TAXPAYER REFUND ACT OF 1999
(Senate - July 30, 1999)

Text available as:

Formatting necessary for an accurate reading of this text may be shown by tags (e.g., <DELETED> or <BOLD>) or may be missing from this TXT display. For complete and accurate display of this text, see the PDF.

[Pages S9885-S9937]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      TAXPAYER REFUND ACT OF 1999

  The PRESIDING OFFICER. Under the previous order, the Senate will now 
resume consideration of S. 1429, which the clerk will report.
  The legislative assistant read as follows:

       A bill (S. 1429) to provide for reconciliation pursuant to 
     section 104 of the concurrent resolution on the budget for 
     fiscal year 2000.

  Pending:

       Bingaman amendment No. 1462, to express the sense of the 
     Senate regarding investment in education.
       Hutchison modified amendment No. 1472, to provide for the 
     relief of the marriage tax penalty beginning in the year 
     2001.
       Roth (for Grassley) amendment No. 1388, making technical 
     corrections to the Saver Act.
       Roth (for Abraham) amendment No. 1411, to provide that no 
     Federal income tax shall be imposed on amounts received, and 
     lands recovered, by Holocaust victims for their heirs.
       Roth (for Sessions) amendment No. 1412, to provide for the 
     Collegiate Learning and Students Savings (CLASS) Act title.
       Roth (for Collins/Coverdell) modified amendment No. 1446, 
     to eliminate the 2-percent floor on miscellaneous itemized 
     deductions for qualified professional development and 
     incidental expenses of elementary and secondary school 
     teachers.
       Roth (for Abraham) amendment No. 1455, to amend the 
     Internal Revenue Code of 1986 to expand the deduction for 
     computer donations to schools and to allow a tax credit for 
     donated computers.


                           amendment no. 1462

  The PRESIDING OFFICER. Under the previous order, there will now be 15 
minutes equally divided with respect to the Bingaman amendment No. 
1462.
  Who yields time?
  Mr. BINGAMAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. BINGAMAN. How much time is allotted to me?
  The PRESIDING OFFICER. The Senator has 7 minutes 30 seconds.
  Mr. BINGAMAN. I yield myself 4 minutes.
  The PRESIDING OFFICER. The Senator is recognized for 4 minutes.
  Mr. BINGAMAN. Mr. President, the amendment I presented yesterday and 
that we are going to vote on first this morning is a simple statement 
that we should reduce the size of the tax cut that is proposed by $132 
billion so that we will have funds available to maintain the current 
level of effort in support of education. It, I grant you, is a sense-
of-the-Senate resolution. It does not ensure that the money is spent 
there, but to my mind it at least reserves those funds so we can 
maintain the current level of effort in support of education. In other 
words, I believe we should be on record for funding education at least 
at current levels before we settle on the size of the tax cut that we 
can afford.
  Some might ask why am I singling out education. Well, S. 1429 is more

[[Page S9886]]

than just a tax bill; it is a reconciliation bill, which means, at 
least in rough form, it purports to set national priorities for the 
next 10 years. I believe that a very top priority should be providing 
quality education to the young people of this Nation. Our future 
depends more on that investment than it does on virtually any other 
investment we might make.
  So if education is a priority, what is the relationship of this tax 
cut bill to education? Now, as I understand the estimates for the next 
10 years, the tax cut bill is so large that it will require us to make 
significant cuts in discretionary spending, including education, in 
this coming decade, and that is the concern I have and that is what has 
prompted this amendment.
  Yesterday, as I was describing the amendment, I was informed that my 
concern is unfounded; that in fact even after the tax cut--and I know 
people do not like to have it referred to as a massive tax cut; I 
notice that is what the Wall Street Journal called it this morning in 
their headline--there will be plenty of discretionary funds for 
education. That was the information I was given.
  So let me look at the figures I have and see where I am confused on 
this and where I have misunderstood the situation.
  First of all, we all expect a surplus, and that is why we are having 
this debate and talking about cutting taxes in the first place. So we 
all agree to that. We also all agree that the portion of that surplus 
attributable to Social Security should be left for Social Security. And 
that is about $1.9 trillion. There is no dispute about that that I am 
aware of, at least in this debate.
  So after we take that out, what is left? At the beginning of the 
debate, the Congressional Budget Office came out with the figure in the 
range of $1 trillion, the non-Social Security-related surplus. So that 
is represented here. This chart shows CBO, Congressional Budget Office. 
This column represents the non-Social Security surplus as it was 
understood by me when we started the debate.
  Now I am informed that we have a new estimate and that the surplus is 
not going to be $2.8 trillion over the next 10 years; instead, it is 
going to be over $3.3 trillion. So there is going to be substantially 
more money. The question is, Where did we find this additional $400 to 
$500 billion?
  Mr. President, let me yield myself 1 more minute.
  The PRESIDING OFFICER. The Senator is recognized.
  Mr. BINGAMAN. It was arrived at by assuming that less money is going 
to be spent on discretionary spending during the 10 years. The 
Congressional Budget Office assumed that $595 billion would be cut in 
discretionary spending. The new claim is that there is going to be $1 
trillion cut, and that by cutting discretionary spending by $1 trillion 
instead of by $595 billion, we are going to have extra money that we 
can turn around and spend on discretionary accounts.
  Mr. President, that doesn't add up in my mind. I believe 
discretionary accounts are important. I believe education has to be at 
the top of that list. I do not see where we can expect to find the 
money to maintain current levels of effort on education if we vote for 
this very large tax cut. That is why the size of the tax cut should be 
reduced so that education programs will not have to be cut.
  How much time remains?
  The PRESIDING OFFICER. The Senator has 2 minutes 25 seconds.
  Mr. BINGAMAN. I yield the balance of my time to the Senator from 
Washington.
  Mrs. MURRAY. Mr. President, I rise in support of the amendment 
offered by the Senator from New Mexico, Mr. Bingaman. This is a very 
important amendment that he has offered. Certainly, as we are talking 
about what the future of our country is going to be, we should be 
looking at what we are doing to invest in our young children today so 
they can be economically viable when they graduate from high school and 
college 15, 20 years from now, making sure that we have the money there 
for the Head Start Program, Pell grants, early childhood education.
  These are important investments in our children, and if we follow 
through on a massive tax cut at this time, as the Senator from New 
Mexico has said, in the future we will not have the money to make sure 
that our kids get the kind of education they need to be viable members 
of our community. This is a very important amendment.
  As we come to the end of this debate about what we are going to do to 
invest in our future, let's remember that if we put in place a tax cut 
such as this, we will harm our young children, we will harm Social 
Security and Medicare and critical programs for women in this country 
to make sure they don't live in poverty. We will not be able to pay off 
our debt, a very important issue that is facing us, which we have not 
left ourselves room for with a massive tax cut of this size.
  Most critically, we will not be able to do what we have a 
responsibility to do, not only as Senators but as parents and as adults 
in this country, to make sure that those who follow us have the skills 
they need to make sure this country continues to run well in the 
future. Investment in Pell grants and in early childhood education, and 
investment in education, class size reduction, and training of our 
teachers will make a difference for the future. We have a 
responsibility to do that.
  I thank the Senator from New Mexico for his work on education, and I 
urge my colleagues to support this amendment.
  I thank the Chair.
  Mr. DOMENICI addressed the Chair.
  The PRESIDING OFFICER. The Senator from New Mexico is recognized.
  Mr. DOMENICI. Mr. President, as I said yesterday, I don't normally 
take to the Senate floor and speak in opposition to an amendment of my 
colleague from New Mexico. But I did yesterday, and I must this morning 
because if this amendment is reported in New Mexico, and if it says to 
constituents of our State that the budget resolution we adopted, and 
what will be left over after the tax cut would decimate education, then 
it would appear to me that I must answer because that isn't true.
  First of all, the Senator from New Mexico, my colleague, is at least 
not as sensational in his approach as the President was yesterday. The 
President even knows right down to the nickel what is not going to be 
spent in education. That is impossible. He says that 544,000 kids 
aren't going to be able to learn to read. That is ludicrous. If that is 
the kind of talk he needs to defeat a tax bill, then good luck to him. 
It is just absolutely untrue.
  Let's get the facts as I remember and understand them. We produced a 
budget resolution. It is nothing new with reference to the taxes; $792 
billion spread out over 10 years was the tax cut in that bill. We also 
allocated the remaining money for the next decade and, incidentally, in 
doing that, even though there was a reduction in discretionary 
spending, the highest priority domestic program was education, for all 
the reasons stated on the floor by Senator Murray and Senator Bingaman. 
It is terribly important that we use our education dollars right and 
better but that there be more of them. We put $37 billion in additional 
money during the first 5 years of that budget for education.
  Now, what happened after that? After that, some 3 months later, the 
Congressional Budget Office did a midsession review and told us there 
was more money than that. As a matter of fact, there was $170 billion 
more in the surplus account. We didn't add some of that to the tax cut. 
It is sitting there. What I did, so that everyone would understand, I 
said let's look at this surplus in the chart I used yesterday, and 
let's assume that we freeze discretionary spending and ask CBO how much 
money would then be available to put back into discretionary accounts 
during the decade.
  They told us: We don't know whether you will use it in discretionary 
accounts. We can't say that.
  But there is $505 billion that could be added into priority spending. 
I believe that means all of the discretionary spending can go up 
significantly and you can establish education as a high-priority item 
and fund it at levels higher than we have now, which I think 
Republicans will do if we have reform in the educational allowances of 
the Federal Government, so that there is accountability and flexibility 
in the programs that we send there.
  I believe what my colleague from New Mexico is expressing on the 
floor

[[Page S9887]]

is a sincere desire that we be sure that in the discretionary accounts 
we fund education adequately. If that is what he was saying, I join 
with him in saying that is true. But when he says you need to take $122 
billion--or whatever the number is--out of the tax cut in order to do 
that, I disagree. I don't think you have to do that.
  Plain and simple, I think there is plenty of discretionary money 
available. I add, if you use the President's numbers on Medicare--and 
he said you only needed $46 billion to fix prescription drugs--you have 
$505 billion, less the $46 billion, and all the rest can go to 
discretionary spending in the next decade. I am not trying to mislead 
anybody. In order to understand it, I said start with the premise that 
we freeze all these accounts and put in what is left. If you look at 
the budget resolution, we put $181 billion into those accounts, with 
education being the highest priority. It just happens there is more 
than that $181 billion because the midsession review added many 
billions of dollars in accumulated surplus.

  I am fully aware that Senator Bingaman, my colleague, has regularly 
and consistently as a member of the Committee on Education, and on the 
floor, been a promoter and a staunch supporter of education. I agree 
with him, but I believe he is wrong in thinking that we have to reduce 
the tax cut in order to be sure we do that. I also remind everybody 
that there are some very significant education programs in this tax 
bill. It makes it easier to continue your education because it has 
allowances, credits, and deductions in the adult education area. It 
makes it easier to pay off student loans. It makes college more 
affordable, and it provides tax exempt financing for school 
construction. All of that is in the Roth bill.
  Whatever time I had remaining, I yield back.
  I make a point of order that the Bingaman amendment No. 1462 is 
extraneous to the bill before us. Therefore, I raise a point of order 
under section 313(b)(1)(A) of the Congressional Budget Act.
  Mr. BINGAMAN. Mr. President, pursuant to section 904 of the 
Congressional Budget Act, I move to waive the applicable sections of 
that act for the consideration of the pending amendment.
  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.


                Amendment No. 1472, As Further Modified

  The PRESIDING OFFICER. Under the previous order, there will now be 15 
minutes equally divided for concluding remarks with respect to the 
Hutchison of Texas amendment, No. 1472.
  Who yields time?
  The Senator from Texas.
  Mrs. HUTCHISON. Mr. President, under the previous unanimous consent 
agreement, I send a modification of the amendment to the desk to 
amendment No. 1472.
  The PRESIDING OFFICER. The amendment is so modified.
  The amendment (No. 1472), as further modified, is as follows:

       On page 10, line 6, strike ``2004'' and insert ``2005''.
       On page 10, strike the matter between lines 19 and 20, and 
     insert:

                                                             Applicable
``Calendar year:                                         dollar amount:
  2006 or 2007..............................................$4,000 ....

  2008 and thereafter......................................$5,000. ....

       On page 11, strike the matter before line 1, and insert:

                                                             Applicable
``Calendar year:                                         dollar amount:
  2006 or 2007..............................................$2,000 ....

  2008 and thereafter......................................$2,500. ....

       On page 11, line 3, strike ``2007'' and insert ``2008''.
       On page 11, line 11, strike ``2006'' and insert ``2007''.
       On page 32, between lines 14 and 15, insert:

     SEC. __. ELIMINATION OF MARRIAGE PENALTY IN STANDARD 
                   DEDUCTION.

       (a) In General.--Paragraph (2) of section 63(c) (relating 
     to standard deduction) is amended--
       (1) by striking ``$5,000'' in subparagraph (A) and 
     inserting ``twice the dollar amount in effect under 
     subparagraph (C) for the taxable year'',
       (2) by adding ``or'' at the end of subparagraph (B),
       (3) by striking ``in the case of'' and all that follows in 
     subparagraph (C) and inserting ``in any other case.'', and
       (4) by striking subparagraph (D).
       (b) Phase-in.--Subsection (c) of section 63 is amended by 
     adding at the end the following new paragraph:
       ``(7) Phase-in of increase in basic standard deduction.--In 
     the case of taxable years beginning before January 1, 2008--
       ``(A) paragraph (2)(A) shall be applied by substituting for 
     `twice'--
       ``(i) `1.671 times' in the case of taxable years beginning 
     during 2001,
       ``(ii) `1.70 times' in the case of taxable years beginning 
     during 2002,
       ``(iii) `1.727 times' in the case of taxable years 
     beginning during 2003,
       ``(iv) `1.837 times' in the case of taxable years beginning 
     during 2004,
       ``(v) `1.951 times' in the case of taxable years beginning 
     during 2005,
       ``(vi) `1.953 times' in the case of taxable years beginning 
     during 2006, and
       ``(vii) `1.973 times' in the case of taxable years 
     beginning during 2007, and
       ``(B) the basic standard deduction for a married individual 
     filing a separate return shall be one-half of the amount 
     applicable under paragraph (2)(A).

     If any amount determined under subparagraph (A) is not a 
     multiple of $50, such amount shall be rounded to the next 
     lowest multiple of $50.''.
       (c) Technical Amendments.--
       (1) Subparagraph (B) of section 1(f)(6) is amended by 
     striking ``(other than with'' and all that follows through 
     ``shall be applied'' and inserting ``(other than with respect 
     to sections 63(c)(4) and 151(d)(4)(A)) shall be applied''.
       (2) Paragraph (4) of section 63(c) is amended by adding at 
     the end the following flush sentence:

     ``The preceding sentence shall not apply to the amount 
     referred to in paragraph (2)(A).''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.
       On page 38, line 18, strike ``2000'' and insert ``2002''.
       On page 236, strike line 12 through the matter following 
     line 21, and insert:
       (a) In General.--Section 2503(b) (relating to exclusions 
     from gifts) is amended--
       (1) by striking the following:
       ``(b) Exclusions From Gifts.--
       ``(1) In general.--In the case of gifts'',
       (2) by inserting the following:
       ``(b) Exclusions From Gifts.--In the case of gifts'',
       (3) by striking paragraph (2), and
       (4) by striking ``$10,000'' and inserting ``$20,000''.
       On page 237, line 3, strike ``2000'' and insert ``2004''.
       On page 262, strike lines 15 through 17, and insert:
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2004, and before January 1, 2007.
       On page 270, line 18, strike ``2003'' and insert ``2004''.
       On page 273, line 21, strike ``2003'' and insert ``2004''.
       On page 275, line 12, strike ``2003'' and insert ``2004''.
       On page 277, line 13, strike ``2003'' and insert ``2005''.
       On page 278, line 13, strike ``2002'' and insert ``2004''.

  Mrs. HUTCHISON. Mr. President, I now yield 2 minutes to Senator 
Ashcroft of Missouri.
  The PRESIDING OFFICER. The Senator from Missouri is recognized for 2 
minutes.
  Mr. ASHCROFT. Mr. President, first of all, I thank the Senator from 
Texas for her outstanding work correcting a pernicious discrimination 
against the most valuable institution in our society, the family. I 
thank the chairman for his sensitivity to this important issue, for 
placing in this bill procedures to remedy the marriage penalty.
  The marriage penalty simply is an anomaly. It is a strangeness in the 
tax structure that has evolved, that penalizes people for being 
married. It puts them into higher tax brackets when they get married 
than when they were single. When people get married, they start paying 
a tax penalty. That is something we should stop.
  The Senator from Texas and the chairman of this committee have agreed 
that we should stop it. And we should, as a matter of fact, according 
to the amendment of the Senator from Texas, of which I am an original 
cosponsor along with Senator Brownback, accelerate the time at which we 
begin to stop this very serious fault with the tax system.
  America should not penalize the family. It should not make it harder 
for people to have families. It should not make it financially more 
difficult for two people to be married and live together than unmarried 
and live together. That is a simple fact. It is because the family is 
the best department of social services, the best department of 
education; it is the best place in which individuals are enriched to 
learn individual responsibility and the values and character our 
culture needs to survive.

[[Page S9888]]

  I am very pleased to be a part of this tax measure which will say 
about America's families that we cherish them rather than punish them 
and it is time for all of us to join together and eliminate the 
marriage tax penalty.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Who yields time? The Senator from Delaware.
  Mr. ROTH. Mr. President, I yield myself 4 minutes.
  Mrs. HUTCHISON. Mr. President, parliamentary inquiry. Is the 4 
minutes from my 7\1/2\ minutes?
  Mr. ROTH. I am yielding this from my time.
  The PRESIDING OFFICER. Time in opposition to the amendment?
  Mr. ROTH. Actually, Mr. President, I want to add my support for the 
amendment put forward by Senator Hutchison. It builds on the basic 
objectives of the Taxpayer Refund Act of 1999, particularly objectives 
of helping families bring greater equity to the Tax Code.
  One very important provision of the tax relief package we have 
proposed is the elimination of the marriage tax penalty. There is 
strong bipartisan agreement that this penalty is not only unfair but 
that it is counterproductive in a way that discourages couples from 
marrying.
  When I introduced the Taxpayer Refund Act 2 days ago, I introduced 
Robert and Dianne, a hypothetical couple who had fallen in love and 
wanted to marry. I explained how, as individuals, they would not be 
considered wealthy, how Robert worked as a foreman in an auto plant and 
Dianne worked as a nurse. I then explained how, as a married couple 
with a combined income, they would be considered well off and how they 
would end up paying the Government $1,500 more in taxes than they would 
if they remained single.
  The Taxpayer Refund Act of 1999 does away with the marriage tax 
penalty. It completely eliminates the penalty for Robert and Dianne and 
for any other couples who choose to marry. What I like about the 
amendment introduced by our distinguished colleague from Texas, Senator 
Hutchison, is that under her plan the tax relief is expedited. This is 
done at a price. The change does require the delay of other provisions 
that provide relief for the taxpayer. I regret that. But we do think it 
is desirable to provide marriage relief as early as possible.
  Therefore, I encourage my colleagues to vote for this amendment.
  I reserve the remainder of my time.
  The PRESIDING OFFICER. Who yields time?
  Mr. BAUCUS. If the Senator will yield just a few minutes?
  Mr. ROTH. I yield 3 minutes to the Senator from Montana.
  The PRESIDING OFFICER. The Senator from Montana is recognized for 3 
minutes.
  Mr. BAUCUS. Mr. President, I again compliment my good friend, the 
Senator from Texas, as well as the chairman of the committee. The 
Senator from Texas offered this amendment last night, and at that time 
I explained we thought this was a very good amendment because it moves 
in the direction of the Democratic substitute, raising the standard 
deduction, in her case for married couples, to eliminate the marriage 
tax penalty. We would have gone further, but we compliment the Senator 
in going in this direction.
  Last night, too, there was a slight question how this was going to be 
paid for. We have worked it out overnight. As I understand it--the 
Senator may correct me if I am wrong--the AMT delayed relief provisions 
are no longer in place, but rather there will be a delay in the 
expansion of the 15-percent bracket in order to pay for this.
  Mrs. HUTCHISON. The Senator is correct. There are delays. Nothing is 
eliminated, but there are delays in several provisions because we are 
trying to say this is our first priority.
  Mr. BAUCUS. Mr. President, I think that is a good offset. It adds a 
little more progressivity, frankly, to the bill, than otherwise would 
be there.
  I compliment the Senator on her amendment.
  The PRESIDING OFFICER. Who yields time?
  The Senator from Texas.
  Mrs. HUTCHISON. I yield the Senator from Kansas, Senator Brownback, 2 
minutes.
  The PRESIDING OFFICER. The Senator is recognized for 2 minutes.
  Mr. BROWNBACK. Mr. President, I thank the Senator from Texas. I am 
delighted to join her in this amendment that it appears will garner 
overwhelming support. I hope that sends a strong signal across this 
country that today is a day to celebrate. We should be celebrating the 
institution of marriage and support that institution rather than tax 
it.
  For many years now we have taxed it. Clearly, if there is a policy in 
Government that stands it is if you want less of something, tax it; if 
you want more of something, subsidize it. We have been taxing marriage, 
and marriage has fallen off in this country 43 percent over the last 30 
years. That is a terrible situation for an institution that is so 
central.
  I note to my colleagues, we all frequently talk about family values. 
Thomas, from Hilliard, OH, writes in about this point on the marriage 
penalty and the notion of family values:

       No person who legitimately supports family values could be 
     against this bill. The marriage penalty is but another 
     example of how in the past 40 years the federal government 
     has enacted policies that have broken down the fundamental 
     institutions that were the strength of this country from the 
     start.

  I could not have put it better. I am delighted it appears that this 
amendment is going to be agreed to. I hope we can get it to the 
President's desk and that the President will be supportive of 
eliminating the marriage penalty tax. I hope as well we could go 
further in the future and enact income splitting, that we could provide 
for a couple to split their income. This would be even more supportive 
of this fundamental institution in our culture, in our Nation, of 
marriage. I hope we can take that step on into the future.
  I am delighted to have the chairman's support in this. I urge all my 
colleagues in the name of family values, vote for this amendment.
  I yield the remainder of my time to the Senator from Texas.
  The PRESIDING OFFICER. Who yields time?
  The Senator from Texas.
  Mrs. HUTCHISON. Mr. President, how much time remains?
  The PRESIDING OFFICER. There are remaining 3 minutes 20 seconds.
  Mrs. HUTCHISON. Mr. President, I will finish on my statement.
  Something very important is happening. What is important is, we are 
apparently going to pass overwhelmingly the only amendment that will 
have passed on this bill. On this very important tax cut measure, we 
are going to add certainly the first amendment, and maybe the only one, 
that says the marriage tax penalty is not going to be allowed to stand 
in the United States of America. That is what we are doing today. The 
bill provides for marriage tax penalty relief in 2005. I applaud the 
committee for doing that. But I thought we should address it earlier. 
That is why Senator Ashcroft, Senator Brownback, Senator Domenici, 
Senator Roth, and Senator Baucus have come together and said that is 
right. The people of this country who want to get married should not 
have to pay $1,000 in taxes just because they got married. We are going 
to end it today because we are sending a signal that is joined by the 
House that this is our first priority.
  So a high school football coach and a schoolteacher can get married 
and not move into a bracket that is almost double just because they got 
married. It hits our middle-income taxpayers the most. They are the 
ones who are trying to save for a new house or a new car or to do 
something special for their new baby. We are going to send a signal out 
of the Senate, along with the House, to the President, saying: Mr. 
President, we are going to have $1 trillion in income tax surplus. Are 
you serious in saying you would veto this bill that gives marriage tax 
penalty relief to our country, that gives pension relief to the women 
who go in and out of the workforce who are unable to have the same 
pension capabilities as those who never leave the workforce?
  Is the President serious about vetoing a bill that provides for 
Social Security, that provides for Medicare and education, and, yes, 
the marriage tax penalty relief?
  Mr. President, we are making a statement with this amendment. I am 
proud the Senate is going to take up and I believe overwhelmingly pass 
a

[[Page S9889]]

priority of eliminating the marriage tax penalty in this country once 
and for all. I urge my colleagues to give a unanimous vote for the 
married people who have been living with a penalty that is not 
warranted.
  I yield the floor.
  Mr. ROTH. Mr. President, we yield back the remainder of the time.


                       Vote on Amendment No. 1462

  The PRESIDING OFFICER. Under the previous order, the question is now 
on the motion to waive the Budget Act on the Bingaman amendment.
  The yeas and nays have been ordered.
  The clerk will call the roll.
  The legislative assistant called the roll.
  The PRESIDING OFFICER (Mr. DeWine). Are there any other Senators in 
the Chamber desiring to vote?
  The yeas and nays resulted--yeas 48, nays 52, as follows:

                      [Rollcall Vote No. 232 Leg.]

                                YEAS--48

     Akaka
     Baucus
     Bayh
     Biden
     Bingaman
     Boxer
     Breaux
     Bryan
     Byrd
     Cleland
     Collins
     Conrad
     Daschle
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Moynihan
     Murray
     Reed
     Reid
     Robb
     Rockefeller
     Sarbanes
     Schumer
     Snowe
     Specter
     Torricelli
     Wellstone
     Wyden

                                NAYS--52

     Abraham
     Allard
     Ashcroft
     Bennett
     Bond
     Brownback
     Bunning
     Burns
     Campbell
     Chafee
     Cochran
     Coverdell
     Craig
     Crapo
     DeWine
     Domenici
     Enzi
     Fitzgerald
     Frist
     Gorton
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Roberts
     Roth
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Stevens
     Thomas
     Thompson
     Thurmond
     Voinovich
     Warner
  The PRESIDING OFFICER. On this vote the yeas are 48, the nays are 52. 
Three-fifths of the Senators duly chosen and sworn not having voted in 
the affirmative, the motion is rejected. The point of order is 
sustained and the amendment falls.
  Mr. LOTT. I move to reconsider the vote.
  Mr. LEAHY. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. LOTT addressed the Chair.
  The PRESIDING OFFICER. The majority leader.
  Mr. LOTT. Mr. President, I would object to any unanimous consent 
regarding comments on my outfit this morning.
  I ask unanimous consent that the remaining votes in the series be 
limited to 10 minutes in length.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. LOTT. I urge my colleagues, please stay in the Chamber. We still 
do have a number of amendments we will need to go through. Senator 
Daschle and I have agreed that we want to limit those to 10 minutes 
each, with 2 minutes between the 10 minutes for 1 minute of explanation 
on each side. If we do that, I believe we can still finish this bill at 
a reasonable hour.
  Mr. ROTH addressed the Chair.
  The PRESIDING OFFICER. The Senator from Delaware.


                         Privilege Of The Floor

  Mr. ROTH. Mr. President, I ask unanimous consent that Brig Pari and 
Ed McClellan of the Finance Committee staff be granted floor privileges 
for the duration of the consideration of this bill.
  The PRESIDING OFFICER. Without objection, it is so ordered.


            Vote On Amendment No. 1472, As Further Modified

  The PRESIDING OFFICER. The question is now on the amendment of the 
Senator from Texas. Does the Senator request the yeas and nays?
  Mrs. HUTCHISON. Yes.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  Mrs. HUTCHISON. I ask unanimous consent that Senator Domenici be 
added as an original cosponsor of the amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The question is on agreeing to amendment No. 1472, as further 
modified. The yeas and nays have been ordered. The clerk will call the 
roll.
  The legislative clerk called the roll.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 98, nays 2, as follows:

                      [Rollcall Vote No. 233 Leg.]

                                YEAS--98

     Abraham
     Akaka
     Allard
     Ashcroft
     Baucus
     Bayh
     Bennett
     Biden
     Bingaman
     Bond
     Boxer
     Breaux
     Brownback
     Bryan
     Bunning
     Burns
     Byrd
     Campbell
     Chafee
     Cleland
     Cochran
     Collins
     Conrad
     Coverdell
     Craig
     Crapo
     Daschle
     DeWine
     Dodd
     Domenici
     Dorgan
     Durbin
     Edwards
     Enzi
     Feingold
     Feinstein
     Fitzgerald
     Frist
     Gorton
     Graham
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Harkin
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Kyl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Mikulski
     Moynihan
     Murkowski
     Murray
     Nickles
     Reed
     Reid
     Robb
     Roberts
     Rockefeller
     Roth
     Santorum
     Sarbanes
     Schumer
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Torricelli
     Warner
     Wellstone
     Wyden

                                NAYS--2

     Hollings
     Voinovich
       
  The amendment (No. 1472), as further modified, was agreed to.
  Mrs. HUTCHISON. Mr. President, I move to reconsider the vote.
  Mr. BROWNBACK. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Ms. LANDRIEU addressed the Chair.
  The PRESIDING OFFICER. The Senator from Louisiana is recognized.


                         Privilege Of The Floor

  Ms. LANDRIEU. Mr. President, I ask unanimous consent that two 
staffers, Kathleen Strottman and Ben Cannon, have floor privileges.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DURBIN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Illinois is recognized.


                         Privilege Of The Floor

  Mr. DURBIN. Mr. President, I ask unanimous consent that a member of 
my staff, Chris Stanek, have access to the floor.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Motion To Recommit

  Mr. KERRY. Mr. President, I have a motion at the desk and ask that it 
be called up.
  The PRESIDING OFFICER. The clerk will read the motion.
  The legislative clerk read as follows:

       The Senator from Massachusetts [Mr. Kerry] moves to 
     recommit S. 1429, the Taxpayer Refund Act of 1999, to the 
     Committee on Finance, with instructions to report back to the 
     Senate within 3 days, with an amendment to reserve $20 
     billion over ten years for relief from the unintended 
     consequences of the Balanced Budget Act on teaching 
     hospitals, skilled nursing facilities, home health care 
     providers, rural and other community hospitals, and other 
     health care providers, by reducing or deferring certain new 
     tax breaks in the bill.

  Mr. KERRY. Mr. President, I understand I have 1 minute.
  The PRESIDING OFFICER. That is correct.
  Mr. KERRY. Mr. President, let me share with my colleagues what this 
is. Under the Balanced Budget Act, we set out to save some $103 billion 
in Medicare expenditures with respect to hospitals, home care, et 
cetera. The problem is the unintended consequences of the way that has 
happened, coupled with the managed care process, in fact, about $205 
billion in Medicare payments has been reduced. The result is that, in 
hospitals, home care facilities, and nursing homes all across the 
country, all of our States are significantly affected in the quality of 
care that is being delivered.
  Special care units in hospitals are closing. Home care facilities are 
refusing patients. There has been a significant reduction in the 
quality of care across the country. Our teaching hospitals are 
threatened. What we are saying is that we need to reserve some $20 
billion in order to be able to adequately make up for the unintended

[[Page S9890]]

consequences of the Balanced Budget Act.
  Mr. ROTH. Mr. President, although the Kerry amendment is well-
intended, it is not germane to this reconciliation bill. The Finance 
Committee is paying close attention to the concerns of health care 
providers and beneficiaries. Over ten Medicare hearings have been held 
this year, three focusing specifically on BBA 1997 policies.
  The Finance Committee is also developing a Medicare package that will 
address the many concerns in the Balanced Budget Act. The tax package 
in no way interferes with this process.
  Finally, I might add that even the President's Medicare proposal sets 
aside a maximum of only $7.5 billion over 10 years to address BBA 
fixes, $12.5 billion less than this amendment.
  The amendment is not germane to this reconciliation legislation, and 
I raise a point of order under section 305 (b)(2) of the Budget Act.
  Mr. KERRY. Mr. President, pursuant to section 904 of the Budget Act, 
I move to waive that section in that act for consideration of this 
motion.
  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.
  Mr. KENNEDY. The Balanced Budget Act of 1997 helped bring us to this 
era of budget surpluses and economic prosperity. But too much of the 
actual savings used to balance the budget have come from Medicare.
  At the time the BBA was enacted, those savings were expected to total 
$116 billion over five years. Now, they are estimated by CBO to be 
nearly twice as great--nearly $200 billion over five years. Such deep 
cuts in Medicare are clearly unfair and unacceptable.
  Not surprisingly, all of us are now hearing from bedrock health care 
institutions across the country that are being devastated by these 
excessive cuts. Teaching hospitals--community hositals--community 
health centers and many others. We are hearing from those who care for 
the elderly and disabled when they leave the hospital--nursing homes--
home health agencies--rehabilitation facilities. We are hearing from 
virtually every one who cares for the 40 million senior citizens and 
disabled citizens on Medicare. They are telling us in no uncertain 
terms that Congress went too far.
  This motion is the first step toward reducing the steepest cuts. It 
would provide $20 billion over the next ten years to slow or eliminate 
the harshest impact of the Balanced Budget Act. It would ensure that 
the nation's hospitals and other health care facilities will be able to 
care for senior citizens and the disabled in the years ahead.
  With the retirement of the baby boom generation, the last thing we 
should be doing is jeopardizing the viability of the many health care 
facilities that depend on Medicare for their survival. These 
institutions are being hard hit in cities and towns across the nation.
  Often, the hospitals and other institutions that care for Medicare 
patients also care for other patients as well. Health care in the 
entire community is being threatened.
  Teaching hospitals are on the receiving end of a triple-whammy. The 
slash in Medicare reductions is leading to less patient care, less 
doctor training, and less medical research at the nation's top 
hospitals. In my own state of Massachusetts, for the first time in 
history, some of the finest and most renowned teaching hospitals in the 
country are now operating at a deficit. This situation is 
unsustainable--and it is happening all over our country. We will all 
suffer if these great institutions are forced out of business or into 
the arms of for-profit corporations.
  Community hospitals are suffering, too. Throughout my State of 
Massachusetts, we are seeing red ink and cutbacks in essential 
services. This, too, is happening all over the country.
  In Massachusetts alone, house health agencies are losing $160 million 
a year. Twenty agencies have closed their doors since the Balanced 
Budget Act went into effect. Many others are seeing fewer patients, and 
seeing their remaining patients less often. The home-bound elderly are 
especially vulnerable, and are suffering even more. In just the last 
two weeks, two Massachusetts nursing homes have declared bankruptcy.
  This proposal is an important step to restore the viability of these 
indispensable institutions in our health care system, and I urge the 
Senate to approve it. We must undo the damage before it is too late. 
The last thing we need to see on the doors of the nation's teaching 
hospitals, community hospitals, home health agencies, and nursing 
homes, is a sign that says, ``Closed because of the ill-considered 
activities of the United States Congress.''
  The PRESIDING OFFICER. The question is on agreeing to the motion. The 
yeas and nays have been ordered. The clerk will call the roll.
  The assistant legislative clerk called the roll.
  The yeas and nays resulted--yeas 50, nays 50, as follows:

                      [Rollcall Vote No. 234 Leg.]

