     Baucus
     Bayh
     Bennett
     Biden
     Bingaman
     Bond
     Boxer
     Brown
     Brownback
     Bunning
     Burr
     Byrd
     Cantwell
     Cardin
     Carper
     Casey
     Chambliss
     Clinton
     Cochran
     Coleman
     Collins
     Conrad
     Corker
     Cornyn
     Craig
     Crapo
     Dodd
     Dole
     Domenici
     Dorgan
     Durbin
     Ensign
     Enzi
     Feingold
     Feinstein
     Graham
     Grassley
     Gregg
     Hagel
     Harkin
     Hatch
     Hutchison
     Inouye
     Isakson
     Kennedy
     Kerry
     Klobuchar
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Lott
     Lugar
     Martinez
     McCain
     McCaskill
     McConnell
     Menendez
     Mikulski
     Murkowski
     Murray
     Nelson (FL)
     Nelson (NE)
     Obama
     Pryor
     Reed
     Reid
     Roberts
     Rockefeller
     Salazar
     Sanders
     Sessions
     Shelby
     Smith
     Snowe
     Specter
     Stabenow
     Stevens
     Sununu
     Tester
     Thomas
     Thune
     Vitter
     Voinovich
     Warner
     Webb
     Whitehouse
     Wyden

                                NAYS--3

     Coburn
     DeMint
     Kyl

                             NOT VOTING--3

     Inhofe
     Johnson
     Schumer
  The bill (H.R. 2), as amended, was passed, as follows:

                                 H.R. 2

       Resolved, That the bill from the House of Representatives 
     (H.R. 2) entitled ``An Act to amend the Fair Labor Standards 
     Act of 1938 to provide for an increase in the Federal minimum 
     wage.'', do pass with the following amendment:
       Strike out all after the enacting clause and insert:

                       TITLE I--FAIR MINIMUM WAGE

     SEC. 100. SHORT TITLE.

       This title may be cited as the ``Fair Minimum Wage Act of 
     2007''.

     SEC. 101. MINIMUM WAGE.

       (a) In General.--Section 6(a)(1) of the Fair Labor 
     Standards Act of 1938 (29 U.S.C. 206(a)(1)) is amended to 
     read as follows:
       ``(1) except as otherwise provided in this section, not 
     less than--
       ``(A) $5.85 an hour, beginning on the 60th day after the 
     date of enactment of the Fair Minimum Wage Act of 2007;
       ``(B) $6.55 an hour, beginning 12 months after that 60th 
     day; and
       ``(C) $7.25 an hour, beginning 24 months after that 60th 
     day;''.

[[Page 2956]]

       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect 60 days after the date of enactment of this 
     Act.

     SEC. 102. APPLICABILITY OF MINIMUM WAGE TO THE COMMONWEALTH 
                   OF THE NORTHERN MARIANA ISLANDS.

       (a) In General.--Section 6 of the Fair Labor Standards Act 
     of 1938 (29 U.S.C. 206) shall apply to the Commonwealth of 
     the Northern Mariana Islands.
       (b) Transition.--Notwithstanding subsection (a), the 
     minimum wage applicable to the Commonwealth of the Northern 
     Mariana Islands under section 6(a)(1) of the Fair Labor 
     Standards Act of 1938 (29 U.S.C. 206(a)(1)) shall be--
       (1) $3.55 an hour, beginning on the 60th day after the date 
     of enactment of this Act; and
       (2) increased by $0.50 an hour (or such lesser amount as 
     may be necessary to equal the minimum wage under section 
     6(a)(1) of such Act), beginning 6 months after the date of 
     enactment of this Act and every 6 months thereafter until the 
     minimum wage applicable to the Commonwealth of the Northern 
     Mariana Islands under this subsection is equal to the minimum 
     wage set forth in such section.

                TITLE II--SMALL BUSINESS TAX INCENTIVES

     SEC. 200. SHORT TITLE; AMENDMENT OF CODE.

       (a) Short Title.--This title may be cited as the ``Small 
     Business and Work Opportunity Act of 2007''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this title an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

            Subtitle A--Small Business Tax Relief Provisions

                       PART I--GENERAL PROVISIONS

     SEC. 201. EXTENSION OF INCREASED EXPENSING FOR SMALL 
                   BUSINESSES.

       Section 179 (relating to election to expense certain 
     depreciable business assets) is amended by striking ``2010'' 
     each place it appears and inserting ``2011''.

     SEC. 202. EXTENSION AND MODIFICATION OF 15-YEAR STRAIGHT-LINE 
                   COST RECOVERY FOR QUALIFIED LEASEHOLD 
                   IMPROVEMENTS AND QUALIFIED RESTAURANT 
                   IMPROVEMENTS; 15-YEAR STRAIGHT-LINE COST 
                   RECOVERY FOR CERTAIN IMPROVEMENTS TO RETAIL 
                   SPACE.

       (a) Extension of Leasehold and Restaurant Improvements.--
       (1) In general.--Clauses (iv) and (v) of section 
     168(e)(3)(E) (relating to 15-year property) are each amended 
     by striking ``January 1, 2008'' and inserting ``April 1, 
     2008''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to property placed in service after December 31, 
     2007.
       (b) Modification of Treatment of Qualified Restaurant 
     Property as 15-Year Property for Purposes of Depreciation 
     Deduction.--
       (1) Treatment to include new construction.--Paragraph (7) 
     of section 168(e) (relating to classification of property) is 
     amended to read as follows:
       ``(7) Qualified restaurant property.--The term `qualified 
     restaurant property' means any section 1250 property which is 
     a building (or its structural components) or an improvement 
     to such building if more than 50 percent of such building's 
     square footage is devoted to preparation of, and seating for 
     on-premises consumption of, prepared meals.''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to any property placed in service after the date 
     of the enactment of this Act, the original use of which 
     begins with the taxpayer after such date.
       (c) Recovery Period for Depreciation of Certain 
     Improvements to Retail Space.--
       (1) 15-year recovery period.--Section 168(e)(3)(E) 
     (relating to 15-year property) is amended by striking ``and'' 
     at the end of clause (vii), by striking the period at the end 
     of clause (viii) and inserting ``, and'', and by adding at 
     the end the following new clause:
       ``(ix) any qualified retail improvement property placed in 
     service before April 1, 2008.''.
       (2) Qualified retail improvement property.--Section 168(e) 
     is amended by adding at the end the following new paragraph:
       ``(8) Qualified retail improvement property.--
       ``(A) In general.--The term `qualified retail improvement 
     property' means any improvement to an interior portion of a 
     building which is nonresidential real property if--
       ``(i) such portion is open to the general public and is 
     used in the retail trade or business of selling tangible 
     personal property to the general public, and
       ``(ii) such improvement is placed in service more than 3 
     years after the date the building was first placed in 
     service.
       ``(B) Improvements made by owner.--In the case of an 
     improvement made by the owner of such improvement, such 
     improvement shall be qualified retail improvement property 
     (if at all) only so long as such improvement is held by such 
     owner. Rules similar to the rules under paragraph (6)(B) 
     shall apply for purposes of the preceding sentence.
       ``(C) Certain improvements not included.--Such term shall 
     not include any improvement for which the expenditure is 
     attributable to--
       ``(i) the enlargement of the building,
       ``(ii) any elevator or escalator,
       ``(iii) any structural component benefitting a common area, 
     or
       ``(iv) the internal structural framework of the 
     building.''.
       (3) Requirement to use straight line method.--Section 
     168(b)(3) is amended by adding at the end the following new 
     subparagraph:
       ``(I) Qualified retail improvement property described in 
     subsection (e)(8).''.
       (4) Alternative system.--The table contained in section 
     168(g)(3)(B) is amended by inserting after the item relating 
     to subparagraph (E)(viii) the following new item:
``(E)(ix).....................................................39''.....

       (5) Effective date.--The amendments made by this section 
     shall apply to property placed in service after the date of 
     the enactment of this Act.

     SEC. 203. CLARIFICATION OF CASH ACCOUNTING RULES FOR SMALL 
                   BUSINESS.

       (a) Cash Accounting Permitted.--
       (1) In general.--Section 446 (relating to general rule for 
     methods of accounting) is amended by adding at the end the 
     following new subsection:
       ``(g) Certain Small Business Taxpayers Permitted To Use 
     Cash Accounting Method Without Limitation.--
       ``(1) In general.--An eligible taxpayer shall not be 
     required to use an accrual method of accounting for any 
     taxable year.
       ``(2) Eligible taxpayer.--For purposes of this subsection, 
     a taxpayer is an eligible taxpayer with respect to any 
     taxable year if--
       ``(A) for each of the prior taxable years ending on or 
     after the date of the enactment of this subsection, the 
     taxpayer (or any predecessor) met the gross receipts test in 
     effect under section 448(c) for such taxable year, and
       ``(B) the taxpayer is not subject to section 447 or 448.''.
       (2) Expansion of gross receipts test.--
       (A) In general.--Paragraph (3) of section 448(b) (relating 
     to entities with gross receipts of not more than $5,000,000) 
     is amended to read as follows:
       ``(3) Entities meeting gross receipts test.--Paragraphs (1) 
     and (2) of subsection (a) shall not apply to any corporation 
     or partnership for any taxable year if, for each of the prior 
     taxable years ending on or after the date of the enactment of 
     the Small Business and Work Opportunity Act of 2007, the 
     entity (or any predecessor) met the gross receipts test in 
     effect under subsection (c) for such prior taxable year.''.
       (B) Conforming amendments.--Section 448(c) of such Code is 
     amended--
       (i) by striking ``$5,000,000'' in the heading thereof,
       (ii) by striking ``$5,000,000'' each place it appears in 
     paragraph (1) and inserting ``$10,000,000'', and
       (iii) by adding at the end the following new paragraph:
       ``(4) Inflation adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2008, the dollar 
     amount contained in paragraph (1) shall be increased by an 
     amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `calendar year 2007' for 
     `calendar year 1992' in subparagraph (B) thereof.

     If any amount as adjusted under this subparagraph is not a 
     multiple of $100,000, such amount shall be rounded to the 
     nearest multiple of $100,000.''.
       (b) Clarification of Inventory Rules for Small Business.--
       (1) In general.--Section 471 (relating to general rule for 
     inventories) is amended by redesignating subsection (c) as 
     subsection (d) and by inserting after subsection (b) the 
     following new subsection:
       ``(c) Small Business Taxpayers Not Required To Use 
     Inventories.--
       ``(1) In general.--A qualified taxpayer shall not be 
     required to use inventories under this section for a taxable 
     year.
       ``(2) Treatment of taxpayers not using inventories.--If a 
     qualified taxpayer does not use inventories with respect to 
     any property for any taxable year beginning after the date of 
     the enactment of this subsection, such property shall be 
     treated as a material or supply which is not incidental.
       ``(3) Qualified taxpayer.--For purposes of this subsection, 
     the term `qualified taxpayer' means--
       ``(A) any eligible taxpayer (as defined in section 
     446(g)(2)), and
       ``(B) any taxpayer described in section 448(b)(3).''.
       (2) Conforming amendments.--
       (A) Subpart D of part II of subchapter E of chapter 1 is 
     amended by striking section 474.
       (B) The table of sections for subpart D of part II of 
     subchapter E of chapter 1 is amended by striking the item 
     relating to section 474.
       (c) Effective Date and Special Rules.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after the date of the 
     enactment of this Act.
       (2) Change in method of accounting.--In the case of any 
     taxpayer changing the taxpayer's method of accounting for any 
     taxable year under the amendments made by this section--
       (A) such change shall be treated as initiated by the 
     taxpayer;
       (B) such change shall be treated as made with the consent 
     of the Secretary of the Treasury; and
       (C) the net amount of the adjustments required to be taken 
     into account by the taxpayer under section 481 of the 
     Internal Revenue Code

[[Page 2957]]

     of 1986 shall be taken into account over a period (not 
     greater than 4 taxable years) beginning with such taxable 
     year.

     SEC. 204. EXTENSION AND MODIFICATION OF COMBINED WORK 
                   OPPORTUNITY TAX CREDIT AND WELFARE-TO-WORK 
                   CREDIT.

       (a) Extension.--Section 51(c)(4)(B) (relating to 
     termination) is amended by striking ``2007'' and inserting 
     ``2012''.
       (b) Increase in Maximum Age for Designated Community 
     Residents.--
       (1) In general.--Paragraph (5) of section 51(d) is amended 
     to read as follows:
       ``(5) Designated community residents.--
       ``(A) In general.--The term `designated community resident' 
     means any individual who is certified by the designated local 
     agency--
       ``(i) as having attained age 18 but not age 40 on the 
     hiring date, and
       ``(ii) as having his principal place of abode within an 
     empowerment zone, enterprise community, or renewal community.
       ``(B) Individual must continue to reside in zone or 
     community.--In the case of a designated community resident, 
     the term `qualified wages' shall not include wages paid or 
     incurred for services performed while the individual's 
     principal place of abode is outside an empowerment zone, 
     enterprise community, or renewal community.''.
       (2) Conforming amendment.--Subparagraph (D) of section 
     51(d)(1) is amended to read as follows:
       ``(D) a designated community resident,''.
       (c) Clarification of Treatment of Individuals Under 
     Individual Work Plans.--Subparagraph (B) of section 51(d)(6) 
     (relating to vocational rehabilitation referral) is amended 
     by striking ``or'' at the end of clause (i), by striking the 
     period at the end of clause (ii) and inserting ``, or'', and 
     by adding at the end the following new clause:
       ``(iii) an individual work plan developed and implemented 
     by an employment network pursuant to subsection (g) of 
     section 1148 of the Social Security Act with respect to which 
     the requirements of such subsection are met.''.
       (d) Treatment of Disabled Veterans Under the Work 
     Opportunity Tax Credit.--
       (1) Disabled veterans treated as members of targeted 
     group.--
       (A) In general.--Subparagraph (A) of section 51(d)(3) 
     (relating to qualified veteran) is amended by striking 
     ``agency as being a member of a family'' and all that follows 
     and inserting ``agency as--
       ``(i) being a member of a family receiving assistance under 
     a food stamp program under the Food Stamp Act of 1977 for at 
     least a 3-month period ending during the 12-month period 
     ending on the hiring date, or
       ``(ii) entitled to compensation for a service-connected 
     disability incurred after September 10, 2001.''.
       (B) Definitions.--Paragraph (3) of section 51(d) is amended 
     by adding at the end the following new subparagraph:
       ``(C) Other definitions.--For purposes of subparagraph (A), 
     the terms `compensation' and `service-connected' have the 
     meanings given such terms under section 101 of title 38, 
     United States Code.''.
       (2) Increase in amount of wages taken into account for 
     disabled veterans.--Paragraph (3) of section 51(b) is 
     amended--
       (A) by inserting ``($12,000 per year in the case of any 
     individual who is a qualified veteran by reason of subsection 
     (d)(3)(A)(ii))'' before the period at the end, and
       (B) by striking ``Only first  $6,000 of'' in the heading 
     and inserting ``Limitation on''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to individuals who begin work for the employer 
     after the date of the enactment of this Act, in taxable years 
     ending after such date.