                                YEAS--50

     Abraham
     Akaka
     Baucus
     Bayh
     Biden
     Bingaman
     Boxer
     Breaux
     Bryan
     Byrd
     Chafee
     Cleland
     Collins
     Conrad
     Daschle
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Frist
     Harkin
     Hollings
     Hutchison
     Inouye
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Moynihan
     Murray
     Reed
     Reid
     Robb
     Rockefeller
     Sarbanes
     Schumer
     Snowe
     Specter
     Torricelli
     Wellstone
     Wyden

                                NAYS--50

     Allard
     Ashcroft
     Bennett
     Bond
     Brownback
     Bunning
     Burns
     Campbell
     Cochran
     Coverdell
     Craig
     Crapo
     DeWine
     Domenici
     Enzi
     Fitzgerald
     Gorton
     Graham
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Inhofe
     Jeffords
     Kerrey
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Roberts
     Roth
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Stevens
     Thomas
     Thompson
     Thurmond
     Voinovich
     Warner
  The PRESIDING OFFICER. On this vote the yeas are 50, the nays are 50. 
Three-fifths of the Senators duly chosen and sworn not having voted in 
the affirmative, the motion is rejected. The point of order is 
sustained and the motion falls.
  Without objection, the motion to table is agreed to.
  The Senator from Tennessee.


                             change of vote

  Mrs. HUTCHISON. Mr. President, on rollcall vote No. 234, I voted 
``no.'' It was my intention to vote ``aye.'' Therefore, I ask unanimous 
consent that I may be permitted to change my vote. It will in no way 
change the outcome of the vote.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The foregoing tally has been changed to reflect the above order.)


                           Amendment No. 1467

  Mr. FRIST. Mr. President, I call up amendment No. 1467.
  The PRESIDING OFFICER. The clerk will report.
  The bill clerk read as follows:

       The Senator from Tennessee (Mr. Frist) proposes an 
     amendment numbered 1467.

  Mr. FRIST. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The amendment is printed in a previous edition of the Record.)
  Mr. FRIST. Mr. President, this amendment is a sense-of-the-Senate 
amendment that goes right at the heart of what we should be doing about 
Medicare. It says Congress should be acting to modernize Medicare, to 
ensure its solvency, and to include prescription drugs.
  The congressional budget plan has $505 billion over the next 10 years 
in unallocated budget surpluses that could be used for long-term 
Medicare reform. In addition, the congressional budget resolution for 
the year 2000 has specifically set aside $90 billion for this purpose.
  Thus, my sense-of-the-Senate amendment says that the unallocated on-
budget surpluses provide adequate resources and that: No. 1, the 
congressional budget resolution provides a sound framework for the 
modernization of Medicare; No. 2, improving the solvency of Medicare; 
and No. 3, improving coverage of prescription drugs.
  Congress should act to accomplish these goals for the Medicare 
program.

[[Page S9891]]

  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, with great respect, I must inform this 
body that this amendment is pure fiction. It is pure fiction because 
the House and the Senate this year have been using Congressional Budget 
Office baseline numbers to predict what the surplus is or is not and 
what is left for spending. Under that formula, there is virtually no 
money in this tax bill left for discretionary spending.
  A few days ago, a new chart suddenly popped up. The new chart comes 
up with this money. How does it come up with this money? It basically 
assumes that the Congress, over the next 10 years, is going to not only 
cut discretionary spending under the caps as planned but then not raise 
discretionary spending above inflation over the next 8 years.
  I say that is a fiction--it is just not going to happen, so the money 
is not there--developed by this recent new chart.
  If it is an accurate assumption that there is no spending, then it 
cuts discretionary spending by 50 percent, one or the other. It is a 
fiction.
  The PRESIDING OFFICER. The question is on amendment No. 1467.
  Mr. BAUCUS. Mr. President, I raise a point of order that the pending 
amendment violates 313(b)(1)(A) of the Congressional Budget Act of 
1974.
  Mr. FRIST. Pursuant to section 904 of the Budget Act, I move to waive 
the Budget Act for the consideration of my amendment No. 1467, and 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 clerk will call the roll.
  The legislative clerk called the roll.
  The yeas and nays resulted--yeas 54, nays 46, as follows:

                      [Rollcall Vote No. 235 Leg.]

                                YEAS--54

     Abraham
     Allard
     Ashcroft
     Bennett
     Bond
     Brownback
     Bunning
     Burns
     Campbell
     Chafee
     Cochran
     Collins
     Coverdell
     Craig
     Crapo
     DeWine
     Domenici
     Enzi
     Fitzgerald
     Frist
     Gorton
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Roberts
     Roth
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Warner

                                NAYS--46

     Akaka
     Baucus
     Bayh
     Biden
     Bingaman
     Boxer
     Breaux
     Bryan
     Byrd
     Cleland
     Conrad
     Daschle
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Moynihan
     Murray
     Reed
     Reid
     Robb
     Rockefeller
     Sarbanes
     Schumer
     Torricelli
     Voinovich
     Wellstone
     Wyden
  The PRESIDING OFFICER (Mr. Gorton). On this vote the yeas are 54, the 
nays are 46. Three-fifths of the Senators duly chosen and sworn not 
having voted in the affirmative, the motion is rejected. The point of 
order is sustained and the amendment falls.
  Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
  Mr. STEVENS. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                        Frist Medicare Amendment

  Mr. BYRD. Mr. President, today I voted against the Medicare Sense of 
the Senate amendment numbered 1467, offered by Senator Frist. For the 
benefit of my constituents in West Virginia, I offer a brief 
explanation for why I voted the way I did.
  I opposed Senator Frist's amendment because, in my judgment, it is 
based on a fiction. As we all know, the Congressional Budget Office 
(CBO) has projected a $996 billion non-Social Security surplus over the 
next ten years. The Frist amendment said that, even allowing for the 
$792 billion tax cut, there was still enough money left over to provide 
for the long-term solvency of the Medicare system. One need not be an 
economist, or even an expert in budget policy, to understand why that 
was just plain wrong.
  The Republican tax cut plan will cost $971 billion over the next ten 
years--$792 billion for the actual tax cut, plus $179 billion in 
additional interest payments on the debt. That leaves $25 billion of 
the non-Social Security surplus. From that amount, the Republicans have 
said we can provide for emergency expenditures for natural disasters 
and international conflicts, which averages $80 billion over ten years; 
fund current operations of government; and reserve enough money for 
Medicare. And, as I say, they would do all that without using the 
Social Security surplus. As anyone can plainly see, that is just not 
possible. In all good conscience, I could not vote for the Frist 
amendment.
  The PRESIDING OFFICER. The Senator from New Jersey.


                           Motion To Recommit

  Mr. LAUTENBERG. Mr. President, I call up a motion we have at the desk 
and ask for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from New Jersey [Mr. Lautenberg] moves to 
     recommit the bill to the Committee on Finance, with 
     instructions to report back to the Senate within 3 days, 
     with an amendment to correct the fact that the bill uses 
     Social Security surpluses for tax breaks by causing on-
     budget deficits, taking into account both revenue losses 
     and additional interest costs caused by the higher levels 
     of debt that would result from the bill's enactment.

  The PRESIDING OFFICER. The Senator from New Jersey.
  Mr. LAUTENBERG. Mr. President, the motion is very simple. It directs 
the Finance Committee to correct the bill so that it does not raid 
Social Security surpluses in any year to pay for tax cuts. In its 
current form, this bill would use Social Security surpluses in each of 
the second 5 years after enactment.
  Altogether, $75 billion of Social Security money will be used to pay 
for the broad-based tax rebates that are largely for special interests 
and for the very wealthy. That is the intent, and it is inconsistent 
with the Social Security lockbox that the Republicans claim to support.
  If my colleagues are serious about stopping Congress from raiding 
these surpluses, they will support my motion. The Finance Committee can 
correct the problem very quickly, and then we can proceed to consider 
the bill within only a few days.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. LAUTENBERG. I urge my colleagues to support the motion.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. DOMENICI. Mr. President, I ask unanimous consent that a table 
prepared by the Congressional Budget Office be printed in the Record.
  There being no objection, the table was ordered to be printed in the 
Record, as follows:

                                                       TABLE 3.--CBO ESTIMATE OF THE CONGRESSIONAL BUDGET RESOLUTION FOR FISCAL YEAR 2000
                                                                            [By fiscal year, in billions of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                1999       2000       2001       2002       2003       2004       2005       2006       2007       2008       2009     2000-2009
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
              BASELINE SURPLUS OR DEFICIT (-)
On-budget..................................................         -4         14         38         82         75         85         92        129        146        157        178         996
Off-budget.................................................        125        147        155        164        172        181        195        205        217        228        235       1,901
                                                            ------------------------------------------------------------------------------------------------------------------------------------
  Total....................................................        120        161        193        246        247        266        286        334        364        385        413       2,986
                                                            ====================================================================================================================================
        EFFECTS OF THE BUDGET RESOLUTION'S POLICIES
 
Revenues...................................................          0          0         -8        -54        -32        -49        -63       -109       -136       -151       -177        -778
                                                            ====================================================================================================================================
Outlays:
  Discretionry \1\.........................................          0          0          0          0         10          6         -6        -24        -42        -55        -70        -180

[[Page S9892]]

 
  Mandatory................................................          0      (\2\)          1          1          1          1          1      (\2\)      (\2\)         -1         -1           4
  *COM008**COM008*.........................................          0      (\2\)      (\2\)          2          4          7         10         15         20         26         32         117
                                                            ------------------------------------------------------------------------------------------------------------------------------------
    Subtotal \3\...........................................          0      (\2\)          1          3         16         14          5         -9        -22        -29        -38         -59
    Total \4\..............................................          0      (\2\)         -9        -57        -48        -63        -68       -100       -114       -121       -139        -719
                                                            ====================================================================================================================================
    SURPLUS OR DEFICIT (-) UNDER THE BUDGET RESOLUTION'S
                POLICIES AS ESTIMATED BY CBO
 
On-budget..................................................         -4         14         29         26         27         21         24         29         32         36         39         277
Off-budget.................................................        125        147        155        164        172        181        195        205        217        228        234       1,901
                                                            ------------------------------------------------------------------------------------------------------------------------------------
  Total....................................................        120        161        184        190        199        203        219        234        250        263        275       2,178
Memorandum:
  Debt Held by the Public:
    Baseline...............................................      3,168      3,473      3,297      3,066      2,835      2,584      2,312      1,992      1,640      1,267        865          NA
    Budget resolution as estimated by CBO..................      3,618      3,473      3,305      3,132      2,949      2,761      2,557      2,336      2,099      1,847      1,584         NA
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ The effect of the 1999 supplemental appropriations bill (P.L. 106-31), which was enacted after the resolution was passed, has been added to the resolution totals. Also, the projections
  include spending from contingent emergencies.
\2\ Less than $500 million.
\3\ Effect on outlays.
\4\ Effect on the surplus.
 
 Note: NA = not applicable.
 
Source: Congressional Budget Office.

  Mr. DOMENICI. Mr. President, this table clearly shows there is no 
Social Security money in this tax cut.
  Secondly, maybe the Senator is confused. CBO says the President still 
does not lock up all the Social Security money. It is $30 billion 
short.
  Last, I suggest if they are really concerned about the Social 
Security trust fund size, why are they filibustering against a lockbox 
that would encapsulate it and make sure it is there?
  In summary, the Senator from New Jersey is using the wrong chart. It 
does not apply to the real situation. We are using no Social Security 
money in terms of our tax cut.
  I move to table the Lautenberg motion to recommit and 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. The question is on agreeing to the motion to 
table the motion to recommit. The yeas and nays have been ordered. The 
clerk will call the roll.
  The assistant legislative clerk called the roll.
  The result was announced--yeas 55, nays 45, as follows:

                      [Rollcall Vote No. 236 Leg.]

                                YEAS--55

     Abraham
     Allard
     Ashcroft
     Bennett
     Bond
     Brownback
     Bunning
     Burns
     Campbell
     Chafee
     Cochran
     Collins
     Coverdell
     Craig
     Crapo
     DeWine
     Domenici
     Enzi
     Fitzgerald
     Frist
     Gorton
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Roberts
     Roth
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Voinovich
     Warner

                                NAYS--45

     Akaka
     Baucus
     Bayh
     Biden
     Bingaman
     Boxer
     Breaux
     Bryan
     Byrd
     Cleland
     Conrad
     Daschle
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Moynihan
     Murray
     Reed
     Reid
     Robb
     Rockefeller
     Sarbanes
     Schumer
     Torricelli
     Wellstone
     Wyden
  The motion was agreed to.
  Mr. LAUTENBERG. I move to reconsider the vote.
  Mr. DOMENICI. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. KYL addressed the Chair.
  The PRESIDING OFFICER. The Senator from Arizona.


                    Amendment No. 1469, As Modified

 (Purpose: To repeal the Federal estate and gift taxes and the tax on 
generation-skipping transfers, to repeal a step up basis at death, and 
                          for other purposes)

  Mr. KYL. I call up amendment No. 1469, and ask unanimous consent that 
it be modified.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Arizona [Mr. Kyl] proposes an amendment 
     numbered 1469, as modified.

  Mr. KYL. I ask unanimous consent that reading of the amendment be 
dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment, as modified, is as follows:
       Beginning on page 226, line 1, strike through page 237, 
     line 5, and insert:

            TITLE VII--ESTATE AND GIFT TAX RELIEF PROVISIONS

  Subtitle A--Repeal of Estate, Gift, and Generation-Skipping Taxes; 
                  Repeal of Step Up in Basis At Death

     SEC. 701. REPEAL OF ESTATE, GIFT, AND GENERATION-SKIPPING 
                   TAXES.

       (a) In General.--Subtitle B is hereby repealed.
       (b) Effective Date.--The repeal made by subsection (a) 
     shall apply to the estates of decedents dying, and gifts and 
     generation-skipping transfers made, after December 31, 2007.

     SEC. 702. TERMINATION OF STEP UP IN BASIS AT DEATH.

       (a) Termination of Application of Section 1014.--Section 
     1014 (relating to basis of property acquired from a decedent) 
     is amended by adding at the end the following:
       ``(f) Termination.--In the case of a decedent dying after 
     December 31, 2007, this section shall not apply to property 
     for which basis is provided by section 1022.''
       (b) Conforming Amendment.--Subsection (a) of section 1016 
     (relating to adjustments to basis) is amended by striking 
     ``and'' at the end of paragraph (26), by striking the period 
     at the end of paragraph (27) and inserting ``; and'', and by 
     adding at the end the following:
       ``(28) to the extent provided in section 1022 (relating to 
     basis for certain property acquired from a decedent dying 
     after December 31, 2007).''

     SEC. 703. CARRYOVER BASIS AT DEATH.

       (a) General Rule.--Part II of subchapter O of chapter 1 
     (relating to basis rules of general application) is amended 
     by inserting after section 1021 the following:

     ``SEC. 1022. CARRYOVER BASIS FOR CERTAIN PROPERTY ACQUIRED 
                   FROM A DECEDENT DYING AFTER DECEMBER 31, 2007.

       ``(a) Carryover Basis.--Except as otherwise provided in 
     this section, the basis of carryover basis property in the 
     hands of a person acquiring such property from a decedent 
     shall be determined under section 1015.
       ``(b) Carryover Basis Property Defined.--
       ``(1) In general.--For purposes of this section, the term 
     `carryover basis property' means any property--
       ``(A) which is acquired from or passed from a decedent who 
     died after December 31, 2007, and
       ``(B) which is not excluded pursuant to paragraph (2).

     The property taken into account under subparagraph (A) shall 
     be determined under section 1014(b) without regard to 
     subparagraph (A) of the last sentence of paragraph (9) 
     thereof.
       ``(2) Certain property not carryover basis property.--The 
     term `carryover basis property' does not include--
       ``(A) any item of gross income in respect of a decedent 
     described in section 691,
       ``(B) property which was acquired from the decedent by the 
     surviving spouse of the decedent, the value of which would 
     have been deductible from the value of the taxable estate of 
     the decedent under section 2056, as in effect on the day 
     before the date of enactment of the Taxpayer Refund Act of 
     1999, and
       ``(C) any includible property of the decedent if the 
     aggregate adjusted fair market

[[Page S9893]]

     value of such property does not exceed $2,000,000.

     For purposes of this paragraph and paragraph (3), the term 
     `adjusted fair market value' means, with respect to any 
     property, fair market value reduced by any indebtedness 
     secured by such property.
       ``(3) Phasein of carryover basis if includible property 
     exceeds $1,300,000.--
       ``(A) In general.--If the adjusted fair market value of the 
     includible property of the decedent exceeds $1,300,000, but 
     does not exceed $2,000,000, the amount of the increase in the 
     basis of such property which would (but for this paragraph) 
     result under section 1014 shall be reduced by the amount 
     which bears the same ratio to such increase as such excess 
     bears to $700,000.
       ``(B) Allocation of reduction.--The reduction under 
     subparagraph (A) shall be allocated among only the includible 
     property having net appreciation and shall be allocated in 
     proportion to the respective amounts of such net 
     appreciation. For purposes of the preceding sentence, the 
     term `net appreciation' means the excess of the adjusted fair 
     market value over the decedent's adjusted basis immediately 
     before such decedent's death.
       ``(4) Includible property.--
       ``(A) In general.--For purposes of this subsection, the 
     term `includible property' means property which would be 
     included in the gross estate of the decedent under any of the 
     following provisions as in effect on the day before the date 
     of the enactment of the Taxpayer Refund Act of 1999:
       ``(i) Section 2033.
       ``(ii) Section 2038.
       ``(iii) Section 2040.
       ``(iv) Section 2041.
       ``(v) Section 2042(a)(1).
       ``(B) Exclusion of property acquired by spouse.--Such term 
     shall not include property described in paragraph (2)(B).
       ``(c) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this section.''
       (b) Miscellaneous Amendments Related To Carryover Basis.--
       (1) Capital gain treatment for inherited art work or 
     similar property.--
       (A) In general.--Subparagraph (C) of section 1221(3) 
     (defining capital asset) is amended by inserting ``(other 
     than by reason of section 1022)'' after ``is determined''.
       (B) Coordination with section 170.--Paragraph (1) of 
     section 170(e) (relating to certain contributions of ordinary 
     income and capital gain property) is amended by adding at the 
     end the following: ``For purposes of this paragraph, the 
     determination of whether property is a capital asset shall be 
     made without regard to the exception contained in section 
     1221(3)(C) for basis determined under section 1022.''
       (2) Definition of Executor.--Section 7701(a) (relating to 
     definitions) is amended by adding at the end the following:
       ``(47) Executor.--The term `executor' means the executor or 
     administrator of the decedent, or, if there is no executor or 
     administrator appointed, qualified, and acting within the 
     United States, then any person in actual or constructive 
     possession of any property of the decedent.''
       (3) Clerical amendment.--The table of sections for part II 
     of subchapter O of chapter 1 is amended by adding at the end 
     the following new item:

``Sec. 1022. Carryover basis for certain property acquired from a 
              decedent dying after December 31, 2007.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying after December 31, 
     2007.

    Subtitle B--Reductions of Estate, Gift, and Generation-Skipping 
                             Transfer Taxes

     SEC. 711. REDUCTIONS OF ESTATE, GIFT, AND GENERATION-SKIPPING 
                   TRANSFER TAXES.

       (a) Maximum Rate of Tax Reduced to 50 Percent.--The table 
     contained in section 2001(c)(1) is amended by striking the 2 
     highest brackets and inserting the following:

$1,025,800, plus 53% of the excess over $2,500,000.''..................

       (b) Repeal of Phaseout of Graduated Rates.--Subsection (c) 
     of section 2001 is amended by striking paragraph (2).
       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying, and gifts made, 
     after December 31, 2003.

     Subtitle C--Simplification of Generation-Skipping Transfer Tax

  Mr. KYL. Mr. President, I begin today by thanking Senator Roth, the 
chairman of the Senate Finance Committee, for recognizing that there is 
a place for estate-tax relief in this bill. The measure reported by the 
Finance Committee includes a variety of changes: a one-time reduction 
in the top death-tax rate, converting the unified credit to a true 
exemption, and raising the annual gift exclusion. These are all steps 
in the right direction. The problem is, at the end of the day, the Roth 
bill leaves the death tax in place.
  By contrast, the bill that the House of Representatives passed last 
week phases out the death tax over a 10-year period, and then 
implements a version of the bill I introduced back in May with Senator 
Bob Kerrey and a bipartisan group of 19 other Senators.
  The amendment I am offering today is based upon that bipartisan 
initiative. I would replace the death tax with a tax on the appreciated 
value of inherited assets to be paid when the assets are sold. In other 
words, the tax would be imposed when income is actually realized from 
inherited property. Death would no longer be a taxable event.
  This amendment represents an effort to find bipartisan consensus 
about how to deal with the death tax, and I hope all Senators will 
consider it with an open mind. It is an approach that Senators Moynihan 
and Kerrey actually suggested to me during a hearing before the Finance 
Committee two years ago. Bill Beach of the Heritage Foundation 
discussed its merits at the same hearing. The more I looked into the 
idea since then, the more sense I thought it made. The essence of it is 
very simple: It takes death out of the equation. Whether an asset is 
sold by the decedent during his or her lifetime, or by someone who 
later inherits the property, the gain is taxed the same. Under this 
approach, death neither confers a benefit, nor results in a punitive, 
confiscatory tax. This is an approach that I believe both Republicans 
and Democrats should be able to accept.
  We know that many Americans are troubled by the estate tax's 
complexity and high rates, and by the mere fact that it is triggered by 
a person's death rather than the realization of income. For a long 
time, I have advocated its repeal, because I believe death should not 
be a taxable event.
  Others agree that the tax is problematic, but are concerned the 
appreciated value of certain assets might escape taxation forever if 
the death tax is repealed while the step-up in basis allowed by the 
Internal Revenue Code remains in effect. That is a legitimate concern.
  We try to reconcile these positions in this amendment by eliminating 
both the death tax and the step-up in basis, and attributing a 
carryover basis to inherited property so that all gains are taxed at 
the time the property is sold and income is realized.
  The concept of a carryover basis is not new. It exists in current law 
with respect to gifts, property transferred in cases of divorce, and in 
connection with involuntary conversions of property relating to theft, 
destruction, seizure, requisition, or condemnation.
  In the latter case, when an owner receives compensation for 
involuntarily converted property, a taxable gain normally results to 
the extent that the value of the compensation exceeds the basis of the 
converted property. However, section 1033 of the Internal Revenue Code 
allows the taxpayer to defer the recognition of the gain until the 
property is sold. This amendment would treat the transfer of property 
at death--perhaps the most involuntary conversion of all--the same way, 
deferring recognition of any gain until the inherited property is sold.
  Small estates, which currently pay no estate tax by virtue of the 
unified credit, and no capital-gains tax by virtue of the step up, 
would be unaffected by the basis changes being proposed here. The 
estate tax would be eliminated for them, and they would still get the 
benefit of the current law's step-up. The basis changes would apply 
only to estates valued at over $2 million.
  There are four problems I see with the underlying bill's death-tax 
provisions. First, the bill tries to make palatable what is 
fundamentally indefensible. Taxing death is wrong.
  Second, because it leaves the death tax in place, the need for 
expensive estate-tax planning also remains. Some people will have to 
divert money they would have spent on new equipment or new hires to 
insurance policies designed to cover death-tax costs. Still others will 
spend millions on lawyers, accountants, and other advisors for death-
tax planning purposes. But that leaves fewer resources to invest, start 
up new businesses, hire additional people, or pay better wages.
  Third, the higher exemption proposed in the committee bill provides 
some relief, but I believe it also serves as an artificial cap on small 
businesses' growth. To avoid the death tax, an entrepreneur merely 
needs to limit the growth of his or her business so it does not exceed 
the $1.5 million exemption amount. That means fewer jobs, and less 
output.

[[Page S9894]]

  I believe it would be better to eliminate the tax and, if there is a 
need to impose a tax, impose it when income is actually realized--that 
is, when the assets are sold. That is what this amendment would do.
  I want to stress to colleagues, particularly colleagues on the 
Democratic side of the aisle, that we do not allow appreciation in 
inherited assets to go untaxed, as other death-tax repeal proposals 
would do. We are merely saying that if a tax is imposed, it should be 
imposed when income is realized. Earnings from an asset should be taxed 
the same whether the asset is earned or inherited.
  The question has been posed at various times during debate on this 
bill whether the American people want tax relief. Let me answer that 
question with respect to the issue at hand. Although most Americans 
will probably never pay a death tax, most people still sense that there 
is something terribly wrong with a system that allows Washington to 
seize more than half of whatever is left after someone dies--a system 
that prevents hard-working Americans from passing the bulk of their 
nest eggs to their children or grandchildren.
  Seventy-seven percent of the people responding to a survey by the 
Polling Company last year indicated that they favor repeal of the death 
tax. When Californians had the chance to weigh in with a ballot 
proposition, they voted two-to-one to repeal their state's death tax. 
The legislatures of five other states have enacted legislation since 
1997 that will either eliminate or significantly reduce the burden of 
their states' death taxes.
  The 1995 White House Conference on Small Business identified the 
death tax as one of small business's top concerns, and delegates to the 
conference voted overwhelming to endorse its repeal. Outright repeal 
received the fourth highest number of votes among all resolutions 
approved at the conference.
  A couple of other points to consider about the death tax. it is one 
of the most inefficient taxes that the government levies. Alicia 
Munnell, who was a member of President Clinton's Council of Economic 
Advisors, estimated that the costs of complying with death-tax laws are 
of roughly the same magnitude as the revenue raised. In 1998, that was 
about $23 billion. In other words, for every dollar of tax revenue 
raised by the death tax, another dollar is squandered in the economy 
simply to comply with or avoid the tax.
  The tax hurts the economy. A report issued by the Joint Economic 
Committee in December of 1998 concluded that the existence of the death 
tax this century has reduced the stock of capital in the economy by 
nearly half a trillion dollars. By repealing it and putting those 
resources to better use, the Joint Committee estimated that as many as 
240,000 jobs could be created over seven years and Americans would have 
an additional $24.4 billion in disposable personal income. So much for 
the contention that this is a tax that touches only a few.
  It appears that the chairman of the Finance Committee will raise a 
point of order against this amendment. I think that is regrettable. If 
there is a way to improve this amendment, I am willing to work with 
Chairman Roth on any ideas he might have. But if the point of order is 
intended to preserve the death tax as a permanent part of the Tax Code, 
we have a very significant difference of opinion, and I think he should 
allow the Senate to work its will, rather than use a parliamentary 
point of order to block it.
  This is a good amendment; the policy it proposes is sound, and fair. 
Its time has come. I urge my colleagues to support the amendment.
  As I say, this amendment would repeal the estate tax, the so-called 
death tax. According to the Joint Tax Committee, under scoring, it 
cannot occur until the eighth year or until 2007. But at that point it 
replaces the death tax with a tax on the sale of the assets, usually a 
capital gains tax, if and when the property is sold. In other words, it 
is a very fair compromise between those who believe there should be 
some tax on the sale of assets and those who believe that death itself 
should not be a taxable event.
  I am advised that a point of order will be made that this amendment 
is not germane. If that is done, I believe that to be very unfortunate. 
But because Senator Kerrey would prefer that we not proceed with a vote 
on the point of order, I will not contest the ruling of the Chair.
  I believe that repeal of the death tax enjoys more than majority 
support and am confident that in the conference committee, we will be 
able to accept the House version or something close to it which repeals 
the death tax along the lines of the Kyl-Kerrey approach.
  I urge my colleagues to support repeal of the death tax. If a point 
of order is made, I will not contest it.
  The PRESIDING OFFICER. Who seeks recognition?
  Mr. MOYNIHAN. Mr. President, the pending amendment is not germane. I 
therefore raise a point of order that the amendment violates section 
305(b)(2) of the Congressional Budget Act of 1974.
  The PRESIDING OFFICER. The point of order is well taken and the 
amendment falls. Who seeks recognition?
  Mr. HOLLINGS addressed the Chair.
  The PRESIDING OFFICER. The Senator from South Carolina.


                           Motion To Recommit

  Mr. HOLLINGS. Mr. President, on behalf of Senator Lieberman, Senator 
Levin, and myself, I move to recommit the bill to the Finance Committee 
with instructions that the committee report back within 3 days with an 
amendment that implements the Greenspan recommendations by deferring 
tax reductions and by taking any projected revenue surplus and actually 
reducing the national debt.
  Now, for days on end we have been talking about what Mr. Greenspan 
said here, what Mr. Greenspan said here. As our friend, the former 
Attorney General Mitchell said: Watch what we do, not what we say.
  He has been trying to stay the course; namely, just take, in a sense, 
any surpluses--don't argue about them, but if you can find them, then 
apply that to reducing the national debt. So often we say that all of 
us want to go to heaven but we don't want to do what is necessary to 
get there. All of us say we want to reduce or pay down the national 
debt, but we don't want to do what is necessary to get there. All you 
have to do in order to get there or reduce the debt is vote for this 
motion.
  I yield to Senator Lieberman.
  Mr. LIEBERMAN. Mr. President, in the interest of legislative 
efficiency, let alone fiscal responsibility, Senator Levin and I are 
withdrawing our motion to strike the entire tax cut and joining to 
raise the same issue with Senator Hollings on this amendment which says 
you can't have a tax cut if the surplus is not there, and there is no 
evidence the surplus is there.
  The PRESIDING OFFICER. The time of the Senator has expired. The 
Senator from Delaware.
  Mr. ROTH. Mr. President, I rise in opposition to this motion. In a 
very real way, this is the final vote on the legislation before us. Let 
me point out that both Democrats and Republicans have broadly agreed 
that there should be a tax cut. That tax cut should be now. The 
American people are entitled to relief. What we are really doing here 
is restoring the excess taxes already paid. For that reason, I shall 
make a motion to table.
  Let me reemphasize again, the Democrats have had a proposal of $300 
billion in a tax cut. There has been a $500 billion tax cut. We have 
followed the budget recommendations of $792 billion. To deny the 
working people of America the tax break they deserve today makes no 
sense at all.
  For that reason, I move to table the motion to recommit, and 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.
  Mr. LEVIN. Mr. President, I join in cosponsoring the Hollings motion 
to recommit the bill to the Finance Committee with instructions to 
defer tax reductions in order to reduce the national debt. I 
cosponsored the Hollings motion in lieu of calling up the Lieberman-
Levin amendment because the effect of the Hollings motion, had it been 
adopted, would have been largely the same as the Lieberman-Levin 
amendment.
  The tax program before the Senate is unfair to middle income 
Americans, it is economically unwise and it's based on unrealistic 
assumptions. The unfairness is perhaps best shown by the fact that 
about two-thirds of its tax benefits go to the upper one-fifth of our

[[Page S9895]]

people. In addition to being unfair, it is economically unwise in that 
jeopardizes Medicare, fails to strengthen Social Security, and risks 
higher interest rates.
  This bill takes us back to the bad old days of backloaded tax breaks 
whose real costs explode several years after enactment. This budgetary 
time bomb is set to go off at roughly the same time as the Medicare 
trust fund is expected to be bankrupt and the bill begins to come due 
for Social Security. In that decade, as the ``baby boomers'' begin to 
retire, the Social Security Trust fund will begin to run a deficit, 
requiring the redemption of Treasury bonds which it holds.
  It is also based on unrealistic projections. Projections are always 
risky. We have seen many federal budget estimates, and we know well 
that as quickly as these surpluses appear, they can disappear. In 1981, 
President Ronald Reagan introduced his Economic Recovery Tax Act which 
included huge tax cuts and predictions that the budget would be 
balanced by 1984. In 1981, I opposed the Reagan tax cut because I was 
convinced that it would lead to huge deficits. We have paid dearly for 
the debt which resulted from that legislation. In 1992, the deficit in 
the federal budget was $290 billion. The remarkable progress which has 
brought us now to the threshold of surpluses has come about in large 
part as a result of the deficit reduction package which President 
Clinton presented in 1993, and which this Senate passed by a margin of 
one vote, the Vice-President's. We should not now, by passing a tax 
bill like the one before us, head back down the road toward new future 
deficits.
  I joined with Senator Hollings in his motion to defer the tax cut, 
because it seems clear to me that we should first see if the surplus is 
real before we adopt tax cuts; second, if those surpluses are real, we 
should pay down the national debt faster; and third, we should save tax 
cuts for a time of economic slow down.
  During the consideration of this legislation and the national debate 
which has surrounded it, much has been made of the projected reduction 
of the national debt and concurrent reductions in interest payments. 
Although the debt held by the public, or the so-called external debt, 
is projected to be paid down by the surpluses accumulated in the Social 
Security Trust Funds, interest paid to the Social Security Trust funds 
in the form of bonds will continue to increase for more than a decade. 
At that time, in approximately 2014, unless Social Security reform has 
been accomplished, the Trust Funds will no longer be in surplus, but 
instead there will be a shortfall in those funds. As the bonds held by 
the Social Security Trust Funds are redeemed, we will therefore begin 
paying a portion of the interest owed to the Social Security Trust 
Funds, and eventually all of the interest owed to the Social Security 
Trust Funds, in cash. Also, we will then have to redeem the trillions 
of dollars of bonds representing principal owed to the trust funds.
  Mr. President, I ask unanimous consent that a table entitled 
``Interest Payments and Social Security'' based on data which has been 
provided to me by the Office of Management and Budget (OMB) be printed 
in the Record. (See Exhibit 1.)
  The table shows that through 2035, under current projections, that 
although the cash interest payments to the public on external debt go 
down over the course of the next 15 years or so to zero, the amount of 
interest that the Treasury will be required to pay to the Social 
Security Trust Funds in bonds and eventually in cash rises steadily 
during that period and beyond. After that, the amount of cash necessary 
to redeem bonds representing principal held by the Social Security 
Trusts Funds kicks in and then rises sharply. The projections show that 
in the year 2025, for example, the Treasury would be required to pay to 
Social Security $295 billion in interest payments and an additional $35 
billion in cash to redeem bonds representing principal held by the 
Social Security Trust Funds which will then be needed to pay benefits 
to recipients. Ten years later, in the year 2035, the projections show 
that, in the absence of Social security reform, the Treasury would be 
required to pay to Social Security $135 billion in interest payments 
and an additional $576 in cash for bonds representing principal 
redeemed. These obligations are one more powerful reason why a huge tax 
cut, at this time, before the surpluses have even actually materialized 
is, in my judgement, both unwise and imprudent.

                               Exhibit 1

                                                          INTEREST PAYMENTS AND SOCIAL SECURITY
                                                        [By fiscal year, in billions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             2000        2005        2010        2015        2020        2025        2030        2035
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cash Interest Paid to Trust Fund........................         0           0           0           0         139.7       295.4       253.3       135.9
Interest Paid on External Debt..........................       218.5       155.2        43.1         0           0           0           0           0
Bond Interest Paid to Trust Fund........................        58.2        98.5       158.8       225.0       139.2         0           0           0
Trust Fund Principal Redemptions in Cash................         0           0           0           0           0          35.3       279.7       576.7 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: OMB.

  The PRESIDING OFFICER. The question is on agreeing to the motion to 
table the motion to recommit. The yeas and nays have been ordered. The 
clerk will call the roll.
  The legislative clerk called the roll.
  The result was announced--yeas 65, nays 35, as follows:

                      [Rollcall Vote No. 237 Leg.]

                                YEAS--65

     Abraham
     Allard
     Ashcroft
     Bayh
     Bennett
     Bingaman
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Campbell
     Chafee
     Cochran
     Collins
     Coverdell
     Craig
     Crapo
     DeWine
     Domenici
     Enzi
     Fitzgerald
     Frist
     Gorton
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kennedy
     Kerrey
     Kerry
     Kohl
     Kyl
     Landrieu
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Roberts
     Roth
     Santorum
     Schumer
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Torricelli
     Warner
     Wyden

                                NAYS--35

     Akaka
     Baucus
     Biden
     Boxer
     Bryan
     Byrd
     Cleland
     Conrad
     Daschle
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham
     Harkin
     Hollings
     Inouye
     Johnson
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Moynihan
     Murray
     Reed
     Reid
     Robb
     Rockefeller
     Sarbanes
     Voinovich
     Wellstone
  The motion was agreed to.
  Mr. McCAIN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Arizona is recognized.


                           Amendment No. 1397

  Mr. McCAIN. Mr. President, I call up amendment No. 1397 and ask for 
its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Arizona (Mr. McCain) proposes an amendment 
     numbered 1397.

  Mr. McCAIN. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The amendment is printed in a previous edition of the Record.)
  Mr. McCAIN. Mr. President, my amendment would create a national 
three-year school choice demonstration for children from economically 
disadvantaged families and the cost of this is fully paid for by 
eliminating unnecessary corporate subsidies for the ethanol, oil, gas, 
and sugar industries.
  This demonstration would provide educational opportunities for low-
income children by providing parents and students the freedom to choose 
the

[[Page S9896]]

best school for their unique academic needs, while encouraging schools 
to be creative and responsive to the needs of all students.
  Each eligible child would receive $2,000 each year for attending any 
school of their choice--including private or religious schools.
  In total, the amendment authorizes $5.4 billion for the three-year 
school choice demonstration program, as well as a GAO evaluation of the 
program upon its completion. The cost of this important test of school 
vouchers is fully offset by eliminating more than $5.4 billion in 
unnecessary and inequitable corporate tax loopholes which benefit the 
ethanol, sugar, gas and oil industries.
  These tuition vouchers would help provide over 1 million low-income 
children trapped in poor performing schools the same educational 
choices as children of economic privilege.
  Providing educational choice to low-income children is an important 
step in ensuring all our children, not just wealthy children can make 
their dreams a reality.
  We can not afford to continue subsidizing the ethanol, sugar, oil and 
gas industries at a time when we are struggling to save Social Security 
and Medicare, provide much needed and deserved tax relief to American 
families and strengthening our investment in the health, security and 
education of our children--our future.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Mr. REED addressed the Chair.
  The PRESIDING OFFICER. The Senator from Rhode Island is recognized.
  Mr. REED. Mr. President, I oppose this amendment on procedural 
grounds. This is a highly complex subject. It is a subject that I am 
sure will be debated extensively as we consider the Elementary and 
Secondary Education Act. But in principle also I think it is 
inappropriate to divert these resources to private education when we 
have so many unmet needs in public education.
  I believe also that if we adopt the underlying tax bill there will be 
even less resources to devote to public education and it will 
exacerbate the demands that we already must meet with respect to public 
education.
  There is a difference between private schools and public schools. 
Private schools can exclude children. Public schools must educate every 
child in America.
  I believe our obligation and commitment is to public education, and 
this amendment will defeat that.
  I also note that the pending amendment is not germane.
  Therefore, I raise a point of order that the amendment violates 
Section 305(b)(2) of the Congressional Budget Act of 1974.
  The PRESIDING OFFICER. The Senator from Arizona.
  Mr. McCAIN. Mr. President, pursuant to section 904 of the 
Congressional Budget Act, I move to waive the point of order against 
amendment No. 1397, and 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 (Mr. Hagel). The question is on agreeing to the 
motion to waive the Congressional Budget Act in relation to the McCain 
amendment No. 1397. The yeas and nays have been ordered. The clerk will 
call the roll.
  The legislative assistant proceed proceeded to call the roll.
  The yeas and nays resulted--yeas 13, nays 87, as follows:

                      [Rollcall Vote No. 238 Leg.]

                                YEAS--13

     Allard
     Biden
     DeWine
     Gregg
     Hutchinson
     Kyl
     Lieberman
     McCain
     Moynihan
     Santorum
     Shelby
     Specter
     Thompson

                                NAYS--87

     Abraham
     Akaka
     Ashcroft
     Baucus
     Bayh
     Bennett
     Bingaman
     Bond
     Boxer
     Breaux
     Brownback
     Bryan
     Bunning
     Burns
     Byrd
     Campbell
     Chafee
     Cleland
     Cochran
     Collins
     Conrad
     Coverdell
     Craig
     Crapo
     Daschle
     Dodd
     Domenici
     Dorgan
     Durbin
     Edwards
     Enzi
     Feingold
     Feinstein
     Fitzgerald
     Frist
     Gorton
     Graham
     Gramm
     Grams
     Grassley
     Hagel
     Harkin
     Hatch
     Helms
     Hollings
     Hutchison
     Inhofe
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lincoln
     Lott
     Lugar
     Mack
     McConnell
     Mikulski
     Murkowski
     Murray
     Nickles
     Reed
     Reid
     Robb
     Roberts
     Rockefeller
     Roth
     Sarbanes
     Schumer
     Sessions
     Smith (NH)
     Smith (OR)
     Snowe
     Stevens
     Thomas
     Thurmond
     Torricelli
     Voinovich
     Warner
     Wellstone
     Wyden
  The PRESIDING OFFICER. On this vote the yeas are 13 and the nays are 
87. Three-fifths of the Senators present and voting, not having voted 
in the affirmative, the motion to waive the Budget Act is rejected. The 
point of order is sustained, and the amendment falls.
  The Senator from Nebraska.


                             Change Of Vote

  Mr. HAGEL. Mr. President, on rollcall No. 238, I voted ``aye''. It 
was my intention to vote ``no.'' Therefore, I ask unanimous consent 
that I be permitted to change my vote since it would in no way change 
the outcome of the vote.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The foregoing tally has been changed to reflect the above order.)


                           Amendment No. 1383

            (Purpose: To Increase the Federal minimum wage.)

  Mr. KENNEDY. Mr. President, I have an amendment at the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Massachusetts [Mr. Kennedy] proposes an 
     amendment numbered 1383.

  Mr. KENNEDY. Mr. President, I ask unanimous consent reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The amendment is printed in a previous edition of the Record.)
  Mr. KENNEDY. Mr. President, Republicans continue to deny us the 
opportunity to vote on our bill to raise the minimum wage for the 
lowest paid workers. That is why I have filed the Fair Minimum Wage Act 
of 1999 as an amendment to the Budget Reconciliation Bill.
  Shame on Congress for giving tax breaks to the rich, but denying a 
pay raise for the working poor. The $792 billion Republican tax package 
will disproportionately benefit the richest Americans. Almost thirty 
percent of the tax breaks, once fully implemented, will go to the 
wealthiest 1 percent of Americans--those who make over $300,000 a year. 
Seventy-five percent of the tax breaks will benefit the wealthiest 20 
percent of Americans--those with an average income of over $139,000.
  But these tax breaks do virtually nothing for the lowest paid 
workers. They give minimum wage earners less than $22 a year in tax 
relief, compared to an average tax break of $22,964 a year for the 
wealthiest Americans. The Republicans want to give America's wealthiest 
1 percent a tax break that is equal to or higher than what 40 percent 
of Americans earn in a year.
  The vast magnitude of these tax breaks is possible only because they 
depend on severe budget cuts in Head Start, Summer Jobs for low-income 
youth, and HUD housing subsidies for low-income tenants. Shame on 
Congress for ignoring the majority of America's workers to benefit the 
wealthy few.
  Our amendment is a modest proposal to raise the minimum wage from its 
present level of $5.15 an hour to $5.65 on September 1, 1999 and to 
$6.15 on September 1, 2000. It will help over 11 million American 
families.
  At $6.15 an hour, working full-time, a minimum wage worker would earn 
$12,800 a year under this amendment--an increase of over $2,000 a year.
  That additional $2,000 will pay for seven months of groceries to feed 
the average family. It will pay the rent for an average family for five 
months. It will pay for almost ten months of utilities. It will cover a 
year and a half of tuition and fees at a two-year college, and provide 
greater opportunities for those struggling at the minimum wage to 
obtain the skills needed to obtain better jobs.
  The national economy is the strongest in a generation, with the 
lowest unemployment rate in three decades. Under the leadership of 
President Clinton, the country as a whole is enjoying a remarkable 
period of growth and

[[Page S9897]]

prosperity. Enterprise and entrepreneurship are flourishing--generating 
unprecedented expansion, with impressive efficiencies and significant 
job creation. The stock market has soared. Inflation is low, and 
interest rates are low. We are witnessing the strongest peace-time 
growth in our history.
  The sad reality, however, is that low wage workers are being left 
behind. And the Republican tax bill only widens the gap between the 
wealthy and the working poor. The Republican pension provisions, for 
example, only benefit high income Americans with extra income to 
contribute to IRAs and 401(k) plans. Raising the contribution limits on 
these savings vehicles only discourages companies from offering across-
the-board retirement plans that benefit all employees. The Republican 
tax bill also undermines the current tax code rules that require 
retirement benefits to be distributed fairly among lower and higher 
paid workers.
  Under current law, minimum wage earners can barely make ends meet. 
Working 40 hours a week, 52 weeks a year, they earn $10,712--almost 
$3,200 below the poverty line for a family of three. The real value of 
the minimum wage is now more than $2.00 below what it was in 1968. To 
have the purchasing power it had in 1968, the minimum wage should today 
be at least $7.49 an hour, not $5.15. This unconscionable gap shows how 
far we have fallen short over the past three decades in giving low 
income workers their fair share of the country's extraordinary 
prosperity.
  To rub salt in the wound, Congress recently signed off on a cost of 
living pay increase for every member of the Senate and House of 
Representatives. Republican Senators don't blink about giving 
themselves an increase--how can they possibly deny a fair increase to 
minimum wage workers?
  It is time to raise the Federal minimum wage. No one who works for a 
living should have to live in poverty. I urge my colleagues to join me 
in raising the minimum wage.
  The PRESIDING OFFICER. The Senator from Oklahoma.
  Mr. NICKLES. Mr. President, we should not be passing a law on a tax 
cut bill to say it is against the law anywhere in the country to work 
for $6.10 an hour, that the Federal Government, in its infinite wisdom, 
decided if you don't have a job that pays at least $6.15 an hour you 
should be unemployed. That would be a serious mistake.
  This language in this amendment is not germane to the bill now before 
us. I now raise a point of order under section 305(b)(2) of the 
Congressional Budget Act.
  Mr. KENNEDY. Mr. President, pursuant to section 904 of the 
Congressional Budget Act, I move to waive all the applicable sections 
of the Act for consideration of the pending amendment.
  Mr. 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. The question is on agreeing to the motion to 
waive the Budget Act in relation to the Kennedy amendment, No. 1383. 
The yeas and nays have been ordered.
  The clerk will call the roll.
  The legislative clerk called the roll.
  The yeas and nays resulted--yeas 46, nays 54, as follows:

                      [Rollcall Vote No. 239 Leg.]

                                YEAS--46

     Akaka
     Baucus
     Bayh
     Biden
     Bingaman
     Boxer
     Breaux
     Bryan
     Byrd
     Cleland
     Conrad
     Daschle
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Fitzgerald
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Moynihan
     Murray
     Reed
     Reid
     Robb
     Rockefeller
     Sarbanes
     Schumer
     Specter
     Torricelli
     Wellstone
     Wyden

                                NAYS--54

     Abraham
     Allard
     Ashcroft
     Bennett
     Bond
     Brownback
     Bunning
     Burns
     Campbell
     Chafee
     Cochran
     Collins
     Coverdell
     Craig
     Crapo
     DeWine
     Domenici
     Enzi
     Frist
     Gorton
     Graham
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Roberts
     Roth
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Stevens
     Thomas
     Thompson
     Thurmond
     Voinovich
     Warner
  The PRESIDING OFFICER. On this vote, the yeas are 46, the nays are 
54. Three-fifths of the Senators duly chosen and sworn not having voted 
in the affirmative, the motion is rejected. The point of order is 
sustained, and the amendment falls.


                           Amendment No. 1386

              (Purpose: To provide a complete substitute)

  Mr. SPECTER. Mr. President, I call up amendment No. 1386.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Pennsylvania [Mr. Specter] proposes an 
     amendment numbered 1386.

  (The amendment is printed in a previous edition of the Record.)
  The PRESIDING OFFICER. The Senator from Pennsylvania.
  Mr. SPECTER. Mr. President, I urge my colleagues to support this flat 
tax amendment realistically as a protest against the complicated Tax 
Code which now numbers some 7.5 million words, costs $600 billion in 
compliance, and takes 5.4 billion hours to comply. This amendment is 
supported by Senator Lott, Senator Nickles, Senator Craig, and others.
  In a very shorthand statement, this is a tax return under the flat 
tax. It is a postcard, and it can be filled out in 15 minutes. It 
eliminates taxes on capital gains, on estates, and on dividends, all of 
which have been taxed before. It is not regressive. There is no tax for 
a family of four up to $27,500 in earnings, which is 53 percent of 
Americans. There is a reduction in tax for $1,000 up to $35,000. It is 
even at $75,000. An affirmative vote will signal a protest to urge the 
Finance Committee and Ways and Means to give serious consideration to 
this important reform.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, we have not seen a copy of this amendment, 
but I assume it is the standard flat tax that has been discussed for 
years. If that is the case, then the net effect of it will be, for most 
income earners, most American taxpayers, in effect, a tax increase. The 
only taxpayers with a tax reduction under the standard flat tax 
proposal will be those of adjusted gross incomes of over $200,000, and 
the tax reduction will be 50 percent. Stated differently, this is a tax 
on workers but it is not a tax on investment income, it is not a tax on 
other income, which I think is unfair.
  In any event, the amendment is not germane. I raise a point of order 
that it violates section 305(b)(2) of the Budget Act.
  Mr. SPECTER. Mr. President, under the applicable provision, I move to 
waive the provision as to germaneness, and 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. The question is on agreeing to the motion to 
waive the Budget Act with respect to amendment No. 1386. The yeas and 
nays have been ordered. The clerk will call the roll.
  The assistant legislative clerk called the roll.
  The yeas and nays resulted--yeas 35, nays 65, as follows:

                      [Rollcall Vote No. 240 Leg.]

                                YEAS--35

     Allard
     Bennett
     Brownback
     Burns
     Campbell
     Cochran
     Collins
     Coverdell
     Craig
     Crapo
     Frist
     Gorton
     Gramm
     Grassley
     Gregg
     Hatch
     Helms
     Hutchison
     Inhofe
     Kyl
     Lott
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Reid
     Sessions
     Shelby
     Smith (NH)
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond

                                NAYS--65

     Abraham
     Akaka
     Ashcroft
     Baucus
     Bayh
     Biden
     Bingaman
     Bond
     Boxer
     Breaux
     Bryan
     Bunning
     Byrd
     Chafee
     Cleland
     Conrad
     Daschle
     DeWine
     Dodd
     Domenici
     Dorgan
     Durbin
     Edwards
     Enzi
     Feingold
     Feinstein
     Fitzgerald
     Graham
     Grams
     Hagel
     Harkin
     Hollings
     Hutchinson
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman

[[Page S9898]]


     Lincoln
     Lugar
     Mikulski
     Moynihan
     Murray
     Reed
     Robb
     Roberts
     Rockefeller
     Roth
     Santorum
     Sarbanes
     Schumer
     Smith (OR)
     Snowe
     Torricelli
     Voinovich
     Warner
     Wellstone
     Wyden
  The PRESIDING OFFICER. On this vote the yeas are 35, the nays are 65. 
Three-fifths of the Senators duly chosen and sworn not having voted in 
the affirmative, the motion is rejected. The point of order is 
sustained and the amendment falls.


                           Amendment No. 1416

  (Purpose: To amend the Internal Revenue Code of 1986 to make higher 
education more affordable by providing a full tax deduction for higher 
    education expenses and a tax credit for student education loans)

  Mr. SCHUMER. Mr. President, I call up my amendment.
  The PRESIDING OFFICER. The clerk will report.
  The legislative assistant read as follows:

       The Senator from New York [Mr. Schumer], for himself, Ms. 
     Snowe, Mr. Bayh, and Mr. Smith of Oregon, proposes an 
     amendment numbered 1416.

  Mr. SCHUMER. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The text of the amendment is printed in a prior edition of the 
Record.)
  Mr. SCHUMER. I thank the Chair. I yield 30 seconds of my time to the 
Senator from Maine when I am completed.
  This amendment is simple. It is bipartisan, sponsored by the Senator 
from Maine, Ms. Snowe, Mr. Smith of Oregon, Mr. Bayh of Indiana, and 
myself. It seeks no political advantage for either side. It helps the 
middle class in a vitally needed way, by making college tuition, up to 
$12,000, fully deductible for all those in the 28 percent bracket or 
lower. That is over 90 percent of all Americans. The average middle 
class person making $50,000, $60,000, $70,000 a year sweats at night 
worrying about paying for the cost of college, which is getting higher 
and higher. I urge support of the amendment.
  The PRESIDING OFFICER (Mr. Bunning). The Senator's 30 seconds have 
expired.
  The Senator from Maine.
  Ms. SNOWE. Mr. President, I urge my colleagues to support this 
amendment. It will dramatically improve access for working American 
families in this country to pursue higher education. The bottom line is 
that even as the cost of college has quadrupled over the past 20 years, 
in fact, growing nearly to twice the rate of inflation, the value of 
Pell grants has actually decreased. Where it used to cover 39 percent 
of the cost of public education, today it is 22 percent. In fact, in 
the last 5 years alone, the total amount of college loans has soared by 
82 percent, even after adjusted for inflation. I hope that we will help 
American families with this amendment.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. ROTH. Mr. President, Senator Schumer's amendment would provide a 
full tax deduction for higher education and a tax credit for student 
loans. While I recognize that we need to assist American families with 
the cost of higher education, I cannot support this amendment. The 
costs of this amendment are enormous. I understand that it would cost 
something like $25 billion over 10 years, but the pay-for would delay 
the AMT relief that is provided in this bill. That delay would impact 
on working Americans, depriving them of the child credit, personal 
exemptions, and, ironically, educational benefits such as the HOPE 
scholarship and lifetime earnings.
  Mr. President, I regret that I must make a point of order against the 
amendment under section 305 of the Budget Act on the grounds it is not 
germane.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. SCHUMER. Mr. President, I move to waive the Budget Act, and 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. The question is on agreeing to the motion to 
waive the Congressional Budget Act in relation to the Schumer amendment 
No. 1416. The yeas and nays have been ordered.
  The clerk will call the roll.
  The legislative assistant called the roll.
  The result was announced--yeas 53, nays 47, as follows:

                      [Rollcall Vote No. 241 Leg.]

                                YEAS--53

     Abraham
     Akaka
     Baucus
     Bayh
     Biden
     Bingaman
     Boxer
     Breaux
     Bryan
     Byrd
     Cleland
     Collins
     Conrad
     Daschle
     DeWine
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Fitzgerald
     Graham
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Moynihan
     Murray
     Reed
     Reid
     Robb
     Rockefeller
     Santorum
     Sarbanes
     Schumer
     Smith (OR)
     Snowe
     Specter
     Torricelli
     Wellstone
     Wyden

                                NAYS--47

     Allard
     Ashcroft
     Bennett
     Bond
     Brownback
     Bunning
     Burns
     Campbell
     Chafee
     Cochran
     Coverdell
     Craig
     Crapo
     Domenici
     Enzi
     Frist
     Gorton
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Roberts
     Roth
     Sessions
     Shelby
     Smith (NH)
     Stevens
     Thomas
     Thompson
     Thurmond
     Voinovich
     Warner
  The PRESIDING OFFICER. On this vote the yeas are 53, the nays are 47. 
Three-fifths of the Senators duly chosen and sworn not having voted in 
the affirmative, the motion is rejected. The point of order is 
sustained and the amendment falls.


                     Objection to Committee Meeting

  The PRESIDING OFFICER. The Senator from Rhode Island.
  Mr. REED. Mr. President, I note that the banking committee is meeting 
at this time, and objection to that meeting has been made for the 
Record.
  The PRESIDING OFFICER. It is so noted.
  The PRESIDING OFFICER. The Senator from Oklahoma.
  Mr. NICKLES. Mr. President, I thank the majority leader, the minority 
leader, and also Senator Roth, Senator Reid, and Senator Moynihan.
  We have made very good progress in reducing the number of amendments. 
I think we are down to maybe a few amendments. I know that on this side 
we are only looking at one or two that would require a rollcall vote. 
We are trying to make it one or two. We have a few more requests. I 
think we are making good progress. I know Senator Reid is making good 
progress.
  That is for the information of our colleagues.
  We would also like to keep the rollcall votes to 10 minutes. The last 
rollcall vote went a little extra. We are going to finish this bill 
today. It is in everybody's interest to stay on the floor and to have 
timely rollcall votes.
  We expect to accept a couple of amendments right now. That will help 
expedite the process.
  I yield the floor.


                           Amendment No. 1452

  (Purpose: To increase the mandatory spending in the Child Care and 
 Development Block Grant by $10,000,000,000 over 10 years in order to 
  assist working families with the costs of child care, and for other 
                               purposes)

  Mr. DODD. Mr. President, I call up amendment 1452 and ask for its 
immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Connecticut [Mr. Dodd], for himself and 
     Mr. Jeffords, proposes an amendment numbered 1452.

  (The text of the amendment is printed in a previous edition of the 
Record.)
  Mr. JEFFORDS. Mr. President, the child development block grant has 
helped thousands of families keep jobs by helping offset the enormous 
costs of child care, which enable them to go to work. In most cases, 
subsidies are so low that families are forced to use the cheapest and, 
in many cases, the poorest quality child care.
  There are 66 Senators who voted for the money in the budget for this 
purpose. The kids at the Burlington YMCA are right: We must act now for 
quality child care.
  Mr. DODD. Mr. President, this is a very good amendment. Only one in 
10 eligible children is being served.

[[Page S9899]]

  I thank my colleagues, Senators Jeffords, Chafee, Snowe, Collins, 
Roberts, Specter, Stevens, and Domenici. This is a large bipartisan 
group that cares about this very much.
  These are needed resources to get to children who are not being well 
served. The tax credit is not refundable so it does not reach that low-
income category. This child care development block grant does assist 
these families.
  For those reasons, we urge adoption of the amendment. I thank the 
leadership for agreeing this be done on a voice vote.
  The PRESIDING OFFICER. The question is on agreeing to the amendment.
  The amendment (No. 1452) was agreed to.
  Mr. DODD. Mr. President, I move to reconsider the vote.
  Mr. ROBB. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                           Motion to Recommit

  The PRESIDING OFFICER. The Senator from Virginia.
  Mr. ROBB. Mr. President, despite the opportunities we have had in 
this bill and in the Finance Committee to address the $112 billion 
school repair needs in this country, this tax bill is simply inadequate 
in terms of infrastructure assistance for our Nation's schools.
  We know 14 million children attend schools in need of extensive 
repair or complete replacement. We know we need to build 2,400 new 
schools by 2003 to accommodate record school enrollments. We know we 
need to equip our schools with modern technology and the infrastructure 
necessary to support that technology. We know all these things. Yet we 
have reported a tax bill that only helps build and renovate 200 
schools. We cannot starve our schools of resources and then criticize 
them when they are overcrowded or dilapidated.
  On behalf of Senators Lautenberg, Conrad, Harkin, and Wellstone, I 
move to recommit the bill to the Committee on Finance, with 
instructions to report back to the Senate within 3 days with an 
amendment reducing or deferring by $5.7 billion over the next 10 years 
certain new tax rates in the bill that benefit those who least need 
relief.
  Mr. NICKLES. I think this procedure would be a serious mistake. We 
don't want Federal bureaucrats trying to improve school construction 
programs. I think it would be a serious mistake. We should leave those 
decisions of which schools to be building and which schools to repair 
to the State and local governments.
  I move to table the motion, and 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. The question is on agreeing to the motion. The 
yeas and nays have been ordered. The clerk will call the roll.
  The assistant legislative clerk called the roll.
  The result was announced--yeas 55, nays 45, as follows:

                      [Rollcall Vote No. 242 Leg.]

                                YEAS--55

     Abraham
     Allard
     Ashcroft
     Bennett
     Bond
     Brownback
     Bunning
     Burns
     Campbell
     Chafee
     Cochran
     Collins
     Coverdell
     Craig
     Crapo
     DeWine
     Domenici
     Enzi
     Fitzgerald
     Frist
     Gorton
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Roberts
     Roth
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Voinovich
     Warner

                                NAYS--45

     Akaka
     Baucus
     Bayh
     Biden
     Bingaman
     Boxer
     Breaux
     Bryan
     Byrd
     Cleland
     Conrad
     Daschle
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Moynihan
     Murray
     Reed
     Reid
     Robb
     Rockefeller
     Sarbanes
     Schumer
     Torricelli
     Wellstone
     Wyden
  The motion was agreed to.
  Mr. DOMENICI. Mr. President, I move to reconsider the vote.
  Mr. ROBB. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                           MOTION TO RECOMMIT

  Mr. WELLSTONE. I call up my motion to recommit on veterans' health 
care.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Minnesota [Mr. Wellstone] moves to 
     recommit the bill, S. 1429, to the Committee on Finance 
     with instructions that the Committee on Finance report the 
     bill to the Senate with provisions which--
       Establish a reserve account for purposes of providing funds 
     for medical care for veterans;
       Provide for the deposit in the reserve account of 
     $3,000,000,000 in each of fiscal years 2000 through 2004;
       Make available amounts in the reserve account in those 
     fiscal years for purposes of medical care for veterans, which 
     amounts shall be in addition to any other amounts available 
     for medical care for veterans in those fiscal years; and
       Provide that amounts for deposits in the reserve account 
     shall be derived by reductions in the amounts of new tax 
     reductions provided in the bill, wherever possible, for 
     individuals with incomes exceeding $200,000 per year.

  Mr. WELLSTONE. Mr. President, I introduce this motion with Senator 
Johnson, Senator Daschle, and Senator Harkin. This motion calls for $3 
billion added to veterans' health care. That is consistent with what 
the Veterans' Affairs Committee has said we need to do. That is 
consistent with the veterans independent budget. That is consistent 
with the report we did last week on the gaps in veterans' health care, 
and every single Senator voted on the budget resolution for a $3 
billion increase for veterans' health care. That is the least we should 
do to make sure there is high-quality health care for veterans in our 
country.
  Mr. JOHNSON. Mr. President, the underlying tax bill calls for 
domestic spending reductions of anywhere from 24 to 38 percent, closing 
down VA hospitals from one end of this country to the other. This is 
the one vote on which my colleagues will have an opportunity to make 
sure there is enough money in the VA system to keep those hospitals 
open.
  The PRESIDING OFFICER. The Senator from Missouri.
  Mr. BOND. Mr. President, I agree with my colleagues on the other 
side. Yet the President's budget devastates veterans' health care. The 
flat-line budget proposed by this administration will result in some 
13,000 Veterans Affairs employees being RIF'd or furloughed. It will 
close down facilities. It will throw people out of the care of the 
veterans facilities.
  The problem is that this motion does nothing to get money to 
veterans. This body has already gone on record saying we do not want to 
stay at the low level submitted by the President. That is why we are 
going to increase by hundreds of millions of dollars in the 
appropriations bill the amount we spend for veterans' health care. We 
are concerned about veterans' health care. That is why we are not going 
to tolerate the unforgivably small budget that the President has 
proposed. This is an attempt to provide appropriations when, in fact, 
it will have no such impact. There is $505 billion set aside in this 
plan for spending on high-priority matters.
  Mr. President, I make a point of order against the amendment under 
section 305 of the Budget Act on the grounds that it is not germane.
  Mr. WELLSTONE. Mr. President, I move to waive the Budget Act, and I 
ask for the yeas and nays on the motion.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question occurs on agreeing to the motion 
to waive the Budget Act with respect to the motion to recommit. The 
yeas and nays have been ordered. The clerk will call the roll.
  The legislative clerk called the roll.
  The yeas and nays resulted--yeas 58, nays 42, as follows:

                      [Rollcall Vote No. 243 Leg.]

                                YEAS--58

     Abraham
     Akaka
     Baucus
     Bayh
     Biden
     Bingaman

[[Page S9900]]


     Boxer
     Bryan
     Burns
     Byrd
     Cleland
     Collins
     Conrad
     Daschle
     DeWine
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham
     Harkin
     Hollings
     Hutchinson
     Hutchison
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     McCain
     Mikulski
     Moynihan
     Murray
     Reed
     Reid
     Robb
     Rockefeller
     Santorum
     Sarbanes
     Schumer
     Smith (NH)
     Snowe
     Specter
     Thomas
     Torricelli
     Warner
     Wellstone
     Wyden

                                NAYS--42

     Allard
     Ashcroft
     Bennett
     Bond
     Breaux
     Brownback
     Bunning
     Campbell
     Chafee
     Cochran
     Coverdell
     Craig
     Crapo
     Domenici
     Enzi
     Fitzgerald
     Frist
     Gorton
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Inhofe
     Kyl
     Lott
     Lugar
     Mack
     McConnell
     Murkowski
     Nickles
     Roberts
     Roth
     Sessions
     Shelby
     Smith (OR)
     Stevens
     Thompson
     Thurmond
     Voinovich
  The PRESIDING OFFICER (Mr. Roberts). On this vote the yeas are 58, 
the nays are 42. Three-fifths of the Senators duly chosen and sworn not 
having voted in the affirmative, the motion is rejected. The point of 
order is sustained and the motion falls.
  Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
  Mr. NICKLES. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. BINGAMAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from New Mexico.


                           Motion To Recommit

  Mr. BINGAMAN. Mr. President, I have a motion at the desk to recommit 
to the Finance Committee that I call up at this time.
  The PRESIDING OFFICER. The clerk will report.
  The legislative assistant read as follows:

       The Senator from New Mexico [Mr. Bingaman] moves to 
     recommit the bill to the Committee on Finance with 
     instructions to report back within three days with an 
     amendment providing for an additional $100 billion of debt 
     reduction, and to do so by reducing narrowly-targeted, 
     special-interest tax breaks and tax reductions that 
     disproportionately benefit the wealthy.

  Mr. BINGAMAN. Mr. President, we have a historic opportunity before 
us. For the first time in my nearly two decades in the Senate, we are 
presented with predictions of a growing surplus. We made the tough 
choices in 1993 and again in 1997 to bring spending under control, to 
reduce the deficit, and to restore the federal budget to balance.
  We are at a crossroads now and must decide how to respond to this 
opportunity. Will we invest it wisely and prudently, or will it be 
squandered? Will we return to the disastrous policies of the 1980's, or 
can we stay on the path of fiscal discipline? The American public is 
deeply cynical about government. Now is our chance to prove we can come 
together in our national interest.
  I am deeply concerned about the Republican plan for using this 
surplus. In my opinion, they are squandering an opportunity we won't 
have again to extend the solvency of Medicare and Social Security, to 
invest in key priorities like education, the environment and medical 
research, and to pay down our national debt. We shouldn't go off on a 
spending or tax-cutting spree when we have this huge debt to repay.
  Unfortunately, the Republicans have chosen to focus single-mindedly 
on cutting taxes. I believe we should have a tax cut--I would favor tax 
relief for working families, such as easing the marriage penalty and 
increasing the per-child credit--but this bill goes much too far. 
Instead, we need to balance the money among several key priorities.
  There is almost no single policy that is more important to the long-
term health of our budget, to the sustainability of the surplus, and to 
our overall economy, than paying off some of our three-and-half 
trillion dollar national debt. We cannot leave this burden to our 
grandchildren.
  With a single voice, economists have told us of the benefits of and 
importance of paying down that debt. It will lead to lower interest 
rates. It will produce higher surpluses, because we will be paying less 
interest. And it will be of tremendous benefit to the economy, because 
it will free up private capital for productive investment that makes 
our economy grown, and raise the standard of living for us all.
  Alan Greenspan himself has said repeatedly that the most important 
thing to do with the surplus is to pay down the debt. He has said it 
over and over and over again. And he's been saying it for quite some 
time now. Some of my Republican colleagues have seized on another 
statement he made--saying that if paying down the debt is not 
politically feasible, then he prefers tax cuts to spending.
  My colleagues, there is no one here but us. We are in charge. We are 
free to vote for what's right, and to define what's possible or what's 
not. We can vote to reduce the debt, or to irresponsibly spend this 
one-in-a-lifetime surplus on an excessively large tax cut that would 
damage our economy and endanger Medicare and Social Security, 
education, law enforcement, defense--just about any important national 
program.
  Paying off the debt today will also leave us in a much stronger 
position to afford the cost of the baby boom's retirement. As other 
speakers have pointed out, the cost of the Republican tax cuts begin to 
rise dramatically just at the same time the pressures on the budget 
begin to grow as the baby boomers start to retire.
  But Republicans have rejected our attempts to pay down the debt. They 
claim they are doing plenty to pay down the debt--and that this is 
enough.
  They may even talk about a Congressional Budget Office report that 
purports to show how their plan reduces the debt. But that analysis is 
based on a fiction; the fiction that Republicans will be able to cut 
spending dramatically--by nearly one-fourth. And if defense is funded 
at the level the Administration has requested, other important domestic 
programs would face cuts of nearly 40 percent. This means less medical 
research, dramatic cuts in the number of children participating in Head 
Start, substantial reductions in the number of law enforcement 
personnel, no new environmental cleanups, closures at national parks. 
The list goes on.
  However, as we all know, Democrats and Republicans both, there is 
really no support for cuts of that magnitude, either in Congress or 
among the public. A story on the front page of the Washington Post on 
July 27, 1999 puts the lie to Republican assertions that they will be 
able to cut spending. They can't even pass this year's appropriations 
bills without resorting to smoke-and-mirrors gimmickry to hid the cost 
of their bills.
  Without those cuts, they need to raid the Social Security trust fund 
to pay for their tax cut. And they will increase, rather than reduce, 
our national debt.
  The truth is, they want their excessive, risky tax cut so badly that 
they are willing to put the health of our economy at risk, to endanger 
the security of retirees, and to short-change important national 
priorities like investments in education, medical research, the 
environment and even national defense.
  Republicans want to spend 97 percent of the available non-Social 
Security surplus on tax cuts--tax cuts whose cost explodes in the 
future, overheat our economy, and disproportionately favor the rich and 
special interests.
  Democrats have offered reasonable alternatives that balance tax cuts 
with Medicare solvency, debt reduction and investments in key domestic 
priorities. But these have all been rejected.
  So I am making this last, very modest attempt to avoid wasting 
surplus--asking that $100 billion of this excessive tax cut be used 
instead for paying off more of our national debt. This would leave 
about 86 percent of the surplus for tax cuts--this is less than 97 
percent they want to spend, but is still a substantial amount. We could 
do more to reduce the debt. I would like to do more. But this is a 
starting point.
  My motion would instruct the Finance Committee to report the bill 
back in 3 days, with an amendment to reduce the tax cut by $100 
billion, and use the savings to pay down more of our national debt. It 
also instructs the Committee to find the savings by reducing narrowly-
targeted special interest tax breaks in the bill, and tax relief that 
disportionately benefits the wealthy.
  Last week, just days after Republicans passed their tax bill out of 
committee, the Washington Post ran a

[[Page S9901]]

story detailing the special-interest giveaways in the Republican tax 
bills. These include special breaks for seaplane owners in Alaska, 
barge lines in Mississippi, and foreign residents who use frequent-
flyer miles to purchase airline tickets. Since then, we have also 
learned just how skewed the bill is toward families with the very 
highest incomes. The top 1 percent of all taxpayers would receive a 
whopping 30 percent of the tax cuts. Overall, the top one-fifth of 
taxpayers would receive 75 percent of the tax relief. It seems to me 
there is plenty of room in this bill to reduce the tax cut by $100 
billion for the sake of reducing our national debt.
  The Republicans have rejected our balanced alternative to a huge, 
imprudent tax cut, and they have rejected our lockbox that would set 
aside money for Social Security and Medicare--but can't they even 
reduce their enormous, risky tax cut by $100 billion in order to 
further reduce our nation's indebtedness? That's only about 10 percent 
of the available surplus. Only 10 percent for prudence and 
responsibility, the rest to fulfill their agenda.
  Mr. NICKLES addressed the Chair.
  The PRESIDING OFFICER. The Senator from Oklahoma.
  Mr. NICKLES. One, I appreciate our colleague's willingness to have a 
voice vote. I encourage others to have voice votes.
  For the information of all Senators, I think we are making good 
progress. We only have a few amendments left, maybe just three or four 
that require votes.
  I urge our colleagues, on this particular motion--despite my 
colleague's very good intentions--to vote no by voice vote.
  The PRESIDING OFFICER. The question is on agreeing to the motion.
  The motion was rejected.
  Mr. SANTORUM. Mr. President, I move to reconsider the vote.
  Mr. NICKLES. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                           Motion to Recommit

  Mr. DORGAN. Mr. President, I call up my motion to recommit.
  The PRESIDING OFFICER. The clerk will report the motion.
  The legislative clerk read as follows:

       The Senator from North Dakota [Mr. Dorgan] moves to 
     recommit the the bill to the Committee on Finance, with 
     instructions to report back within 3 days, with an amendment 
     to reserve amounts sufficient to establish an improved income 
     safety net for family farmers and ranchers in fiscal years 
     2000 through 2009, by limiting the bill's new tax breaks for 
     large corporations and those with annual incomes in excess of 
     $300,000.