     SEC. 205. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.

       (a) Employment Taxes.--Chapter 25 (relating to general 
     provisions relating to employment taxes) is amended by adding 
     at the end the following new section:

     ``SEC. 3511. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.

       ``(a) General Rules.--For purposes of the taxes, and other 
     obligations, imposed by this subtitle--
       ``(1) a certified professional employer organization shall 
     be treated as the employer (and no other person shall be 
     treated as the employer) of any work site employee performing 
     services for any customer of such organization, but only with 
     respect to remuneration remitted by such organization to such 
     work site employee, and
       ``(2) exclusions, definitions, and other rules which are 
     based on the type of employer and which would (but for 
     paragraph (1)) apply shall apply with respect to such taxes 
     imposed on such remuneration.
       ``(b) Successor Employer Status.--For purposes of sections 
     3121(a)(1), 3231(e)(2)(C), and 3306(b)(1)--
       ``(1) a certified professional employer organization 
     entering into a service contract with a customer with respect 
     to a work site employee shall be treated as a successor 
     employer and the customer shall be treated as a predecessor 
     employer during the term of such service contract, and
       ``(2) a customer whose service contract with a certified 
     professional employer organization is terminated with respect 
     to a work site employee shall be treated as a successor 
     employer and the certified professional employer organization 
     shall be treated as a predecessor employer.
       ``(c) Liability of Certified Professional Employer 
     Organization.--Solely for purposes of its liability for the 
     taxes, and other obligations, imposed by this subtitle--
       ``(1) a certified professional employer organization shall 
     be treated as the employer of any individual (other than a 
     work site employee or a person described in subsection (f)) 
     who is performing services covered by a contract meeting the 
     requirements of section 7705(e)(2), but only with respect to 
     remuneration remitted by such organization to such 
     individual, and
       ``(2) exclusions, definitions, and other rules which are 
     based on the type of employer and which would (but for 
     paragraph (1)) apply shall apply with respect to such taxes 
     imposed on such remuneration.
       ``(d) Treatment of Credits.--
       ``(1) In general.--For purposes of any credit specified in 
     paragraph (2)--
       ``(A) such credit with respect to a work site employee 
     performing services for the customer applies to the customer, 
     not the certified professional employer organization,
       ``(B) the customer, and not the certified professional 
     employer organization, shall take into account wages and 
     employment taxes--
       ``(i) paid by the certified professional employer 
     organization with respect to the work site employee, and
       ``(ii) for which the certified professional employer 
     organization receives payment from the customer, and
       ``(C) the certified professional employer organization 
     shall furnish the customer with any information necessary for 
     the customer to claim such credit.
       ``(2) Credits specified.--A credit is specified in this 
     paragraph if such credit is allowed under--
       ``(A) section 41 (credit for increasing research activity),
       ``(B) section 45A (Indian employment credit),
       ``(C) section 45B (credit for portion of employer social 
     security taxes paid with respect to employee cash tips),
       ``(D) section 45C (clinical testing expenses for certain 
     drugs for rare diseases or conditions),
       ``(E) section 51 (work opportunity credit),
       ``(F) section 51A (temporary incentives for employing long-
     term family assistance recipients),
       ``(G) section 1396 (empowerment zone employment credit),
       ``(H) 1400(d) (DC Zone employment credit),
       ``(I) Section 1400H (renewal community employment credit), 
     and
       ``(J) any other section as provided by the Secretary.
       ``(e) Special Rule for Related Party.--This section shall 
     not apply in the case of a customer which bears a 
     relationship to a certified professional employer 
     organization described in section 267(b) or 707(b). For 
     purposes of the preceding sentence, such sections shall be 
     applied by substituting `10 percent' for `50 percent'.
       ``(f) Special Rule for Certain Individuals.--For purposes 
     of the taxes imposed under this subtitle, an individual with 
     net earnings from self-employment derived from the customer's 
     trade or business is not a work site employee with respect to 
     remuneration paid by a certified professional employer 
     organization.
       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (b) Certified Professional Employer Organization Defined.--
     Chapter 79 (relating to definitions) is amended by adding at 
     the end the following new section:

     ``SEC. 7705. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS 
                   DEFINED.

       ``(a) In General.--For purposes of this title, the term 
     `certified professional employer organization' means a person 
     who has been certified by the Secretary for purposes of 
     section 3511 as meeting the requirements of subsection (b).
       ``(b) General Requirements.--A person meets the 
     requirements of this subsection if such person--
       ``(1) demonstrates that such person (and any owner, 
     officer, and such other persons as may be specified in 
     regulations) meets such requirements as the Secretary shall 
     establish with respect to tax status, background, experience, 
     business location, and annual financial audits,
       ``(2) computes its taxable income using an accrual method 
     of accounting unless the Secretary approves another method,
       ``(3) agrees that it will satisfy the bond and independent 
     financial review requirements of subsection (c) on an ongoing 
     basis,
       ``(4) agrees that it will satisfy such reporting 
     obligations as may be imposed by the Secretary,
       ``(5) agrees to verify on such periodic basis as the 
     Secretary may prescribe that it continues to meet the 
     requirements of this subsection, and
       ``(6) agrees to notify the Secretary in writing within such 
     time as the Secretary may prescribe of any change that 
     materially affects whether it continues to meet the 
     requirements of this subsection.
       ``(c) Bond and Independent Financial Review Requirements.--
       ``(1) In general.--An organization meets the requirements 
     of this paragraph if such organization--
       ``(A) meets the bond requirements of paragraph (2), and
       ``(B) meets the independent financial review requirements 
     of paragraph (3).
       ``(2) Bond.--
       ``(A) In general.--A certified professional employer 
     organization meets the requirements of this paragraph if the 
     organization has posted a bond for the payment of taxes under 
     subtitle C (in a form acceptable to the Secretary) in an

[[Page 2958]]

     amount at least equal to the amount specified in subparagraph 
     (B).
       ``(B) Amount of bond.--For the period April 1 of any 
     calendar year through March 31 of the following calendar 
     year, the amount of the bond required is equal to the greater 
     of--
       ``(i) 5 percent of the organization's liability under 
     section 3511 for taxes imposed by subtitle C during the 
     preceding calendar year (but not to exceed $1,000,000), or
       ``(ii) $50,000.
       ``(3) Independent financial review requirements.--A 
     certified professional employer organization meets the 
     requirements of this paragraph if such organization--
       ``(A) has, as of the most recent review date, caused to be 
     prepared and provided to the Secretary (in such manner as the 
     Secretary may prescribe) an opinion of an independent 
     certified public accountant that the certified professional 
     employer organization's financial statements are presented 
     fairly in accordance with generally accepted accounting 
     principles, and
       ``(B) provides, not later than the last day of the second 
     month beginning after the end of each calendar quarter, to 
     the Secretary from an independent certified public accountant 
     an assertion regarding Federal employment tax payments and an 
     examination level attestation on such assertion.

     Such assertion shall state that the organization has withheld 
     and made deposits of all taxes imposed by chapters 21, 22, 
     and 24 of the Internal Revenue Code in accordance with 
     regulations imposed by the Secretary for such calendar 
     quarter and such examination level attestation shall state 
     that such assertion is fairly stated, in all material 
     respects.
       ``(4) Controlled group rules.--For purposes of the 
     requirements of paragraphs (2) and (3), all professional 
     employer organizations that are members of a controlled group 
     within the meaning of sections 414(b) and (c) shall be 
     treated as a single organization.
       ``(5) Failure to file assertion and attestation.--If the 
     certified professional employer organization fails to file 
     the assertion and attestation required by paragraph (3) with 
     respect to any calendar quarter, then the requirements of 
     paragraph (3) with respect to such failure shall be treated 
     as not satisfied for the period beginning on the due date for 
     such attestation.
       ``(6) Review date.--For purposes of paragraph (3)(A), the 
     review date shall be 6 months after the completion of the 
     organization's fiscal year.
       ``(d) Suspension and Revocation Authority.--The Secretary 
     may suspend or revoke a certification of any person under 
     subsection (b) for purposes of section 3511 if the Secretary 
     determines that such person is not satisfying the 
     representations or requirements of subsections (b) or (c), or 
     fails to satisfy applicable accounting, reporting, payment, 
     or deposit requirements.
       ``(e) Work Site Employee.--For purposes of this title--
       ``(1) In general.--The term `work site employee' means, 
     with respect to a certified professional employer 
     organization, an individual who--
       ``(A) performs services for a customer pursuant to a 
     contract which is between such customer and the certified 
     professional employer organization and which meets the 
     requirements of paragraph (2), and
       ``(B) performs services at a work site meeting the 
     requirements of paragraph (3).
       ``(2) Service contract requirements.--A contract meets the 
     requirements of this paragraph with respect to an individual 
     performing services for a customer if such contract is in 
     writing and provides that the certified professional employer 
     organization shall--
       ``(A) assume responsibility for payment of wages to such 
     individual, without regard to the receipt or adequacy of 
     payment from the customer for such services,
       ``(B) assume responsibility for reporting, withholding, and 
     paying any applicable taxes under subtitle C, with respect to 
     such individual's wages, without regard to the receipt or 
     adequacy of payment from the customer for such services,
       ``(C) assume responsibility for any employee benefits which 
     the service contract may require the organization to provide, 
     without regard to the receipt or adequacy of payment from the 
     customer for such services,
       ``(D) assume responsibility for hiring, firing, and 
     recruiting workers in addition to the customer's 
     responsibility for hiring, firing and recruiting workers,
       ``(E) maintain employee records relating to such 
     individual, and
       ``(F) agree to be treated as a certified professional 
     employer organization for purposes of section 3511 with 
     respect to such individual.
       ``(3) Work site coverage requirement.--The requirements of 
     this paragraph are met with respect to an individual if at 
     least 85 percent of the individuals performing services for 
     the customer at the work site where such individual performs 
     services are subject to 1 or more contracts with the 
     certified professional employer organization which meet the 
     requirements of paragraph (2) (but not taking into account 
     those individuals who are excluded employees within the 
     meaning of section 414(q)(5)).
       ``(f) Determination of Employment Status.--Except to the 
     extent necessary for purposes of section 3511, nothing in 
     this section shall be construed to affect the determination 
     of who is an employee or employer for purposes of this title.
       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (c) Conforming Amendments.--
       (1) Section 3302 is amended by adding at the end the 
     following new subsection:
       ``(h) Treatment of Certified Professional Employer 
     Organizations.--If a certified professional employer 
     organization (as defined in section 7705), or a customer of 
     such organization, makes a contribution to the State's 
     unemployment fund with respect to a work site employee, such 
     organization shall be eligible for the credits available 
     under this section with respect to such contribution.''.
       (2) Section 3303(a) is amended--
       (A) by striking the period at the end of paragraph (3) and 
     inserting ``; and'' and by inserting after paragraph (3) the 
     following new paragraph:
       ``(4) if the taxpayer is a certified professional employer 
     organization (as defined in section 7705) that is treated as 
     the employer under section 3511, such certified professional 
     employer organization is permitted to collect and remit, in 
     accordance with paragraphs (1), (2), and (3), contributions 
     during the taxable year to the State unemployment fund with 
     respect to a work site employee.'', and
       (B) in the last sentence--
       (i) by striking ``paragraphs (1), (2), and (3)'' and 
     inserting ``paragraphs (1), (2), (3), and (4)'', and
       (ii) by striking ``paragraph (1), (2), or (3)'' and 
     inserting ``paragraph (1), (2), (3), or (4)''.
       (3) Section 6053(c) (relating to reporting of tips) is 
     amended by adding at the end the following new paragraph:
       ``(8) Certified professional employer organizations.--For 
     purposes of any report required by this subsection, in the 
     case of a certified professional employer organization that 
     is treated under section 3511 as the employer of a work site 
     employee, the customer with respect to whom a work site 
     employee performs services shall be the employer for purposes 
     of reporting under this section and the certified 
     professional employer organization shall furnish to the 
     customer any information necessary to complete such reporting 
     no later than such time as the Secretary shall prescribe.''.
       (d) Clerical Amendments.--
       (1) The table of sections for chapter 25 is amended by 
     adding at the end the following new item:

``Sec. 3511. Certified professional employer organizations.''.

       (2) The table of sections for chapter 79 is amended by 
     inserting after the item relating to section 7704 the 
     following new item:

``Sec. 7705. Certified professional employer organizations defined.''.

       (e) Reporting Requirements and Obligations.--The Secretary 
     of the Treasury shall develop such reporting and 
     recordkeeping rules, regulations, and procedures as the 
     Secretary determines necessary or appropriate to ensure 
     compliance with the amendments made by this section with 
     respect to entities applying for certification as certified 
     professional employer organizations or entities that have 
     been so certified. Such rules shall be designed in a manner 
     which streamlines, to the extent possible, the application of 
     requirements of such amendments, the exchange of information 
     between a certified professional employer organization and 
     its customers, and the reporting and recordkeeping 
     obligations of the certified professional employer 
     organization.
       (f) User Fees.--Subsection (b) of section 7528 (relating to 
     Internal Revenue Service user fees) is amended by adding at 
     the end the following new paragraph:
       ``(4) Certified professional employer organizations.--The 
     fee charged under the program in connection with the 
     certification by the Secretary of a professional employer 
     organization under section 7705 shall not exceed $500.''.
       (g) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply with respect to wages for services performed on or 
     after January 1 of the first calendar year beginning more 
     than 12 months after the date of the enactment of this Act.
       (2) Certification program.--The Secretary of the Treasury 
     shall establish the certification program described in 
     section 7705(b) of the Internal Revenue Code of 1986, as 
     added by subsection (b), not later than 6 months before the 
     effective date determined under paragraph (1).
       (h) No Inference.--Nothing contained in this section or the 
     amendments made by this section shall be construed to create 
     any inference with respect to the determination of who is an 
     employee or employer--
       (1) for Federal tax purposes (other than the purposes set 
     forth in the amendments made by this section), or
       (2) for purposes of any other provision of law.

                    PART II--SUBCHAPTER S PROVISIONS

     SEC. 211. CAPITAL GAIN OF S CORPORATION NOT TREATED AS 
                   PASSIVE INVESTMENT INCOME.

       (a) In General.--Section 1362(d)(3) is amended by striking 
     subparagraphs (B), (C), (D), (E), and (F) and inserting the 
     following new subparagraph:
       ``(B) Passive investment income defined.--
       ``(i) In general.--Except as otherwise provided in this 
     subparagraph, the term `passive investment income' means 
     gross receipts derived from royalties, rents, dividends, 
     interest, and annuities.
       ``(ii) Exception for interest on notes from sales of 
     inventory.--The term `passive investment income' shall not 
     include interest on any

[[Page 2959]]

     obligation acquired in the ordinary course of the 
     corporation's trade or business from its sale of property 
     described in section 1221(a)(1).
       ``(iii) Treatment of certain lending or finance 
     companies.--If the S corporation meets the requirements of 
     section 542(c)(6) for the taxable year, the term `passive 
     investment income' shall not include gross receipts for the 
     taxable year which are derived directly from the active and 
     regular conduct of a lending or finance business (as defined 
     in section 542(d)(1)).
       ``(iv) Treatment of certain dividends.--If an S corporation 
     holds stock in a C corporation meeting the requirements of 
     section 1504(a)(2), the term `passive investment income' 
     shall not include dividends from such C corporation to the 
     extent such dividends are attributable to the earnings and 
     profits of such C corporation derived from the active conduct 
     of a trade or business.
       ``(v) Exception for banks, etc.--In the case of a bank (as 
     defined in section 581) or a depository institution holding 
     company (as defined in section 3(w)(1) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1813(w)(1)), the term `passive 
     investment income' shall not include--

       ``(I) interest income earned by such bank or company, or
       ``(II) dividends on assets required to be held by such bank 
     or company, including stock in the Federal Reserve Bank, the 
     Federal Home Loan Bank, or the Federal Agricultural Mortgage 
     Bank or participation certificates issued by a Federal 
     Intermediate Credit Bank.''.