  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Mr. President, this is a motion to recommit. I will not 
seek a recorded vote on it. My motion to recommit is to recommit the 
bill to the Finance Committee with instructions to report back with an 
amendment to reserve sufficient amounts to establish an improved income 
safety net for family farmers and ranchers in fiscal years 2000 through 
2009 by limiting the bill's new tax breaks for large corporations and 
those with annual incomes in excess of $300,000.
  I ask for its immediate consideration.
  Mr. ROTH. Mr. President, I suggest we are ready for a voice vote.
  The PRESIDING OFFICER. The question is on agreeing to the motion.
  The motion was rejected.
  Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
  Mr. ROTH. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. MOYNIHAN. May I just note, sir, for the Record, there are several 
of us, including the junior Senator from Alaska, who regret that the 
rum cover-over provisions for Puerto Rico and the Virgin Islands are 
not included in this legislation. We hope to do so at some early future 
date. I yield the floor.
  The PRESIDING OFFICER. The Senator from Michigan.


                     Amendment No. 1470, Withdrawn

(Purpose: Providing the Sense of the Senate regarding Capital Gains Tax 
                                 Cuts)

  Mr. ABRAHAM. Mr. President, I call up amendment No. 1470.
  The PRESIDING OFFICER. The clerk will report the amendment.
  The legislative clerk read as follows:

       The Senator from Michigan [Mr. Abraham] proposes an 
     amendment numbered 1470.

  Mr. ABRAHAM. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The amendment is printed in a previous edition of the Record.)
  Mr. ABRAHAM. Mr. President, this amendment tries to address what I 
consider to be one of the shortfalls in the Senate Finance Committee's 
tax bill. This tax bill does not include any provisions to reduce the 
capital gains tax rate. I believe we need to address the needs of 
America's growing investor class through mutual funds, pension plans, 
IRAs and other investment vehicles about 50 percent of Americans have. 
Half the Nation's population own stocks and other financial assets.
  I believe it is time to put to rest once and for all the old class 
warfare slogan that only the rich pay capital gains taxes. Forty-nine 
percent of the investor class are women, and 38 percent are 
nonprofessional, salaried workers. Wall Street and Main Street are no 
longer separated. I believe it is time we recognize this fact and help 
new middle-class investors succeed in their drive to invest and save 
for the future.
  I think it is time to cut the tax on mutual funds and pensions for 
working Americans and, therefore, I have offered this amendment which 
is a sense of the Senate suggesting we should, in the conference that 
will follow the passage of this legislation, recede to the House 
position which reduces capital gains tax rates.
  The PRESIDING OFFICER. The distinguished Senator from New York.
  Mr. MOYNIHAN. Mr. President, the pending amendment is not germane. 
Accordingly, I raise a point of order that the amendment violates 
section 305(b)(2) of the Congressional Budget Act of 1974.
  Mr. ABRAHAM. Mr. President, I respond by saying that it is my 
impression that we will not have a majority for this amendment. We will 
not overcome the point of order. So at this time, in light of the time 
constraints we are operating under today, I withdraw the amendment.
  The PRESIDING OFFICER. Without objection, the amendment is withdrawn.
  The distinguished Senator from North Dakota.


                           Amendment No. 1439

(Purpose: To amend the Internal Revenue Code of 1986 to allow employers 
    a credit against income tax for information technology training 
   expenses paid or incurred by the employer, and for other purposes)

  Mr. CONRAD. Mr. President, I call up my amendment No. 1439.
  The PRESIDING OFFICER. The clerk will report the amendment.
  The legislative clerk read as follows:

       The Senator from North Dakota [Mr. Conrad], for himself, 
     Mr. Reid, and Mr. Robb, proposes an amendment numbered 1439.

  Mr. CONRAD. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The amendment is printed in a previous edition of the Record.)
  Mr. CONRAD. Mr. President, this amendment, I believe, addresses a 
critical national need. The Commerce Department tells us we have a 
shortage of information technology workers of 34,000 and that that will 
grow by 130,000 a year every year for the next 10 years. This amendment 
seeks to deal with that situation by providing for a tax credit of 20 
percent, up to a limit of $6,000 per worker per year.
  This means that the Federal Government would be in partnership with 
businesses training high-technology workers. The company would have to 
put up 80 percent of the cost, the Federal Government, through a tax 
credit, 20 percent. This is a reasonable response to a critical 
national need.
  This amendment is cosponsored by Senator Reid of Nevada, Senator Robb 
of Virginia, and Senator Abraham of Michigan. It is endorsed by the 
Information Technology Association of America, the Software Information 
Industry Association, the American Society for Training and 
Development, Cisco Systems, EDS, Intel, Microsoft, Texas Instruments, 
and many others.
  Mr. NICKLES. Mr. President, I urge our colleagues to vote no on this

[[Page S9902]]

amendment, both on substance and also on a germaneness point, which I 
will raise in a moment.
  The Senator is proposing a $6,000 tax credit if somebody is trained 
as a high-tech employee. We are going to have the Federal Government 
saying in this one area we want to pay $6,000 for this person to be 
trained how to run computers.
  I want people to learn how to run computers. Millions of people are 
doing it today. They don't need the Federal Government to give them 
$6,000 to do it. What about steelworkers? What about auto workers? What 
about oil workers? What about factory workers? We don't do it for them. 
We shouldn't do it for this industry.
  Also the Senator pays for it by taking away the tax benefits we have 
that allow people to enhance their retirement income. I think that is a 
serious mistake.
  I make a point of order against the amendment under section 305 of 
the Budget Act on the grounds that it is not germane, and I ask for the 
yeas and nays.
  Mr. CONRAD. Mr. President, I move to waive the Congressional Budget 
Act point of order.
  The PRESIDING OFFICER. Is there a sufficient second? There is a 
sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question is on agreeing to the motion to 
waive the Congressional Budget Act in relation to the Conrad amendment 
No. 1439. The yeas and nays have been ordered. The clerk will call the 
roll.
  The legislative assistant called the roll.
  The result was announced--yeas 46, nays 54, as follows:

                      [Rollcall Vote No. 244 Leg]

                                YEAS--46

     Abraham
     Akaka
     Baucus
     Bayh
     Biden
     Bingaman
     Boxer
     Breaux
     Bryan
     Byrd
     Cleland
     Conrad
     Daschle
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Moynihan
     Murray
     Reed
     Reid
     Robb
     Rockefeller
     Sarbanes
     Schumer
     Torricelli
     Wellstone
     Wyden

                                NAYS--54

     Allard
     Ashcroft
     Bennett
     Bond
     Brownback
     Bunning
     Burns
     Campbell
     Chafee
     Cochran
     Collins
     Coverdell
     Craig
     Crapo
     DeWine
     Domenici
     Enzi
     Fitzgerald
     Frist
     Gorton
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Roberts
     Roth
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Voinovich
     Warner
  The PRESIDING OFFICER. On this vote the yeas are 46, the nays are 54. 
Three-fifths of the Senators duly chosen not having voted in the 
affirmative, the motion is rejected. The point of order is sustained 
and the amendment falls.
  Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
  Mr. BOND. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The distinguished Senator from Iowa is 
recognized.


                           Amendment No. 1454

(Purpose: To block companies from entering into a situation where they 
are giving benefits to younger workers and denying those same benefits 
to older employees. The amendment clearly stops a method by which some 
   employers skirt the intent of current law that prevents them from 
             taking away already accrued pension benefits)

  Mr. HARKIN. Mr. President, I call up amendment No. 1454 and ask 
unanimous consent that Senator Kennedy and Senator Wellstone be added 
as cosponsors.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will report.
  The legislative clerk read as follows:

       The Senator from Iowa (Mr. Harkin), for himself, and Mr. 
     Kennedy, and Mr. Wellstone, proposes an amendment numbered 
     1454.

  Mr. HARKIN. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The amendment is printed in a previous edition of the Record.)
  Mr. HARKIN. Mr. President, right now companies are changing pension 
plans. They are going from defined benefit plans to these cash balance 
plans. That is OK. This amendment doesn't stop that. But what is 
happening now is workers who have worked at these companies for 
sometimes 20 or 25 years have their pensions degraded. There are 5 to 
7, and sometimes as many as 10, years when nothing is put into their 
pension plans. The younger workers are getting money paid into their 
pensions and the older workers are not.
  This amendment says that if they change pension plans they can not 
discriminate against the older workers, and the companies have to put 
into the older workers' pension accounts whatever they are putting into 
the younger workers' pension accounts so that we don't have this kind 
of wear away for 5 or 7 years when older workers are denied their 
pension benefits.
  The PRESIDING OFFICER. The Senator from Tennessee.
  Mr. THOMPSON. Mr. President, I rise to oppose this amendment.
  Employer sponsorship of defined benefit pension plans have been 
declining over the last few years, mainly due to the increased 
regulatory burden that Congress and the IRS has placed on employers who 
offer these plans to employees.
  This amendment would also substantially impair the employer's ability 
to design and change their pension plans to meet the changing needs of 
the business and of the employees. In addition, it would punish good 
corporate citizens who maintain pension plans while leaving other 
companies free to terminate their plans in order to get from under this 
new law.
  We have dealt with the concerns that participants do not know or 
understand changes to their pension plans with the more expansive 
disclosure requirements that are contained in this bill.
  We should focus on revitalizing the defined pension system, rather 
than adding new burdens on employers who voluntarily establish these 
plans. For these reasons, I urge my colleagues to oppose this 
amendment.
  Mr. President, I make a point of order against the amendment under 
section 305 of the Budget Act on the grounds that it is not germane.
  Mr. HARKIN. Mr. President, pursuant to section 904 of the 
Congressional Budget Act, I move to waive the Congressional Budget Act 
for the consideration of amendment No. 1454, and 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. The question is on agreeing to the motion to 
waive the Congressional Budget Act in relation to the Harkin amendment 
No. 1454. The yeas and nays have been ordered. The clerk will call the 
roll
  The legislative clerk called the roll.
  The yeas and nays resulted--yeas 48, nays 52, as follows:

                      [Rollcall Vote No. 245 Leg.]

                                YEAS--48

     Akaka
     Baucus
     Bayh
     Biden
     Bingaman
     Boxer
     Breaux
     Bryan
     Byrd
     Cleland
     Conrad
     Daschle
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham
     Grassley
     Harkin
     Hollings
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Moynihan
     Murray
     Reed
     Reid
     Robb
     Rockefeller
     Sarbanes
     Schumer
     Specter
     Torricelli
     Wellstone
     Wyden

                                NAYS--52

     Abraham
     Allard
     Ashcroft
     Bennett
     Bond
     Brownback
     Bunning
     Burns
     Campbell
     Chafee
     Cochran
     Collins
     Coverdell
     Craig
     Crapo
     DeWine
     Domenici
     Enzi
     Fitzgerald
     Frist
     Gorton
     Gramm
     Grams
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Roberts
     Roth
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Stevens
     Thomas
     Thompson
     Thurmond
     Voinovich
     Warner
  The PRESIDING OFFICER. On this vote the yeas are 48, the nays are 52.

[[Page S9903]]

 Three-fifths of the Senators duly chosen and sworn not having voted in 
the affirmative, the motion is rejected. The point of order is 
sustained and the amendment falls.
  Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
  Mr. LEAHY. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                           Motion To Recommit

  The PRESIDING OFFICER. The distinguished Senator from Massachusetts 
is recognized. The Senate will be in order.
  Mr. KENNEDY. Mr. President, I send a motion to the desk and ask for 
its immediate consideration.
  The PRESIDING OFFICER. The clerk will report the motion.
  The legislative clerk read as follows:

       The Senator from Massachusetts [Mr. Kennedy] moves to 
     recommit the bill to the Committee on Finance, with 
     instructions to report back to the Senate within 3 days, with 
     an amendment to reserve $39 billion to provide permanent 
     appropriations to the Pell Grant program in years 2000 
     through 2009 by reducing or deferring certain new tax breaks 
     in the bill, especially those that disproportionately benefit 
     the wealthy.

  Mr. KENNEDY. Mr. President, as I understand, there is a 2-minute time 
limit, 1 minute to either side; is that correct?
  The PRESIDING OFFICER. The Senator's time is limited to 1 minute.
  If we could have order in the Senate, please, we could expedite 
things.
  The Senator is recognized for 1 minute.
  Mr. KENNEDY. Mr. President, this is to try to provide some help and 
additional assistance to those individuals who are receiving the Pell 
grants. Those are virtually the lowest-income students. For the over 4 
million students who are receiving Pell grants, their average income is 
$14,000 a year. They are the students who are encumbered to the 
greatest degree as a result of borrowing. They start out, if they are 
lucky enough to get into college, having these overwhelming debts. This 
would provide some $39 billion which would increase the Pell grants 
some $400. It would still only make them about 60 percent of what the 
Pell grants were some 20 years ago.
  As we are looking out after providing tax breaks for those in the 
upper incomes, it does seem to me that to try to give further 
encouragement to able and gifted students at the lower income level 
deserves support.
  The PRESIDING OFFICER. The distinguished Senator from Texas is 
recognized.
  Mr. GRAMM. We are all aware Congress has provided substantial funds 
for Pell grants.
  The PRESIDING OFFICER. The Senate is not in order.
  Mr. GRAMM. Mr. President, you would have had to have just come in on 
a turnip truck not to realize this Congress is a major funder of Pell 
grants. We provide substantial funding in Pell grants in guaranteed 
student loans. What we have before us is not another assistance 
program, not another program that is trying to single out every 
interest group in America and give them something, but instead we have 
a tax bill that is aimed at letting working Americans keep more of what 
they earn so they can help send their children to college.
  I hope we might see an amendment such as this withdrawn and not have 
to vote on it.
  I yield the remainder of my time.
  Mr. KENNEDY. Mr. President, as I understand it, the time has been 
used or yielded back. I look forward to a vote on this motion.
  The PRESIDING OFFICER. The question is on agreeing to the motion.
  The motion was rejected.
  Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
  Mr. ROTH. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                           Motion To Recommit

  Mr. DORGAN. I have a motion at the desk and ask for its immediate 
consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from North Dakota [Mr. Dorgan] moves to 
     recommit the bill to the Committee on Finance, with 
     instructions to report back within 3 days, with an amendment 
     to reserve sufficient amounts of funding to allow our nation 
     to reach our goal of serving one million children through the 
     Head Start program and to ensure that the number of 
     nutritionally at-risk women and children being served by the 
     Special Supplemental Nutrition Program for Women, Infants, 
     and Children will not be reduced in fiscal years 2000 through 
     2009, by limiting the bill's new tax breaks for those with 
     annual incomes in excess of $300,000 and for large 
     businesses.

  The PRESIDING OFFICER. Without objection, the Senator is recognized.
  Mr. DORGAN. Mr. President, I would like to take just a few seconds 
and then yield to Senator Wellstone the remainder of the 1 minute.
  This is a motion to recommit the bill to the Committee on Finance 
with instructions to report back with an amendment to reserve 
sufficient amounts of funding to allow our Nation to reach our goal of 
serving 1 million children through the Head Start Program and to make 
sure we are not diminishing or threatening those who are receiving 
benefits under the WIC Program.
  We hope if there is enough opportunity to provide tax cuts for 9 or 
10 years, Members of the Senate will agree that Head Start and WIC also 
ought to receive priority.
  I yield to Senator Wellstone.
  Mr. WELLSTONE. Mr. President, this is all about whether or not we 
support children in our country. It is a terribly important program. We 
will vote it up or down on a voice vote. On the ag appropriations bill 
we will have a recorded vote.
  The PRESIDING OFFICER. Does any Senator wish to speak in opposition?
  Mr. ROTH. I suggest a voice vote.
  The PRESIDING OFFICER. The question is on agreeing to the motion to 
recommit.
  The motion was rejected.
  Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
  Mr. HATCH. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                           Amendment No. 1456

  Mr. ASHCROFT. Mr. President, I call up amendment No. 1456 which is at 
the desk.
  The PRESIDING OFFICER. The clerk will report the amendment.
  The assistant legislative clerk read as follows:

       The Senator from Missouri [Mr. Ashcroft] proposes an 
     amendment numbered 1456.

  Mr. ASHCROFT. Mr. President, I ask unanimous consent that the reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The amendment is printed in a previous edition of the Record.)
  The PRESIDING OFFICER. The Senator is recognized for 1 minute.
  Mr. ASHCROFT. Mr. President, this amendment simply eliminates from 
this bill a special tax cut aimed at foreign technologies for 
converting poultry waste into electricity. I agree with converting 
poultry waste into something useful, but I disagree with giving a tax 
break to foreign corporations when there are U.S. companies capable of 
achieving that end.
  Two such companies exist in my home State. Agri-Cycle of Springfield, 
MO, processes chicken manure into pollution-free fertilizer pellets. 
The British company that wants to build the facility here and burn the 
waste claims they need the tax break because without it, they would not 
be able to expand here because they are used to large subsidies they 
receive from the British Government.
  I ask my colleagues to support this amendment, and I ask for the yeas 
and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. Does any Senator wish to speak in opposition 
to the amendment?
  The Senator from Delaware.
  Mr. ROTH. Mr. President, I rise in opposition to this amendment. The 
poultry provision in the Taxpayer Refund Act of 1999 meets three 
important criteria:
  First, it facilitates the development and use of alternative fuel to 
generate clean electricity--energy that is not only abundant, but 
environmentally friendly. Certainly, in this summer of rolling 
brownouts, we cannot overstate how important this is.

[[Page S9904]]

  Second, the poultry provision in this bill addresses the need to 
safely and effectively dispose of chicken waste. Poultry production in 
the United States has tripled since 1975. Along with this growth, comes 
the waste, and the need to dispose of it.
  And third, the poultry provision in the bill demonstrates Congress' 
willingness to help our poultry farmers, while encouraging 
technological advances. Providing incentives for facilities that turn 
chicken waste into clean energy is consistent with our objectives.
  For these reasons, I urge my colleagues to vote against this 
amendment, and to support the production of clean electricity--
production that will help America meet its energy needs, while helping 
our farmers and protecting our environment.
  Mr. MOYNIHAN. Mr. President, this measure was thoroughly discussed in 
the Committee on Finance and is well understood on our side. I support 
the chairman in the existing provision of the bill.
  The PRESIDING OFFICER. The opposition time has expired.
  Mr. ROTH. I call for the yeas and nays.
  The PRESIDING OFFICER. The yeas and nays have already been ordered.
  The question is on agreeing to amendment No. 1456. The yeas and nays 
have been ordered. The clerk will call the roll.
  The assistant legislative clerk called the roll.
  The result was announced--yeas 23, nays 77, as follows:

                      [Rollcall Vote No. 246 Leg.]

                                YEAS--23

     Abraham
     Allard
     Ashcroft
     Bond
     Brownback
     Burns
     Craig
     Crapo
     Durbin
     Enzi
     Fitzgerald
     Gorton
     Gregg
     Inhofe
     Johnson
     Kohl
     Kyl
     McCain
     Nickles
     Roberts
     Smith (NH)
     Thomas
     Wyden

                                NAYS--77

     Akaka
     Baucus
     Bayh
     Bennett
     Biden
     Bingaman
     Boxer
     Breaux
     Bryan
     Bunning
     Byrd
     Campbell
     Chafee
     Cleland
     Cochran
     Collins
     Conrad
     Coverdell
     Daschle
     DeWine
     Dodd
     Domenici
     Dorgan
     Edwards
     Feingold
     Feinstein
     Frist
     Graham
     Gramm
     Grams
     Grassley
     Hagel
     Harkin
     Hatch
     Helms
     Hollings
     Hutchinson
     Hutchison
     Inouye
     Jeffords
     Kennedy
     Kerrey
     Kerry
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Lott
     Lugar
     Mack
     McConnell
     Mikulski
     Moynihan
     Murkowski
     Murray
     Reed
     Reid
     Robb
     Rockefeller
     Roth
     Santorum
     Sarbanes
     Schumer
     Sessions
     Shelby
     Smith (OR)
     Snowe
     Specter
     Stevens
     Thompson
     Thurmond
     Torricelli
     Voinovich
     Warner
     Wellstone
  Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
  Mr. LOTT. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER (Mr. Brownback). The Senator from Wisconsin.


                           Amendment No. 1417

  (Purpose: To amend the Internal Revenue Code of 1986 to repeal the 
       percentage depletion allowance for certain hardrock mines)

  Mr. FEINGOLD. Mr. President, I call up amendment No. 1417.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Wisconsin [Mr. Feingold] proposes an 
     amendment numbered 1417.

  Mr. FEINGOLD. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The amendment is printed in a previous edition of the Record.)
  Mr. FEINGOLD. Mr. President, my amendment eliminates the percentage 
depletion allowance for minerals mined on Federal public lands. It 
applies only to hard rock minerals and does not touch oil and gas, and 
it preserves the deduction for private lands.
  The President's fiscal year 2000 budget recommends eliminating this 
tax break. OMB estimates this amendment would raise $478 million over 5 
years.
  We allow companies to mine on public lands for very low patent fees 
already. We shouldn't continue to provide them with a double subsidy by 
preserving this special tax break for hard rock mining companies which 
ordinary businesses do not get.
  I understand this will be the subject of a voice vote.
  The PRESIDING OFFICER. The question is on agreeing to amendment No. 
1417.
  The amendment (No. 1417) was rejected.
  Mr. ROTH. Mr. President, I recognize Senator Coverdell for the next 
amendment.


                    Amendment No. 1426, As Modified

  Mr. COVERDELL. Mr. President, I ask unanimous consent to send a 
modification of my amendment No. 1426 to the desk.
  The PRESIDING OFFICER. Without objection, it is so ordered. The clerk 
will report.
  The legislative clerk read as follows:

       The Senator from Georgia [Mr. Coverdell], for himself, Mr. 
     Torricelli, Mr. Domenici, Mr. Bayh, and Mr. Abraham, proposes 
     an amendment numbered 1426, as modified.

  Mr. COVERDELL. Mr. President, I ask unanimous consent that further 
reading of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment, as modified, is as follows:

       On page 32, strike lines 12 through 14, insert the 
     following:
       (2) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. __. LONG-TERM CAPITAL GAINS DEDUCTION FOR INDIVIDUALS.

       (a) General Rule.--Part I of subchapter P of chapter 1 
     (relating to treatment of capital gains) is amended by 
     redesignating section 1202 as section 1203 and by inserting 
     after section 1201 the following new section:

     ``SEC. 1202. CAPITAL GAINS DEDUCTION FOR INDIVIDUALS.

       ``(a) In General.--In the case of an individual, there 
     shall be allowed as a deduction for the taxable year an 
     amount equal to the lesser of--
       ``(1) the net capital gain of the taxpayer for the taxable 
     year, or
       ``(2) $1,000.
       ``(b) Sales Between Related Parties.--Gains from sales and 
     exchanges to any related person (within the meaning of 
     section 267(b) or 707(b)(1)) shall not be taken into account 
     in determining net capital gain.
       ``(c) Special Rule for Section 1250 Property.--Solely for 
     purposes of this section, in applying section 1250 to any 
     disposition of section 1250 property, all depreciation 
     adjustments in respect of the property shall be treated as 
     additional depreciation.
       ``(d) Section Not To Apply to Certain Taxpayers.--No 
     deduction shall be allowed under this section to--
       ``(1) an individual with respect to whom a deduction under 
     section 151 is allowable to another taxpayer for a taxable 
     year beginning in the calendar year in which such 
     individual's taxable year begins,
       ``(2) a married individual (within the meaning of section 
     7703) filing a separate return for the taxable year, or
       ``(3) an estate or trust.
       ``(e) Special Rule for Pass-Thru Entities.--
       ``(1) In general.--In applying this section with respect to 
     any pass-thru entity, the determination of when the sale or 
     exchange occurs shall be made at the entity level.
       ``(2) Pass-thru entity defined.--For purposes of paragraph 
     (1), the term `pass-thru entity' means--
       ``(A) a regulated investment company,
       ``(B) a real estate investment trust,
       ``(C) an S corporation,
       ``(D) a partnership,
       ``(E) an estate or trust, and
       ``(F) a common trust fund.''
       (b) Coordination With Maximum Capital Gains Rate.--
     Paragraph (3) of section 1(h) (relating to maximum capital 
     gains rate) is amended to read as follows:
       ``(3) Coordination with other provisions.--For purposes of 
     this subsection, the amount of the net capital gain shall be 
     reduced (but not below zero) by the sum of--
       ``(A) the amount of the net capital gain taken into account 
     under section 1202(a) for the taxable year, plus
       ``(B) the amount which the taxpayer elects to take into 
     account as investment income for the taxable year under 
     section 163(d)(4)(B)(iii).''
       (c) Deduction Allowable in Computing Adjusted Gross 
     Income.--Subsection (a) of section 62 (defining adjusted 
     gross income) is amended by inserting after paragraph (17) 
     the following new paragraph:
       ``(18) Long-term capital gains.--The deduction allowed by 
     section 1202.''
       (d) Treatment of Collectibles.--
       (1) In general.--Section 1222 (relating to other terms 
     relating to capital gains and losses) is amended by inserting 
     after paragraph (11) the following new paragraph:
       ``(12) Special rule for collectibles.--
       ``(A) In general.--Any gain or loss from the sale or 
     exchange of a collectible shall be treated as a short-term 
     capital gain or loss (as the case may be), without regard to 
     the period such asset was held. The preceding sentence shall 
     apply only to the extent the gain or loss is taken into 
     account in computing taxable income.
       ``(B) Treatment of certain sales of interest in 
     partnership, etc.--For purposes

[[Page S9905]]

     of subparagraph (A), any gain from the sale or exchange of an 
     interest in a partnership, S corporation, or trust which is 
     attributable to unrealized appreciation in the value of 
     collectibles held by such entity shall be treated as gain 
     from the sale or exchange of a collectible. Rules similar to 
     the rules of section 751(f) shall apply for purposes of the 
     preceding sentence.
       ``(C) Collectible.--For purposes of this paragraph, the 
     term `collectible' means any capital asset which is a 
     collectible (as defined in section 408(m) without regard to 
     paragraph (3) thereof).''
       (2) Charitable deduction not affected.--
       (A) Paragraph (1) of section 170(e) is amended by adding at 
     the end the following new sentence: ``For purposes of this 
     paragraph, section 1222 shall be applied without regard to 
     paragraph (12) thereof (relating to special rule for 
     collectibles).''
       (B) Clause (iv) of section 170(b)(1)(C) is amended by 
     inserting before the period at the end the following: ``and 
     section 1222 shall be applied without regard to paragraph 
     (12) thereof (relating to special rule for collectibles)''.
       (e) Personal Exemptions Allowed in Computing Minimum Tax.--
       (1) In general.--Subparagraph (E) of section 6(b)(1) is 
     amended by striking ``$50'' and inserting ``$300''.
       (2) Conforming amendment.--Subparagraph (E) of section 
     56(b)(1), as amended by section 206(b)(2), is amended by 
     striking ``$50'' and inserting ``$300''.
       (f) Conforming Amendments.--
       (1) Section 57(a)(7) is amended by striking ``1202'' and 
     inserting ``1203''.
       (2) Clause (iii) of section 163(d)(4)(B) is amended to read 
     as follows:
       ``(iii) the sum of--

       ``(I) the portion of the net capital gain referred to in 
     clause (ii)(II) (or, if lesser, the net capital gain referred 
     to in clause (ii)(I)) taken into account under section 1202, 
     reduced by the amount of the deduction allowed with respect 
     to such gain under section 1202, plus

       ``(II) so much of the gain described in subclause (I) which 
     is not taken into account under section 1202 and which the 
     taxpayer elects to take into account under this clause.''

       (3) Subparagraph (B) of section 172(d)(2) is amended to 
     read as follows:
       ``(B) the deduction under section 1202 and the exclusion 
     under section 1203 shall not be allowed.''
       (4) Section 642(c)(4) is amended by striking ``1202'' and 
     inserting ``1203''.
       (5) Section 643(a)(3) is amended by striking ``1202'' and 
     inserting ``1203''.
       (6) Paragraph (4) of section 691(c) is amended inserting 
     ``1203,'' after ``1202,''.
       (7) The second sentence of section 871(a)(2) is amended by 
     inserting ``or 1203'' after ``section 1202''.
       (8) The last sentence of section 1044(d) is amended by 
     striking ``1202'' and inserting ``1203''.
       (9) Paragraph (1) of section 1402(i) is amended by 
     inserting ``, and the deduction provided by section 1202 and 
     the exclusion provided by section 1203 shall not apply'' 
     before the period at the end.
       (10) Section 121 is amended by adding at the end the 
     following new subsection:
       ``(h) Cross Reference.--

  ``For treatment of eligible gain not excluded under subsection (a), 
see section 1202.''
       (11) Section 1203, as redesignated by subsection (a), is 
     amended by adding at the end the following new subsection:
       ``(l) Cross Reference.--

  ``For treatment of eligible gain not excluded under subsection (a), 
see section 1202.''
       (12) The table of sections for part I of subchapter P of 
     chapter 1 is amended by striking the item relating to section 
     1202 and by inserting after the item relating to section 1201 
     the following new items:

``Sec. 1202. Capital gains deduction.
``Sec. 1203. 50-percent exclusion for gain from certain small business 
              stock.''
       (g) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     beginning after December 31, 2005.
       (2) Collectibles.--The amendments made by subsection (d) 
     shall apply to sales and exchanges after December 31, 2005.

  Mr. COVERDELL. Mr. President, it is my understanding this will be 
done by a voice vote. I am going to speak for about 50 seconds and 
yield to my coauthor, Senator Torricelli from New Jersey.
  Seventy-five percent of stockholders today have household incomes 
less than $75,000. The Coverdell-Torricelli amendment targets middle-
class investors by exempting their first $1,000 capital gains from 
taxation, beginning in fiscal year 2006. This is a bipartisan 
amendment, which is also cosponsored by, as I said, Senators 
Torricelli, Domenici, Bayh, and Abraham. It will wipe out the gains tax 
for millions of middle-class taxpayers and promote tax simplification.
  I yield the remainder of my minute to the Senator from New Jersey.
  The PRESIDING OFFICER. The Senator from New Jersey.
  Mr. TORRICELLI. Mr. President, Senator Bayh and I have joined with 
Senator Coverdell on this amendment. It is simple on its face: to 
encourage people to engage in modest savings, eliminating $1,000 of 
capital gains tax for modest savers. Seventy-five percent of the people 
who will be affected by this earn less than $70,000. It is to encourage 
the culture of savings so people plan for their own retirements and 
security in their own families.
  The Nation today is in the midst of a savings crisis. I know of no 
better way to encourage people to participate in the growth of this 
economy and investment than giving this simple $1,000 exclusion on 
their capital gains.
  I thank the Chair.
  The PRESIDING OFFICER. Who yields time in opposition?
  Mr. ROTH. Mr. President, I call for a voice vote.
  The PRESIDING OFFICER. The question is on agreeing to amendment No. 
1426, as modified.
  The amendment (No. 1426) was agreed to.
  Mr. GRAMM. Mr. President, I move to reconsider the vote.
  Mr. ROTH. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. ROTH. I recognize Senator Snowe for the next amendment.


                           Amendment No. 1468

  Ms. SNOWE. Mr. President, I call up amendment No. 1468.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Maine [Ms. Snowe] proposes an amendment 
     numbered 1468.

  Ms. SNOWE. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The amendment is printed in a previous edition of the Record.)
  Ms. SNOWE. Mr. President, I ask unanimous consent to add Senator 
Schumer as a cosponsor of this amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Ms. SNOWE. Mr. President, essentially this takes a provision that is 
included in the amendment that Senator Schumer and I had offered that 
addresses the growing debt burden faced by recent college students.
  The bottom line is, we all recognize that the cost of college 
education has quadrupled over the last 20 years, growing at twice the 
rate of inflation. In fact, over the past 5 years, the demand for 
college loans has soared by more than 82 percent. Therefore, recent 
graduates have been forced to assume a greater burden of debt after 
they graduate from college.
  My amendment would add a tax credit for interest on student loans for 
the first 5 years upon graduation so that it would ease the amount of 
debt that individuals have to assume. It would be a $1,500 tax credit. 
In fact, this has received the support of the American Council on 
Education.
  I will quote from this letter:

       By adding your amendment to the Roth provision, students 
     who are working hard to repay their loans will receive tax 
     relief for the duration of their repayment and benefit from 
     the additional relief of your credit during their first years 
     out of college.

  I ask unanimous consent to have printed in the Record the letter from 
which I just quoted.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                    American Council on Education,


                                      Office of the President,

                                    Washington, DC, July 30, 1999.
     Hon. Olympia J. Snowe,
     U.S. Senate,
     Washington, DC.
       Dear Senator Snowe: The higher education associations 
     listed below write in support of your amendment to create a 
     tax credit for interest payments on student loans. Your 
     amendment, which would provide a $1,500 tax credit on 
     interest payments for the first 60 months of repayment, is a 
     welcome addition to the provisions already contained in 
     Chairman Roth's bill.
       We strongly support the provisions that Chairman Roth has 
     included in his bill to expand the existing Student Loan 
     Interest Deduction by eliminating the 60 payment restriction 
     and by modestly increasing the income limits for married 
     couples. We understand that your amendment is fully offset,

[[Page S9906]]

     and will not change any of the underlying education 
     provisions in S. 1429.
       By adding your amendment to the Roth provisions, students 
     who are working hard to repay their loans will receive tax 
     relief for the duration of their repayment and benefit from 
     the additional relief of your credit during their first years 
     out of college.
       Thank you for your efforts to lessen the burden on student 
     borrowers.
           Sincerely,
                                             Stanley O. Ikenberry,
                                                        President.
           On behalf of:
       American Association of Community Colleges.
       American Association of State Colleges and Universities.
       American Council on Education.
       Association of American Universities.
       Association of Jesuit Colleges and Universities.
       Council of Independent Colleges.
       National Association of Independent Colleges and 
     Universities.
       National Association of State Universities and Land-Grant 
     Colleges.
       National Association of Student Financial Aid 
     Administrators.
       United States Student Association.
       US PIRG.

  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. ROTH. Mr. President, I suggest a voice vote.
  The PRESIDING OFFICER. The question is on agreeing to amendment No. 
1468.
  The amendment (No. 1468) was rejected.
  Mr. GRAMM. Mr. President, I move to reconsider the vote.
  Mrs. BOXER. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. ROTH. Mr. President, I recognize Senator Gregg for the next 
amendment.


                    Amendment No. 1375, As Modified

 (Purpose: To provide a minimum dependent care credit for stay-at-home 
                    parents, and for other purposes)

  Mr. GREGG. Mr. President, I send an amendment to the desk and ask for 
its modification.
  The PRESIDING OFFICER. Without objection, it is so ordered. The clerk 
will report the amendment.
  The assistant legislative clerk read as follows:

       The Senator from New Hampshire [Mr. Gregg] proposes an 
     amendment numbered 1375, as modified.

  Mr. GREGG. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment, as modified, is as follows:

       On page 21, before line 1, insert:
       (c) Minimum Dependent Care Credit Allowed for Stay-at-Home 
     Parents.--Section 21(e) (relating to special rules) is 
     amended by adding at the end the following:
       ``(11) Minimum credit allowed for stay-at-home parents.--
       ``(A) In general.--Notwithstanding subsection (d), in the 
     case of any taxpayer with 1 or more qualifying individuals 
     described in subsection (b)(1)(A) under the age of 1, such 
     taxpayer shall be deemed to have employment-related expenses 
     for the taxable year with respect to each such qualifying 
     individual in an amount equal to the sum of--
       ``(i) $200 for each month in such taxable year during which 
     such qualifying individual is under the age of 1, and
       ``(ii) the amount of employment-related expenses otherwise 
     incurred for such qualifying individual for the taxable year 
     (determined under this section without regard to this 
     paragraph).
       ``(B) Election to not apply this paragraph.--This paragraph 
     shall not apply with respect to any qualifying individual for 
     any taxable year if the taxpayer elects to not have this 
     paragraph apply to such qualifying individual for such 
     taxable year.''.
       On page 21, line 1, strike ``(c)'' and insert ``(d)''.

  Mr. GREGG. Mr. President, this is the stay-at-home-moms amendment. It 
basically extends the dependent care tax credit to stay-at-home moms. I 
note that the Senate voted 96-0 in a sense of the Senate for this 
proposal. It applies to the first year of the child's life and would 
apply the dependent care tax credit to that first year, so that mothers 
who stay at home and raise children are treated the same way as mothers 
who have to go to work and send their children to day care.
  I note that it is an amendment that is targeted at middle- and low-
income families, with stay-at-home mothers in households with an 
average $38,000 in income and with two working parents with an average 
income of about $58,000. It is a proposal the Senate has spoken on 
relative to the sense of the Senate. Therefore, I hope the Senate 
supports this proposal.
  I ask for a voice vote.
  Mr. NICKLES addressed the Chair.
  The PRESIDING OFFICER. The Senator from Oklahoma.
  Mr. NICKLES. Mr. President, I urge my colleagues to support the Gregg 
amendment.
  The PRESIDING OFFICER. The question is on agreeing to the amendment.
  The amendment (No. 1375) was agreed to.


                       Vote On Amendment No. 1468

  Mr. NICKLES. Mr. President, if I might have the attention of the 
Senate, a moment ago we had a voice vote on the Snowe amendment and 
there was some question on the outcome. I think the Chair ruled ``no'' 
on the Snowe amendment, and I personally think there was a significant 
question about that. A lot of people voted in favor of the Snowe 
amendment. So I move to reconsider the vote on the Snowe amendment.
  The PRESIDING OFFICER. Is there objection to reconsidering the vote?
  Without objection, the vote will be reconsidered.
  The question is on agreeing to amendment No. 1468 by the Senator from 
Maine, Ms. Snowe.
  The amendment (No. 1468) was agreed to.
  Mr. ROTH addressed the Chair.
  The PRESIDING OFFICER. The Senator from Delaware is recognized.


                            Motion To Waive

  Mr. ROTH. Mr. President, section 202 of S. 1429 makes certain that 
the marriage penalty relief in the bill also applies to married couples 
receiving earned-income tax credits. Thus, the provision violates the 
Budget Act because it increases outlays.
  In order to protect the provision against a point of order, I move to 
waive any point of order against section 202 in this legislation, a 
subsequent conference report, or in an amendment between the Houses if 
such point of order is made on the grounds that the enhancement of the 
earned-income tax credit for married couples is an increase in outlays.
  I call for a voice vote.
  The PRESIDING OFFICER. The question is on agreeing to the motion of 
the Senator from Delaware.
  In the opinion of the Chair, three-fifths of the Senators duly sworn 
having voted in the affirmative, the motion is agreed to.
  Mr. ROTH. Mr. President, I ask unanimous consent that notwithstanding 
the passage of the reconciliation bill, the managers of the bill have 
the authority, in conjunction with the Secretary of the Senate, to make 
further changes to the bill.
  I further ask consent that the changes just described must be cleared 
by both managers and the authority extend until 5 p.m. on Friday.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                     Amendments Agreed To, En Bloc

  Mr. ROTH. Mr. President, I send a series of amendments to the desk 
and ask unanimous consent that these amendments be considered agreed to 
en bloc, the motion to reconsider be laid upon the table, and any 
statements relating to these amendments appear at this point in the 
Record. I indicate to my colleagues that these amendments have been 
cleared on both sides of the aisle.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendments (Nos. 1377, 1387, 1394, 1402, 1407, 1425, 1441, 1458, 
1460, 1464, 1479, 1485, 1488, and 1491), en bloc, were agreed to.
  (The amendments are printed in a previous edition of the Record.)
  The amendments (Nos. 1378, as modified; 1403, as modified; 1404, as 
modified; 1418, as modified; 1443, as modified; 1465, as modified; 
1474, as modified), en bloc, were agreed to, as follows:


                     AMENDMENT NO. 1378 AS MODIFIED

   (Purpose: To amend the Internal Revenue Code of 1986 to expand S 
       corporation eligibility for banks, and for other purposes)

       On page 225, after line 24, add the following:

     SEC. __. EXCLUSION OF INVESTMENT SECURITIES INCOME FROM 
                   PASSIVE INCOME TEST FOR BANK S CORPORATIONS.

       (a) In General.--Section 1362(d)(3)(C) (defining passive 
     investment income) is amended by adding at the end the 
     following:
       ``(v) Exception for banks; etc.--In the case of a bank (as 
     defined in section 581), a

[[Page S9907]]

     bank holding company (as defined in section 
     246A(c)(3)(B)(ii)), or a qualified subchapter S subsidiary 
     bank, the term `passive investment income' shall not 
     include--

       ``(I) interest income earned by such bank, bank holding 
     company, or qualified subchapter S subsidiary bank, or
       ``(II) dividends on assets required to be held by such 
     bank, bank holding company, or qualified subchapter S 
     subsidiary bank to conduct a banking business, 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) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.

     SEC. __. TREATMENT OF QUALIFYING DIRECTOR SHARES.

       (a) In General.--Section 1361 is amended by adding at the 
     end the following:
       ``(f) Treatment of Qualifying Director Shares.--
       ``(1) In general.--For purposes of this subchapter--
       ``(A) qualifying director shares shall not be treated as a 
     second class of stock, and
       ``(B) no person shall be treated as a shareholder of the 
     corporation by reason of holding qualifying director shares.
       ``(2) Qualifying director shares defined.--For purposes of 
     this subsection, the term `qualifying director shares' means 
     any shares of stock in a bank (as defined in section 581) or 
     in a bank holding company registered as such with the Federal 
     Reserve System--
       ``(i) which are held by an individual solely by reason of 
     status as a director of such bank or company or its 
     controlled subsidiary; and
       ``(ii) which are subject to an agreement pursuant to which 
     the holder is required to dispose of the shares of stock upon 
     termination of the holder's status as a director at the same 
     price as the individual acquired such shares of stock.
       ``(3) Distributions.--A distribution (not in part or full 
     payment in exchange for stock) made by the corporation with 
     respect to qualifying director shares shall be includible as 
     ordinary income of the holder and deductible to the 
     corporation as an expense in computing taxable income under 
     section 1363(b) in the year such distribution is received.''
       (b) Conforming Amendments.--
       (1) Section 1361(b)(1) is amended by inserting ``, except 
     as provided in subsection (f),'' before ``which does not''.
       (2) Section 1366(a) is amended by adding at the end the 
     following:
       ``(3) Allocation with respect to qualifying director 
     shares.--The holders of qualifying director shares (as 
     defined in section 1361(f)) shall not, with respect to such 
     shares of stock, be allocated any of the items described in 
     paragraph (1).''
       (3) Section 1373(a) is amended by striking ``and'' at the 
     end of paragraph (1), by striking the period at the end of 
     paragraph (2) and inserting ``, and'', and adding at the end 
     the following:
       ``(3) no amount of an expense deductible under this 
     subchapter by reason of section 1361(f)(3) shall be 
     apportioned or allocated to such income.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.
                                  ____



                    amendment no. 1403, as modified

 (Purpose: To amend the Internal Revenue Code of 1986 with respect to 
  the treatment of the transportation of person traveling to or from 
                 areas not connected to a road system)

       At page 180, line 18 before the period insert the following 
     new phrase:

     ``AND PASSENGERS PERMITTED TO UTILIZE OTHERWISE EMPTY SEATS 
                   ON AIRCRAFT''.

       At page 180, between lines 21 and 22 insert the following 
     new subsections:
       ``(b) Subsection (h) of section 132 of the Internal Revenue 
     Code of 1986 (relating to certain fringe benefits) is amended 
     by adding at the end thereof the following new paragraph:
       ``(4) Special rule for passengers traveling on 
     noncommercial aircraft.--Any use of non-commercial air 
     transportation by an individual shall be treated as use by an 
     employee if no regularly scheduled commercial flight is 
     available that day from the air facility at the individual 
     location.
       ``(c) Subsection (j) of section 132 of the Internal Revenue 
     Code of 1986 (relating to certain fringe benefits'' is 
     amended by adding at the end thereof the following new 
     paragraph:
       ``(9) Special rule for certain noncommercial air 
     transportation.--For the purposes of subsection (b) the term 
     ``no-additional-cost service'' includes the value of 
     transportation provided by an employer to an employee on a 
     noncommercially operated aircraft if--
       ``(A) such transportation is provided on a flight made in 
     the ordinary course of the trade or business of the employer 
     owning or leasing such aircraft for use in such trade or 
     business,
       ``(B) the flight on which the transportation is provided by 
     the employer would have been made whether or not such 
     employee was transported on the flight, and
       ``(C) the employer incurs no substantial additional cost in 
     providing such transportation to such employee.

     For purposes of this paragraph, an aircraft is 
     noncommercially operated if transportation provided by the 
     employer is not provided or made available to the general 
     public by purchase of a ticket or other fare.
       At page 180 line 22 strike ``(b)'' and insert in lieu 
     thereof ``(d)''.
                                  ____



                     AMENDMENT NO. 1404 AS MODIFIED

   (Purpose: To expand the adoption credit to provide assistance to 
  adoptive parents of special needs children, and for other purposes)

       At the end of title II, insert the following:

     SEC. __. EXPANSION OF ADOPTION CREDIT.

       (a) In General.--Section 23(a)(1) (relating to allowance of 
     credit) is amended to read as follows:
       ``(1) In general.--In the case of an individual, there 
     shall be allowed as a credit against the tax imposed by this 
     chapter--
       ``(A) in the case of an adoption of a child other than a 
     child with special needs, the amount of the qualified 
     adoption expenses paid or incurred by the taxpayer, and
       ``(B) in the case of an adoption of a child with special 
     needs, $7,500.''
       (b) Dollar Limitation.--Section 23(b)(1) is amended--
       (1) by striking ``($6,000, in the case of a child with 
     special needs)'', and
       (2) by striking ``subsection (a)'' and inserting 
     ``subsection (a)(1)''.
       (c) Year Credit Allowed.--Section 23(a)(2) is amended by 
     adding at the end the following new flush sentence:
     ``In the case of the adoption of a child with special needs, 
     the credit allowed under paragraph (1) shall be allowed for 
     the taxable year in which the adoption becomes final.''
       (d) Definition of Eligible Child.--Section 23(d)(2) is 
     amended to read as follows:
       ``(2) Eligible child.--The term `eligible child' means any 
     individual who--
       ``(A) has not attained age 18, or
       ``(B) is physically or mentally incapable of caring for 
     himself.''
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.
                                  ____



                     amendment no. 1418 as modified

 (Purpose: To amend the Internal Revenue Code of 1986 with respect to 
                the treatment of maple syrup production)

       On line 3 of subsection (k) of section 3306 of the Internal 
     Revenue Code of 1986 is amended by inserting after 
     ``chapter'' the following: ``agricultural labor includes 
     labor connected to the harvesting or production of maple sap 
     into maple syrup or sugar, and''.
                                  ____



                     AMENDMENT NO. 1443 as modified

    (Purpose: To provide that trusts established for the benefit of 
   individuals with disabilities shall be taxed at the same rates as 
             individual taxpayers, and for other purposes)

       On page 32, between lines 14 and 15, insert the following:

     SEC. 207. MODIFICATION OF TAX RATES FOR TRUSTS FOR 
                   INDIVIDUALS WHO ARE DISABLED.

       (a) In General.--Section 1(e) (relating to tax imposed on 
     estates and trusts) is amended to read as follows:
       ``(e) Estates and Trusts.--
       ``(1) In general.--Except as provided in paragraph (2), 
     there is hereby imposed on the taxable income of--
       ``(A) every estate, and
       ``(B) every trust,
     taxable under this subsection a tax determined in accordance 
     with the following table:

The tax is:e income is:
15% of taxable income..................................................
$225, plus 28% of the excess over $1,500...............................
$785, plus 31% of the excess over $3,500...............................
$1,405, plus 36% of the excess over $5,500.............................
$2,125, plus 39.6% of the excess over $7,500...........................
       ``(2) Special rule for trusts for disabled individuals.--
       ``(A) In general.--There is hereby imposed on the taxable 
     income of an eligible trust taxable under this subsection a 
     tax determined in the same manner as under subsection (c).
       ``(B) Eligible trust.--For purposes of subparagraph (A), a 
     trust shall be treated as an eligible trust for any taxable 
     year if, at all times during such year during which the trust 
     is in existence, the exclusive purpose of the trust is to 
     provide reasonable amounts for the support and maintenance of 
     1 beneficiary who is permanently and totally disabled (within 
     the meaning of section 22(e)(3)). A trust shall not fail to 
     meet the requirements of this subparagraph merely because the 
     corpus of the trust may revert to the grantor or a member of 
     the grantor's family upon the death of the beneficiary.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.
                                  ____



                     AMENDMENT NO. 1465 as modified

(Purpose: To index the State-ceiling on the low-income housing credit, 
                        and for other purposes)

       On page 288, strike line 5 and insert:
       (c) Adjustment of State Ceiling for Increases in Cost-of-
     Living.--Paragraph (3) of

[[Page S9908]]

     section 42(h) (relating to housing credit dollar amount for 
     agencies), as amended by subsection (b), is amended by adding 
     at the end the following new subparagraph:
       ``(I) Cost-of-living adjustment.--
       ``(i) In general.--In the case of a calendar year after 
     2005, the $1.75 amount in subparagraph (H) 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 by substituting 
     `calendar year 2004' for `calendar year 1992' in subparagraph 
     (B) thereof.

       ``(ii) Rounding.--Any increase under clause (i) which is 
     not a multiple of 5 cents shall be rounded to the next lowest 
     multiple of 5 cents.''.
       (d) Conforming Amendments.--
       On page 288, line 19, strike ``(d)'' and insert ``(e)''.
                                  ____



                     AMENDMENT NO. 1474 as modified

  (Purpose: To exclude certain severance payment amounts from income)

       On page 371, between lines 16 and 17, insert the following:

     SEC. __. EXCLUSION FROM INCOME OF SEVERANCE PAYMENT AMOUNTS.

       (a) In General.--Part III of subchapter B of chapter 1 
     (relating to items specifically excluded from gross income) 
     is amended by redesignating section 139 as section 140 and by 
     inserting after section 138 the following new section:

     ``SEC. 139. SEVERANCE PAYMENTS.

       ``(a) In General.--In the case of an individual, gross 
     income shall not include any qualified severance payment.
       ``(b) Limitation.--The amount to which the exclusion under 
     subsection (a) applies shall not exceed $2,000 with respect 
     to any separation from employment.
       ``(c) Qualified Severance Payment.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified severance payment' 
     means any payment received by an individual if--
       ``(A) such payment was paid by such individual's employer 
     on account of such individual's separation from employment,
       ``(B) such separation was in connection with a reduction in 
     the work force of the employer, and
       ``(C) such individual does not attain employment within 6 
     months of the date of such separation in which the amount of 
     compensation is equal to or greater than 95 percent of the 
     amount of compensation for the employment that is related to 
     such payment.
       ``(2) Limitation.--Such term shall not include any payment 
     received by an individual if the aggregate payments received 
     with respect to the separation from employment exceed 
     $75,000.''
       (b) Clerical Amendment.--The table of sections for part III 
     of subchapter B of chapter 1 is amended by striking the item 
     relating to section 139 and inserting the following new 
     items:

``Sec. 139. Severance payments.
``Sec. 140. Cross references to other Acts.''
       (c) Effective Date.--The amendments made by subsections (a) 
     and (b) shall apply to taxable years beginning after December 
     31, 2000, and before January 1, 2002.


                    amendment no. 1378, as modified

  Mr. ALLARD. Mr. President, this amendment would expand the small 
business provisions of this tax bill. I am pleased that several of the 
provisions have been accepted. We are making solid progress on this 
issue.
  This is a bipartisan amendment, cosponsored by Senators Robb of 
Virginia and Hagel of Nebraska.
  I support tax relief for the American people, and I will support this 
tax bill. The surplus belongs to the American people, and I think a 
refund of one-third of the surplus is reasonable.
  While I support the bill, I have been working to improve it before 
final passage.
  In particular, we should expand the small business tax section of the 
code known as Subchapter S. Subchapter S of the Internal Revenue Code 
was enacted by Congress in 1958 and has been liberalized a number of 
times over the last two decades, significantly in 1982 and again in 
1996.
  This reflects a desire on the part of Congress to reduce taxes on 
small businesses. Subchapter S eliminates the double taxation of small 
business income.
  Under Subchapter S the business is taxed at the shareholder level 
alone, it is not taxed at the corporate level. Subchapter S is 
available only to small businesses that have a small number of 
shareholders.
  Congress made small banks eligible for S corporation status in the 
1996 ``Small Business Job Protection Act.''
  Since first becoming eligible, nearly 1,000 small banks have 
converted from regular corporations to small business corporations.
  Unfortunately, many more would like to convert, but are prevented 
from doing so by a number of remaining obstacles in the tax law.
  My amendment builds on and clarifies the Subchapter S provisions from 
1996. It contains several provisions of particular benefit to community 
banks that may be contemplating a conversion to Subchapter S.
  The amendment is based on S. 875, legislation that I introduced 
earlier this year with the cosponsorship of Senators Gramm, Bennett, 
Shelby, Abraham, Hagel, Enzi, Mack, Grams, Inhofe, Brownback, and 
Thomas.
  I have selected several provisions from the bill for this amendment 
and the Finance Committee has agreed to accept them. Let me review 
these provisions:
  First, we exclude investment securities income from the passive 
income test for banks. Banks are unique, they are required to hold 
passive investments such as federal bonds and municipal bonds in order 
to comply with safety and soundness regulations.
  This provision is only fair. If we require certain investments by 
regulation, we should not use this requirement to prohibit banks from 
becoming Subchapter S small businesses.
  Second, we permit Subchapter S small business corporations to have 
bank director stock. Again, regulations require banks to have bank 
director stock.
  We clarify that this does not punish banks. They can still become 
small business corporations.
  In addition, I will be working with Chairman Roth and his staff on 
several other provisions to consider for the future. These include one 
to permit Individual Retirement Accounts to be shareholders in an S 
corporation. This provision is a recognition of the importance of IRAs.
  We have found that many community bank owners have their shares in an 
IRA. There is nothing wrong with this. We should let them be 
shareholders.
  In addition, we hope in the future to permit S corporations to issue 
preferred stock. This would give all small businesses that are S 
corporations access to investment capital.
  Let me conclude with a general statement on why we should enact these 
changes. Last year we enacted broad legislation to support credit 
unions. I supported this legislation.
  We should now give small banks some tax relief. They are in a tough 
competitive position.
  We are about to approve financial modernization in this Congress. I 
am a member of the Conference on this important legislation. I support 
the legislation.
  But I think it is right to note that this legislation is of greatest 
appeal to larger financial institutions.
  Again, our small community banks need help. They need tax relief to 
help them compete and survive. This amendment give the small banks tax 
relief.
  This amendment is supported by the Independent Community Bankers of 
America, the American Bankers Association, the Independent Bankers of 
Colorado, the Colorado Bankers Association, the Independent Bankers 
Association of Texas, and others.
  I am pleased that the Finance Committee has accepted the passive 
income and director stock provisions of the amendment.
  In addition, Senator Roth  and his staff have agreed to work with us 
on the remaining provisions of the amendment and S. 875.


                           Amendment No. 1403

  Mr. STEVENS. Mr. President, my amendment mirrors a bill I introduced 
on an earlier occasion-S. 1410.
  This amendment would equate the tax treatment of persons flying what 
would otherwise be empty seats on private noncommercial aircraft with 
the treatment of airline employees flying on space available basis on 
regularly scheduled flights. Currently, use of these empty seats is 
deemed taxable personal income to the employee. I refer to it as the 
empty-seat tax. In contrast, under current law, airline employees, 
retirees and their parents and children can fly tax-free on scheduled 
commercial flights for nonbusiness reasons. Military personnel and 
their families can hop military flights for nonbusiness reasons without 
the imposition of tax. Current and former employees of airborne freight 
or cargo haulers, together with their parents and children, can fly 
tax-free for nonbusiness reasons on seats that would have otherwise 
been empty.
  Employers who own or lease these aircraft are compelled by IRS 
regulations to consider 13 separate factors or

[[Page S9909]]

steps in determining the incidence and amount of tax to be imposed on 
their employees. My proposal seeks to deal with this inequity by 
treating all passengers the same way, but includes a provision which 
retains a reasonable standard of proof at audit to prevent abuse.
  This amendment would not allow an executive to use a company jet to 
fly with his family and friends on vacation. My amendment would require 
proof to be shown that the flight was made in the ordinary course of 
business, the flight would have been made whether or not the person was 
transported on the flight, and no substantial additional cost was 
incurred in providing the transportation for the passenger.
  In addition to the facilitation of employee travel, this provision is 
an especially important issue to large States with smaller populations 
because air travel comprises such a large part of our transportation 
systems. Instead of driving a car from city to city, many people from 
rural areas get on a plane to travel within their States. There are no 
roads from Barrow to Nome or Anchorage to Cold Bay. Additionally, in 
the event of illness, many people in rural States must take an empty 
seat on a company owned airplane and incur a tax penalty because they 
need medical treatment that can only be found in larger cities. My 
amendment includes a provision to allow passengers to be treated as 
employees if they live in remote areas that are not connected to a road 
system. For cases of medical emergency or other time sensitive 
situations, a passenger could as if they were an employee of the 
operator of the non-commercial aircraft without being taxes on the 
value of the seat.
  This is a modest proposal with small revenue impacts. The joint 
Committee on Taxation estimates the revenue impact for this provision 
would be approximately five million dollars per year over the next ten 
year period. While this is a small amount against the backdrop of the 
overall tax cut measure we are considering, it is a large amount to the 
people who are forced to pay the tax simply because they do not work 
for or are not related to an employee of an airline, the military, a 
cargo freight company, or because they live in remote areas without 
road access. Flights are often, at best, biweekly to some rural 
villages in my State and during the long periods when no flights are 
scheduled, transportation out of these remote areas in emergency 
situations requires chartering an aircraft.
  We should keep in mind that we are currently debating a tax refund 
bill that seeks to level the playing field for the American taxpayers. 
The tax refund bill would remove the marriage penalty that discriminate 
against married couples. It addresses inequities in pension plans that 
discriminate against certain workers. Yet, the Tax Refund Act does not 
address the tax discrimination against the users of empty seats who 
live or do business in rural areas.
  It is my hope that we can address this basic issue of tax fairness 
and complexity by eliminating the empty seat tax.


                           amendment no. 1460

  Mr. STEVENS. Mr. President, the proposed Taxpayers Refund Act of 1999 
includes a provision to create farm and ranch risk management (FARRM) 
accounts to help farmers and ranchers through down times. The estimated 
cost for this provision is $887 million over the next ten years. The 
FARRM accounts would be used to let farmers and ranchers set aside up 
to 20 percent of their income on a tax deferred basis. The money could 
be held for up to five years, then it would have to be withdrawn from 
the individual's account. Once the money is withdrawn from the account, 
the farmers and ranchers would pay tax on the amount that was 
originally deferred. Any interest earned on the money in the account 
would be taxed in the year that it was earned.
  This approach to encouraging farmers and ranchers to set some money 
aside for downturns in the market makes sense. However, this provision 
should be expanded to include fishermen--I have an amendment that would 
do just that. The Joint Committee on Taxation estimates allowing 
fishermen to set aside 20 percent of their income into these tax 
deferred accounts would cost only an additional $18 million over 10 
years.
  Fishermen are the farmers of the sea. They face the same type of 
economic problems that farmers and ranchers face and they shouldn't be 
excluded from establishing their own tax deferred accounts. In previous 
years we have had to bail out fishing areas that have been hit hard by 
fishery failures. A recent fishery failure in Alaska, and the impact of 
that failure on families and communities, is still being felt today. We 
were forced to allocate $50 million to bail out those fishermen and the 
local communities. This amendment, at a cost of $18 million over ten 
years, is a far-sighted way to let fishermen play a part in a disaster 
recovery and preserve the proud self-reliance that marks their 
industry.
  Fishermen should receive the same benefits as farmers and ranchers 
under the Tax Code. They share seasonal cyclical harvest levels and 
should not be left behind in the Tax Code. While this amendment is one 
step toward equal treatment, it is an important part of ensuring the 
long-term sustainability of our fishing industry. I thank my colleagues 
who have joined me on this amendment, Senators Murkowski, Inouye, 
Shelby, Breaux, Hollings, Gorton, and Murray.


                           amendment no. 1488

  Mr. STEVENS. Mr. President, the proposed Taxpayer Refund Act of 1999 
contains a provision to coordinate a farmer's income averaging with the 
alternative minimum tax (AMT). This would ensure that a farmer's AMT is 
not increased solely because he or she elects income averaging.
  Under section 604 of the Finance Committee's bill, a farmer electing 
to average his or her farm income would owe AMT only to the extent he 
or she would have owned alternative minimum tax had averaging not been 
elected. I have offered an amendment that would extend the income 
averaging to fishermen and would coordinate the tax treatment with the 
AMT, just as the bill attempts to do for farmers.
  Fishermen should receive the same treatment as farmers. The Joint 
Committee on Taxation estimates the measure for farmers would cost $22 
million over the next ten years. According to the Joint Committee on 
Taxation, my amendment for fishermen would cost $5 million over the 
next ten years. This is a small amount to ensure that fishermen receive 
the same benefits as farmers under our current tax structure.
  Fishermen face the same type of economic ups and downs that farmers 
and ranchers face. Because of this, they shouldn't be excluded from 
income averaging or coordination with the AMT. I thank my colleagues 
who have joined me on this amendment, Senators Murkowski, Inouye, 
Shelby, Breaux, Hollings, Gorton, and Murray.


                    amendment no. 1485, As Modified

  Mr. BENNETT. Mr. President, I ask unanimous consent that amendment 
No. 1485, which was previously adopted, be modified with the changes 
that are at the desk.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 1485), as modified, is as follows:

       On page 286, line 6, strike ``1999'' and insert ``2004''.
       On page 371, between lines 16 and 17, insert the following:

     SEC. __. TREATMENT OF BONDS ISSUED TO ACQUIRE RENEWABLE 
                   RESOURCES ON LAND SUBJECT TO CONSERVATION 
                   EASEMENT.

       (a) In General.--Section 145 (defining qualified 501(c)(3) 
     bond) is amended by redesignating subsection (e) as 
     subsection (f) and by inserting after subsection (d) the 
     following new subsection:
       ``(e) Bonds Issued To Acquire Renewable Resources on Land 
     Subject to Conservation Easement.--
       ``(1) In general.--If--
       ``(A) the proceeds of any bond are used to acquire land (or 
     a long-term lease thereof) together with any renewable 
     resource associated with the land (including standing timber, 
     agricultural crops, or water rights) from an unaffiliated 
     person,
       ``(B) the land is subject to a conservation restriction--
       ``(i) which is granted in perpetuity to an unaffiliated 
     person that is--

       ``(I) a 501(c)(3) organization, or
       ``(II) a Federal, State, or local government conservation 
     organization,

       ``(ii) which meets the requirements of clauses (ii) and 
     (iii)(II) of section 170(h)(4)(A),
       ``(iii) which exceeds the requirements of relevant 
     environmental and land use statutes and regulations, and

[[Page S9910]]

       ``(iv) which obligates the owner of the land to pay the 
     costs incurred by the holder of the conservation restriction 
     in monitoring compliance with such restriction,
       ``(C) a management plan which meets the requirements of the 
     statutes and regulations referred to in subparagraph (B)(iii) 
     is developed for the conservation of the renewable resources, 
     and
       ``(D) such bond would be a qualified 501(c)(3) bond (after 
     the application of paragraph (2)) but for the failure to use 
     revenues derived by the 501(c)(3) organization from the sale, 
     lease, or other use of such resource as otherwise required by 
     this part,
     such bond shall not fail to be a qualified 501(c)(3) bond by 
     reason of the failure to so use such revenues if the revenues 
     which are not used as otherwise required by this part are 
     used in a manner consistent with the stated charitable 
     purposes of the 501(c)(3) organization.
       ``(2) Treatment of timber, etc.--
       ``(A) In general.--For purposes of subsection (a), the cost 
     of any renewable resource acquired with proceeds of any bond 
     described in paragraph (1) shall be treated as a cost of 
     acquiring the land associated with the renewable resource and 
     such land shall not be treated as used for a private business 
     use because of the sale or leasing of the renewable resource 
     to, or other use of the renewable resource by, an 
     unaffiliated person to the extent that such sale, leasing, or 
     other use does not constitute an unrelated trade or business, 
     determined by applying section 513(a).
       ``(B) Application of bond maturity limitation.--For 
     purposes of section 147(b), the cost of any land or renewable 
     resource acquired with proceeds of any bond described in 
     paragraph (1) shall have an economic life commensurate with 
     the economic and ecological feasibility of the financing of 
     such land or renewable resource.
       ``(C) Unaffiliated person.--For purposes of this 
     subsection, the term `unaffiliated person' means any person 
     who controls not more than 20 percent of the governing body 
     of another person.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to obligations issued after the date of the 
     enactment of this Act.

     SEC.   . MODIFICATION OF ALTERNATIVE MINIMUM TAX FOR 
                   INDIVIDUALS.

       Section 56(b)(1)(e), as amended by section 206, is amended 
     by striking ``$250'' and inserting ``$300''.