       (b) Conforming Amendment.--Clause (i) of section 
     1042(c)(4)(A) is amended by striking ``section 
     1362(d)(3)(C)'' and inserting ``section 1362(d)(3)(B)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 212. TREATMENT OF BANK DIRECTOR SHARES.

       (a) In General.--Section 1361 (defining S corporation) is 
     amended by adding at the end the following new subsection:
       ``(f) Restricted Bank Director Stock.--
       ``(1) In general.--Restricted bank director stock shall not 
     be taken into account as outstanding stock of the S 
     corporation in applying this subchapter (other than section 
     1368(f)).
       ``(2) Restricted bank director stock.--For purposes of this 
     subsection, the term `restricted bank director stock' means 
     stock in a bank (as defined in section 581) or a depository 
     institution holding company (as defined in section 3(w)(1) of 
     the Federal Deposit Insurance Act (12 U.S.C. 1813(w)(1)), if 
     such stock--
       ``(A) is required to be held by an individual under 
     applicable Federal or State law in order to permit such 
     individual to serve as a director, and
       ``(B) is subject to an agreement with such bank or company 
     (or a corporation which controls (within the meaning of 
     section 368(c)) such bank or company) pursuant to which the 
     holder is required to sell back such stock (at the same price 
     as the individual acquired such stock) upon ceasing to hold 
     the office of director.
       ``(3) Cross reference.--

``For treatment of certain distributions with respect to restricted 
              bank director stock, see section 1368(f)''.

       (b) Distributions.--Section 1368 (relating to 
     distributions) is amended by adding at the end the following 
     new subsection:
       ``(f) Restricted Bank Director Stock.--If a director 
     receives a distribution (not in part or full payment in 
     exchange for stock) from an S corporation with respect to any 
     restricted bank director stock (as defined in section 
     1361(f)), the amount of such distribution--
       ``(1) shall be includible in gross income of the director, 
     and
       ``(2) shall be deductible by the corporation for the 
     taxable year of such corporation in which or with which ends 
     the taxable year in which such amount in included in the 
     gross income of the director.''.
       (c) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 2006.
       (2) Special rule for treatment as second class of stock.--
     In the case of any taxable year beginning after December 31, 
     1996, restricted bank director stock (as defined in section 
     1361(f) of the Internal Revenue Code of 1986, as added by 
     this section) shall not be taken into account in determining 
     whether an S corporation has more than 1 class of stock.

     SEC. 213. SPECIAL RULE FOR BANK REQUIRED TO CHANGE FROM THE 
                   RESERVE METHOD OF ACCOUNTING ON BECOMING S 
                   CORPORATION.

       (a) In General.--Section 1361, as amended by this Act, is 
     amended by adding at the end the following new subsection:
       ``(g) Special Rule for Bank Required To Change From the 
     Reserve Method of Accounting on Becoming S Corporation.--In 
     the case of a bank which changes from the reserve method of 
     accounting for bad debts described in section 585 or 593 for 
     its first taxable year for which an election under section 
     1362(a) is in effect, the bank may elect to take into account 
     any adjustments under section 481 by reason of such change 
     for the taxable year immediately preceding such first taxable 
     year.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 214. TREATMENT OF THE SALE OF INTEREST IN A QUALIFIED 
                   SUBCHAPTER S SUBSIDIARY.

       (a) In General.--Subparagraph (C) of section 1361(b)(3) 
     (relating to treatment of terminations of qualified 
     subchapter S subsidiary status) is amended--
       (1) by striking ``For purposes of this title,'' and 
     inserting the following:
       ``(i) In general.--For purposes of this title,'', and
       (2) by inserting at the end the following new clause:
       ``(ii) Termination by reason of sale of stock.--If the 
     failure to meet the requirements of subparagraph (B) is by 
     reason of the sale of stock of a corporation which is a 
     qualified subchapter S subsidiary, the sale of such stock 
     shall be treated as if--

       ``(I) the sale were a sale of an undivided interest in the 
     assets of such corporation (based on the percentage of the 
     corporation's stock sold), and
       ``(II) the sale were followed by an acquisition by such 
     corporation of all of its assets (and the assumption by such 
     corporation of all of its liabilities) in a transaction to 
     which section 351 applies.''.

       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006 .

     SEC. 215. ELIMINATION OF ALL EARNINGS AND PROFITS 
                   ATTRIBUTABLE TO PRE-1983 YEARS FOR CERTAIN 
                   CORPORATIONS.

       In the case of a corporation which is--
       (1) described in section 1311(a)(1) of the Small Business 
     Job Protection Act of 1996, and
       (2) not described in section 1311(a)(2) of such Act,

     the amount of such corporation's accumulated earnings and 
     profits (for the first taxable year beginning after the date 
     of the enactment of this Act) shall be reduced by an amount 
     equal to the portion (if any) of such accumulated earnings 
     and profits which were accumulated in any taxable year 
     beginning before January 1, 1983, for which such corporation 
     was an electing small business corporation under subchapter S 
     of the Internal Revenue Code of 1986.

     SEC. 216. EXPANSION OF QUALIFYING BENEFICIARIES OF AN 
                   ELECTING SMALL BUSINESS TRUST.

       (a) No Look Through for Eligibility Purposes.--Clause (v) 
     of section 1361(c)(2)(B) is amended by adding at the end the 
     following new sentence: ``This clause shall not apply for 
     purposes of subsection (b)(1)(C).''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

                     Subtitle B--Revenue Provisions

     SEC. 221. MODIFICATION OF EFFECTIVE DATE OF LEASING 
                   PROVISIONS OF THE AMERICAN JOBS CREATION ACT OF 
                   2004.

       (a) Leases to Foreign Entities.--Section 849(b) of the 
     American Jobs Creation Act of 2004 is amended by adding at 
     the end the following new paragraph:
       ``(5) Leases to foreign entities.--In the case of tax-
     exempt use property leased to a tax-exempt entity which is a 
     foreign person or entity, the amendments made by this part 
     shall apply to taxable years beginning after December 31, 
     2006, with respect to leases entered into on or before March 
     12, 2004.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the enactment of the 
     American Jobs Creation Act of 2004.

     SEC. 222. APPLICATION OF RULES TREATING INVERTED CORPORATIONS 
                   AS DOMESTIC CORPORATIONS TO CERTAIN 
                   TRANSACTIONS OCCURRING AFTER MARCH 20, 2002.

       (a) In General.--Section 7874(b) (relating to inverted 
     corporations treated as domestic corporations) is amended to 
     read as follows:
       ``(b) Inverted Corporations Treated as Domestic 
     Corporations.--
       ``(1) In general.--Notwithstanding section 7701(a)(4), a 
     foreign corporation shall be treated for purposes of this 
     title as a domestic corporation if such corporation would be 
     a surrogate foreign corporation if subsection (a)(2) were 
     applied by substituting `80 percent' for `60 percent'.
       ``(2) Special rule for certain transactions occurring after 
     march 20, 2002.--
       ``(A) In general.--If--
       ``(i) paragraph (1) does not apply to a foreign 
     corporation, but
       ``(ii) paragraph (1) would apply to such corporation if, in 
     addition to the substitution under paragraph (1), subsection 
     (a)(2) were applied by substituting `March 20, 2002' for 
     `March 4, 2003' each place it appears,

     then paragraph (1) shall apply to such corporation but only 
     with respect to taxable years of such corporation beginning 
     after December 31, 2006.
       ``(B) Special rules.--Subject to such rules as the 
     Secretary may prescribe, in the case of a corporation to 
     which paragraph (1) applies by reason of this paragraph--
       ``(i) the corporation shall be treated, as of the close of 
     its last taxable year beginning before January 1, 2007, as 
     having transferred all of its assets, liabilities, and 
     earnings and profits to a domestic corporation in a 
     transaction with respect to which no tax is imposed under 
     this title,
       ``(ii) the bases of the assets transferred in the 
     transaction to the domestic corporation shall be the same as 
     the bases of the assets in the hands of the foreign 
     corporation, subject to any adjustments under this title for 
     built-in losses,
       ``(iii) the basis of the stock of any shareholder in the 
     domestic corporation shall be the same as the basis of the 
     stock of the shareholder in the foreign corporation for which 
     it is treated as exchanged, and

[[Page 2960]]

       ``(iv) the transfer of any earnings and profits by reason 
     of clause (i) shall be disregarded in determining any deemed 
     dividend or foreign tax creditable to the domestic 
     corporation with respect to such transfer.
       ``(C) Regulations.--The Secretary may prescribe such 
     regulations as may be necessary or appropriate to carry out 
     this paragraph, including regulations to prevent the 
     avoidance of the purposes of this paragraph.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 223. DENIAL OF DEDUCTION FOR PUNITIVE DAMAGES.

       (a) Disallowance of Deduction.--
       (1) In general.--Section 162(g) (relating to treble damage 
     payments under the antitrust laws) is amended--
       (A) by redesignating paragraphs (1) and (2) as 
     subparagraphs (A) and (B), respectively,
       (B) by striking ``If'' and inserting:
       ``(1) Treble damages.--If'', and
       (C) by adding at the end the following new paragraph:
       ``(2) Punitive damages.--No deduction shall be allowed 
     under this chapter for any amount paid or incurred for 
     punitive damages in connection with any judgment in, or 
     settlement of, any action. This paragraph shall not apply to 
     punitive damages described in section 104(c).''.
       (2) Conforming amendment.--The heading for section 162(g) 
     is amended by inserting ``Or Punitive Damages'' after 
     ``Laws''.
       (b) Inclusion in Income of Punitive Damages Paid by Insurer 
     or Otherwise.--
       (1) In general.--Part II of subchapter B of chapter 1 
     (relating to items specifically included in gross income) is 
     amended by adding at the end the following new section:

     ``SEC. 91. PUNITIVE DAMAGES COMPENSATED BY INSURANCE OR 
                   OTHERWISE.

       ``Gross income shall include any amount paid to or on 
     behalf of a taxpayer as insurance or otherwise by reason of 
     the taxpayer's liability (or agreement) to pay punitive 
     damages.''.
       (2) Reporting requirements.--Section 6041 (relating to 
     information at source) is amended by adding at the end the 
     following new subsection:
       ``(h) Section To Apply to Punitive Damages Compensation.--
     This section shall apply to payments by a person to or on 
     behalf of another person as insurance or otherwise by reason 
     of the other person's liability (or agreement) to pay 
     punitive damages.''.
       (3) Conforming amendment.--The table of sections for part 
     II of subchapter B of chapter 1 is amended by adding at the 
     end the following new item:

``Sec. 91. Punitive damages compensated by insurance or otherwise.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to damages paid or incurred on or after the date 
     of the enactment of this Act.

     SEC. 224. DENIAL OF DEDUCTION FOR CERTAIN FINES, PENALTIES, 
                   AND OTHER AMOUNTS.

       (a) In General.--Subsection (f) of section 162 (relating to 
     trade or business expenses) is amended to read as follows:
       ``(f) Fines, Penalties, and Other Amounts.--
       ``(1) In general.--Except as provided in paragraph (2), no 
     deduction otherwise allowable shall be allowed under this 
     chapter for any amount paid or incurred (whether by suit, 
     agreement, or otherwise) to, or at the direction of, a 
     government or entity described in paragraph (4) in relation 
     to the violation of any law or the investigation or inquiry 
     by such government or entity into the potential violation of 
     any law.
       ``(2) Exception for amounts constituting restitution or 
     paid to come into compliance with law.--Paragraph (1) shall 
     not apply to any amount which--
       ``(A) the taxpayer establishes--
       ``(i) constitutes restitution (including remediation of 
     property) for damage or harm caused by or which may be caused 
     by the violation of any law or the potential violation of any 
     law, or
       ``(ii) is paid to come into compliance with any law which 
     was violated or involved in the investigation or inquiry, and
       ``(B) is identified as restitution or as an amount paid to 
     come into compliance with the law, as the case may be, in the 
     court order or settlement agreement.

     A taxpayer shall not meet the requirements of subparagraph 
     (A) solely by reason an identification under subparagraph 
     (B). This paragraph shall not apply to any amount paid or 
     incurred as reimbursement to the government or entity for the 
     costs of any investigation or litigation.
       ``(3) Exception for amounts paid or incurred as the result 
     of certain court orders.--Paragraph (1) shall not apply to 
     any amount paid or incurred by order of a court in a suit in 
     which no government or entity described in paragraph (4) is a 
     party.
       ``(4) Certain nongovernmental regulatory entities.--An 
     entity is described in this paragraph if it is--
       ``(A) a nongovernmental entity which exercises self-
     regulatory powers (including imposing sanctions) in 
     connection with a qualified board or exchange (as defined in 
     section 1256(g)(7)), or
       ``(B) to the extent provided in regulations, a 
     nongovernmental entity which exercises self-regulatory powers 
     (including imposing sanctions) as part of performing an 
     essential governmental function.
       ``(5) Exception for taxes due.--Paragraph (1) shall not 
     apply to any amount paid or incurred as taxes due.''.
       (b) Reporting of Deductible Amounts.--
       (1) In general.--Subpart B of part III of subchapter A of 
     chapter 61 is amended by inserting after section 6050V the 
     following new section:

     ``SEC. 6050W. INFORMATION WITH RESPECT TO CERTAIN FINES, 
                   PENALTIES, AND OTHER AMOUNTS.