                               tax relief

  Mr. ABRAHAM. Mr. President, my motion to recommit is the substitute 
tax plan submitted by Majority Leader Lott in the Finance Committee. I 
will not request a vote on this motion.
  I commend the efforts of Chairman Roth in putting together the 
Taxpayer Refund Act. However, it is my belief that Congress right now 
has a unique opportunity to enact broad-based tax cuts, providing more 
pro-growth and pro-family relief than is currently provided in the 
Finance Committee bill.
  This substitute combines the elements I believe are essential to 
preserving economic security for years to come: It preserves Social 
Security and Medicare; It reduces the near-record tax burden currently 
placed on the American people; and It empowers America's growing 
investor class--working, middle class families who strive to save for 
the future so that they may enjoy secure retirements and so that they 
can bequeath a legacy to their children.
  All this, Mr. President, without greatly increasing the complexity of 
the tax code.
  Over the next 10 years the federal government will accumulate 
surpluses of about $3 trillion. Now that the age of surpluses has 
arrived, we must decide what to do with them, how we can best use them 
to insure economic growth and security into the next millennium.
  Thus, of the $3 trillion in coming surpluses, the $1.8 trillion for 
the Social Security Trust Funds must be protected; it must stay in 
Social Security. The question is, what should we do with the remaining 
$1 trillion?
  I believe that we should give at least $800 billion back to the 
American people. Whatever plan we adopt, it seems to me we must ensure 
that Social Security remains strong so that the senior citizens of 
today and tomorrow may depend on it for security in their old age. We 
also must approach our national debt in a responsible way seeing to it 
that it never again becomes a drain on our economy. And, also for the 
sake of our economy, we must see to it that investments in plant, 
equipment and human capital increase over the coming decades. Finally, 
we must address a worsening problem in American life: the overtaxation 
of the American people.
  The President's plan addresses none of these needs. It does nothing 
to save Social Security, instead merely commencing a vast shell game 
with taxpayer money. What is more, the President proposes massive new 
spending, and even $95 billion in new taxes.
  The bottom line is this, Mr. President Clinton wants to spend the 
surplus. According to the CBO, the President proposes $1 trillion in 
new spending over the next 10 years. That would mean taking $29 billion 
out of the Social Security Trust Fund surplus.
  Now I know some of my colleagues on the other side of the aisle have 
been quoting from Federal Reserve Chairman Greenspan's recent 
Congressional testimony. In that testimony, Chairman Greenspan said 
``My first priority, if I were given such a priority, is to let the 
surpluses run.''
  Some of my colleagues have been claiming that, in these words, 
Chairman Greenspan has rejected tax relief for the American people. But 
this is simply not so, Mr. President. Any reasonable examination of the 
record would show Chairman Greenspan's true views on the matter, namely 
that he would delay tax cuts ``unless, as I've indicated many times, it 
appears that the surplus is going to become a lightening rod for major 
increases in outlays. That's the worst of all possible worlds, from a 
fiscal policy point of view, and that, under all conditions, should be 
avoided.''
  Chairman Greenspan was not saying ``I oppose tax cuts.'' Rather, he 
was saying, quite reasonably in my view, that tax cuts must not come at 
the expense of fiscal and monetary stability.
  I agree with Chairman Greenspan that tax cuts cannot be our first 
priority. Our first priority must be to protect Social Security and 
address the national debt. Which is exactly what this substitute does 
by setting aside more than half our projected surpluses for those 
purposes.
  At the same time, we cannot allow these surpluses to become 
``lightning rods'' for yet more increases in the size and scope of 
government, and in the tax burden on the American people. And that is 
precisely what the President's plan would do; it would spend the 
surplus, including the Social Security surplus, on further government 
programs, leaving nothing for the American people.
  That is simply wrong. And I was pleased to learn that Chairman 
Greenspan agrees. In his testimony he said ``I have great sympathy for 
those who wish to cut taxes now to pre-empt that [spending] process, 
and indeed, if it turns out that they are right, then I would say 
moving on the tax front makes a good deal of sense to me.''
  It makes a great deal of sense, Mr. President, for us to set aside 
the bulk of the surplus for Social Security and debt relief, then to 
return the rest to the American people. It makes a great deal of sense 
for us, after reserving over $2 trillion for these essential functions 
to return $800 billion to the American people, as a refund of their tax 
overpayment.
  I believe we are doing the right thing by giving 25 cents back to the 
American people for every surplus dollar. I believe the plan crafted by 
those on the other side of the aisle is wrong to give back only 10 
cents on each surplus dollar.
  Let me briefly outline the provisions of this substitute, crafted as 
I said by majority Leader Lott. It includes:
  Broad-based rate cuts, expanding the 15% tax bracket upwards by 
$10,000.
  Family tax relief, including an end to the marriage penalty and 
provisions for child care and foster care.
  An end to the estate or death tax.
  Incentives for savings and investments, including exclusions for 
interest and dividend income and a cut in individual capital gains 
rates to 15% and 7.5%.
  Retirement savings incentives through an increase in the IRA 
contribution limit to $5,000 per year.
  Education incentives, including education savings accounts, student 
loan interest deductions and prepaid tuition plans for public and 
private schools.
  Provisions making health care more affordable, including a new 
deduction for health insurance expenses, long-term care provisions, 
Medical Savings Accounts, and an additional caretaker dependency 
deduction.
  Small business tax relief, including immediate 100% deductibility of 
health insurance for the self-employed and in increase in small 
business expensing to $30,000.
  Risk management accounts for farmers and ranchers.

[[Page S9911]]

  Permanent extension of the Research and Development tax credit, and
  An extension of the work opportunity credit and welfare to work 
credit.
  I would like to focus on the provisions in this substitute that I 
believe differentiate it from the Finance Committee legislation; 
provisions that in my view provide even more pro-family and pro-growth 
tax relief where it is most needed.
  First is family tax relief. Families today pay a higher proportion of 
their incomes in taxes than ever before in our history--31.7 percent. 
They pay more in income taxes than at any time since World War II. They 
spend more on taxes than on food, clothing and shelter combined. And 
this tax burden leaves families with less money to spend on 
necessities, and less to save for their retirement and for their 
children's education.
  Families deserve tax relief, particularly at a time when they are 
overpaying to the tune of over a trillion dollars.
  This substitute will give families the substantive tax break they 
need and deserve.
  First, it includes broad-based tax relief by increasing the amount of 
income a family can earn while remaining in the 15% income tax bracket 
by $10,000. The figure for single taxpayers will increase by $5,000. In 
this way, Mr. President, we will return 7 million taxpayers to the 
lower, 15% tax bracket, and 35 million taxpayers will receive a tax 
cut.
  Under this proposal, even a single filer would save $550 on his or 
her taxes.
  In addition, this substitute ends the marriage penalty and provides 
relief for child and foster care services.
  Taken together, these provisions will directly reduce the tax rate 
imposed on American families and increase incentives for work and 
economic growth.
  Second, this substitute will provide tax relief to literally millions 
of working Americans struggling to build a nest egg for the future. By 
cutting taxes on interest, dividends and capital gains.
  This latest era of economic growth has been unique, Mr. President, in 
that it has seen savings rates fall into negative numbers--indicating 
an increase in consumer borrowing in excess of savings. We cannot 
sustain economic growth and job creation unless Americans save and 
invest for the future.
  That is why this substitute will address the needs of America's 
growing ``investor class.'' These working Americans--125 million and 
counting--are the real owners of the means of production in America.
  Surveys conducted by a number of sources agree that, through pension 
plans, IRAs and other investment vehicles, roughly 50% of Americans--
half our nation--owns stocks. They outnumber any of the special 
interest groups you would care to name. Yet they want no special 
favors, just the opportunity to save and invest. And, with $4.5 
trillion invested in mutual funds alone, America's investor class has 
become the bedrock of our economy.
  It is time to put to rest once and for all the old class warfare 
slogan that only the rich pay capital gains taxes. Is half of America 
``rich?'' Do half our people earn so much money that they do not 
deserve a tax relief?
  I think not. Indeed, 49% of the investor class if female, 38% are 
non-professional salaried workers. Wall Street and Main Street are no 
longer separated by a vast socioeconomic divide. It is high time we 
recognized this fact, and helped new, middle class investors succeed in 
their drive to invest for the future.
  This substitute would do precisely that, Mr. President. It would make 
the first $500 of interest and/or dividend income tax-free for 
families, with the first $250 of this income becoming tax-free for 
individuals. It also would increase the IRA contribution limit to 
$5,000 per year, allowing Americans to more effectively save for 
retirement. Finally, it would cut capital gains tax rates, reducing the 
current 20 and 10% tax brackets to 15 and 7.5%, respectively.
  Of course, not all of nation's economic growth comes from stock 
investment. Many entrepreneurs in this country invest their blood, 
tears, toil and sweat into family owned businesses--businesses that 
keep our main streets vital and our economy growing.
  Our nation was built on the strength of family-owned businesses. 
Whether on the frontier or in more settled urban areas, family 
businesses have delivered the goods for generations. Yet the federal 
government sets up almost insurmountable obstacles to family 
businesses.
  The death tax makes it impossible for many entrepreneurs to pass the 
business on to their children. Too often today, children must sell the 
family business just to pay taxes. And the result is often a sell-off 
of assets to large corporations, destroying jobs and investment 
opportunities.
  I realize that some people favor the death tax as a means of 
punishing people who have amassed great quantities of wealth. But the 
IRS' own records show that fully 80% of all taxable estates are worth 
less than $1 million.
  $1 million still sounds like a lot of money, Mr. President. But 
consider this: according to the Associated General Contractors of 
America, any contractor who purchases the three pieces of equipment 
essential to this trade, an off-highway dump truck, bulldozer and 
front-end loader, will have already amassed assets valued at over $1 
million.
  And relatively new businesses, such as those begun by black Americans 
until recent years deprived of the chance to compete, are especially 
vulnerable to the death tax. A Kennesaw State College survey found that 
close to a third of African American-owned businesses would have to be 
sold by their inheriting heirs to pay taxes. The death tax destroys 
family businesses. It destroys wealth, and it destroys jobs. It is time 
to end it.
  But entrepreneurs need more help from us. Current tax laws, by 
subsidizing employer-purchased health plans, penalize small business 
owners. They make it more difficult for them to afford their own health 
insurance and to attract and keep good employees without spending 
themselves into bankruptcy.
  The substitute framed by Leader Lott would address these barriers to 
family-owned business survival by accelerating the 100% deductibility 
of self-employed health insurance.
  The provisions I have outlined aim to bring substantive tax relief to 
the mainstream of the American economy. This is crucial to the economic 
well-being of our nation.
  But we must do more. We also must bring greater economic opportunity 
to disadvantaged urban and rural areas throughout the United States. If 
we are to remain prosperous over the long term, we must bring more 
Americans into the vast mainstream of our economy by empowering them to 
take control of their own economic lives. That is why this substitute 
extends the critical work opportunity credit and welfare-to-work 
credits through 2004.
  Finally, we must continue to encourage the research and development 
so crucial to maintaining our competitive edge in global markets, 
particularly in this era of high-tech development. That is why this 
substitute provides for the permanent extension of the R tax credit.
  All told, the provisions making up this substitute will provide $800 
billion in tax relief for the American people. This substitute will 
encourage work, savings and investment, it will help working families, 
it will help distressed urban and rural areas, and it will provide $2.2 
trillion for Social Security, Medicare, and debt reduction.
  It is my hope that the conference committee on the tax bill will 
produce an agreement that mirrors the Leader's substitute tax plan.
  I believe we must look to this era of budget surpluses with 
confidence. Confidence in ourselves and confidence in the American 
people. This is no time for business as usual. Rather, we are faced 
with once-in-a-lifetime opportunity to free Americans from the burden 
of stifling overtaxation, freeing their energies and their intellects 
even as we provide a solid grounding of Social Security and Medicare 
for generations to come.
  There are voices of doom abroad in the land, Mr President. But these 
voices are as wrong today as they have always been. They would have us 
put all of our faith and confidence in an ever-growing federal 
government, with its ever-growing financial resources diverted by its 
bureaucratic experts into

[[Page S9912]]

programs designed to protect us from ourselves.
  I say no to these doomsayers. I say ``no'' to them because I believe 
it is important for us to say ``yes' to the American people. Yes to 
their dreams of financial security, yes to their desire to pass the 
family business on to their children, yes to their cries for help 
relieving the highest tax burden since World War II.
  It is time to provide the kind of broad-based tax relief in this 
substitute so that the American economy and the American spirit may 
grow and prosper. This act of hope will protect our seniors, pay down 
our debt and constitute an investment in our future that will pay 
dividends for decades to come.
  Mr. REED. Mr. President, I am proud to join Senator Rockefeller in 
proposing a prudent, fiscally responsible tax cut alternative.
  Like many, we are skeptical with the underlying assumption that there 
will be nearly a trillion dollar surplus. Indeed, the numbers show that 
much of the surplus is generated under the assumption that Congress 
will significantly slash investments in education, veterans, and 
defense below the level needed to keep pace with inflation. Such cuts 
in key investments are not what the American people want. Moreover, the 
current majority has already exceeded last year's spending limit by $35 
billion in the first 10 months of this fiscal year.
  The real surplus from our current economic growth is closer to $112 
billion when one eliminates the unrealistic, rosy scenarios painted by 
the Republican's $800 billion tax bill.
  Mr. President, our great economic growth has presented us with an 
opportunity to do many things. Sensible, modest, and targeted tax cuts 
for working families is part of that mix along with domestic 
investments and Medicare reform.
  In that spirit of balancing priorities, I supported the proposal of 
Sen. Moynihan to provide $290 billion in targeted tax relief, while 
extending the life of Medicare and preserving funding for our most 
pressing domestic needs. That proposal was realistic and based on sound 
footings.
  But, we should not enact an $800 billion tax cut based on mere 
projections; which slashes domestic investments; and which does nothing 
to preserve Medicare.
  Our $112 billion tax cut proposal is tied to a realistic review of 
the actual unencumbered surplus. This is the judgement of many outside 
experts including former Congressional Budget Office Director Robert 
Reischauer. Using this figure we can still provide marriage penalty 
relief, education tax credits, preserve Medicare, and meet the 
expectations of America's families. That is why Senators Rockefeller, 
Leahy, and I have put forth this proposal.
  Mr. President, my hope is that our colleagues on the side of the 
aisle will take a moment to review the real surplus numbers and join us 
in our effort.
  Mr. EDWARDS. Mr. President, I rise today to oppose S. 1429. Passing 
this bill is like going on a spending spree just because a sweepstakes 
company tells you ``you might be a winner.''
  I support tax cuts. The question for me is, when? I am a fiscal 
conservative and am happy to vote for tax cuts. Any tax cut, however, 
needs to be done in a fiscally-responsible manner. This is common 
sense.
  But we need to look at the big picture, and we can't engage in 
wishful thinking. So when we talk about cutting taxes we must do it in 
the same breath as paying down the national debt and dealing with 
Social Security and Medicare.
  We should cut government spending. Working Americans pay taxes to the 
federal government, and that money buys a lot of great things. But we 
have a responsibility and obligation to only spend what is absolutely 
necessary, and I am afraid that we haven't done a very good job of 
that. The federal government is too big and spends too much, and we 
need to do something about it.
  We should pay down the public debt. If we reduce our public debt, we 
reduce the money the federal government owes to foreign investors and 
other bondholders. If we reduce our public debt--a debt that has 
accumulated because of out-of-control government spending in years 
past--it will lower interest rates, increase investment in America's 
economy, and help ensure our economy's continued growth and success. 
That has real benefits for average Americans: lower mortgage interest 
rates and a booming economy.
  This isn't inside-the-Beltway stuff. This is important to North 
Carolinians and all other Americans. And I think all of them can relate 
to why it is unwise to cut taxes before we are certain there is a 
surplus and before we are on the road to securing the future of Social 
Security and Medicare.
  Look into your crystal ball. How much will you be earning in the year 
2008? Will your 10-year-old be going to Duke or UNC, and what will be 
the tuition? What are you going to pay for health insurance during the 
next 10 years? And how much can you put away for retirement?
  I think these questions are important to North Carolinians and all 
other Americans. I have been thinking about how a family might try to 
answer these questions, and two things come to mind.
  First, answers are extremely difficult to find with any degree of 
certainty. Unforseen expenses can arise. And other factors--career 
changes, interest rates, or family size--may also affect the answers. 
It seems to me very likely, given this uncertainty, that a family would 
be very cautious about their financial planning.
  Second, if that family had to make a decision now about which one of 
those items they would forego if they needed extra money to cover 
unforseen expenses, which one would it be?
  If making these projections for a family is difficult, what can be 
said about the difficulty of predicting the federal government's budget 
10 years?
  I'll tell you what I think about it. I think it is extremely 
difficult. And I am not alone.
  I had an exchange the day before yesterday with Federal Reserve Board 
Chairman Alan Greenspan during a hearing. I talked to him about his 
earlier comments about the surplus, the proposed tax cuts and about the 
problems the federal government has showing restraint.
  Mr. Greenspan noted that these projections are rarely accurate.
  His advice, then, is very simple and practical: wait. ``Several 
years,'' he said. ``In other words, one year, two years.'' Chairman 
Greenspan said he favors paying down the public debt--not using any 
surplus for increasing government spending.
  It is hard to wait. This has been a real struggle. I break with the 
President, with my party and with the Republican party. But I do so 
because first and foremost we should not imperil our unprecedented 
economic prosperity by moving too quickly. To put it simply: look 
before you leap. A huge tax cut today is like entering the biggest 
watermelon contest the day after an especially good-looking vine 
sprouts up.
  I, myself, just don't have that much confidence that we have a 
surplus at all or that the economic assumptions underlying the surplus 
projections are reliable. It feels like smoke and mirrors--hocus pocus. 
And when people waive around numbers like $1 trillion, it's hard not to 
get swept away.
  But if we step back and take a look at the facts, we get a more 
frightening picture. If government spending is 1 percent higher than 
projected and revenues are 1 percent lower than projected, then the so-
called $1 trillion surplus would be off by $170 billion annually.
  When it comes to government spending, the truth is Congress has not 
been able to live within its budgets. Federal spending should be cut, 
but let's not be naive: Congress has bad spending habits.

  Current projections are based on assumptions about our spending 
habits that everyone admits have been impossible to live with. This is 
a fact. I want to remind everyone that this body passed a $12 billion 
``emergency'' spending package--raiding the Social Security Trust 
Fund--earlier this year. I voted against that package because nearly 
half of it was spending that no honest person would consider an 
``emergency.'' We've also been pouring money into defense spending--
something I support--but it's not within the budget we tried to set for 
the government. We can't stick to our limits now, and yet we are 
talking about a tax cut

[[Page S9913]]

based on the assumption that we are going to spend less. This just 
doesn't make sense to me.
  Having noted that we never stay within the spending caps, let me say 
that we should not give up on them. They are important. And, despite 
our history of breaking them, they have acted to keep our spending 
lower than it would have been otherwise. This is important because we 
need to make sure that the federal government doesn't just spend money 
because taxpayers send it to us. We need to constantly look for ways to 
cut unnecessary spending and pressure the federal government to operate 
more efficiently.
  Even as we propose to dramatically cut taxes based on the fantasy 
that we will control spending and enjoy unprecedented economic 
prosperity, we are hiding our head in the sand about a very real and 
very near fiscal catastrophe. In 2012, we will need to pay more for 
Medicare than we have. We'll need to dip into a Medicare trust fund. 
But there is no Medicare trust fund. In 2014, Social Security benefits 
paid out will exceed receipts, and we will have to start dipping into 
the trust fund. This tax cut puts the cart before the horse. Cut taxes 
and then try to figure out how to deal with a looming crisis? No one 
could call that fiscally responsible.
  What if there's a real emergency? This bill leaves me worried. 
Suppose a Class 5 hurricane were to strike North Carolina sometime in 
the next few years. If we needed emergency relief, this proposal could 
leave us high and dry--or taking a dip into Social Security.
  North Carolinians might be excused for thinking that the current tax 
debate sounds like hocus pocus. And they might be excused for wondering 
whether people are making promises they can't keep. This government has 
made a great many promises:
  Putting more money in your pocket;
  Saving Social Security;
  Reserving money for Medicare;
  Improving Veterans' health care;
  Funding for the National Institute of Health;
  Putting 100,000 cops on the street;
  Aiding America's farmers;
  Funding for programs like Head Start;
  Maintaining interstate highways; and
  Supporting National Missile Defense and other spending to ensure a 
strong national defense.
  I don't think we can keep all of these promises. And I can't bring 
myself to bait the American public with a tax cut only to be forced to 
cut their legs off on Social Security, Medicare and debt reduction or 
raise taxes again.
  If not now, when?
  I heard this question asked earlier today about tax cuts. My answer 
is the same as the one Chairman Greenspan gave at the hearing 
yesterday--he said wait a few years.
  After a few years we may know a few things.
  First, are we keeping spending reasonably under control?
  Second, have we saved Social Security and reformed Medicare?
  Third, how's the economy doing?
  Fourth, have we paid down some of our national debt?
  Our first real test will come this fall--when we will again start the 
process that will lead to meeting--or breaking--the spending caps. The 
federal government needs to prove to the American public that it can 
operate under its own budgetary limits. If we can do this, if we can 
break the habit of busting the budget caps, we will then be able to 
tell if we do in fact have a surplus.
  I want the American people to know this: I am for cutting taxes paid 
by working Americans. We've got an amazingly successful economy right 
now. I want to make sure when I cast my vote that I'm voting for 
something that will ensure, not destroy, the continued growth of our 
economy. Right now, the projections are too speculative, the 
assumptions too unrealistic, and to me, the solution is obvious. We 
should not spend money until we know we have it--and when we do have 
it, we need to give it back to working Americans.
  Mr. ALLARD. Mr. President, I would like to make some comments 
regarding repeal of the ``temporary'' 0.2 percent Federal unemployment 
tax (FUTA) surtax.
  Earlier this year I introduced S. 103 to repeal the surtax.
  I commend Chairman Roth and my colleagues on the Finance Committee 
for including in their tax bill repeal of the temporary 0.2 percent 
FUTA surtax.
  I would, however, like to accelerate the effective date from 2004 to 
next year.
  I believe that this tax relief provision is very important for both 
businesses and employees. We should repeal the surtax immediately.
  The ``temporary'' surtax was enacted in 1976 by Congress to repay the 
general fund of the Treasury for funds borrowed by the unemployment 
trust fund.
  Although the borrowings were repaid in 1987, Congress has continued 
to extend the surtax in tax bill after tax bill.
  Since 1987, Congress has used extension of the surtax to help raise 
revenue to pay for tax packages.
  In fact, the surtax was most recently extended to help pay for the 
1997 tax bill.
  The tax takes money out of the private economy for no valid reason.
  By repealing the surtax, Congress will honor a promise that it made 
when the surtax was first enacted.
  Small businesses were told repeatedly that the tax was temporary and 
would be repealed when it was no longer needed to finance the 
unemployment tax system.
  Clearly a tax is not temporary when it has already been in place for 
over twenty years.
  Based on the original purpose, the surtax is no longer needed.
  The economy is experiencing the highest level of employment in 
decades, and all state unemployment funds have surpluses.
  It is inappropriate for the government to continue to raise excess 
unemployment taxes and then use the surplus for purposes completely 
unrelated to unemployment.
  Repeal of the temporary unemployment surtax will also be beneficial 
to small businesses.
  The surtax is especially hard on the small businesses because they 
are often labor intensive.
  Any payroll tax is added directly to the employer's payroll costs.
  In fact, according to the National Federation of Independent 
Business, payroll taxes are the fastest growing federal tax burden on 
small business.
  It is also important to note that the payroll taxes must be paid 
whether the business experiences a profit or a loss.
  As a former small businessman myself, I am particularly aware of this 
fact.
  I suspect that my view is similar to the view of many other small 
business owners.
  It is one thing to have a surtax when unemployment is high and the 
surtax is necessary.
  However, it is totally unjustified when unemployment is at the lowest 
level in three decades.
  Repeal of the 0.2 percent surtax will reduce the tax burden on 
employers and workers by $6 billion over the next five years.
  Lower payroll taxes mean higher wages for workers.
  Although the employer appears to fully pay the unemployment surtax 
and other payroll taxes, the economic evidence is strong that the cost 
is actually passed along to workers in the form of lower wages.
  Consistent tax relief will help to ensure that our economy remains 
the strongest and most vibrant in the world.
  Low taxes reduce unemployment and help ensure that future surtaxes 
are unnecessary.
  The time has come to do away with this outdated and unnecessary 
surtax.
  Again, I commend the Finance Committee for their provision to repeal 
the FUTA surtax, and I urge my colleagues to support efforts to 
accelerate the effective date so that repeal is immediate.
  Mr. REED. Mr. President, we are at a historic juncture. In the 
1980's, we faced massive deficits and growing debts. In sum, Congress 
debated red ink.
  On the edge of the millennium, we are debating the question of what 
to do with about $1 trillion in anticipated budget surpluses.
  Why are we here debating a surplus? We are here because of the tough

[[Page S9914]]

choice we made in the past: a choice to use fiscal discipline. We 
started down the road of deficit reduction with the 1993 budget 
package, which passed without a single Republican vote. In fact, some 
members on the other side of the aisle claimed the bill would lead to 
economic collapse. However, because of the courageous stand we took 
then, we have gone from a $290 billion deficit in 1992 to an estimated 
$70 billion surplus in 1999.
  But we did more than reduce the deficit and restore fiscal 
discipline, we spurred tremendous economic growth and unprecedented 
economic expansion. For the sake of perspective, I would like to list 
the following facts: we have seen 3.5% annual growth since 1993, 18.9 
million new jobs, 4.3% unemployment, and the median family income grow 
by more than $3,500 since 1993. This is good news, and we cannot afford 
to squander it.
  The days of red ink as far as the eye can see are gone. Instead, 
based on various budget projections, we can suppose that there will be 
a total surplus of approximately $3 trillion over the next ten years. 
More than $2 billion of that total comes from Social Security payroll 
taxes and must absolutely be set aside to preserve Social Security for 
current and future beneficiaries. Social Security is a promise to those 
Americans who worked and fought to make this nation great, and it is a 
program that must be preserved.
  The Office of Management and Budget and the Congressional Budget 
Office both project that the remaining non-Social Security surplus 
totals roughly $965 billion. But these are merely projections, 
dependent upon the performance and vagaries of the economy. And, I 
would caution that the Office and Management and Budget and the 
Congressional Budget Office have a history of predictions that fall far 
short of the mark. Indeed, Mr. President, because of changes in the 
economy between April and July of 1999, the Congressional Budget Office 
revised its ten year projections, adding $300 billion to the surplus. 
Imagine--a swing of $300 billion in three months.
  But how are we generating the surplus, or more accurately, why is the 
Congressional Budget Office predicting a budget surplus?
  Quite simply, the vast bulk of the non-Social Security surplus, 
nearly $600 billion of it, comes from the continuation of arbitrary 
spending caps established in the 1997 Balanced Budget Act. When we 
passed that legislation, we still had a deficit, but many of us 
realized then that if these budget caps were maintained beyond the 
period they were required to balance the budget, they would prevent us 
from meeting our long-term obligations for education, health care, and 
the environment.
  The American people cannot afford, as my colleagues on the other side 
of the aisle have asked of them, to retain these caps for the next 10 
years. We cannot afford $600 billion in cuts to Pell Grants, Head 
Start, the Special Supplemental Nutrition Program for Women Infants and 
Children, Brownfield cleanup, Community Policing, Veterans benefits, 
and the National Institutes of Health, to name a few essential 
initiatives. Let me emphasize that the $600 billion figure is not for 
new, outlandish investments. Rather, that figure represents the 
resources we need to maintain current levels of funding. Make no 
mistake, these are cuts, not ``reductions in the rate of growth'', but 
real cuts.
  Moreover, if we adopt the Republican $800 billion tax cut plan and if 
we fund the President's plan to meet the military's personnel and 
equipment needs, as the Republican leadership has said it will do, non-
defense domestic spending will be cut by a whopping 38% in 2009. Under 
this scenario, 375,000 children will not get Head Start services, 1.4 
million veterans will lose medical care, and 6.5 million poor students 
will lose Title I education aid. Simply put, the $800 billion tax cut 
before us today crowds out every priority we know must be met in the 
future.
  Mr. President, the most serious shortfall of the Republican tax bill 
is that it disposes of the entire surplus without making any provisions 
to shore up Medicare. By using all of the projected surplus for tax 
cuts, we leave ourselves severely restricted in the options we will 
have in the future.
  Actuarial reports from the Medicare Trustees project that, under 
current economic conditions, we will have to contend with the 
inevitable fact that the Medicare program will be insolvent by 2015. 
Regrettably, by allocating the entire federal budget surplus for tax 
cuts, we will be forced to make radical changes to the program, either 
in the form of dramatic benefit reductions, large increases in 
premiums, or tax increases.
  In addition, the Republican tax cut plan completely ignores the 
impending burdens of a retiring baby boom generation. The truth is that 
by 2030, there will be about 70 million Americans 65 years or older, 
more than twice their number in 1996. In terms of the total population, 
seniors will grow from 13% to 20% between 1999 and 2030.
  In spite of these imminent demographic challenges, the Republican tax 
cut bill is structured in a way that tax breaks would explode during 
their second ten years. As the baby boom generation retirements occur, 
the cost of the tax cuts would explode to $2 trillion.
  Prudence dictates that we should take the opportunity the surplus 
presents to make meaningful changes to the Medicare program. I believe 
that we should be looking at the possibility of adding a prescription 
drug benefit as well as additional preventive benefits to the basic 
package of health care benefits. For elderly Rhode Islanders the cost 
of prescription drugs is a major concern and a major expense. 
Unfortunately, Medicare does not cover this expense nor does the COLA 
for Social Security accurately represent the medical expenditures of 
today's seniors.
  While consideration of these matters should be made in the context of 
overall structural reform, we must ensure that there are adequate 
resources to guarantee a basic benefit package upon which Medicare 
beneficiaries continue to rely.
  Sadly, the Republican tax bill saps these resources before the debate 
can even begin. The massive size of the Republican tax plan threatens 
to unravel the many years of fiscal austerity that have brought us to 
this important juncture. Their unrealistic and dangerous proposal 
sacrifices the future for short-term gratification.
  Mr. President, these are good times in our nation. More Americans are 
employed. More Americans own a home. Crime is down. Productivity is up, 
and inflation is low.
  Working families in Rhode Island expect us to be responsible and 
prepare for the future. They want us to preserve Medicare, but the 
Republicans say ``no''. They want us to invest in education, but the 
Republicans say ``no''. They want us to care for our veterans, but the 
Republicans say ``no''. They want us to address the shameful fact that 
1 out of every 5 children in America lives in poverty, but the 
Republicans say ``no''.
  Mr. President, saying ``no'' to the needs of the American people is 
not an acceptable legacy for this Congress. On the edge of the 
Millennium, we should not put politics ahead of what is fair and 
responsible. Let's build for the future.
  Ms. COLLINS. Mr. President, yesterday I offered an amendment to the 
Taxpayer Refund Act of 1999. My good friend Senator Coverdell and I 
crafted this amendment to help our public school teachers pursue 
professional development and pay for incidental supplies for their 
classrooms.
  Our amendment will allow teachers to deduct their professional 
development expenses without subjecting the deduction to the existing 
two percent floor. It will also allow teachers to deduct up to $125 for 
books, supplies, and equipment related to their teaching.
  Mr. President, while our amendment provides financial relief for 
teachers, its ultimate beneficiaries will be their students. Other than 
involved parents, a well-qualified teacher is the most important 
prerequisite for student success. Educational researchers have 
demonstrated the close relationship between qualified teachers and 
successful students. Moreover, teachers themselves understand how 
important professional development is to maintaining and extending 
their levels of competence. When I meet with teachers from Maine, they 
repeatedly tell me of their need for more professional development and 
the scarcity of financial support for this worthy pursuit.

[[Page S9915]]

  The willingness of Maine's teachers to fund their own professional 
development activities has impressed me deeply. For example, an English 
teacher who serves on my Educational Policy Advisory Committee told me 
of spending her own money to attend a curriculum conference. She is 
typical of many teachers who generously reach into their own pockets to 
pay for professional development and to purchase materials that enhance 
their teaching.
  Let me explain how our amendment works in terms of real dollars. The 
average yearly salary of a teacher in 1997 was about $38,500. Under 
current law, a teacher making this salary could not deduct the first 
$770 in professional development and incidental instruction-related 
expenses that he or she paid for out of pocket. Our amendment would see 
to it that teachers receive tax relief for all such expenses.
  I greatly admire the many teachers who have voluntarily financed the 
additional education that they need to improve their skills and to 
serve their students better and who purchase books, supplies, equipment 
and other materials that enhance their teaching. I hope that this 
change in our tax code will encourage teachers to continue to take 
formal course work in the subject matter that they teach, to complete 
graduate degrees in either their subject matter or in education, and to 
attend conferences to give them new ideas for presenting course work in 
a challenging manner. This amendment will reimburse teachers for a 
small part of what they invest in our children's future.
  Mr. President, this would be money well spent. Investing in education 
is the surest way for us to build one of the most important assets for 
our country's future, a well-educated population. We need to ensure 
that our public schools have the best teachers possible in order to 
bring out the best in our students. Adopting this amendment will help 
us to accomplish this goal. I thank my colleagues in joining Senator 
Coverdell and me in support of this effort.
  Mr. CRAIG. Mr. President, I rise in support of S. 1429, the Taxpayer 
Refund Act of 1999.
  This debate has been about numbers and surpluses and budget rules. To 
some extent, it has to be. But our efforts to provide tax relief are 
also about something more important:
  People.
  The kind of relief that both the Senate and House tax bills would 
provide is a matter of providing real help to real people who have real 
needs.
  This tax relief is about returning some modest amount of liberty, 
some small measure of power, to the people. This is the most heavily 
taxed generation of Americans in history. Providing some degree of tax 
relief will return to individuals and families more power over their 
own lives, more ability to meet their pressing needs, and more of an 
opportunity to pursue their dreams.
  I've looked at both the Senate and House bills. I think we can come 
up with a very good conference report based on these two bills--a 
conference report that preserves the best of both bills, and helps 
improve the lives of all Americans.
  We are talking about a tax bill that removes some fundamental 
unfairness from the current system.
  For example, it just isn't fair that two individuals should be forced 
to pay hundreds of dollars more in taxes simply because they get 
married. That's why the Senate bill ends the marriage penalty for two 
earners. I think we should go farther, which is why I've supported the 
Gramm amendment and the Hutchison amendment and hope we can do more in 
conference.
  Mr. President, it just isn't fair that working families sometimes 
have to sell part or all of the family farm or the family business just 
to pay taxes. I've seen family farms carved up because of the death 
tax. The other side would have us believe that this is a debate about 
the so-called ``estates'' of rich people. It's not.
  Death tax relief is a question of saving the family farm; maintaining 
the family business; and allowing people the fundamental freedom to 
dispose of their own property and their own savings as they see fit. 
The death tax imposes a double tax, because it confiscates property and 
savings built up from income left over after it's already been taxed 
one, two, or three times before.
  But we know where the other side and the Administration are coming 
from. In fact, this Administration's former Secretary of Labor, in one 
of his books, called it a ``loophole'' for the tax code to allow 
parents actually to pass along some of their savings and possessions to 
their children.
  I support the relief from the death tax in this bill and wish we 
could do more. That's why I've supported the Kyl amendment.
  This tax relief bill is good for children. It would allow more 
parents to afford child care, both because it increases and expands the 
child care tax credit, also called the Dependent Care Credit, and 
because it allows more modest- and middle-income families to make full 
use of the child tax credit we enacted in the 1997 Tax Relief Act. It 
also would expand the tax exclusion for foster care payments.
  This bill will help make education more affordable and available to 
individuals and families. It includes tax-free, qualified tuition 
plans; extends the employer-provided tuition assistance; and makes our 
1997 education tax credits more fully available to modest- and middle-
income families, by taking it out of the Alternative Minimum Tax 
calculations.
  We should be doing even more to help families meet their educational 
needs and opportunities. This is why I've supported the Coverdell-
Torricelli amendment to expand and improve Educational Savings 
Accounts.
  The Coverdell-Torricelli amendment would give parents greater choice 
in how best to educate their children. The issue here is parental 
choice. Who knows best--parents or a distant government bureau in 
Washington, DC? In recent years, the focus has been entirely too much 
on growing the government and inventing federal programs. But much of 
that national government is far removed from the year-to-year and day-
to-day decisions that parents must make, and work on with teachers and 
school boards, about their children's education.
  This amendment would shift power and resources back to the most local 
level--Mom and Dad. The Coverdell amendment would allow more 
flexibility--and the use of more of their own money--as they face 
decisions about paying for things like tutoring, home computers, 
private or religious school, higher education, and vocational 
education. The amendment focuses especially on those who find it hard 
to pay for educational expenses now. In talking about public schools, 
supplies and activity fees are a burden on parents today. The Coverdell 
amendment would help families deal with those costs.
  Mr. President, a few months ago, we passed the Ed-Flex bill. This law 
gives the state educational agency and the local educational agency the 
flexibility in how they spend federal dollars. Now, Mr. President, it 
is time to give parents similar flexibility in how they help provide 
for their children's education.
  I hope we can do more to help families with their children's 
educational needs when this bill goes to conference. I hope we can 
include provisions that come much closer to the Coverdell-Torricelli 
amendment.
  Besides helping families with the care and education of their 
children early in life, this bill also will help provide care in the 
twilight of life, through an additional deduction for providing in-home 
care for an elderly family member.
  This bill takes a significant step forward in making health care 
coverage more affordable and available for millions of Americans. Small 
businesses and farm families, especially, will be helped by the 
accelerated, full deductibility of health care premiums, as will other 
workers not covered by an employer-provided plan. More Americans would 
be able to plan for long-term care, a critical area of growing need, 
because of an above-the-line deduction for individuals and inclusion in 
cafeteria plans at work.

  America's farm families are in a period of economic crisis today. 
That crisis should be, and will be, addressed in a major farmers' aid 
package a number of us are working on. But additional, much-needed help 
is provided in this bill, as well.
  Besides self-employed health insurance and death tax relief, this 
bill would provide for increased expensing,

[[Page S9916]]

starting next year, to $30,000; create the new FARRM Accounts--Farm and 
Ranch Risk Management Accounts--that Senators Grassley, Burns, I, and 
others have been working on; protect income averaging from the 
Alternative Minimum Tax; increase credits for reforestation; and allow 
farmer co-ops more dividend flexibility.
  Like farmers, small business, the over-taxed engines of job-creation, 
innovation, and economic opportunity in our economy, will finally 
receive some relief from many of these same provisions.
  The Senate bill makes tremendous strides in retirement security. 
Today's baby boomers, the first generation to have spent their entire 
lives in the most heavily-taxed generation, are becoming increasingly 
anxious about their prospects for retirement security. Why is no 
mystery: Since the baby boomers were children, they have seen the 
average family's tax burden, at all levels, increase by more than 50 
percent, as a share of income. When the government takes 50 percent 
more from you than it did from your parents, how do you save and invest 
for your own retirement?
  All taxpayers, of all incomes and all ages, stand to benefit from 
expanding the use of Individual Retirement Accounts. In the past, IRAs 
were a simple, universally-understood, readily-accessible to save for 
retirement. One of the worst things in the 1986 tax bill was the 
confusing limitations placed on IRAs that, in fact, have discouraged 
many modest- and middle-income workers from using them. Farmers and 
small business owners and their employees, especially, have an 
important stake in more accessible IRAs, because they have no other 
large, employer-provided pension plan to participate in.
  Mr. President, the tax relief bills moving through Congress will help 
real people. The real debate is over two competing visions of how the 
government can help people. Those of us who support tax relief say, we 
help people when we give them back the power and freedom to control 
their own destinies. The other side says, they think it would help 
people if the government made decisions for them, and dispensed 
dependency through an expensive bureaucracy.
  You can confiscate more and more money from workers, savers, and 
families. That, in fact, has been and is the trend. Then the government 
can spend that money, grow the bureaucracy, write more rules, make 
citizens feel more like supplicants, and, in the end, hand someone 
another small government check.
  Or we can let workers, savers, entrepreneurs, and families keep a 
little more of their fruits of their own labors, and let them apply 
that directly to taking care of their children, their parents, their 
health care needs, and their education.
  We can, as this bill does by extending the Work Opportunity Tax 
Credit, tell employers they can keep a little more of what they earn, 
if they also provide jobs for disadvantaged, hard-to-place workers.
  Today, 70 percent of taxpayers receive no recognition of charitable 
giving--because they don't itemize their deductions. We can, in this 
bill, reward and encourage those middle-class taxpayers who benefit 
their community, help the less fortunate, and promote the social good, 
by letting them keep a little more of their hard-earned income, with an 
above-the line deduction for charitable donations.
  We are talking about a modest and reasonable package of tax relief. 
Both Houses are calling for a tax cut of only 3.5 percent over the next 
10 years, or less than one-fourth of the total amount taxpayers have 
been overcharged by their government.
  We are proposing a modest amount of tax relief that leaves plenty of 
room to safeguard Social Security completely. In fact, with the budget 
we passed earlier this year, for the first time in history, Congress 
has committed itself to reserving all of the Social Security surplus, 
and all future Social Security revenues, exclusively for future Social 
Security benefits.
  Our tax relief is based upon huge over-collections of taxes from 
American workers and taxpayers. In other words, yes, it is based upon 
projections of budget surpluses--surpluses projected both by the 
nonpartisan Congressional Budget Office and the President's own Office 
of Management and Budget. It is interesting that the same critics who 
criticize the idea of basing tax relief on projections then make up 
their own, speculative projections about the cuts in future spending 
programs they claim would result from this tax relief.
  In point of fact, we all agree that Medicare, Veterans programs, 
education, and other priorities must be maintained and improved in the 
future. The budget we passed earlier this year provides for that, and 
this tax relief package doesn't infringe on them.
  I remember how, just a few years ago, some in Congress, the White 
House, and special interest groups made dire predictions of how 
spending on all kinds of essential programs would have to be slashed to 
balance the budget.
  Since then, a new Congress came to town in 1995, committed to 
balancing the budget and reining in the growth of government.
  We've still had increases in spending, but they've been more 
moderate. We do have some high priority programs to re-evaluate. Some 
increases are needed. In other places, we need more restraint, and even 
some cuts.
  But a balanced budget and a significant surplus have emerged--along 
with an economy that is strong because the people who work, save, 
invest, and create jobs took us seriously when we said we would balance 
the budget and limit the growth of spending.
  Now, Congress has taken the first critical steps needed to save and 
preserve Social Security for the current generation of seniors and 
those who expect to retire soon. We all agree the next step is to 
modernize it for future generations. Our budget, and this tax relief, 
is perfectly consistent with that commitment.
  Most of us agree with the majority of the bipartisan Medicare 
Commission that we need to shore up that program as well, too. That 
will involve expanding or improving some of what Medicare provides, as 
well as expanding consumer choice, increasing market discipline, 
curbing waste and abuse, and finding savings. Unfortunately, the 
necessary super-majority of the commission didn't allow it to turn its 
majority views into what it could call its ``official'' 
recommendations. But we in Congress stand ready to work with the 
President on the responsible reforms suggested by that commission and 
others.
  And this Congress remains committed to reducing the national debt. 
Under our budget, and including this tax bill, we will cut the public 
debt in half over the next ten years, and reduce the debt by more than 
$200 billion over what the President's budget recommendations called 
for.
  Still, Mr. President, even as we tackle all these challenges, we do 
have the capability of refunding to the hard-working American taxpayers 
a little of what they have been overcharged. That's what this 
legislation, and this debate, are all about today.
  The choice is simple: More government and more spending versus 
letting the people keep a little more of their hard-earned incomes and 
a little more control over their own lives.
  Mr. President, I vote for this tax relief bill because I am casting a 
vote of confidence for the wisdom of the people, and a vote to help by 
removing some of the heavy tax burden they are bearing.


          community renewal and charity empowerment amendment

  Mr. SANTORUM. Mr. President, I rise to discuss one of my amendments, 
No. 1476, offered with Senator Abraham and Senator DeWine, to establish 
renewal communities and encourage charitable giving to those 
organizations which make a lasting difference in the lives of people.
  The amendment creates 100 renewal communities where businesses will 
have the incentive to stay and locate to provide economic opportunity 
for some of the most disadvantaged communities in America. The 
amendment also allows states to utilize federal block grant funds, if 
they choose to, in order to offset any revenue loss associated with 
offering a targeted state charity tax credit for individual donations 
to charities working predominantly to alleviate poverty.
  Mr. President, I will continue to work with the chairman of the 
Finance Committee in order to see that these

[[Page S9917]]

critical provisions for expanding opportunity and transforming lives 
are included in the conference report. The Renewal Community provisions 
were included in the House of Representatives tax relief package and I 
look forward to working with the chairman to see that these provisions 
are included which unleash the power of the private sector and American 
charitable and faith-based resources to renew our commodities.
  Mr. ROTH. I appreciate the comments of the Senator from Pennsylvania. 
My staff has been reviewing this proposal and we will continue working 
with him toward a favorable outcome.
  Mr. SANTORUM. I thank the Senator. I appreciate his continued 
assistance.
  Mr. ABRAHAM. Mr. President, I also rise in strong support of this 
legislation creating Renewal Communities. These distressed communities 
will be able to benefit from lower taxes, regulatory relief, and 
brownfields clean-up while committing to lowering barriers to economic 
opportunity. The President of the United States has voiced his support 
for helping these communities. The House of Representatives has already 
passed this legislation. Moreover, our amendment also provides states 
the option to leverage federal dollars to transform lives and 
communities to the extent that individuals are motivated to contribute 
to charitable organizations walking along side those in need.
  Mr. ROTH. I thank the Senator from Michigan for his comments and look 
forward to working with him.
  Mr. ABRAHAM. I thank the Senator.
  Mr. ASHCROFT. Mr. President, I join the Senator from Pennsylvania and 
the Senator from Michigan and rise in support of the American community 
renewal and charity empowerment amendment. I would also encourage the 
Chairman to include these essential provisions in the conference 
report. The legislation will also provide increased flexibility for 
states that choose to offer targeted charity tax credits. This 
principle is consistent with the growing support for expansion of 
charitable choice and recognizes that empowering faith-based and other 
charities is an essential next step in welfare reform.
  Mr. ROTH. I thank the Senator from Missouri and appreciate the 
commitment of the Senators who have spoken to these important issues.
  Ms. MIKULSKI. Mr. President, I rise today to oppose what the 
Republicans are calling a tax cut. This so-called tax cut is a gimmick 
to get attention, to get votes, but not to get America what it needs.
  The Republicans are trying to pander to every interest group in 
America and give them a tax break. And who doesn't want a tax break?
  I oppose these tax cuts for three reasons. First, these tax cuts are 
premature. They are based on a projected surplus of funds that we do 
not have. We all know that this surplus exists on paper only. It is no 
more than a promissory note and we don't know if that note can or will 
be delivered.
  Second, these tax cuts are irresponsible. With no surplus, we are 
spending money before we have it. We are on a collision course between 
monetary and fiscal responsibility. Shouldn't we combine our monetary 
and fiscal responsibilities to get the country in the right direction 
towards growth in the future?
  Third, these tax cuts are callous. We are giving money away that we 
don't have--when we've not even met the compelling needs of our 
country: We've not fixed the draconian Medicare cuts stemming from the 
Balanced Budget Act of 1997. We've not ensured the long-term solvency 
of Social Security and Medicare. We've not addressed the spending 
caps--which are forcing cruel cuts in critical services for veterans 
health, and children's education, and which are crippling scientific 
research.
  The Medicare cuts in the Balanced Budget Act of 1997 have already 
caused 34 Home Health agencies in my state to close--only two public 
Home Health Agencies remain in Maryland. Maryland is also facing a 
managed care crisis. Because of Balanced Budget Act of 1997, 18,000 
people in Maryland will lose access to supplemental benefits such as 
prescription drug coverage and preventive health benefits.
  Republicans may say that a tax cut will allow these senior citizens 
to use the money from a tax cut to buy supplemental coverage, such as 
Medi-Gap and that they are returning ``choice'' and ``freedom'' to the 
American people. But what about the forty-percent of Medicare 
beneficiaries who do not even submit tax returns because their incomes 
are so low. Those people will not see a dime of the tax out. They will 
still not have any way to afford prescription drugs like heart 
medication or insulin for diabetes, because their HMO left town.
  Spending caps will threaten our ability to meet compelling human 
needs; to maintain the national security of the United States; and to 
stay the course on research and development.
  Because of the spending caps, veterans of this nation are facing a 
10% cut in health care.
  Because of the spending caps, our members of the military will 
continue to be forced to shop in consignment shops and use food stamps 
because they are not making enough money. Mr. President, we cannot have 
a second-hand military. These are people who put their lives on the 
line to protect our nation. They should not have to use food stamps to 
feed their families and shop in second-hand stores for clothing.
  Because of the spending caps, our continued technological advancement 
will be jeopardized. America must maintain its competitive edge if we 
are to maintain our leadership in science and technology.
  I am not opposed to tax cuts when it is the right time to do so. I 
believe it is the right time for tax cuts when there is a real and 
actual surplus or an incredible recession and we need to stimulate 
consumption. It is clear that neither of these conditions exists today.
  We need to get back to basics--to save lives, save communities, and 
save America. I urge my colleagues to join me in rejecting this phony 
tax cut.


                                  CIAC

  Mr. GRASSLEY. Mr. President, in the Small Business Job Protection Act 
of 1996, I had the good fortune of working with my esteemed colleague, 
the senior senator from Nevada, on an amendment restoring the exclusion 
for the receipt of contributions in aid of construction (CIAC) for 
water and sewage disposal property repealed by the Tax Reform Act of 
1986.
  I rise today to voice my concern about the possible direction of the 
Department of the Treasury's regulations interpreting the definition of 
CIAC under Internal Revenue Code section 118(b). Specifically, I am 
troubled by an effort to narrow the definition to exclude service 
laterals.
  The Senator from Nevada and I, along with many of our colleagues here 
in the Chamber worked hard over the course of a number of years to 
restore the pre-1986 Act exclusion for the receipt of CIACs for water 
and sewage. As part of our efforts, we developed a revenue raiser in 
cooperation with the industry to make up any revenue loss due to our 
legislation. This revenue raiser extended the life, and changed the 
method, for depreciating water utility property from 20 year 
accelerated to 25 year straight line depreciation. As a consequence of 
this cooperation with the industry, our CIAC change made a net $274 
million contribution toward deficit reduction.
  In addition to these efforts, we made a number of changes to the pre-
1986 language. The most important of these was a change to clarify that 
service laterals should be included in the definition of CIAC.
  These lines typically run from a larger water distribution line to 
the property line of one or more customers. The utility is responsible 
for all maintenance and liability associated with service laterals. 
Additionally, state public utility commissions treat contributions for 
service laterals (or any other capital component of the water supply 
system) as a CIAC and, therefore, do not allow a utility company to 
include them in its rate base.
  It is important to distinguish that service laterals are not fees 
charged to customers for the right to start and stop service. Such fees 
would be treated as taxable income. However, as elements of utility 
plant, the service laterals should be treated as CIAC.
  Additionally, it is my sense that the final revenue estimate done by 
the Joint Committee on Taxation on the restoration of CIAC included 
service

[[Page S9918]]

laterals. In an October 11, 1995 letter to me the Joint Committee on 
Taxation provided revenue estimates for the CIAC legislation. A 
footnote in this letter states, ``These estimates have been revisited 
to reflect more recent data.'' The industry had only recently supplied 
the committee with comprehensive data, which reflected total CIAC in 
the industry including service laterals.
  It is my sincere hope that the Department of the Treasury drafts the 
regulations on this important matter clearly reflecting the intent of 
Congress to include service laterals in the definition of CIAC.
  Mr. REID. Mr. President, I, too, stand to express my concern over the 
possible direction of the Treasury regulations. The Senator from Iowa 
and I worked long and hard to fix this problem in 1996. We worked with 
the various staffs here in Congress and at the Department of the 
Treasury to ensure that all contributions in aid of construction as 
regulated by the various state utility commissions were included under 
our legislation. We worked with the industry to develop a revenue 
raiser paid for by companies receiving relief in our legislation. I 
urge the Department to stick closely with the congressional intent of 
our amendment and look forward to working with my colleague to ensure 
that we reach the correct result on this issue.
  Mr. KOHL. Mr. President, I rise in opposition to the Roth tax bill 
and to express disappointment that Senator Moynihan's alternative did 
not pass the Senate. The Moynihan amendment would have provided real 
tax relief to those Americans who need it most, maintained the balanced 
budget that we fought so hard to achieve, and strengthened the Social 
Security and Medicare programs for generations to come.
  Senator Moynihan's amendment would have reduced the unprecedented 
$800 billion, ten year tax cut to a more reasonable $295 billion. The 
Moynihan proposal pays a fair dividend, fairly distributed, to the 
working families that have fueled the current economic recovery. The 
Roth proposal breaks the bank with tax breaks for those who don't need 
them, and benefit cuts to those who have already suffered them. The 
Moynihan proposal takes a conservative, cautious estimate of the 
American economic pie and divides it evenly. The Roth proposal uses 
``pie in the sky'' surplus estimates to justify huge tax breaks for a 
very small segment of society.
  The proponents of $800 billion worth of tax relief would have us 
believe that a $1 trillion surplus is as reliable and inevitable as the 
sun coming up in the morning. But as my colleagues know, this 
projection is based on the most optimistic and unrealistic 
assumptions--assumptions about the precise direction of the economy, 
which is notoriously hard to predict, and assumptions about the 
willingness of Congress to make large and drastic spending cuts, which 
is notoriously nonexistent.
  Over the next 5 years, the smallest changes in the economy could lead 
the $1 trillion surplus estimate to be off by as much as $250 billion.
  And, who among us believes that Congress and the President have the 
ability, or the desire, to cut programs like education, agriculture, 
and biomedical research by the approximately 50% required? In fact, 
already this year we have increased spending by $35 billion with more 
added every day. Furthermore, members of Congress from both sides of 
the aisle admit there is no way we will finish our annual 
appropriations bill without yet another, end-of-the-year cash infusion.
  The surplus is not a sure thing, and basing an $800 billion tax cut 
on it is a long-shot gamble. It was wrong, during the years of deficit 
spending, to take money from future generations and spend it on 
ourselves. It is equally wrong today to bet the money of future 
generations on shaky economic projections and the surreal expectation 
that Congress will suddenly--for the first time--decide to make tough 
cuts in government spending.
  None of this is to suggest that our budget is as bad as it was ten 
years ago--it is just not as good as the Roth proposal assumes. Our 
nation is currently enjoying record unemployment, falling welfare 
rolls, and increased prosperity for more Americans than at any time in 
history. We can and should use this opportunity to fix oversights and 
inequities in our tax code. Working Americans have driven this economy, 
and they deserve to share in it--they deserve a tax code that helps 
them send their children to college, that eases the burden of paying 
for long-term care, that encourages marriage, saving and high quality 
child care. Simply put, in times of economic prosperity, we have the 
chance--and the obligation--to expand the pool of winners in our 
economy.
  And there are definitely some provisions in the Roth proposal that do 
just that. Both Senator Roth's bill and the Moynihan amendment contain 
a version of my Child Care Tax Credit to encourage employers to get 
involved in increasing the supply of quality child care. Both bills 
also contain my Farmer Tax Fairness Act to allow farmers to realize the 
benefits of income averaging. And both bills provide for education tax 
relief, marriage penalty relief, full health insurance deduction for 
the self-employed, tax relief to cover the costs of long-term care, and 
the extension of tax credits that are vital to our economic health.
  But despite any common elements, on almost every point, the Moynihan 
alternative not only does a better job of containing the overall cost 
of tax relief, it also focuses that relief on those taxpayers most in 
need of help. It is a conservative package that leaves plenty of room 
to preserve Social Security and Medicare, preserve the fiscal balance 
we have worked so hard to achieve, and pay down the national debt.
  Mr. President, for all these reasons, I hope, when we finally get 
serious about writing a tax bill later this year, we will seriously 
consider the Moynihan alternative. It is balanced, responsible and 
fiscally prudent. It will help us expand opportunities and make life 
better and easier for more Americans and their families. And we should 
reject the Roth proposal. It turns the clock back to the failed budget 
policies of the past, while providing too much benefit for too few 
Americans at too great a cost.
  Mr. GORTON. Mr. President, the question now being considered by the 
Senate is whether we should refund a portion of the federal government 
surplus to American families.
  Over the next ten years, the federal government will collect $996 
billion more in income and other taxes than is necessary to pay fully 
for every existing federal program, agency and department. This means 
that the IRS will be taking almost $1 trillion more in taxes from the 
American people's paychecks than it needs to operate the government. 
This is a tax surplus--a tax overpayment.
  This tax relief debate, serious as it is, concerns only the non-
Social Security surplus. Both sides agree that the Social Security 
surplus itself is to be reserved for Social Security recipients only, 
and not be diverted to any other purpose.
  There is, however, an important distinction between the two parties 
even on Social Security. Republicans, myself included, believe that we 
should pass a ``lockbox'' law, giving the strongest possible statutory 
protection to that Social Security surplus. Democrats have consistently 
filibustered our proposal, asking Americans simply to trust them not to 
raid the Social Security surplus in the future as they have in the 
past. That is not enough.
  The difference between the parties on taxes is even more striking. 
Republicans believe that the lion's share of the non-Social Security 
surplus ought to be returned to the American taxpayer whose taxes 
created that surplus; Democrats want to spend that surplus on new and 
expanded government programs.
  I am convinced that this tax overpayment should be refunded to the 
American people who worked for and earned it. It is their money and it 
should be returned to them to invest and spend as they deem best for 
their families and their futures. The alternative to refunding the tax 
surplus to taxpayers is to leave the money in Washington, DC where it 
will be spent to create $1 trillion in new government programs.
  The President and his supporters in Congress are making outrageous 
claims that giving a refund to taxpayers is risky or even dangerous. 
They say that somehow returning a portion of the government surplus to

[[Page S9919]]

American families will somehow endanger the very livelihoods of women 
and children. On that point, I would ask every American citizen to 
challenge the President and his Democratic allies to back up with facts 
their politically-charged claims.
  This latest shameless charade by the President is absolutely 
outrageous. The inference propounded by President Clinton is that those 
of us in this Chamber who support a tax refund are out to harm women 
and children, and that those who oppose such a refund care more about 
women and children than we do. That's an absolute outrage, and I'm 
truly sorry to see that the President of the United States will stoop 
to such low levels in order to keep this money here in Washington, D.C. 
so that he can spend it on new government programs.
  I will resist the temptation to join the President in his game of 
scare tactics, but I will take this opportunity to challenge all 
Americans to ask themselves this question when they hear these 
ridiculous charges: how will women and children, or anyone else for 
that matter, possibly be hurt by the government giving them back some 
of the money they overpaid to Washington, D.C.?
  To further illustrate the weakness of the President's argument, I'd 
like everyone watching this on C-Span back home to take three dollars 
out of his or her purse or wallet. Now imagine that each dollar bill is 
worth a trillion dollars. That's the surplus--the people's tax 
overpayment. That's the amount that Americans have overpaid the 
government in personal income and other taxes.
  We Republicans want to put two of these dollars aside to protect 
Social Security and Medicare and other essential programs, and to cut 
the national debt in half.
  The debate with the Democrats is over what to do with the third 
dollar. Republicans want to give it back to the taxpayers who earned 
it. Democrats want to spend it on new programs and bureaucracies. It's 
as simple and clear as that.
  The surplus is generated from personal income and other taxes, it 
belongs to the American people. It's not the government's money--it's 
your money .  .  . you sent it here. Shouldn't you get some of it back?
  While I strongly support refunding the tax surplus to the taxpaying 
families and hardworking individuals all across this country, it is my 
sincere hope that Congress will ultimately pass a bill that reduces the 
tax burden on Washington state families while moving towards 
simplification of the federal tax code.
  Fundamental reform of the tax code is my number one tax priority. I 
am a strong, committed advocate for the elimination of our current 
federal tax system. It is too complicated, too burdensome, too unfair. 
The current system should be scrapped and replaced with one that is 
much simpler and easier to understand. We need to focus our energy and 
attention in Congress on developing an alternative. I will support a 
replacement code that is based on four principles: the new code must be 
fair, simple, uniform and consistent. Americans deserve a tax code they 
can understand and predict.
  A vast majority of the American people and those in Congress support 
reforming our tax code. I hope that when Congress takes action to ease 
the cost burden of the federal tax code, the opportunity to simplify or 
reduce the complexity of the tax code will be seized. I do not pretend 
to believe there is consensus on how to reform the code completely at 
this time, but at the very least Congress should pass a tax bill that 
does not make the code even more of a bewildering mess than it is 
today.
  Unfortunately, the bill reported out of the Finance Committee does 
not achieve the goals of either simplifying the code, or even to do no 
further harm. The bill contains 15 titles, 19 subtitles and 163 various 
sections to total over 400 pages in length. It takes a report of an 
additional almost 300 pages to explain what the bill even does. Yes, 
the bill does refund nearly $800 billion in unneeded tax dollars back 
to the American people, but at what price? Adding more pages to the tax 
code? Making the code more complicated? Further confusing taxpayers as 
they struggle to fill out their tax returns?
  What is most unfortunate is that a tax relief bill need not be so 
complex. It is certainly possible to refund the tax surplus simply and 
directly. An alternative was proposed during committee consideration by 
Senator Gramm that accomplished the goal of simple tax relief by 
including just four elements: broad-based income tax rate relief, 
repeal of death taxes, elimination of the marriage penalty, and full 
deductibility for health insurance for all Americans. I voted for that 
alternative in the Senate.
  While I may not fully endorse every aspect of this specific proposal, 
I strongly and enthusiastically support its intent to refund the 
taxpayers' money in a manner that simplifies and corrects injustices in 
the current tax code. We should get rid of death taxes, stop penalizing 
married couples through the tax code, allow self-employed and 
individual Americans to fully deduct their health insurance costs just 
as corporations can, and we should permanently extend the R tax 
credit so that our increasingly technology driven economy can continue 
to grow and create jobs.
  I cannot, though, happily endorse a tax relief package that moves 
toward such reform only to get lost in a 443-page swamp of countless 
new provisions and rules. The citizens of Washington state and the 
taxpayers of this nation deserve to have a significant portion of the 
tax surplus returned to them, and they deserve it in a manner that 
doesn't make filling out their IRS return by April 15th even more of an 
exasperating experience.
  For now, I will continue to push for a debate that reforms our tax 
code. In the meantime, I am committed to pushing onward with the 
principles that guide this debate: Should a portion of the government 
surplus be refunded to American families, or should the rest of the 
non-Social Security and Medicare surplus be left in Washington, D.C. 
for increased spending on government programs?
  On that question, the answer is easy .  .  . give American families a 
tax refund. That requires a yes vote, though with serious reservations.


                        captial gains exclusion

  Mr. DORGAN. Mr. President, I rise to enter into a colloquy with the 
chairman of the Finance Committee, Senator Roth, about a tax issue that 
is important to farm families across the country.
  The Senate is on record in this year's budget resolution as 
supporting legislation to end the disparity between family farmers and 
their urban and suburban counterparts with respect to the $500,000 
capital gains inclusion for homes sales that Congress passed in 1997 by 
expanding it to cover capital gains from the sale of farmland along 
with the farmhouse. Under current law, farmers receive little or no 
benefit from the existing capital gains exclusion because farm homes 
away from town often hold little or no value.
  It is my understanding that the chairman is supportive of the effort 
to end this tax inequity and will work to include this family farmers 
capital gains fairness proposal in conference should the final tax bill 
include other capital gains tax relief.
  Mr. ROTH. I understand the Senator's concerns. In the context of 
capital gains, I believe the needs of farmers should be considered as 
we develop future legislation. In the conference, we will certainly be 
discussing capital gains. And we will consider the special needs of 
farmers in this area.
  Mr. CAMPBELL. Mr. President. Today I express my support for S. 1429, 
The Taxpayer Refund Act of 1999. This is a sound bill based on real 
need and I believe the American taxpayers deserve and want this 
legislation.
  The Taxpayer Refund Act of 1999 goes a long way to relieve taxpayers 
of an unfair tax burden. This bill provides: broad-based tax relief; 
family tax relief by addressing the Marriage Penalty Tax; retirement 
savings and education incentives; health care tax reductions; small 
business tax relief; international tax reform, and death and gift tax 
relief, among other provisions.
  I am particularly interested in the estate tax relief because earlier 
this year I introduced the Estate and Gift Tax Rate Reduction Act of 
1999, (S. 38). Estate and gift taxes remain a burden on American 
families, particularly those who pursue the American dream

[[Page S9920]]

of owning their own business. This is because family-owned businesses 
and farms are hit with the highest tax rate when they are handed down 
to descendants--often immediately following the death of a loved one. 
These taxes, and the financial burdens and difficulties they create 
come at the worst possible time. Making a terrible situation worse is 
the fact that the rate of this estate tax is crushing, reaching as high 
as 55 percent for the highest bracket. That's higher than even the 
highest income tax rate bracket of 39 percent.
  Furthermore, the tax is due as soon as the business is turned over to 
the heir, allowing no time for financial planning or the setting aside 
of money to pay the tax bills. Estate and gift taxes right now are one 
of the leading reasons why the number of family-owned farms and 
businesses are declining; the burden of this tax is just too much.
  This tax sends the troubling message that families should either sell 
the business while they are still alive, in order to spare their 
descendants this huge tax after their passing, or run-down the value of 
the business, so that it won't make it into their higher tax brackets. 
Whichever the case may be, it hardly seems to encourage private 
investment and initiative, which have always been such a strong part of 
our American heritage.
  I am pleased that the bill before us takes the important step to 
address this unfair burden. I will continue to work with my colleagues 
for the complete elimination of the death tax.
  I have heard the argument that this tax cut will threaten Social 
Security, but that's just not true. In fact, this bill saves every 
penny of the money set aside for Social Security. Social Security is 
safe and secure with this bill. This bill also leaves $277 billion to 
finance Medicare, emergencies or other priorities, so this bill does 
not threaten Medicare or Medicare beneficiaries. In contrast, the 
administration's budget would increase spending by $1 trillion and 
increase taxes by $100 billion over the next 10 years according to the 
Congressional Budget Office. How can this administration believe that 
they can increase spending and taxes even though they already admitted 
raising taxes too much? I think since we now have a balanced budget, 
then the American people deserve this tax cut. The American people have 
earned this tax cut, this is their money and I think we should give it 
back to them.
  I know that $792 billion is a lot of money, but we have a $3 trillion 
surplus and one reason we have a $3 trillion surplus is the taxpayers 
got their taxes raised too much. I realize that we could just go ahead 
and spend that extra money like the administration wants to do, but I 
think that would be irresponsible. I think if the American people 
overpaid, then the American people should get their money back--that's 
just fair.
  The Taxpayer Refund Act of 1999 is the largest middle-class tax 
relief since the Reagan administration and I think it's high time the 
hard-working taxpayer get this refund.
  I ask unanimous consent to have pertinent information printed in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                    Congress of the United States,


                                  Joint Committee on Taxation,

                                    Washington, DC, March 5, 1999.
     Senator Ben Nighthorse Campbell,
     U.S. Senate,
     Washington, DC.
       Dear Senator Campbell: This is in response to your request 
     dated February 24, 1999, for a revenue estimate of your bill, 
     S. 38, ``The Estate and Gift Tax Rate Reduction Act.'' 
     Briefly, this bill would reduce the statutory estate and gift 
     tax rates contained in section 2010 of the Internal Revenue 
     Code of 1986 (the ``Code'') each year by subtracting 5 
     percent from each rate in each rate bracket contained 
     therein. In addition, your bill would also reduce the credit 
     for State death taxes contained in section 2011 of the Code 
     by subtracting each year 1.5 percent from each rate in each 
     rate bracket contained therein. As the result of these 
     reductions in the statutory estate and gift tax rates, 
     Subtitle B of the Code pertaining to estate, gift, and 
     generation-skipping transfer taxes will effectively be 
     repealed for decedents dying and gifts made after December 
     31, 2009.
       Assuming that your bill would take effect for decedents 
     dying and gifts made after December 31, 1999, we estimate 
     that this proposal would decrease Federal fiscal year budget 
     receipts as follows:

                        [In billions of dollars]

Fiscal years:
  2000..............................................................
  2001.............................................................-4.1
  2002.............................................................-8.4
  2003............................................................-13.4
  2004............................................................-18.1
  2005............................................................-22.1
  2006............................................................-26.3
  2007............................................................-30.8
  2008............................................................-35.1
  2009............................................................-39.5
                                                             __________
                                                             
      Total......................................................-197.8

       I hope this information is helpful to you. Please let me 
     know if we can be of further assistance in this matter.
           Sincerely,
     Lindy L. Paul.
                                  ____



                                         United States Senate,

                                Washington, DC, December 11, 1998.
       Dear Colleague: As we prepare to convene the 106th 
     Congress, I am writing to seek your co-sponsorship of 
     legislation that would eliminate the burden of the death 
     taxes. On July 16, 1998, I introduced S. 2318, a bill that 
     took a fresh and prudent approach to reducing the burden of 
     estate and gift taxes. This important bill, which I plan on 
     re-introducing as soon as we reconvene, would amend the 
     Internal Revenue Service Code of 1986 to phase out gift and 
     estate taxes completely over a ten year period. A copy of S. 
     2318 is enclosed for your convenience.
       Just this month, the Joint Economic Committee released its 
     study entitled, ``The Economics of the Estate Tax.'' This 
     thorough analysis concluded that ``the estate tax generates 
     costs to taxpayers, the economy and the environment that far 
     exceed any potential benefits that it might arguably 
     produce.'' The study shows persuasively that this unfair and 
     byzantine tax restricts economic growth and squelches 
     entrepreneurial initiative. Of special importance to me, the 
     study also demonstrates how this tax undermines family-owned 
     businesses and farms--a segment of our economy responsible 
     for about \2/3\ of new job creation since the early 1970s. 
     Clearly, the time for eliminating the estate tax has arrived.
       My bill would gradually eliminate this tax completely, by 
     reducing the tax five percent each year, until the highest 
     rate reaches zero. Although the $23 billion received from 
     this tax last year represents only a tiny percentage of 
     overall IRS receipts, eliminating it requires a gradual 
     approach. A gradual reduction over ten years is wise as we 
     struggle to maintain our commitment to balance the budget and 
     prune the federal government. A gradual approach minimizes 
     possible dislocations.
       Several states have already taken a similar initiative and 
     phased out their state taxes on their own. I think it's time 
     we follow their example and eliminate this federal tax. My 
     bill last year was endorsed by the American Farm Bureau, the 
     Family Business Estate Tax Coalition, the U.S. Chamber of 
     Commerce, and other interested groups.
       Should you wish to be an original cosponsor of this bill 
     when I reintroduce it, or if you have any questions about 
     this bill, please contact me, or have your staff contact Amy 
     Amato of my staff at 224-5852. I look forward to working with 
     you.
           Sincerely,
                                          Ben Nighthorse Campbell,
     U.S. Senator.
                                  ____



                                         United States Senate,

                                   Washington, DC, April 22, 1999.
       Dear Colleague: We are writing to request your 
     cosponsorship of S. 38, the Estate and Gift Tax Rate 
     Reduction Act of 1999. This bill takes a fresh and prudent 
     approach to reducing the burden of estate and gift taxes by 
     phasing out gift and estate taxes completely over a ten year 
     period.
       In December, the Joint Economic Committee released its 
     study entitled, ``The Economics of the Estate Tax.'' This 
     thorough analysis concluded that ``the estate tax generates 
     costs to taxpayers, the economy and the environment that far 
     exceed any potential benefits that it might arguably 
     produce.'' The study shows persuasively that this unfair and 
     Byzantine tax retards economic growth, and squelches 
     entrepreneurial initiative. The study also demonstrates how 
     this tax undermines family-owned businesses and farms--a 
     segment of our economy responsible for about \2/3\ of new job 
     creation since the early 1970s. In fact, in large part due to 
     this tax, only 30% of family-owned businesses survive through 
     the second generation and only 13% survive through the third. 
     Clearly, the time for eliminating the estate tax has arrived.
       S. 38 would gradually eliminate this tax completely, by 
     reducing the tax five percent each year, until the highest 
     rate reaches zero. Although the $23 billion received from 
     this tax last year represents only a tiny percentage of 
     overall IRS receipts, eliminating it requires a gradual 
     approach to minimize possible dislocations. A gradual 
     reduction over ten years is prudent as we struggle to 
     maintain our commitment to balance the budget and prune the 
     federal government.
       Several states have already taken a similar initiative and 
     phased out their state estate taxes on their own. It's time 
     we follow their example and eliminate this federal tax. 
     Eliminating the tax has widespread support. In fact, 60% of 
     business owners report that they would increase investment 
     and add more jobs if this tax were eliminated. That kind of 
     positive effect on the American economy is tremendous. This 
     bill has the endorsement of the American Farm Bureau, the 
     Family Business Estate Tax Coalition,

[[Page S9921]]

     the U.S. Chamber of Commerce, the National Federation of 
     Business, and over 100 other interested organizations. The 
     time to eliminate this tax has clearly come.
       Should you wish to be a cosponsor of this bill, or if you 
     have any questions about this bill, please contact us, or 
     have your staff contact Amy Amato of Senator Campbell's staff 
     at 224-5852 or Kolan Davis of Senator Grassley's staff at 
     224-3744. We look forward to working with you.
           Sincerely,
     Ben Nighthorse Campbell,
       U.S. Senator.
     Charles Grassley,
       U.S. Senator.