       ``(a) Requirement of Reporting.--
       ``(1) In general.--The appropriate official of any 
     government or entity which is described in section 162(f)(4) 
     which is involved in a suit or agreement described in 
     paragraph (2) shall make a return in such form as determined 
     by the Secretary setting forth--
       ``(A) the amount required to be paid as a result of the 
     suit or agreement to which paragraph (1) of section 162(f) 
     applies,
       ``(B) any amount required to be paid as a result of the 
     suit or agreement which constitutes restitution or 
     remediation of property, and
       ``(C) any amount required to be paid as a result of the 
     suit or agreement for the purpose of coming into compliance 
     with any law which was violated or involved in the 
     investigation or inquiry.
       ``(2) Suit or agreement described.--
       ``(A) In general.--A suit or agreement is described in this 
     paragraph if--
       ``(i) it is--

       ``(I) a suit with respect to a violation of any law over 
     which the government or entity has authority and with respect 
     to which there has been a court order, or
       ``(II) an agreement which is entered into with respect to a 
     violation of any law over which the government or entity has 
     authority, or with respect to an investigation or inquiry by 
     the government or entity into the potential violation of any 
     law over which such government or entity has authority, and

       ``(ii) the aggregate amount involved in all court orders 
     and agreements with respect to the violation, investigation, 
     or inquiry is $600 or more.
       ``(B) Adjustment of reporting threshold.--The Secretary may 
     adjust the $600 amount in subparagraph (A)(ii) as necessary 
     in order to ensure the efficient administration of the 
     internal revenue laws.
       ``(3) Time of filing.--The return required under this 
     subsection shall be filed not later than--
       ``(A) 30 days after the date on which a court order is 
     issued with respect to the suit or the date the agreement is 
     entered into, as the case may be, or
       ``(B) the date specified Secretary.
       ``(b) Statements To Be Furnished to Individuals Involved in 
     the Settlement.--Every person required to make a return under 
     subsection (a) shall furnish to each person who is a party to 
     the suit or agreement a written statement showing--
       ``(1) the name of the government or entity, and
       ``(2) the information supplied to the Secretary under 
     subsection (a)(1).

     The written statement required under the preceding sentence 
     shall be furnished to the person at the same time the 
     government or entity provides the Secretary with the 
     information required under subsection (a).
       ``(c) Appropriate Official Defined.--For purposes of this 
     section, the term `appropriate official' means the officer or 
     employee having control of the suit, investigation, or 
     inquiry or the person appropriately designated for purposes 
     of this section.''.
       (2) Conforming amendment.--The table of sections for 
     subpart B of part III of subchapter A of chapter 61 is 
     amended by inserting after the item relating to section 6050V 
     the following new item:

``Sec. 6050W. Information with respect to certain fines, penalties, and 
              other amounts.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred on or after the date 
     of the enactment of this Act, except that such amendments 
     shall not apply to amounts paid or incurred under any binding 
     order or agreement entered into before such date. Such 
     exception shall not apply to an order or agreement requiring 
     court approval unless the approval was obtained before such 
     date.

     SEC. 225. REVISION OF TAX RULES ON EXPATRIATION OF 
                   INDIVIDUALS.

       (a) In General.--Subpart A of part II of subchapter N of 
     chapter 1 is amended by inserting after section 877 the 
     following new section:

     ``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.

       ``(a) General Rules.--For purposes of this subtitle--
       ``(1) Mark to market.--Except as provided in subsections 
     (d) and (f), all property of a covered expatriate to whom 
     this section applies shall be treated as sold on the day 
     before the expatriation date for its fair market value.
       ``(2) Recognition of gain or loss.--In the case of any sale 
     under paragraph (1)--
       ``(A) notwithstanding any other provision of this title, 
     any gain arising from such sale shall be taken into account 
     for the taxable year of the sale, and
       ``(B) any loss arising from such sale shall be taken into 
     account for the taxable year of the sale to the extent 
     otherwise provided by this title, except that section 1091 
     shall not apply to any such loss.

     Proper adjustment shall be made in the amount of any gain or 
     loss subsequently realized for gain or loss taken into 
     account under the preceding sentence.

[[Page 2961]]

       ``(3) Exclusion for certain gain.--
       ``(A) In general.--The amount which, but for this 
     paragraph, would be includible in the gross income of any 
     individual by reason of this section shall be reduced (but 
     not below zero) by $600,000. For purposes of this paragraph, 
     allocable expatriation gain taken into account under 
     subsection (f)(2) shall be treated in the same manner as an 
     amount required to be includible in gross income.
       ``(B) Cost-of-living adjustment.--
       ``(i) In general.--In the case of an expatriation date 
     occurring in any calendar year after 2007, the $600,000 
     amount under subparagraph (A) shall be increased by an amount 
     equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year, determined by 
     substituting `calendar year 2006' for `calendar year 1992' in 
     subparagraph (B) thereof.

       ``(ii) Rounding rules.--If any amount after adjustment 
     under clause (i) is not a multiple of $1,000, such amount 
     shall be rounded to the next lower multiple of $1,000.
       ``(4) Election to continue to be taxed as united states 
     citizen.--
       ``(A) In general.--If a covered expatriate elects the 
     application of this paragraph--
       ``(i) this section (other than this paragraph and 
     subsection (i)) shall not apply to the expatriate, but
       ``(ii) in the case of property to which this section would 
     apply but for such election, the expatriate shall be subject 
     to tax under this title in the same manner as if the 
     individual were a United States citizen.
       ``(B) Requirements.--Subparagraph (A) shall not apply to an 
     individual unless the individual--
       ``(i) provides security for payment of tax in such form and 
     manner, and in such amount, as the Secretary may require,
       ``(ii) consents to the waiver of any right of the 
     individual under any treaty of the United States which would 
     preclude assessment or collection of any tax which may be 
     imposed by reason of this paragraph, and
       ``(iii) complies with such other requirements as the 
     Secretary may prescribe.
       ``(C) Election.--An election under subparagraph (A) shall 
     apply to all property to which this section would apply but 
     for the election and, once made, shall be irrevocable. Such 
     election shall also apply to property the basis of which is 
     determined in whole or in part by reference to the property 
     with respect to which the election was made.
       ``(b) Election To Defer Tax.--
       ``(1) In general.--If the taxpayer elects the application 
     of this subsection with respect to any property treated as 
     sold by reason of subsection (a), the payment of the 
     additional tax attributable to such property shall be 
     postponed until the due date of the return for the taxable 
     year in which such property is disposed of (or, in the case 
     of property disposed of in a transaction in which gain is not 
     recognized in whole or in part, until such other date as the 
     Secretary may prescribe).
       ``(2) Determination of tax with respect to property.--For 
     purposes of paragraph (1), the additional tax attributable to 
     any property is an amount which bears the same ratio to the 
     additional tax imposed by this chapter for the taxable year 
     solely by reason of subsection (a) as the gain taken into 
     account under subsection (a) with respect to such property 
     bears to the total gain taken into account under subsection 
     (a) with respect to all property to which subsection (a) 
     applies.
       ``(3) Termination of postponement.--No tax may be postponed 
     under this subsection later than the due date for the return 
     of tax imposed by this chapter for the taxable year which 
     includes the date of death of the expatriate (or, if earlier, 
     the time that the security provided with respect to the 
     property fails to meet the requirements of paragraph (4), 
     unless the taxpayer corrects such failure within the time 
     specified by the Secretary).
       ``(4) Security.--
       ``(A) In general.--No election may be made under paragraph 
     (1) with respect to any property unless adequate security is 
     provided to the Secretary with respect to such property.
       ``(B) Adequate security.--For purposes of subparagraph (A), 
     security with respect to any property shall be treated as 
     adequate security if--
       ``(i) it is a bond in an amount equal to the deferred tax 
     amount under paragraph (2) for the property, or
       ``(ii) the taxpayer otherwise establishes to the 
     satisfaction of the Secretary that the security is adequate.
       ``(5) Waiver of certain rights.--No election may be made 
     under paragraph (1) unless the taxpayer consents to the 
     waiver of any right under any treaty of the United States 
     which would preclude assessment or collection of any tax 
     imposed by reason of this section.
       ``(6) Elections.--An election under paragraph (1) shall 
     only apply to property described in the election and, once 
     made, is irrevocable. An election may be made under paragraph 
     (1) with respect to an interest in a trust with respect to 
     which gain is required to be recognized under subsection 
     (f)(1).
       ``(7) Interest.--For purposes of section 6601--
       ``(A) the last date for the payment of tax shall be 
     determined without regard to the election under this 
     subsection, and
       ``(B) section 6621(a)(2) shall be applied by substituting 
     `5 percentage points' for `3 percentage points' in 
     subparagraph (B) thereof.
       ``(c) Covered Expatriate.--For purposes of this section--
       ``(1) In general.--Except as provided in paragraph (2), the 
     term `covered expatriate' means an expatriate.
       ``(2) Exceptions.--An individual shall not be treated as a 
     covered expatriate if--
       ``(A) the individual--
       ``(i) became at birth a citizen of the United States and a 
     citizen of another country and, as of the expatriation date, 
     continues to be a citizen of, and is taxed as a resident of, 
     such other country, and
       ``(ii) has not been a resident of the United States (as 
     defined in section 7701(b)(1)(A)(ii)) during the 5 taxable 
     years ending with the taxable year during which the 
     expatriation date occurs, or
       ``(B)(i) the individual's relinquishment of United States 
     citizenship occurs before such individual attains age 18\1/
     2\, and
       ``(ii) the individual has been a resident of the United 
     States (as so defined) for not more than 5 taxable years 
     before the date of relinquishment.
       ``(d) Exempt Property; Special Rules for Pension Plans.--
       ``(1) Exempt property.--This section shall not apply to the 
     following:
       ``(A) United states real property interests.--Any United 
     States real property interest (as defined in section 
     897(c)(1)), other than stock of a United States real property 
     holding corporation which does not, on the day before the 
     expatriation date, meet the requirements of section 
     897(c)(2).
       ``(B) Specified property.--Any property or interest in 
     property not described in subparagraph (A) which the 
     Secretary specifies in regulations.
       ``(2) Special rules for certain retirement plans.--
       ``(A) In general.--If a covered expatriate holds on the day 
     before the expatriation date any interest in a retirement 
     plan to which this paragraph applies--
       ``(i) such interest shall not be treated as sold for 
     purposes of subsection (a)(1), but
       ``(ii) an amount equal to the present value of the 
     expatriate's nonforfeitable accrued benefit shall be treated 
     as having been received by such individual on such date as a 
     distribution under the plan.
       ``(B) Treatment of subsequent distributions.--In the case 
     of any distribution on or after the expatriation date to or 
     on behalf of the covered expatriate from a plan from which 
     the expatriate was treated as receiving a distribution under 
     subparagraph (A), the amount otherwise includible in gross 
     income by reason of the subsequent distribution shall be 
     reduced by the excess of the amount includible in gross 
     income under subparagraph (A) over any portion of such amount 
     to which this subparagraph previously applied.
       ``(C) Treatment of subsequent distributions by plan.--For 
     purposes of this title, a retirement plan to which this 
     paragraph applies, and any person acting on the plan's 
     behalf, shall treat any subsequent distribution described in 
     subparagraph (B) in the same manner as such distribution 
     would be treated without regard to this paragraph.
       ``(D) Applicable plans.--This paragraph shall apply to--
       ``(i) any qualified retirement plan (as defined in section 
     4974(c)),
       ``(ii) an eligible deferred compensation plan (as defined 
     in section 457(b)) of an eligible employer described in 
     section 457(e)(1)(A), and
       ``(iii) to the extent provided in regulations, any foreign 
     pension plan or similar retirement arrangements or programs.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Expatriate.--The term `expatriate' means--
       ``(A) any United States citizen who relinquishes 
     citizenship, and
       ``(B) any long-term resident of the United States who--
       ``(i) ceases to be a lawful permanent resident of the 
     United States (within the meaning of section 7701(b)(6)), or
       ``(ii) commences to be treated as a resident of a foreign 
     country under the provisions of a tax treaty between the 
     United States and the foreign country and who does not waive 
     the benefits of such treaty applicable to residents of the 
     foreign country.
       ``(2) Expatriation date.--The term `expatriation date' 
     means--
       ``(A) the date an individual relinquishes United States 
     citizenship, or
       ``(B) in the case of a long-term resident of the United 
     States, the date of the event described in clause (i) or (ii) 
     of paragraph (1)(B).
       ``(3) Relinquishment of citizenship.--A citizen shall be 
     treated as relinquishing United States citizenship on the 
     earliest of--
       ``(A) the date the individual renounces such individual's 
     United States nationality before a diplomatic or consular 
     officer of the United States pursuant to paragraph (5) of 
     section 349(a) of the Immigration and Nationality Act (8 
     U.S.C. 1481(a)(5)),
       ``(B) the date the individual furnishes to the United 
     States Department of State a signed statement of voluntary 
     relinquishment of United States nationality confirming the 
     performance of an act of expatriation specified in paragraph 
     (1), (2), (3), or (4) of section 349(a) of the Immigration 
     and Nationality Act (8 U.S.C. 1481(a)(1)-(4)),
       ``(C) the date the United States Department of State issues 
     to the individual a certificate of loss of nationality, or

[[Page 2962]]

       ``(D) the date a court of the United States cancels a 
     naturalized citizen's certificate of naturalization.
     Subparagraph (A) or (B) shall not apply to any individual 
     unless the renunciation or voluntary relinquishment is 
     subsequently approved by the issuance to the individual of a 
     certificate of loss of nationality by the United States 
     Department of State.
       ``(4) Long-term resident.--The term `long-term resident' 
     has the meaning given to such term by section 877(e)(2).
       ``(f) Special Rules Applicable to Beneficiaries' Interests 
     in Trust.--
       ``(1) In general.--Except as provided in paragraph (2), if 
     an individual is determined under paragraph (3) to hold an 
     interest in a trust on the day before the expatriation date--
       ``(A) the individual shall not be treated as having sold 
     such interest,
       ``(B) such interest shall be treated as a separate share in 
     the trust, and
       ``(C)(i) such separate share shall be treated as a separate 
     trust consisting of the assets allocable to such share,
       ``(ii) the separate trust shall be treated as having sold 
     its assets on the day before the expatriation date for their 
     fair market value and as having distributed all of its assets 
     to the individual as of such time, and
       ``(iii) the individual shall be treated as having 
     recontributed the assets to the separate trust.
     Subsection (a)(2) shall apply to any income, gain, or loss of 
     the individual arising from a distribution described in 
     subparagraph (C)(ii). In determining the amount of such 
     distribution, proper adjustments shall be made for 
     liabilities of the trust allocable to an individual's share 
     in the trust.
       ``(2) Special rules for interests in qualified trusts.--
       ``(A) In general.--If the trust interest described in 
     paragraph (1) is an interest in a qualified trust--
       ``(i) paragraph (1) and subsection (a) shall not apply, and
       ``(ii) in addition to any other tax imposed by this title, 
     there is hereby imposed on each distribution with respect to 
     such interest a tax in the amount determined under 
     subparagraph (B).
       ``(B) Amount of tax.--The amount of tax under subparagraph 
     (A)(ii) shall be equal to the lesser of--
       ``(i) the highest rate of tax imposed by section 1(e) for 
     the taxable year which includes the day before the 
     expatriation date, multiplied by the amount of the 
     distribution, or
       ``(ii) the balance in the deferred tax account immediately 
     before the distribution determined without regard to any 
     increases under subparagraph (C)(ii) after the 30th day 
     preceding the distribution.
       ``(C) Deferred tax account.--For purposes of subparagraph 
     (B)(ii)--
       ``(i) Opening balance.--The opening balance in a deferred 
     tax account with respect to any trust interest is an amount 
     equal to the tax which would have been imposed on the 
     allocable expatriation gain with respect to the trust 
     interest if such gain had been included in gross income under 
     subsection (a).
       ``(ii) Increase for interest.--The balance in the deferred 
     tax account shall be increased by the amount of interest 
     determined (on the balance in the account at the time the 
     interest accrues), for periods after the 90th day after the 
     expatriation date, by using the rates and method applicable 
     under section 6621 for underpayments of tax for such periods, 
     except that section 6621(a)(2) shall be applied by 
     substituting `5 percentage points' for `3 percentage points' 
     in subparagraph (B) thereof.
       ``(iii) Decrease for taxes previously paid.--The balance in 
     the tax deferred account shall be reduced--

       ``(I) by the amount of taxes imposed by subparagraph (A) on 
     any distribution to the person holding the trust interest, 
     and
       ``(II) in the case of a person holding a nonvested 
     interest, to the extent provided in regulations, by the 
     amount of taxes imposed by subparagraph (A) on distributions 
     from the trust with respect to nonvested interests not held 
     by such person.

       ``(D) Allocable expatriation gain.--For purposes of this 
     paragraph, the allocable expatriation gain with respect to 
     any beneficiary's interest in a trust is the amount of gain 
     which would be allocable to such beneficiary's vested and 
     nonvested interests in the trust if the beneficiary held 
     directly all assets allocable to such interests.
       ``(E) Tax deducted and withheld.--
       ``(i) In general.--The tax imposed by subparagraph (A)(ii) 
     shall be deducted and withheld by the trustees from the 
     distribution to which it relates.
       ``(ii) Exception where failure to waive treaty rights.--If 
     an amount may not be deducted and withheld under clause (i) 
     by reason of the distributee failing to waive any treaty 
     right with respect to such distribution--

       ``(I) the tax imposed by subparagraph (A)(ii) shall be 
     imposed on the trust and each trustee shall be personally 
     liable for the amount of such tax, and
       ``(II) any other beneficiary of the trust shall be entitled 
     to recover from the distributee the amount of such tax 
     imposed on the other beneficiary.

       ``(F) Disposition.--If a trust ceases to be a qualified 
     trust at any time, a covered expatriate disposes of an 
     interest in a qualified trust, or a covered expatriate 
     holding an interest in a qualified trust dies, then, in lieu 
     of the tax imposed by subparagraph (A)(ii), there is hereby 
     imposed a tax equal to the lesser of--
       ``(i) the tax determined under paragraph (1) as if the day 
     before the expatriation date were the date of such cessation, 
     disposition, or death, whichever is applicable, or
       ``(ii) the balance in the tax deferred account immediately 
     before such date.

     Such tax shall be imposed on the trust and each trustee shall 
     be personally liable for the amount of such tax and any other 
     beneficiary of the trust shall be entitled to recover from 
     the covered expatriate or the estate the amount of such tax 
     imposed on the other beneficiary.
       ``(G) Definitions and special rules.--For purposes of this 
     paragraph--
       ``(i) Qualified trust.--The term `qualified trust' means a 
     trust which is described in section 7701(a)(30)(E).
       ``(ii) Vested interest.--The term `vested interest' means 
     any interest which, as of the day before the expatriation 
     date, is vested in the beneficiary.
       ``(iii) Nonvested interest.--The term `nonvested interest' 
     means, with respect to any beneficiary, any interest in a 
     trust which is not a vested interest. Such interest shall be 
     determined by assuming the maximum exercise of discretion in 
     favor of the beneficiary and the occurrence of all 
     contingencies in favor of the beneficiary.
       ``(iv) Adjustments.--The Secretary may provide for such 
     adjustments to the bases of assets in a trust or a deferred 
     tax account, and the timing of such adjustments, in order to 
     ensure that gain is taxed only once.
       ``(v) Coordination with retirement plan rules.--This 
     subsection shall not apply to an interest in a trust which is 
     part of a retirement plan to which subsection (d)(2) applies.
       ``(3) Determination of beneficiaries' interest in trust.--
       ``(A) Determinations under paragraph (1).--For purposes of 
     paragraph (1), a beneficiary's interest in a trust shall be 
     based upon all relevant facts and circumstances, including 
     the terms of the trust instrument and any letter of wishes or 
     similar document, historical patterns of trust distributions, 
     and the existence of and functions performed by a trust 
     protector or any similar adviser.
       ``(B) Other determinations.--For purposes of this section--
       ``(i) Constructive ownership.--If a beneficiary of a trust 
     is a corporation, partnership, trust, or estate, the 
     shareholders, partners, or beneficiaries shall be deemed to 
     be the trust beneficiaries for purposes of this section.
       ``(ii) Taxpayer return position.--A taxpayer shall clearly 
     indicate on its income tax return--

       ``(I) the methodology used to determine that taxpayer's 
     trust interest under this section, and
       ``(II) if the taxpayer knows (or has reason to know) that 
     any other beneficiary of such trust is using a different 
     methodology to determine such beneficiary's trust interest 
     under this section.

       ``(g) Termination of Deferrals, Etc.--In the case of any 
     covered expatriate, notwithstanding any other provision of 
     this title--
       ``(1) any period during which recognition of income or gain 
     is deferred shall terminate on the day before the 
     expatriation date, and
       ``(2) any extension of time for payment of tax shall cease 
     to apply on the day before the expatriation date and the 
     unpaid portion of such tax shall be due and payable at the 
     time and in the manner prescribed by the Secretary.
       ``(h) Imposition of Tentative Tax.--
       ``(1) In general.--If an individual is required to include 
     any amount in gross income under subsection (a) for any 
     taxable year, there is hereby imposed, immediately before the 
     expatriation date, a tax in an amount equal to the amount of 
     tax which would be imposed if the taxable year were a short 
     taxable year ending on the expatriation date.
       ``(2) Due date.--The due date for any tax imposed by 
     paragraph (1) shall be the 90th day after the expatriation 
     date.
       ``(3) Treatment of tax.--Any tax paid under paragraph (1) 
     shall be treated as a payment of the tax imposed by this 
     chapter for the taxable year to which subsection (a) applies.
       ``(4) Deferral of tax.--The provisions of subsection (b) 
     shall apply to the tax imposed by this subsection to the 
     extent attributable to gain includible in gross income by 
     reason of this section.
       ``(i) Special Liens for Deferred Tax Amounts.--
       ``(1) Imposition of lien.--
       ``(A) In general.--If a covered expatriate makes an 
     election under subsection (a)(4) or (b) which results in the 
     deferral of any tax imposed by reason of subsection (a), the 
     deferred amount (including any interest, additional amount, 
     addition to tax, assessable penalty, and costs attributable 
     to the deferred amount) shall be a lien in favor of the 
     United States on all property of the expatriate located in 
     the United States (without regard to whether this section 
     applies to the property).
       ``(B) Deferred amount.--For purposes of this subsection, 
     the deferred amount is the amount of the increase in the 
     covered expatriate's income tax which, but for the election 
     under subsection (a)(4) or (b), would have occurred by reason 
     of this section for the taxable year including the 
     expatriation date.
       ``(2) Period of lien.--The lien imposed by this subsection 
     shall arise on the expatriation date and continue until--
       ``(A) the liability for tax by reason of this section is 
     satisfied or has become unenforceable by reason of lapse of 
     time, or
       ``(B) it is established to the satisfaction of the 
     Secretary that no further tax liability may arise by reason 
     of this section.

[[Page 2963]]

       ``(3) Certain rules apply.--The rules set forth in 
     paragraphs (1), (3), and (4) of section 6324A(d) shall apply 
     with respect to the lien imposed by this subsection as if it 
     were a lien imposed by section 6324A.
       ``(j) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (b) Inclusion in Income of Gifts and Bequests Received by 
     United States Citizens and Residents From Expatriates.--
     Section 102 (relating to gifts, etc. not included in gross 
     income) is amended by adding at the end the following new 
     subsection:
       ``(d) Gifts and Inheritances From Covered Expatriates.--
       ``(1) Treatment of gifts and inheritances.--
       ``(A) In general.--Subsection (a) shall not exclude from 
     gross income the value of any property acquired by gift, 
     bequest, devise, or inheritance from a covered expatriate 
     after the expatriation date.
       ``(B) Determination of basis.--Notwithstanding sections 
     1015 or 1022, the basis of any property described in 
     subparagraph (A) in the hands of the donee or the person 
     acquiring such property from the decedent shall be equal to 
     the fair market value of the property at the time of the 
     gift, bequest, devise, or inheritance.
       ``(2) Exceptions for transfers otherwise subject to estate 
     or gift tax.--Paragraph (1) shall not apply to any property 
     if either--
       ``(A) the gift, bequest, devise, or inheritance is--
       ``(i) shown on a timely filed return of tax imposed by 
     chapter 12 as a taxable gift by the covered expatriate, or
       ``(ii) included in the gross estate of the covered 
     expatriate for purposes of chapter 11 and shown on a timely 
     filed return of tax imposed by chapter 11 of the estate of 
     the covered expatriate, or
       ``(B) no such return was timely filed but no such return 
     would have been required to be filed even if the covered 
     expatriate were a citizen or long-term resident of the United 
     States.
       ``(3) Definitions.--For purposes of this subsection, any 
     term used in this subsection which is also used in section 
     877A shall have the same meaning as when used in section 
     877A.''.
       (c) Definition of Termination of United States 
     Citizenship.--Section 7701(a) is amended by adding at the end 
     the following new paragraph:
       ``(50) Termination of united states citizenship.--
       ``(A) In general.--An individual shall not cease to be 
     treated as a United States citizen before the date on which 
     the individual's citizenship is treated as relinquished under 
     section 877A(e)(3).
       ``(B) Dual citizens.--Under regulations prescribed by the 
     Secretary, subparagraph (A) shall not apply to an individual 
     who became at birth a citizen of the United States and a 
     citizen of another country.''.
       (d) Ineligibility for Visa or Admission to United States.--
       (1) In general.--Section 212(a)(10)(E) of the Immigration 
     and Nationality Act (8 U.S.C. 1182(a)(10)(E)) is amended to 
     read as follows:
       ``(E) Former citizens not in compliance with expatriation 
     revenue provisions.--Any alien who is a former citizen of the 
     United States who relinquishes United States citizenship 
     (within the meaning of section 877A(e)(3) of the Internal 
     Revenue Code of 1986) and who is not in compliance with 
     section 877A of such Code (relating to expatriation) is 
     inadmissible.''.
       (2) Availability of information.--
       (A) In general.--Section 6103(l) (relating to disclosure of 
     returns and return information for purposes other than tax 
     administration) is amended by adding at the end the following 
     new paragraph:
       ``(21) Disclosure to deny visa or admission to certain 
     expatriates.--Upon written request of the Attorney General or 
     the Attorney General's delegate, the Secretary shall disclose 
     whether an individual is in compliance with section 877A (and 
     if not in compliance, any items of noncompliance) to officers 
     and employees of the Federal agency responsible for 
     administering section 212(a)(10)(E) of the Immigration and 
     Nationality Act solely for the purpose of, and to the extent 
     necessary in, administering such section 212(a)(10)(E).''.
       (B) Safeguards.--Section 6103(p)(4) (relating to 
     safeguards) is amended by striking ``or (20)'' each place it 
     appears and inserting ``(20), or (21)''.
       (3) Effective dates.--The amendments made by this 
     subsection shall apply to individuals who relinquish United 
     States citizenship on or after the date of the enactment of 
     this Act.
       (e) Conforming Amendments.--
       (1) Section 877 is amended by adding at the end the 
     following new subsection:
       ``(h) Application.--This section shall not apply to an 
     expatriate (as defined in section 877A(e)) whose expatriation 
     date (as so defined) occurs on or after the date of the 
     enactment of this subsection.''.
       (2) Section 2107 is amended by adding at the end the 
     following new subsection:
       ``(f) Application.--This section shall not apply to any 
     expatriate subject to section 877A.''.
       (3) Section 2501(a)(3) is amended by adding at the end the 
     following new subparagraph:
       ``(C) Application.--This paragraph shall not apply to any 
     expatriate subject to section 877A.''.
       (4) Section 6039G(a) is amended by inserting ``or 877A'' 
     after ``section 877(b)''.
       (5) The second sentence of section 6039G(d) is amended by 
     inserting ``or who relinquishes United States citizenship 
     (within the meaning of section 877A(e)(3))'' after ``section 
     877(a))''.
       (f) Clerical Amendment.--The table of sections for subpart 
     A of part II of subchapter N of chapter 1 is amended by 
     inserting after the item relating to section 877 the 
     following new item:

``Sec. 877A. Tax responsibilities of expatriation.''.
       (g) Effective Date.--
       (1) In general.--Except as provided in this subsection, the 
     amendments made by this section shall apply to expatriates 
     (within the meaning of section 877A(e) of the Internal 
     Revenue Code of 1986, as added by this section) whose 
     expatriation date (as so defined) occurs on or after the date 
     of the enactment of this Act.
       (2) Gifts and bequests.--Section 102(d) of the Internal 
     Revenue Code of 1986 (as added by subsection (b)) shall apply 
     to gifts and bequests received on or after the date of the 
     enactment of this Act, from an individual or the estate of an 
     individual whose expatriation date (as so defined) occurs 
     after such date.
       (3) Due date for tentative tax.--The due date under section 
     877A(h)(2) of the Internal Revenue Code of 1986, as added by 
     this section, shall in no event occur before the 90th day 
     after the date of the enactment of this Act.

     SEC. 226. LIMITATION ON ANNUAL AMOUNTS WHICH MAY BE DEFERRED 
                   UNDER NONQUALIFIED DEFERRED COMPENSATION 
                   ARRANGEMENTS.

       (a) In General.--Section 409A(a) of the Internal Revenue 
     Code of 1986 (relating to inclusion of gross income under 
     nonqualified deferred compensation plans) is amended--
       (1) by striking ``and (4)'' in subclause (I) of paragraph 
     (1)(A)(i) and inserting ``(4), and (5)'', and
       (2) by adding at the end the following new paragraph:
       ``(5) Annual limitation on aggregate deferred amounts.--
       ``(A) Limitation.--The requirements of this paragraph are 
     met if the plan provides that the aggregate amount of 
     compensation which is deferred for any taxable year with 
     respect to a participant under the plan may not exceed the 
     applicable dollar amount for the taxable year.
       ``(B) Inclusion of future earnings.--If an amount is 
     includible under paragraph (1) in the gross income of a 
     participant for any taxable year by reason of any failure to 
     meet the requirements of this paragraph, any income (whether 
     actual or notional) for any subsequent taxable year shall be 
     included in gross income under paragraph (1)(A) in such 
     subsequent taxable year to the extent such income--
       ``(i) is attributable to compensation (or income 
     attributable to such compensation) required to be included in 
     gross income by reason of such failure (including by reason 
     of this subparagraph), and
       ``(ii) is not subject to a substantial risk of forfeiture 
     and has not been previously included in gross income.
       ``(C) Aggregation rule.--For purposes of this paragraph, 
     all nonqualified deferred compensation plans maintained by 
     all employers treated as a single employer under subsection 
     (d)(6) shall be treated as 1 plan.
       ``(D) Applicable dollar amount.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `applicable dollar amount' 
     means, with respect to any participant, the lesser of--

       ``(I) the average annual compensation which was payable 
     during the base period to the participant by the employer 
     maintaining the nonqualified deferred compensation plan (or 
     any predecessor of the employer) and which was includible in 
     the participant's gross income for taxable years in the base 
     period, or
       ``(II) $1,000,000.

       ``(ii) Base period.--

       ``(I) In general.--The term `base period' means, with 
     respect to any computation year, the 5-taxable year period 
     ending with the taxable year preceding the computation year.
       ``(II) Elections made before computation year.--If, before 
     the beginning of the computation year, an election described 
     in paragraph (4)(B) is made by the participant to have 
     compensation for services performed in the computation year 
     deferred under a nonqualified deferred compensation plan, the 
     base period shall be the 5-taxable year period ending with 
     the taxable year preceding the taxable year in which the 
     election is made.
       ``(III) Computation year.--For purposes of this clause, the 
     term `computation year' means any taxable year of the 
     participant for which the limitation under subparagraph (A) 
     is being determined.
       ``(IV) Special rule for employees of less than 5 years.--If 
     a participant did not perform services for the employer 
     maintaining the nonqualified deferred compensation plan (or 
     any predecessor of the employer) during the entire 5-taxable 
     year period referred to in subparagraph (A) or (B), only the 
     portion of such period during which the participant performed 
     such services shall be taken into account.''.

       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 2006, 
     except that--
       (A) the amendments shall only apply to amounts deferred 
     after December 31, 2006 (and to earnings on such amounts), 
     and
       (B) taxable years beginning on or before December 31, 2006, 
     shall be taken into account in determining the average annual 
     compensation

[[Page 2964]]

     of a participant during any base period for purposes of 
     section 409A(a)(5)(D) of the Internal Revenue Code of 1986 
     (as added by such amendments).
       (2) Guidance relating to certain existing arrangements.--
     Not later than 60 days after the date of the enactment of 
     this Act, the Secretary of the Treasury shall issue guidance 
     providing a limited period during which a nonqualified 
     deferred compensation plan adopted before December 31, 2006, 
     may, without violating the requirements of section 409A(a) of 
     such Code, be amended--
       (A) to provide that a participant may, no later than 
     December 31, 2007, cancel or modify an outstanding deferral 
     election with regard to all or a portion of amounts deferred 
     after December 31, 2006, to the extent necessary for the plan 
     to meet the requirements of section 409A(a)(5) of such Code 
     (as added by the amendments made by this section), but only 
     if amounts subject to the cancellation or modification are, 
     to the extent not previously included in gross income, 
     includible in income of the participant when no longer 
     subject to substantial risk of forfeiture, and
       (B) to conform to the requirements of section 409A(a)(5) of 
     such Code (as added by the amendments made by this section) 
     with regard to amounts deferred after December 31, 2006.

     SEC. 227. INCREASE IN CRIMINAL MONETARY PENALTY LIMITATION 
                   FOR THE UNDERPAYMENT OR OVERPAYMENT OF TAX DUE 
                   TO FRAUD.

       (a) In General.--Section 7206 (relating to fraud and false 
     statements) is amended--
       (1) by striking ``Any person who--'' and inserting ``(a) In 
     General.--'', and
       (2) by adding at the end the following new subsection:
       ``(b) Increase in Monetary Limitation for Underpayment or 
     Overpayment of Tax Due to Fraud.--If any portion of any 
     underpayment (as defined in section 6664(a)) or overpayment 
     (as defined in section 6401(a)) of tax required to be shown 
     on a return is attributable to fraudulent action described in 
     subsection (a), the applicable dollar amount under subsection 
     (a) shall in no event be less than an amount equal to such 
     portion. A rule similar to the rule under section 6663(b) 
     shall apply for purposes of determining the portion so 
     attributable.''.
       (b) Increase in Penalties.--
       (1) Attempt to evade or defeat tax.--Section 7201 is 
     amended--
       (A) by striking ``$100,000'' and inserting ``$500,000'',
       (B) by striking ``$500,000'' and inserting ``$1,000,000'', 
     and
       (C) by striking ``5 years'' and inserting ``10 years''.
       (2) Willful failure to file return, supply information, or 
     pay tax.--Section 7203 is amended--
       (A) in the first sentence--
       (i) by striking ``Any person'' and inserting the following:
       ``(a) In General.--Any person'', and
       (ii) by striking ``$25,000'' and inserting ``$50,000'',
       (B) in the third sentence, by striking ``section'' and 
     inserting ``subsection'', and
       (C) by adding at the end the following new subsection:
       ``(b) Aggravated Failure To File.--
       ``(1) In general.--In the case of any failure described in 
     paragraph (2), the first sentence of subsection (a) shall be 
     applied by substituting--
       ``(A) `felony' for `misdemeanor',
       ``(B) `$500,000 ($1,000,000' for `$25,000 ($100,000', and
       ``(C) `10 years' for `1 year'.''.
       ``(2) Failure described.--A failure described in this 
     paragraph is a failure to make a return described in 
     subsection (a) for a period of 3 or more consecutive taxable 
     years if the aggregate tax liability for such period is not 
     less than $100,000.''.
       (3) Fraud and false statements.--Section 7206(a) (as 
     redesignated by subsection (a)) is amended--
       (A) by striking ``$100,000'' and inserting ``$500,000'',
       (B) by striking ``$500,000'' and inserting ``$1,000,000'', 
     and
       (C) by striking ``3 years'' and inserting ``5 years''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to actions, and failures to act, occurring after 
     the date of the enactment of this Act.

     SEC. 228. DOUBLING OF CERTAIN PENALTIES, FINES, AND INTEREST 
                   ON UNDERPAYMENTS RELATED TO CERTAIN OFFSHORE 
                   FINANCIAL ARRANGEMENTS.

       (a) Determination of Penalty.--
       (1) In general.--Notwithstanding any other provision of 
     law, in the case of an applicable taxpayer--
       (A) the determination as to whether any interest or 
     applicable penalty is to be imposed with respect to any 
     arrangement described in paragraph (2), or to any 
     underpayment of Federal income tax attributable to items 
     arising in connection with any such arrangement, shall be 
     made without regard to the rules of subsections (b), (c), and 
     (d) of section 6664 of the Internal Revenue Code of 1986, and
       (B) if any such interest or applicable penalty is imposed, 
     the amount of such interest or penalty shall be equal to 
     twice that determined without regard to this section.
       (2) Applicable taxpayer.--For purposes of this subsection--
       (A) In general.--The term ``applicable taxpayer'' means a 
     taxpayer which--
       (i) has underreported its United States income tax 
     liability with respect to any item which directly or 
     indirectly involves--

       (I) any financial arrangement which in any manner relies on 
     the use of offshore payment mechanisms (including credit, 
     debit, or charge cards) issued by banks or other entities in 
     foreign jurisdictions, or
       (II) any offshore financial arrangement (including any 
     arrangement with foreign banks, financial institutions, 
     corporations, partnerships, trusts, or other entities), and

       (ii) has neither signed a closing agreement pursuant to the 
     Voluntary Offshore Compliance Initiative established by the 
     Department of the Treasury under Revenue Procedure 2003-11 
     nor voluntarily disclosed its participation in such 
     arrangement by notifying the Internal Revenue Service of such 
     arrangement prior to the issue being raised by the Internal 
     Revenue Service during an examination.
       (B) Authority to waive.--The Secretary of the Treasury or 
     the Secretary's delegate may waive the application of 
     paragraph (1) to any taxpayer if the Secretary or the 
     Secretary's delegate determines that the use of such offshore 
     payment mechanisms is incidental to the transaction and, in 
     addition, in the case of a trade or business, such use is 
     conducted in the ordinary course of the type of trade or 
     business of the taxpayer.
       (C) Issues raised.--For purposes of subparagraph (A)(ii), 
     an item shall be treated as an issue raised during an 
     examination if the individual examining the return--
       (i) communicates to the taxpayer knowledge about the 
     specific item, or
       (ii) has made a request to the taxpayer for information and 
     the taxpayer could not make a complete response to that 
     request without giving the examiner knowledge of the specific 
     item.
       (b) Applicable Penalty.--For purposes of this section, the 
     term ``applicable penalty'' means any penalty, addition to 
     tax, or fine imposed under chapter 68 of the Internal Revenue 
     Code of 1986.
       (c) Effective Date.--The provisions of this section shall 
     apply to interest, penalties, additions to tax, and fines 
     with respect to any taxable year if, as of the date of the 
     enactment of this Act, the assessment of any tax, penalty, or 
     interest with respect to such taxable year is not prevented 
     by the operation of any law or rule of law.

     SEC. 229. INCREASE IN PENALTY FOR BAD CHECKS AND MONEY 
                   ORDERS.

       (a) In General.--Section 6657 (relating to bad checks) is 
     amended--
       (1) by striking ``$750'' and inserting ``$1,250'', and
       (2) by striking ``$15'' and inserting ``$25''.
       (b) Effective Date.--The amendments made by this section 
     apply to checks or money orders received after the date of 
     the enactment of this Act.

     SEC. 230. TREATMENT OF CONTINGENT PAYMENT CONVERTIBLE DEBT 
                   INSTRUMENTS.

       (a) In General.--Section 1275(d) (relating to regulation 
     authority) is amended--
       (1) by striking ``The Secretary'' and inserting the 
     following:
       ``(1) In general.--The Secretary'', and
       (2) by adding at the end the following new paragraph:
       ``(2) Treatment of contingent payment convertible debt.--
       ``(A) In general.--In the case of a debt instrument which--
       ``(i) is convertible into stock of the issuing corporation, 
     into stock or debt of a related party (within the meaning of 
     section 267(b) or 707(b)(1)), or into cash or other property 
     in an amount equal to the approximate value of such stock or 
     debt, and
       ``(ii) provides for contingent payments,
     any regulations which require original issue discount to be 
     determined by reference to the comparable yield of a 
     noncontingent fixed-rate debt instrument shall be applied as 
     if the regulations require that such comparable yield be 
     determined by reference to a noncontingent fixed-rate debt 
     instrument which is convertible into stock.
       ``(B) Special rule.--For purposes of subparagraph (A), the 
     comparable yield shall be determined without taking into 
     account the yield resulting from the conversion of a debt 
     instrument into stock.''.
       (b) Cross Reference.--Section 163(e)(6) (relating to cross 
     references) is amended by adding at the end the following:
       ``For the treatment of contingent payment convertible debt, 
     see section 1275(d)(2).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to debt instruments issued on or after the date 
     of the enactment of this Act.

     SEC. 231. EXTENSION OF IRS USER FEES.

       Subsection (c) of section 7528 (relating to Internal 
     Revenue Service user fees) is amended by striking ``September 
     30, 2014'' and inserting ``September 30, 2016''.

     SEC. 232. MODIFICATION OF COLLECTION DUE PROCESS PROCEDURES 
                   FOR EMPLOYMENT TAX LIABILITIES.

       (a) In General.--Section 6330(f) (relating to jeopardy and 
     State refund collection) is amended--
       (1) by striking ``; or'' at the end of paragraph (1) and 
     inserting a comma,
       (2) by adding ``or'' at the end of paragraph (2), and
       (3) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) the Secretary has served a levy in connection with 
     the collection of taxes under chapter 21, 22, 23, or 24,''.

[[Page 2965]]

       (b) Effective Date.--The amendments made by this section 
     shall apply to levies issued on or after the date that is 120 
     days after the date of the enactment of this Act.

     SEC. 233. MODIFICATIONS TO WHISTLEBLOWER REFORMS.

       (a) Modification of Tax Threshold for Awards.--Subparagraph 
     (B) of section 7623(b)(5), as added by the Tax Relief and 
     Health Care Act of 2006, is amended by striking 
     ``$2,000,000'' and inserting ``$20,000''.
       (b) Whistleblower Office.--
       (1) In general.--Section 7623 is amended by adding at the 
     end the following new subsections:
       ``(c) Whistleblower Office.--
       ``(1) In general.--There is established in the Internal 
     Revenue Service an office to be known as the `Whistleblower 
     Office' which--
       ``(A) shall at all times operate at the direction of the 
     Commissioner and coordinate and consult with other divisions 
     in the Internal Revenue Service as directed by the 
     Commissioner,
       ``(B) shall analyze information received from any 
     individual described in subsection (b) and either investigate 
     the matter itself or assign it to the appropriate Internal 
     Revenue Service office,
       ``(C) shall monitor any action taken with respect to such 
     matter,
       ``(D) shall inform such individual that it has accepted the 
     individual's information for further review,
       ``(E) may require such individual and any legal 
     representative of such individual to not disclose any 
     information so provided,
       ``(F) in its sole discretion, may ask for additional 
     assistance from such individual or any legal representative 
     of such individual, and
       ``(G) shall determine the amount to be awarded to such 
     individual under subsection (b).
       ``(2) Funding for office.--There is authorized to be 
     appropriated $10,000,000 for each fiscal year for the 
     Whistleblower Office. These funds shall be used to maintain 
     the Whistleblower Office and also to reimburse other Internal 
     Revenue Service offices for related costs, such as costs of 
     investigation and collection.
       ``(3) Request for assistance.--
       ``(A) In general.--Any assistance requested under paragraph 
     (1)(F) shall be under the direction and control of the 
     Whistleblower Office or the office assigned to investigate 
     the matter under subparagraph (A). No individual or legal 
     representative whose assistance is so requested may by reason 
     of such request represent himself or herself as an employee 
     of the Federal Government.
       ``(B) Funding of assistance.--From the amounts available 
     for expenditure under subsection (b), the Whistleblower 
     Office may, with the agreement of the individual described in 
     subsection (b), reimburse the costs incurred by any legal 
     representative of such individual in providing assistance 
     described in subparagraph (A).
       ``(d) Reports.--The Secretary shall each year conduct a 
     study and report to Congress on the use of this section, 
     including--
       ``(1) an analysis of the use of this section during the 
     preceding year and the results of such use, and
       ``(2) any legislative or administrative recommendations 
     regarding the provisions of this section and its 
     application.''.
       (2) Conforming amendment.--Section 406 of division A of the 
     Tax Relief and Health Care Act of 2006 is amended by striking 
     subsections (b) and (c).
       (3) Report on implementation.--Not later than 6 months 
     after the date of the enactment of this Act, the Secretary of 
     the Treasury shall submit to Congress a report on the 
     establishment and operation of the Whistleblower Office under 
     section 7623(c) of the Internal Revenue Code of 1986.
       (c) Publicity of Award Appeals.--Paragraph (4) of section 
     7623(b), as added by the Tax Relief and Health Care Act of 
     2006, is amended to read as follows:
       ``(4) Appeal of award determination.--
       ``(A) In general.--Any determination regarding an award 
     under paragraph (1), (2), or (3) may, within 30 days of such 
     determination, be appealed to the Tax Court (and the Tax 
     Court shall have jurisdiction with respect to such matter).
       ``(B) Publicity of appeals.--Notwithstanding sections 7458 
     and 7461, the Tax Court may, in order to preserve the 
     anonymity, privacy, or confidentiality of any person under 
     this subsection, provide by rules adopted under section 7453 
     that portions of filings, hearings, testimony, evidence, and 
     reports in connection with proceedings under this subsection 
     may be closed to the public or to inspection by the 
     public.''.
       (d) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to information 
     provided on or after the date of the enactment of this Act.
       (2) Publicity of award appeals.--The amendment made by 
     subsection (c) shall take effect as if included in the 
     amendments made by section 406 of the Tax Relief and Health 
     Care Act of 2006.

     SEC. 234. MODIFICATIONS OF DEFINITION OF EMPLOYEES COVERED BY 
                   DENIAL OF DEDUCTION FOR EXCESSIVE EMPLOYEE 
                   REMUNERATION.

       (a) In General.--Paragraph (3) of section 162(m) is amended 
     to read as follows:
       ``(3) Covered employee.--For purposes of this subsection, 
     the term `covered employee' means, with respect to any 
     taxpayer for any taxable year, an individual who--
       ``(A) was the chief executive officer of the taxpayer, or 
     an individual acting in such a capacity, at any time during 
     the taxable year,
       ``(B) is 1 of the 4 highest compensated officers of the 
     taxpayer for the taxable year (other than the individual 
     described in subparagraph (A)), or
       ``(C) was a covered employee of the taxpayer (or any 
     predecessor) for any preceding taxable year beginning after 
     December 31, 2006.
     In the case of an individual who was a covered employee for 
     any taxable year beginning after December 31, 2006, the term 
     `covered employee' shall include a beneficiary of such 
     employee with respect to any remuneration for services 
     performed by such employee as a covered employee (whether or 
     not such services are performed during the taxable year in 
     which the remuneration is paid).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

                     Subtitle C--General Provisions

     SEC. 241. ENHANCED COMPLIANCE ASSISTANCE FOR SMALL 
                   BUSINESSES.

       (a) In General.--Section 212 of the Small Business 
     Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 601 
     note) is amended by striking subsection (a) and inserting the 
     following:
       ``(a) Compliance Guide.--
       ``(1) In general.--For each rule or group of related rules 
     for which an agency is required to prepare a final regulatory 
     flexibility analysis under section 605(b) of title 5, United 
     States Code, the agency shall publish 1 or more guides to 
     assist small entities in complying with the rule and shall 
     entitle such publications `small entity compliance guides'.
       ``(2) Publication of guides.--The publication of each guide 
     under this subsection shall include--
       ``(A) the posting of the guide in an easily identified 
     location on the website of the agency; and
       ``(B) distribution of the guide to known industry contacts, 
     such as small entities, associations, or industry leaders 
     affected by the rule.
       ``(3) Publication date.--An agency shall publish each guide 
     (including the posting and distribution of the guide as 
     described under paragraph (2))--
       ``(A) on the same date as the date of publication of the 
     final rule (or as soon as possible after that date); and
       ``(B) not later than the date on which the requirements of 
     that rule become effective.
       ``(4) Compliance actions.--
       ``(A) In general.--Each guide shall explain the actions a 
     small entity is required to take to comply with a rule.
       ``(B) Explanation.--The explanation under subparagraph 
     (A)--
       ``(i) shall include a description of actions needed to meet 
     the requirements of a rule, to enable a small entity to know 
     when such requirements are met; and
       ``(ii) if determined appropriate by the agency, may include 
     a description of possible procedures, such as conducting 
     tests, that may assist a small entity in meeting such 
     requirements, except that, compliance with any procedures 
     described pursuant to this section does not establish 
     compliance with the rule, or establish a presumption or 
     inference of such compliance.
       ``(C) Procedures.--Procedures described under subparagraph 
     (B)(ii)--
       ``(i) shall be suggestions to assist small entities; and
       ``(ii) shall not be additional requirements, or diminish 
     requirements, relating to the rule.
       ``(5) Agency preparation of guides.--The agency shall, in 
     its sole discretion, taking into account the subject matter 
     of the rule and the language of relevant statutes, ensure 
     that the guide is written using sufficiently plain language 
     likely to be understood by affected small entities. Agencies 
     may prepare separate guides covering groups or classes of 
     similarly affected small entities and may cooperate with 
     associations of small entities to develop and distribute such 
     guides. An agency may prepare guides and apply this section 
     with respect to a rule or a group of related rules.
       ``(6) Reporting.--Not later than 1 year after the date of 
     enactment of the Fair Minimum Wage Act of 2007, and annually 
     thereafter, the head of each agency shall submit a report to 
     the Committee on Small Business and Entrepreneurship of the 
     Senate, the Committee on Small Business of the House of 
     Representatives, and any other committee of relevant 
     jurisdiction describing the status of the agency's compliance 
     with paragraphs (1) through (5).''.
       (b) Technical and Conforming Amendment.--Section 211(3) of 
     the Small Business Regulatory Enforcement Fairness Act of 
     1996 (5 U.S.C. 601 note) is amended by inserting ``and 
     entitled'' after ``designated''.

     SEC. 242. SMALL BUSINESS CHILD CARE GRANT PROGRAM.

       (a) Establishment.--The Secretary of Health and Human 
     Services (referred to in this section as the ``Secretary'') 
     shall establish a program to award grants to States, on a 
     competitive basis, to assist States in providing funds to 
     encourage the establishment and operation of employer-
     operated child care programs.
       (b) Application.--To be eligible to receive a grant under 
     this section, a State shall prepare and submit to the 
     Secretary an application at such time, in such manner, and 
     containing such information as the Secretary may require, 
     including an assurance that the funds required under 
     subsection (e) will be provided.
       (c) Amount and Period of Grant.--The Secretary shall 
     determine the amount of a grant to a State under this section 
     based on the population of the State as compared to the 
     population of all States receiving grants under this

[[Page 2966]]

     section. The Secretary shall make the grant for a period of 3 
     years.
       (d) Use of Funds.--
       (1) In general.--A State shall use amounts provided under a 
     grant awarded under this section to provide assistance to 
     small businesses (or consortia formed in accordance with 
     paragraph (3)) located in the State to enable the small 
     businesses (or consortia) to establish and operate child care 
     programs. Such assistance may include--
       (A) technical assistance in the establishment of a child 
     care program;
       (B) assistance for the startup costs related to a child 
     care program;
       (C) assistance for the training of child care providers;
       (D) scholarships for low-income wage earners;
       (E) the provision of services to care for sick children or 
     to provide care to school-aged children;
       (F) the entering into of contracts with local resource and 
     referral organizations or local health departments;
       (G) assistance for care for children with disabilities;
       (H) payment of expenses for renovation or operation of a 
     child care facility; or
       (I) assistance for any other activity determined 
     appropriate by the State.
       (2) Application.--In order for a small business or 
     consortium to be eligible to receive assistance from a State 
     under this section, the small business involved shall prepare 
     and submit to the State an application at such time, in such 
     manner, and containing such information as the State may 
     require.
       (3) Preference.--
       (A) In general.--In providing assistance under this 
     section, a State shall give priority to an applicant that 
     desires to form a consortium to provide child care in a 
     geographic area within the State where such care is not 
     generally available or accessible.
       (B) Consortium.--For purposes of subparagraph (A), a 
     consortium shall be made up of 2 or more entities that shall 
     include small businesses and that may include large 
     businesses, nonprofit agencies or organizations, local 
     governments, or other appropriate entities.
       (4) Limitations.--With respect to grant funds received 
     under this section, a State may not provide in excess of 
     $500,000 in assistance from such funds to any single 
     applicant.
       (e) Matching Requirement.--To be eligible to receive a 
     grant under this section, a State shall provide assurances to 
     the Secretary that, with respect to the costs to be incurred 
     by a covered entity receiving assistance in carrying out 
     activities under this section, the covered entity will make 
     available (directly or through donations from public or 
     private entities) non-Federal contributions to such costs in 
     an amount equal to--
       (1) for the first fiscal year in which the covered entity 
     receives such assistance, not less than 50 percent of such 
     costs ($1 for each $1 of assistance provided to the covered 
     entity under the grant);
       (2) for the second fiscal year in which the covered entity 
     receives such assistance, not less than 66\2/3\ percent of 
     such costs ($2 for each $1 of assistance provided to the 
     covered entity under the grant); and
       (3) for the third fiscal year in which the covered entity 
     receives such assistance, not less than 75 percent of such 
     costs ($3 for each $1 of assistance provided to the covered 
     entity under the grant).
       (f) Requirements of Providers.--To be eligible to receive 
     assistance under a grant awarded under this section, a child 
     care provider--
       (1) who receives assistance from a State shall comply with 
     all applicable State and local licensing and regulatory 
     requirements and all applicable health and safety standards 
     in effect in the State; and
       (2) who receives assistance from an Indian tribe or tribal 
     organization shall comply with all applicable regulatory 
     standards.
       (g) State-Level Activities.--A State may not retain more 
     than 3 percent of the amount described in subsection (c) for 
     State administration and other State-level activities.
       (h) Administration.--
       (1) State responsibility.--A State shall have 
     responsibility for administering a grant awarded for the 
     State under this section and for monitoring covered entities 
     that receive assistance under such grant.
       (2) Audits.--A State shall require each covered entity 
     receiving assistance under the grant awarded under this 
     section to conduct an annual audit with respect to the 
     activities of the covered entity. Such audits shall be 
     submitted to the State.
       (3) Misuse of funds.--
       (A) Repayment.--If the State determines, through an audit 
     or otherwise, that a covered entity receiving assistance 
     under a grant awarded under this section has misused the 
     assistance, the State shall notify the Secretary of the 
     misuse. The Secretary, upon such a notification, may seek 
     from such a covered entity the repayment of an amount equal 
     to the amount of any such misused assistance plus interest.
       (B) Appeals process.--The Secretary shall by regulation 
     provide for an appeals process with respect to repayments 
     under this paragraph.
       (i) Reporting Requirements.--
       (1) 2-year study.--
       (A) In general.--Not later than 2 years after the date on 
     which the Secretary first awards grants under this section, 
     the Secretary shall conduct a study to determine--
       (i) the capacity of covered entities to meet the child care 
     needs of communities within States;
       (ii) the kinds of consortia that are being formed with 
     respect to child care at the local level to carry out 
     programs funded under this section; and
       (iii) who is using the programs funded under this section 
     and the income levels of such individuals.
       (B) Report.--Not later than 28 months after the date on 
     which the Secretary first awards grants under this section, 
     the Secretary shall prepare and submit to the appropriate 
     committees of Congress a report on the results of the study 
     conducted in accordance with subparagraph (A).
       (2) 4-year study.--
       (A) In general.--Not later than 4 years after the date on 
     which the Secretary first awards grants under this section, 
     the Secretary shall conduct a study to determine the number 
     of child care facilities that are funded through covered 
     entities that received assistance through a grant awarded 
     under this section and that remain in operation, and the 
     extent to which such facilities are meeting the child care 
     needs of the individuals served by such facilities.
       (B) Report.--Not later than 52 months after the date on 
     which the Secretary first awards grants under this section, 
     the Secretary shall prepare and submit to the appropriate 
     committees of Congress a report on the results of the study 
     conducted in accordance with subparagraph (A).
       (j) Definitions.--In this section:
       (1) Covered entity.--The term ``covered entity'' means a 
     small business or a consortium formed in accordance with 
     subsection (d)(3).
       (2) Indian community.--The term ``Indian community'' means 
     a community served by an Indian tribe or tribal organization.
       (3) Indian tribe; tribal organization.--The terms ``Indian 
     tribe'' and ``tribal organization'' have the meanings given 
     the terms in section 658P of the Child Care and Development 
     Block Grant Act of 1990 (42 U.S.C. 9858n).
       (4) Small business.--The term ``small business'' means an 
     employer who employed an average of at least 2 but not more 
     than 50 employees on the business days during the preceding 
     calendar year.
       (5) State.--The term ``State'' has the meaning given the 
     term in section 658P of the Child Care and Development Block 
     Grant Act of 1990 (42 U.S.C. 9858n).
       (k) Application to Indian Tribes and Tribal 
     Organizations.--In this section:
       (1) In general.--Except as provided in subsection (f)(1), 
     and in paragraphs (2) and (3), the term ``State'' includes an 
     Indian tribe or tribal organization.
       (2) Geographic references.--The term ``State'' includes an 
     Indian community in subsections (c) (the second and third 
     place the term appears), (d)(1) (the second place the term 
     appears), (d)(3)(A) (the second place the term appears), and 
     (i)(1)(A)(i).
       (3) State-level activities.--The term ``State-level 
     activities'' includes activities at the tribal level.
       (l) Authorization of Appropriations.--
       (1) In general.--There is authorized to be appropriated to 
     carry out this section, $50,000,000 for the period of fiscal 
     years 2008 through 2012.
       (2) Studies and administration.--With respect to the total 
     amount appropriated for such period in accordance with this 
     subsection, not more than $2,500,000 of that amount may be 
     used for expenditures related to conducting studies required 
     under, and the administration of, this section.
       (m) Termination of Program.--The program established under 
     subsection (a) shall terminate on September 30, 2012.

     SEC. 243. STUDY OF UNIVERSAL USE OF ADVANCE PAYMENT OF EARNED 
                   INCOME CREDIT.

       Not later than 180 days after the date of the enactment of 
     this Act, the Secretary of the Treasury shall report to 
     Congress on a study of the benefits, costs, risks, and 
     barriers to workers and to businesses (with a special 
     emphasis on small businesses) if the advance earned income 
     tax credit program (under section 3507 of the Internal 
     Revenue Code of 1986) included all recipients of the earned 
     income tax credit (under section 32 of such Code) and what 
     steps would be necessary to implement such inclusion.

     SEC. 244. SENSE OF THE SENATE CONCERNING PERSONAL SAVINGS.

       (a) Findings.--The Senate finds that--
       (1) the personal saving rate in the United States is at its 
     lowest point since the Great Depression, with the rate having 
     fallen into negative territory;
       (2) the United States ranks at the bottom of the Group of 
     Twenty (G-20) nations in terms of net national saving rate;
       (3) approximately half of all the working people of the 
     United States work for an employer that does not offer any 
     kind of retirement plan;
       (4) existing savings policies enacted by Congress provide 
     limited incentives to save for low- and moderate-income 
     families; and
       (5) the Social Security program was enacted to serve as the 
     safest component of a retirement system that also includes 
     employer-sponsored retirement plans and personal savings.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that--
       (1) Congress should enact policies that promote savings 
     vehicles for retirement that are simple, easily accessible 
     and provide adequate financial security for all the people of 
     the United States;
       (2) it is important to begin retirement saving as early as 
     possible to take full advantage of the power of compound 
     interest; and

[[Page 2967]]

       (3) regularly contributing money to a financially-sound 
     investment account is one important method for helping to 
     achieve one's retirement goals.

     SEC. 245. RENEWAL GRANTS FOR WOMEN'S BUSINESS CENTERS.

       (a) In General.--Section 29 of the Small Business Act (15 
     U.S.C. 656) is amended by adding at the end the following:
       ``(m) Continued Funding for Centers.--
       ``(1) In general.--A nonprofit organization described in 
     paragraph (2) shall be eligible to receive, subject to 
     paragraph (3), a 3-year grant under this subsection.
       ``(2) Applicability.--A nonprofit organization described in 
     this paragraph is a nonprofit organization that has received 
     funding under subsection (b) or (l).
       ``(3) Application and approval criteria.--
       ``(A) Criteria.--Subject to subparagraph (B), the 
     Administrator shall develop and publish criteria for the 
     consideration and approval of applications by nonprofit 
     organizations under this subsection.
       ``(B) Contents.--Except as otherwise provided in this 
     subsection, the conditions for participation in the grant 
     program under this subsection shall be the same as the 
     conditions for participation in the program under subsection 
     (l), as in effect on the date of enactment of this Act.
       ``(C) Notification.--Not later than 60 days after the date 
     of the deadline to submit applications for each fiscal year, 
     the Administrator shall approve or deny any application under 
     this subsection and notify the applicant for each such 
     application.
       ``(4) Award of grants.--
       ``(A) In general.--Subject to the availability of 
     appropriations, the Administrator shall make a grant for the 
     Federal share of the cost of activities described in the 
     application to each applicant approved under this subsection.
       ``(B) Amount.--A grant under this subsection shall be for 
     not more than $150,000, for each year of that grant.
       ``(C) Federal share.--The Federal share under this 
     subsection shall be not more than 50 percent.
       ``(D) Priority.--In allocating funds made available for 
     grants under this section, the Administrator shall give 
     applications under this subsection or subsection (l) priority 
     over first-time applications under subsection (b).
       ``(5) Renewal.--
       ``(A) In general.--The Administrator may renew a grant 
     under this subsection for additional 3-year periods, if the 
     nonprofit organization submits an application for such 
     renewal at such time, in such manner, and accompanied by such 
     information as the Administrator may establish.
       ``(B) Unlimited renewals.--There shall be no limitation on 
     the number of times a grant may be renewed under subparagraph 
     (A).
       ``(n) Privacy Requirements.--
       ``(1) In general.--A women's business center may not 
     disclose the name, address, or telephone number of any 
     individual or small business concern receiving assistance 
     under this section without the consent of such individual or 
     small business concern, unless--
       ``(A) the Administrator is ordered to make such a 
     disclosure by a court in any civil or criminal enforcement 
     action initiated by a Federal or State agency; or
       ``(B) the Administrator considers such a disclosure to be 
     necessary for the purpose of conducting a financial audit of 
     a women's business center, but a disclosure under this 
     subparagraph shall be limited to the information necessary 
     for such audit.
       ``(2) Administration use of information.--This subsection 
     shall not--
       ``(A) restrict Administration access to program activity 
     data; or
       ``(B) prevent the Administration from using client 
     information (other than the information described in 
     subparagraph (A)) to conduct client surveys.
       ``(3) Regulations.--The Administrator shall issue 
     regulations to establish standards for requiring disclosures 
     during a financial audit under paragraph (1)(B).''.
       (b) Repeal.--Section 29(l) of the Small Business Act (15 
     U.S.C. 656(l)) is repealed effective October 1 of the first 
     full fiscal year after the date of enactment of this Act.
       (c) Transitional Rule.--Notwithstanding any other provision 
     of law, a grant or cooperative agreement that was awarded 
     under subsection (l) of section 29 of the Small Business Act 
     (15 U.S.C. 656), on or before the day before the date 
     described in subsection (b) of this section, shall remain in 
     full force and effect under the terms, and for the duration, 
     of such grant or agreement.

     SEC. 246. REPORTS ON ACQUISITIONS OF ARTICLES, MATERIALS, AND 
                   SUPPLIES MANUFACTURED OUTSIDE THE UNITED 
                   STATES.

       Section 2 of the Buy American Act (41 U.S.C. 10a) is 
     amended--
       (1) by striking ``Notwithstanding'' and inserting the 
     following:
       ``(a) In General.--Notwithstanding''; and
       (2) by adding at the end the following:
       ``(b) Reports.--
       ``(1) In general.--Not later than 180 days after the end of 
     each of fiscal years 2007 through 2011, the head of each 
     Federal agency shall submit to the Committee on Homeland 
     Security and Governmental Affairs of the Senate and the 
     Committee on Oversight and Government Reform of the House of 
     Representatives a report on the amount of the acquisitions 
     made by the agency in that fiscal year of articles, 
     materials, or supplies purchased from entities that 
     manufacture the articles, materials, or supplies outside of 
     the United States.
       ``(2) Contents of report.--The report required by paragraph 
     (1) shall separately include, for the fiscal year covered by 
     such report--
       ``(A) the dollar value of any articles, materials, or 
     supplies that were manufactured outside the United States;
       ``(B) an itemized list of all waivers granted with respect 
     to such articles, materials, or supplies under this Act, and 
     a citation to the treaty, international agreement, or other 
     law under which each waiver was granted;
       ``(C) if any articles, materials, or supplies were acquired 
     from entities that manufacture articles, materials, or 
     supplies outside the United States, the specific exception 
     under this section that was used to purchase such articles, 
     materials, or supplies; and
       ``(D) a summary of--
       ``(i) the total procurement funds expended on articles, 
     materials, and supplies manufactured inside the United 
     States; and
       ``(ii) the total procurement funds expended on articles, 
     materials, and supplies manufactured outside the United 
     States.
       ``(3) Public availability.--The head of each Federal agency 
     submitting a report under paragraph (1) shall make the report 
     publicly available to the maximum extent practicable.
       ``(4) Exception for intelligence community.--This 
     subsection shall not apply to acquisitions made by an agency, 
     or component thereof, that is an element of the intelligence 
     community as specified in, or designated under, section 3(4) 
     of the National Security Act of 1947 (50 U.S.C. 401a(4)).''.

     SEC. 247. SENSE OF THE SENATE REGARDING REPEAL OF 1993 INCOME 
                   TAX INCREASE ON SOCIAL SECURITY BENEFITS.

       It is the sense of the Senate that Congress should repeal 
     the 1993 tax increase on Social Security benefits and 
     eliminate wasteful spending, such as spending on unnecessary 
     tax loopholes, in order to fully offset the cost of such 
     repeal and avoid forcing taxpayers to pay substantially more 
     interest to foreign creditors.

     SEC. 248. SENSE OF THE SENATE REGARDING PERMANENT TAX 
                   INCENTIVES TO MAKE EDUCATION MORE AFFORDABLE 
                   AND MORE ACCESSIBLE FOR AMERICAN FAMILIES.

       It is the sense of the Senate that Congress should make 
     permanent the tax incentives to make education more 
     affordable and more accessible for American families and 
     eliminate wasteful spending, such as spending on unnecessary 
     tax loopholes, in order to fully offset the cost of such 
     incentives and avoid forcing taxpayers to pay substantially 
     more interest to foreign creditors.

     SEC. 249. RESPONSIBLE GOVERNMENT CONTRACTOR REQUIREMENTS.

       Section 274A(e) of the Immigration and Nationality Act (8 
     U.S.C. 1324a(e)) is amended by adding at the end the 
     following new paragraph:
       ``(10) Prohibition on award of government contracts, 
     grants, and agreements.--
       ``(A) Employers with no contracts, grants, or agreements.--
       ``(i) In general.--Subject to clause (iii) and subparagraph 
     (C), if an employer who does not hold a Federal contract, 
     grant, or cooperative agreement is determined to have 
     violated this section, the employer shall be debarred from 
     the receipt of a Federal contract, grant, or cooperative 
     agreement for a period of 7 years.
       ``(ii) Placement on excluded list.--The Secretary of 
     Homeland Security or the Attorney General shall advise the 
     Administrator of General Services of the debarment of an 
     employer under clause (i) and the Administrator of General 
     Services shall list the employer on the List of Parties 
     Excluded from Federal Procurement and Nonprocurement Programs 
     for a period of 7 years.
       ``(iii) Waiver.--

       ``(I) Authority.--The Administrator of General Services, in 
     consultation with the Secretary of Homeland Security and the 
     Attorney General, may waive operation of clause (i) or may 
     limit the duration or scope of a debarment under clause (i) 
     if such waiver or limitation is necessary to national defense 
     or in the interest of national security.
       ``(II) Notification to congress.--If the Administrator 
     grants a waiver or limitation described in subclause (I), the 
     Administrator shall submit to each member of the Committee on 
     the Judiciary of the Senate and of the Committee on the 
     Judiciary of the House of Representatives immediate notice of 
     such waiver or limitation.
       ``(III) Prohibition on judicial review.--The decision of 
     whether to debar or take alternative action under this clause 
     shall not be judicially reviewed.

       ``(B) Employers with contracts, grants, or agreements.--
       ``(i) In general.--Subject to clause (iii) and subclause 
     (C), an employer who holds a Federal contract, grant, or 
     cooperative agreement and is determined to have violated this 
     section shall be debarred from the receipt of new Federal 
     contracts, grants, or cooperative agreements for a period of 
     10 years.
       ``(ii) Notice to agencies.--Prior to debarring the employer 
     under clause (i), the Secretary of Homeland Security, in 
     cooperation with the Administrator of General Services, shall 
     advise any agency or department holding a contract, grant, or 
     cooperative agreement with the employer of the Government's 
     intention to debar the employer from the receipt of new 
     Federal contracts, grants, or cooperative agreements for a 
     period of 10 years.
       ``(iii) Waiver.--

       ``(I) Authority.--After consideration of the views of any 
     agency or department that holds a

[[Page 2968]]

     contract, grant, or cooperative agreement with the employer, 
     the Administrator of General Services, in consultation with 
     the Secretary of Homeland Security and the Attorney General, 
     may waive operation of clause (i) or may limit the duration 
     or scope of the debarment under clause (i) if such waiver or 
     limitation is necessary to the national defense or in the 
     interest of national security.
       ``(II) Notification to congress.--If the Administrator 
     grants a waiver or limitation described in subclause (I), the 
     Administrator shall submit to each member of the Committee on 
     the Judiciary of the Senate and of the Committee on the 
     Judiciary of the House of Representatives immediate notice of 
     such waiver or limitation.
       ``(III) Prohibition on judicial review.--The decision of 
     whether to debar or take alternate action under this clause 
     shall not be judicially reviewed.

       ``(C) Exemption from penalty for employers participating in 
     the basic pilot program.--In the case of imposition on an 
     employer of a debarment from the receipt of a Federal 
     contract, grant, or cooperative agreement under subparagraph 
     (A) or (B), that penalty shall be waived if the employer 
     establishes that the employer was voluntarily participating 
     in the basic pilot program under section 403(a) of the 
     Illegal Immigration Reform and Immigrant Responsibility Act 
     of 1996 (8 U.S.C. 1324a note) at the time of the violations 
     of this section that resulted in the debarment.''.

  Mr. DURBIN. Madam President, I move to reconsider the vote.
  Mrs. FEINSTEIN. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. GRASSLEY. Madam President, after great effort by many people, the 
Senate has adopted the Fair Minimum Wage Act as amended by the Baucus 
substitute amendment containing the Small Business and Work Opportunity 
Act of 2007. This bipartisan small business package will help ensure 
that small businesses are able to cope with an increase in the minimum 
wage.
  Credit must go to the dedicated members of my staff, who spent many 
hours helping to put this package together. Kolan Davis, Mark Prater, 
Dean Zerbe, Elizabeth Paris, Chris Javens, Cathy Barre, Anne Freeman, 
Grant Menke, Stanford Swinton, and Nick Wyatt showed great dedication 
to the tasks before them.
  Of course this package could not have been put together without the 
efforts of Chairman Baucus and his staff. I particularly want to thank 
Russ Sullivan, Bill Dauster, Pat Heck, Judy Miller, Rebecca Baxter, 
Melissa Mueller, Pat Bousliman, and Ryan Abraham.
  Mr. McCONNELL. Madam President, I rise to applaud the Senate for its 
keen sense of balance and judgment in passing H.R. 2, a bill to 
increase the minimum wage. After important input from both sides, we 
have met the needs of both America's workers, who will earn a higher 
wage, and America's small businesses, which fuel our economy.
  The President and the Republican Congress were clear on the need to 
couple an increase in the minimum wage with small-business tax relief, 
and this legislation does just that. This is a testament to what we can 
accomplish when we work together to move critical legislation forward.
  The American people that keep this economy running have created more 
than 7.2 million new jobs since August 2003--that's 40 months straight 
of job growth. The economy added 167,000 new jobs last December, 
exceeding market expectations.
  Our unemployment rate is a staggeringly low 4.5 percent or as I like 
to put it, our employment rate is 95.5 percent. A 4.5 percent 
unemployment rate is lower than the 5.1 percent average unemployment 
rate of 2005, which was already a great year.
  And a low rate of 4.5 percent is lower than the average unemployment 
rate of the 1960s, the 1970s, the 1980s, and even lower than the 
average unemployment rate of the boom years my friends on the other 
side of the aisle like to point to, the 1990s.
  America's small businesses are the key to unlocking this economic 
success. Small businesses employ half of all private-sector employees 
and have generated between 60 to 80 percent of net new jobs annually 
over the last 10 years.
  Here's the bottom line. Since August 2003, the American people have 
created over 7.2 million new jobs, more than the entire European Union 
plus Japan combined.
  So understandably, this side of the aisle had this objective in mind 
regarding this bill: What is the best way to raise the minimum wage 
while keeping our high-flying economy aloft?
  How could we encourage economic growth and not hinder it? How could 
we make sure that an increase in wages wouldn't create a decrease in 
jobs?
  This Senate has successfully done that, by linking an increase in the 
hourly minimum wage, from $5.15 to $7.25 over slightly more than 2 
years, with targeted tax and regulatory relief to small businesses, so 
that the small businesses that create the lion's share of new jobs in 
this country can remain competitive and employ even more people.
  The President last December emphasized the need to pair minimum wage 
increase legislation with just this kind of targeted tax and regulatory 
relief.
  In my initial speech to the Senate of the 110th Congress last month, 
I said we Republicans were open and willing to get things done with 
Democrats. And I said one of the first goals we should accomplish, 
working together, was increasing the minimum wage while providing 
relief for small businesses.
  Around the same time, the distinguished majority leader struck a 
similar note, pledging that when it came to a wage increase plus small-
business tax relief, ``we are going to do it.''
  I am pleased to report that we have done it. An overwhelming majority 
of Senators acknowledged that creating new jobs and expanding the 
economy are more important than partisan wrangling.
  And most importantly, we have taken care of the workers who will 
benefit from a higher wage and the small businesses that grow the 
economy at the same time.
  I am pleased this Senate is doing that, and in doing so reinforcing a 
vital precedent. I note that the last time the minimum wage was 
increased, under a Republican Congress and a Democrat President, the 
same precedent was set.
  We look forward to working with the House of Representatives to send 
a final bill to the President that will be a victory for both those who 
earn the minimum wage and those who pay it.
  When that happens, we will prove that the words of bipartisanship and 
comity during this Senate's first days were more than empty rhetoric.
  We will demonstrate that this Senate can come together to exercise 
balance and judgment, and improve the lives of both the workers who 
earn the minimum wage and the small businesses that employ them and 
keep America's economy running.
  And we will show that divided government need not be divisive.
  The PRESIDING OFFICER. Under the previous order, the majority leader 
is recognized.

                          ____________________