  Mr. AKAKA. Mr. President, I rise, while we are debating the budget 
reconciliation bill, to talk about an important family issue that I 
raised during debate on the emergency supplemental bill in March. I 
want to voice my strong opposition to efforts by Members in the other 
body to use $6 billion in unspent welfare and health care funds, 
intended for low-income children and their families, as a gimmick to 
overcome their problem with this year's low budget caps.
  Mr. President, I am referring to attempts to rescind $6 billion in 
unobligated Temporary Assistance for Needy Families, or TANF money, and 
unobligated Medicaid or Children's Health Insurance Plan funds. I 
learned of this proposal after reading the July 28, 1999, New York 
Times, in which appeared a story entitled, ``Leaders in House Covet 
States' Unspent Welfare Money.'' Why do they want to do this? To help 
fund the $792 billion tax cut proposal that the other body passed last 
week--a proposal that would mostly help the wealthy in our nation. Any 
such action would be a repudiation of our promise to help families 
living in poverty. It is a classic situation of reverse Robin Hood: 
robbing the poor to give more to the rich.
  Mr. President, during debate on the welfare reform bill in 1996, 
states agreed to trade entitlement status under the Aid to Families 
with Dependent Children program for the assurance of a fixed, annual 
amount in the form of a block grant. Those of us who opposed the 
welfare bill for this and other reasons warned that it would be harder 
under a block grant to keep welfare funds from being cut. Now, certain 
members are turning our fears into reality. The cuts in this former 
entitlement program have begun. Cutting funds in this manner, Mr. 
President, would represent a betrayal of our promise to protect 
America's poor families.
  Again, as I explained in March, the term, ``unobligated,'' may seem 
self-explanatory--that these are simply funds that have not been spent 
under TANF, Medicaid, or CHIP. Under TANF, according to the U.S. 
Department of Health and Human Services, a combined total of $4.2 
billion from fiscal years 1997, 1998 and 1999 is available. Some would 
point out that many poor families have worked their way to self-
sufficiency and that welfare rolls have fallen by record numbers, as 
reasons why this money is not needed by states and remains unobligated.
  However, many states are relying heavily on these unobligated funds 
and have already committed them for a wide variety of uses. States need 
to distribute some of this funding to counties and local agencies, or 
to child care and social services activities. Governors are keeping 
``rainy day'' funds for contingencies such as recessions or periods of 
stagnant growth--as we have now in my State of Hawaii--that force 
families back onto welfare and leave states without enough money until 
the next quarterly federal payment. States are also planning to use 
this money for fundamental or new, innovative expenses to help poor 
families become financially independent.
  In July 23, the National Governors Association wrote to Congressmen 
John Porter and David Obey of the House Appropriations Committee, to 
plead their case. This letter is signed by Governors Thomas R. Carper 
of Delaware and Michael O. Leavitt of Utah, one Democrat and one 
Republican. The letter states, ``Cutting funding for vital health and 
human services programs such as Medicaid, CHIP, TANF, and child support 
would adversely affect millions of Americans--with the greatest impact 
on children and the elderly in the greatest need. We reiterate our 
adamant and uniform opposition to these unprecedented cuts and to any 
proposal that would result in such drastic cuts to our most vulnerable 
citizens.''
  I concur with the Governors' sentiments about these valuable 
programs.
  Mr. President, I do this especially because the monies in question 
were originally designated to help our poorest children and their 
families. Instead, they would, over the next 10 years, go toward such 
things as estate tax relief and capital gains tax relief--tax benefits 
for the wealthiest taxpayers in the Nation.
  Tax relief can be a good thing. However, it should not be the top 
priority when we face the urgent need to pay down our country's debt 
and save Social Security and Medicare. I hope my colleagues agree with 
me on an issue that is important to many poor Americans. I hope funding 
is not taken out of TANF, Medicaid or CHIP, as a solution to low budget 
caps.


                       independent bakery drivers

  Mr. NICKLES. Mr. President, I have been working for several years to 
clarify a provision of the tax code which treats certain truck drivers 
as ``statutory employees,'' meaning they are independent contractors 
except for payroll tax purposes.
  Prior to 1991, these individuals could pay their own payroll taxes if 
they had a substantial investment in a distribution route. However, a 
1991 IRS ruling said that an investment in a distribution route no 
longer qualified as an investment in ``facilities.'' This reversal by 
the IRS has created much uncertainty, particularly in the bakery 
industry.
  I have prepared an amendment to clarify that an investment in 
facilities can include a substantial investment in a distribution 
route, area, or territory. Thus, an independent-contractor truck driver 
who has a substantial investment in a distribution route or territory 
will not be treated as a statutory employee for FICA and FUTA tax 
purposes.
  Unfortunately, I am prevented from offering my amendment to this tax 
reconciliation bill because it affects the Social Security program. 
Under Section 310(g) of the Budget Act, the adoption of my amendment 
would cause the entire bill to be subject to a 60-vote point of order.
  Therefore, I will not offer my amendment to this bill. However, I ask 
my colleague from Delaware, Senator Roth, if he would work with me to 
consider this amendment on the next non-reconciliation tax measure 
considered by the Senate Finance Committee.
  Mr. ROTH. I thank the Senator from Oklahoma for his comments on this 
issue. The budget reconciliation procedures do prevent the 
consideration of some amendments such as the one described by the 
Senator from Oklahoma. I look forward to working with the Senator from 
Oklahoma on this important issue on the next non-reconciliation tax 
bill.


       tax rules for consolidation of life insurance compensation

  Mr. COVERDELL. Mr. President, let me ask the Chairman. As I 
understand it, the tax rules regarding the taxation of life insurance 
companies have changed substantially over the past years. As a vestige 
of these old tax rules, however, there are certain limitations on when 
life insurance companies can file consolidated tax returns with non-
life companies.
  Mr. ROTH. Yes, I agree.
  Mr. SHELBY. I also want to note that in the Senator's tax bill and in 
the House tax bill, some of these restrictions on life insurance 
consolidation have been addressed.
  Mr. ROTH. Yes, that is true.
  Mr. SHELBY. I ask that the Chairman keep in mind the further 
rationalization of these restrictions as this bill heads into 
conference and in future action in the Committee.
  Mr. ROTH. I will keep in mind the concerns of both Senators in this 
important issue.


                  bringing computers to the classroom

  Mr. DASCHLE. Mr. President, as a cosponsor of the New Millennium 
Classrooms Act, introduced by Senators Abraham and Wyden, I am very 
pleased the Senate adopted this provision to encourage computer 
donations to schools. While I oppose the underlying bill, and believe 
the magnitude of the Republican tax cut is irresponsible, I do support 
a more reasonable level of tax relief with provisions targeted to 
address national needs. This provision, which has strong bipartisan 
support,

[[Page S9922]]

meets that test. I would also like to point out that Senator Baucus 
sponsored a similar provision that was part of the Democratic 
alternative considered earlier.
  Technology is playing an increasingly important role in our society, 
in homes, in businesses, and in many aspects of everyday life. 
Employers will require increasingly sophisticated levels of 
technological literacy in the workplace of the 21st Century. Education 
Secretary Riley has pointed out that we can expect 70 percent growth in 
computer and technology-related jobs in the next 6 years.
  Yet, a recent U.S. Department of Commerce report, ``Falling Through 
the Net: Defining the Digital Divide,'' finds there is a growing 
disparity in terms of who has access to technology. While more 
Americans are embracing technology, African Americans and Hispanics, 
particularly from lower-income families and from rural areas, have less 
access to computers, and that gap is growing. We find ourselves with a 
new, information-age definition of ``haves'' and ``have-nots.'' These 
conditions are not good either for those left behind, or for those who 
will be looking to hire employees in the future.
  Every child should be able to gain technological skills through his 
or her classroom. Yet many schools are having difficulty meeting this 
challenge. Sadly, while some schools have access to the latest in 
equipment, too many schools, particularly in fiscally strapped urban 
and rural areas, have an insufficient number of computers, and most of 
those are outdated. The average computer in the classroom is 7 years 
old--and many are even older. A large proportion of these computers 
cannot run current educational software or connect to the Internet.
  The Department of Education recommends that the optimal ratio of 
students per computer is five to one. Yet schools where 81 percent or 
more of the children meet the Title I eligibility standards have only 
one multimedia computer for every 32 students. Even schools where less 
than 20 percent of the students are economically disadvantaged have 
only one multimedia computer for every 22 students.
  At the same time, research shows that students with the least access 
to technology can be helped most from effectively integrating 
technology into the classroom. A study by City University of New York 
found test scores of disadvantaged children increased dramatically with 
computer-aided instruction.
  We have taken several steps at the federal level to increase schools' 
ability to integrate technology into the classroom. The creation of the 
E-rate program, for example, is helping schools obtain access to the 
Internet. Technology Challenge grants are providing resources to 
schools to upgrade their computer programs. We are also providing more 
resources to help train teachers on the best ways to use technology 
effectively in their classes. But many schools have a fundamental 
problem in obtaining suitable hardware.
  Current law provides an enhanced deduction for corporate donations to 
schools until December 31, 2000. Unfortunately, few corporations are 
taking advantage of the enhanced deduction for two main reasons: the 
requirement that donated equipment be 2 years old or less does not fit 
companies' equipment use cycles, and the deduction does not provide a 
sufficient incentive. Modifying the tax code to address these 
limitations, as the Abraham-Wyden amendment proposes, will help us 
achieve the goal of putting a computer in every classroom and create 
ongoing incentives to make sure the technology is kept reasonably up-
to-date.
  The Rand Institute has estimated the cost of providing our schools 
with appropriate technology to be about $15 billion. The New Millennium 
Classrooms Act will help stretch federal funds efficiently and 
effectively to address this shortfall.
  Mr. President, we all talk about the importance of encouraging 
businesses to become more involved in the educational process in their 
communities. This provision creates a strong incentive to help build 
those relationships while providing school children with access to 
updated equipment. I thank my colleagues for supporting it and intend 
to work to see it enacted as part of a more responsible budget plan.
  Mr. WYDEN. Mr. President, I am pleased that last night the Senate 
adopted the Abraham-Wyden New Millennium Classrooms Act as an amendment 
to the reconciliation tax bill. Senator Abraham and I have worked on 
many technology issues together as members of the Senate Commerce 
Committee.
  The New Millennium Classrooms Act is about digital recycling. It 
gives companies an incentive to recycle technology. It says the 
computer Bill Gates may see as a dinosaur, is really a dynamic new 
opportunity for seniors and students who have none.
  There is a growing need to encourage access to information technology 
for both seniors and students. The Administration on Aging estimates 
there are about 11,500 senior centers throughout the United States 
serving millions of older Americans. The centers offer a variety of 
services, including employee assistance and educational programs. 
Equipping senior centers with donated computer equipment could help 
open the door to employment opportunities.
  We know there is a growing demand for skilled high tech workers. Just 
last year, the high tech community came to Congress asking for a large 
increase in the number of skilled H-1B visas so they could hire foreign 
workers to fill the gap. Congress agreed to boost the number of H-1B 
visas from 65,000 to 115,000 for 1999 and 2000. Those are 50,000 jobs 
that could have gone to Americans. Many seniors have the drive and the 
desire to keep working; they simply need to gain some basic computer 
skills.
  While it is important for all Americans to have equal access to 
information technology, the most pressing need is in our schools. The 
Department of Commerce recently published a report, ``Falling Through 
the Net: Defining the Digital Divide.'' It shows that the rapid build-
out of the information superhighway has by-passed many in rural and in 
less-advantaged urban communities. The report says factors such as 
race, income and area of residence help limit access to information 
technology. For example, the study found that households earning more 
than $75,000 are five times more likely to own computers than those 
earning less than $10,000. Households earning more than $75,000 are 
seven times more likely to use the Internet as those earning less than 
$10,000.
  We know that very early in the next Century 60% of all jobs will 
require high-tech computer skills. To prepare our children for the jobs 
of the future, they not only must have access to technology, but they 
must be trained to use it as well. But we cannot count on children in 
low-income and rural communities even to have access to computers.
  Schools can serve as great equalizers in this equation, giving all 
children access to information technology resources. However, a 1997 
report by the Educational Testing Service found that on average there 
was only one multimedia computer for every 24 students. In economically 
disadvantaged communities, the situation is worse: the computer to 
student ratio rises to one in 32.
  The purpose of our amendment is to build more bridges between the 
technology ``haves'' and the ``have nots'' to build more on-ramps to 
the information superhighway. You can't get 21st Century classrooms, 
using Flintstones technology. However, technology is not cheap and 
school budgets are limited, making it tough for schools to upgrade 
their systems by themselves. The point of our amendment is to enhance 
existing incentives to businesses to donate computer equipment to 
schools.
  There is a federal program in place, the 21st Century Classroom Act 
of 1997, but its use has been limited. It allows businesses to take a 
tax deduction for certain computer equipment donations to K-12 schools. 
But most businesses take longer to upgrade their computers than allowed 
for under the law.
  The New Millennium Classrooms Act would make this law work the way it 
was intended, and include donations to senior centers under this tax 
credit. First, our legislation would increase the age limit from two to 
three years for donated equipment eligible for a tax credit. This more 
realistically tracks the time line businesses follow for their computer 
upgrades. It will cover hardware that possesses the necessary memory 
capacity and graphics capability to support Internet and multimedia 
applications.

[[Page S9923]]

  Second, our bill expands the current limitation of ``original use'' 
to include both original equipment manufacturers and any corporation 
that reacquires their equipment. We believe that by expanding the 
number of donors eligible for the credit, we will expand the number of 
computers donated to schools and senior centers.
  Third, our bill provides for a 30% tax credit of the fair market 
value for school and senior center computer donations, and a 50% credit 
for donations to schools located in empowerment zones, enterprise 
communities and Indian reservations. The Department of Commerce report 
highlights the need to encourage school computer donation in these 
notoriously under-served communities and we want to target donations 
toward these communities.
  Finally, our bill requires an operating system to be included on a 
donated computer's hard drive in order to qualify for the tax credit. 
This will ensure students and seniors don't get empty computer shells, 
but the brains that drive the computers.
  Our legislation is supported by a wide range of business and 
education groups. Leaders of technology associations, like the 
Information Technology Industry Council and TechNet, and the National 
Association of Manufacturers have joined education associations, such 
as the National Association of Secondary School Principals and the 
National Association of State University and Land Grant Colleges, in 
support of the amendment.
  The Digital Millennium Classrooms Act promotes digital recycling. It 
will encourage companies to put their used computers into classrooms 
instead of into landfills. It will help build a safety net under 
students trying to cross the digital divide. I thank my colleagues for 
supporting this amendment, and again wish to commend Senator Abraham 
for his leadership on this legislation.
  Mr. McCAIN. Mr. President, as one who has advocated tax relief and 
reform for American families throughout my 17 years in Congress, I 
welcome the opportunity to speak on the Taxpayer Refund Act of 1999.
  Americans want, need, and deserve tax relief. The government takes 
too much of the American people's earnings to fund the bloated 
bureaucracy in Washington. The notion that the government knows better 
than families how to spend their money is absurd. Americans should be 
able to keep much more of their hard-earned money to use and invest for 
themselves and their family's future.
  Not only do Americans want and need tax relief, they also deserve 
fundamental reform of our unfair and overly complex tax code. For 
years, and this bill is no exception, we have compounded the tax code's 
complexity and put tax loopholes for special interests ahead of tax 
relief for working families. The result is a tax code that is a 
bewildering 44,000 page catalogue of favors for a privileged few and a 
chamber of horrors for the rest of America--except perhaps the 
accountants and lawyers.
  No one can possibly believe it's fair to tax your salary, your 
investments, your property, your expenses, your marriage, and your 
death. Taxes claim nearly 40 percent of the average taxpayer's income. 
This is simply not right.
  This bill takes several steps toward relieving that excessive tax 
burden, and I congratulate the Chairman and his colleagues on the 
Senate Finance Committee for their hard work in crafting this bill for 
the Senate's consideration.
  There are many good provisions in this bill, and I intend to support 
it in the hope that a conference agreement can be reached that provides 
meaningful tax relief and that the President will sign into law. 
However, I am concerned that the majority of the tax relief proposed in 
this bill will not be available to taxpayers for several years. The 
bill also excludes other very good ideas but includes several 
provisions that are clearly intended to benefit special interests. I 
hope the amendment process, limited though it is by the Senate's arcane 
rules for dealing with reconciliation measures, will improve it before 
we are asked to vote on final passage.
  Mr. President, the latest reports project a nearly $3 trillion 
federal budget surplus over the next 10 years. About two-thirds of the 
projected surplus comes from Social Security payroll taxes that are 
deposited in the Social Security Trust Funds, and must be kept away 
from spendthrift politicians to ensure that Social Security benefits 
are paid as promised. Our first priority must be to lock up the Social 
Security Trust Funds to prevent Presidential or Congressional raids on 
workers' retirement funds to pay for so-called ``emergency'' spending 
or new big government programs. Most Americans don't share the view 
that dubious pork-barrel projects, such as millions of dollars in 
assistance to reindeer ranchers and maple sugar producers, should be 
treated as emergencies to be paid for with their Social Security taxes, 
but that is what Congress did earlier this year.
  That leaves nearly $1 trillion in non-Social Security revenue 
surpluses. Now, the typical Washington response would be to spend the 
money on new government programs and bureaucracies. Let me state very 
clearly that I vehemently oppose the view that ``growing government'' 
should be a national priority. To the contrary, our goal should be to 
continue to shrink the size of the federal government, returning more 
power and money to the people.
  I firmly believe a healthy portion of the projected non-Social 
Security surplus should be returned to the American people in the form 
of tax cuts. I also believe we have a responsibility to balance the 
need for tax relief with other pressing national priorities.
  After locking up the Social Security surpluses, I would dedicate 62 
percent of the remaining $1 trillion in non-Social Security surplus 
revenues, or about $620 billion, to shore up the Social Security Trust 
Funds, extending the solvency of the Social Security system until at 
least the middle of the next century. The President promised to save 
Social Security, but he failed to include this proposal anywhere in his 
budget submission. In fact, he has since proposed or supported spending 
billions of dollars from the surplus on other government programs, 
depleting the funds needed to ensure retirement benefits are paid as 
promised.
  I would also reserve 10 percent of the non-Social Security surplus to 
protect the Medicare system, and use 5 percent to begin paying down our 
$5.6 trillion national debt.
  With the remaining $230 billion in surplus revenues, plus about $300 
billion raised by closing inequitable corporate tax loopholes and 
ending unnecessary spending subsidies, I would provide meaningful tax 
relief that benefits Americans and fuels the economy.
  My tax relief plan, which was filed as an amendment to this bill, 
provides slightly more than $500 billion in tax relief over 10 years, 
targeted toward lower- and middle-income Americans, family farmers and 
small businessmen, and families. The bill before the Senate includes 
provisions that are similar to some of the proposals included in my 
plan.
  The bill does provide relief from the marriage penalty and gift and 
estate taxes, but these important provisions do not take effect for 
several years. I believe we should repeal, once and for all, the 
disgraceful tax penalty that punishes couples who want to get married. 
We should also slash the death tax that prevents a father or a mother 
from leaving the hard-earned fruits of their labor to their children. 
Why wait five or seven years to provide some relief from these onerous 
and unfair taxes?
  The bill properly targets the lowest 15 percent tax bracket for a 
one-percent rate reduction and provides for a gradual increase in the 
upper limit of the bracket. My plan would also expand this bracket to 
allow as many as 17 million more Americans to pay taxes at the lowest 
rate.
  The bill also increases the income threshold for tax-deferred 
contributions to IRAs, but not until 2008, and very gradually increases 
the amount that employees can contribute each year to employer-
sponsored retirement plans. We should make these increases effective 
immediately to encourage more Americans to save now for their 
retirement.

  What the bill before the Senate does not do is provide much-needed 
incentives for saving. Restoring to every American the tax exemption 
for the first $200 in interest and dividend income would go a long way 
toward reversing the abysmal savings rate in this country.

[[Page S9924]]

  Most important, we must eliminate immediately the Social Security 
earnings test. This tax unfairly penalizes senior citizens who choose 
to, or have to, work by taking away $1 of their Social Security 
benefits for every $3 they earn. There is no justifiable reason to 
force seniors with decades of knowledge and expertise out of the 
workforce by imposing such a punitive tax.
  Many of the other provisions in this bill that provide tax relief for 
education, health care, and other issues important to American families 
are implemented gradually or simply delayed for several years. 
Likewise, some of the provisions that benefit small businesses and tax-
exempt organizations do not take effect for a number of years. In fact, 
less than half of the 120 provisions in this bill provide any tax 
relief at all in the year 2000. Those tax cuts that do take effect 
immediately amount to just $5 billion of the nearly $800 billion total 
tax cuts in the bill.
  But look at some of the provisions that do take effect immediately:
  --A provision to extend the tax credit for electricity produced from 
wind and closed-loop biomass sources, and also extend the credit to 
electricity produced from poultry waste, which is defined to include 
rice hulls, wood shavings, straw, bedding, and other litter. This 
provision goes into effect immediately, and will cost $1.6 billion over 
10 years.
  --A provision to exempt individuals with foreign addresses from 
paying the 7.5 percent air passenger ticket tax on frequent flier 
miles, leaving American passengers to pay for our over-burdened air 
traffic control system. The provision goes into effect on January 1, 
2000, and will cost $238 million over 10 years.
  --A provision that exempts small seaplanes from paying ticket taxes. 
This provision goes into effect on December 31, 1999, and will cost $11 
million over 10 years.
  --A provision to reduce the excise tax, from 12.4 percent to 11 
percent, on component parts of arrows used for hunting fish and game 
that measure 18 inches overall or more in length. This provision takes 
effect immediately.
  How can we justify giving a $33 million tax break next year to 
companies producing electricity from chicken waste, when senior 
citizens have to forego some of their Social Security benefits if they 
must work to make ends meet. How can we justify writing off $15 million 
in revenue next year from people from other countries who fly to the 
U.S., when American families get absolutely no relief from the 
egregious marriage penalty until 2005?
  Mr. President, as I have said, there are many good provisions in this 
bill which reflect the hard work and difficult decisions that Chairman 
Roth and the Finance Committee faced. They have worked hard to do the 
best we can for the American people who need and deserve relief from 
excessive taxation and a burdensome tax code.
  I intend to vote for this bill, even though I know, as do my 
colleagues, that the President has pledged to veto both the Senate and 
House tax bills. Neither bill will ever become law, and the American 
people will never see a nickel's cut in their taxes, if the President 
has his way. That is the unfortunate reality that the conferees on this 
measure must recognize as they work to craft a meaningful tax relief 
bill that can be enacted and implemented for the benefit of the 
American people.
  I will vote for this bill to move the process along and send this 
bill to conference with the House. What will matter at the end is that 
we focus on crafting a bill that can become law so that the American 
taxpayers get the relief they deserve and need. I have put forward a 
plan, described briefly here, that I believe can be a starting point 
for meaningful and achievable tax cuts. I urge the conferees on this 
legislation to focus on a conference agreement that the President will 
sign and that will become law this year. That is what the American 
people want and need.
  Mr. DODD. Mr. President, I would like to take this opportunity to 
express my thoughts and observations on the Senate's consideration of 
S. 1429, The Taxpayer Refund Act of 1999.
  Regrettably, in choosing to pass this bill, the Senate has missed a 
unique opportunity to provide Americans with long-term economic 
stability, improved retirement and health security for seniors, and 
targeted tax cuts for working families.
  Instead, the Senate has adopted--along largely partisan lines--a 
package of reckless and fiscally irresponsible tax cuts that threatens 
our economic prosperity and short-changes our commitment to Social 
Security, Medicare, education, and other priorities.
  Let me briefly express my concerns about this legislation in more 
detail.
  First, it would harm the country's long-term economic prospects. I 
find it somewhat ironic that many of our Republican colleagues applaud 
Federal Reserve Chairman Greenspan's economic stewardship, yet choose 
to ignore his warnings about the ill-considered implications of their 
tax plan. In fact, the Chairman has made abundantly clear that this tax 
package will stimulate an economy that is already performing at a high 
level. That will only contribute to the kinds of inflationary pressures 
that have already caused the Fed to recently raise interest rates. The 
further irony, of course, is that, as we all know, an increase in 
interest rates acts as a hidden tax on taxpayers. So by contributing to 
a hike in interest rates, this tax package could actually have the 
effect of raising the cost of a mortgage loan, a car loan, a student 
loan, and so many other items upon which working families depend.
  Second, S. 1429 fails the test of tax fairness. According to the 
Department of the Treasury, nearly 67 percent of the tax cuts would 
benefit the wealthiest 20 percent of families. Only 12 percent of the 
tax benefits are targeted at the bottom 60 percent of income earners. 
The bill contains estate tax relief that eases tax burdens for those 
with estates exceeding $10,000,000 in worth. Is this middle America? I 
don't believe so. Meanwhile, the Majority has once again refused to 
extend child care tax credits to people earning less than $28,000.
  The Republicans stress the importance of securing the solvency of 
Social Security and Medicare. Again, it is a cruel irony that, at 
precisely the time early in the next century that Medicare is scheduled 
to become insolvent and Social Security surpluses are expected to 
disappear, the cost of the Majority's tax cut will begin to skyrocket 
to almost $2 trillion. As the baby boomers begin to retire and the 
solvency needle approaches zero, the Republicans have left virtually 
nothing to secure the viability of these important programs for future 
generations of retirees.
  Drastic cuts to domestic and defense spending are a third consequence 
of this ill-conceived tax bill. It will have the effect, if not the 
intent, of crowding out investments in critical domestic and defense 
priorities. This bill assumes cuts in defense of $198 billion and cuts 
of $511 billion in discretionary priorities. As a result, 375,000 
children would be cut from the Head Start program, 1.4 million veterans 
would be denied much needed medical services from VA hospitals, and 
approximately 1.25 million low-income tenants would lose rental 
subsidies in FY 2009. Even more troublesome is the fact that if defense 
spending is funded at the President's request, cuts in domestic 
spending would be as high as 40 percent.
  Mr. President, I am deeply disturbed not only by the details of this 
tax plan but also by the erosion of the integrity of the budget process 
that it represents. It is premised on accounting gimmicks, false 
assumptions, and budgetary slights of hand to achieve its desired 
numbers on spending and revenues. That was tried in the 1980's, with 
disastrous results. In this decade, we have restored the integrity of 
the budget process. In some ways, that is an achievement almost as 
important as balancing the budget itself, since it has given confidence 
to taxpayers and financial markets that the Administration and Congress 
can keep its fiscal house in order. Now, with S. 1429, we risk simply 
squandering the gains that have been made. This distorted process using 
budgetary smoke and mirrors will, I fear, lead this nation down a 
precarious path in years to come.
  This is not to say that I do not support some reasonable tax relief 
targeted at those who need it the most. But just as no family would 
leave for vacation without making sure that their bills could be paid, 
the Congress should not provide tax cuts without first meeting our 
obligations to

[[Page S9925]]

strengthen Social Security and Medicare, reduce the debt, and invest in 
defense and domestic priorities. What the supporters of this bill have 
done is essentially to buy a vacation without making sure they could 
pay for the necessities.
  Senator Moynihan's amendment struck the proper balance among these 
important obligations by devoting one-third of the surplus to 
discretionary spending, one-third to paying down the debt, and $290 
billion in tax cuts for low and middle income Americans. It would have, 
among other provisions, increased the standard deduction for the 73 
percent of Americans who claim the standard deduction, provided a 100 
percent deduction for health insurance for the self-employed, and 
offered a 25 percent credit for employers who operate child care 
centers on site or who help employees pay the cost of off-site child 
care. This is broad-based tax relief targeted to the people who need it 
the most. While the Dodd-Jeffords amendment on child care was adopted 
by voice vote, regrettably the Moynihan amendment did not prevail. Nor 
did other important amendments. Chief among these was Senator Kennedy's 
efforts to provide a much needed prescription drug benefit. Three-
quarters of American seniors lack dependable private sector coverage of 
prescription drugs. Yet seniors increasingly rely on new and often 
costly medicines to preserve their health and prolong their life. In a 
bill providing $792 billion in tax breaks, I regret that the Senate 
could not find $49 billion for modest drug coverage for seniors.
  My friend and colleague from Connecticut, Senator Lieberman, along 
with Senator Hollings, offered an important amendment that would have 
stricken all of S. 1429's provisions, effectively eliminating the tax 
cut for now. The surplus would have then been used to pay down the 
debt. I voted in favor of this amendment not as a statement against all 
tax cuts, but rather to support its message of fiscal responsibility 
and to express my utter opposition to the Majority's tax bill.
  Mr. President, in simple terms, tax cut may be compared to apple pie. 
Everyone likes them. Everyone would like a slice. But we have other 
responsibilities. We should provide tax cuts, but we should take care 
of our other priorities as well. Especially now, when economic times 
are as good as they have been in our lifetimes, we should build a 
strong foundation for long-term prosperity by reducing the national 
debt, strengthening Social Security and Medicare, boosting our national 
defense, and investing in education, the environment, and other vital 
priorities. The bill that has just passed the Senate fails to do that. 
I remain optimistic that in conference we can craft legislation that is 
more faithful to our shared vision of future prosperity and stability 
for all Americans.
  Mr. McCONNELL. Mr. President, the amendment I submitted would reduce 
the capital gains holding period for horses from 24 months to 12 months 
and would correct an inequity in the tax code that has discriminated 
against the horse industry since 1969. Currently, all capital assets--
with the exception of horses and cattle--qualify for the lowest capital 
gains tax rate if held for 12 months. This discrepancy in the tax code 
is simply not fair to the horse industry and must be changed.
  The horse industry is extremely important to our economy, and 
accounts for thousands of jobs. Whether it is owning, breeding, racing, 
or showing horses--or simply enjoying an afternoon ride along a trail--
one in thirty-five Americans is touched by the horse industry. In 
Kentucky alone, the horse industry has an economic impact of $3.4 
billion, involving 150,000 horses and more than 50,000 employees.
  What supports this industry is the investment in the horses 
themselves. Much like other businesses, outside investments are 
essential to the operation and growth of the horse industry. Without 
others willing to buy and breed horses, it is impossible for the 
industry to remain competitive. The 2-year holding period ultimately 
discourages investment, putting this industry--and the 1.4 million jobs 
it supports nationwide--at risk. Clearly, this is bad economic policy 
and must be changed.
  The two-year holding period for horses is sorely outdated. It was 
established in 1969, primarily as an anti-tax shelter provision. Since 
then, there have been a number of changes in the tax code. 
Specifically, the passive loss limitations have been adopted, putting 
an end to these previous tax loopholes.
  Although horses are categorized as livestock, they have an entirely 
different function than other animals, like cattle. While both are 
livestock, the investment in these two animals is entirely different. 
Beef is a commodity, with a finite and generally short life span. 
However, horses--whether they are used for racing, showing, or 
working--are frequently bought and sold multiple times over their 
longer life in order to maximize the return on the owner's investment. 
Additionally, once horses retire from the track or show arena, they 
continue to enhance their value through breeding.
  The cost of my amendment will be completely offset by postponing for 
one year the 7.5 percent Air Passenger Ticket Tax that has been 
proposed on the frequent flier miles for persons with foreign 
addresses. Changes to the capital gains holding period for horses would 
go into effect in 2001 and the Air Passenger Ticket Tax would also go 
into effect in 2001.
  There is no sound argument for distinguishing horses from other 
capital assets. The two-year holding period discriminates against the 
horse industry and must be reduced. I urge my colleagues to join me in 
correcting this unfair tax policy.


                          Veterans Health Care

  Mr. ROCKEFELLER. Mr. President, I filed a motion to protect veterans' 
health care because veterans are apt to be hurt by the tax reduction 
bill before us. I was joined in this effort by Senators Mikulski, 
Bryan, Daschle, Harkin, and Bingaman. Senator Mikulski, as vice chair 
of VA Appropriations Subcommittee, and my other cosponsors all 
understand what is at stake here. I did not proceed in offering this 
motion, however, because Senator Wellstone offered a similar motion.
  The issue raised by my amendment still applies to this tax bill. It 
is very simple: approval of this $800 billion tax reduction bill leaves 
no ability to meet our obligations to veterans. If we spend all of the 
federal surplus on tax giveaways, there will be nothing left to fund 
veterans' health care.
  In my view, the Senate Finance Committee needed to rethink this tax 
bill and reserve $8.5 billion over 5 years to appropriately fund VA 
health care.
  This is simple math. My motion instructed the Finance Committee to 
provide for slightly more than 1 percent of the tax cut included in the 
bill before us. I want to repeat that--it would have set aside about 1 
percent of the tax cut included in the bill for veterans.
  The amount included in the motion--$8.5 billion over 5 years--has 
been fully justified by the Committee on Veterans' Affairs in its Views 
and Estimates letter to the Committee on the Budget.
  I ask unanimous consent that a copy of this letter be printed in the 
Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                                      U.S. Senate,


                               Committee on Veterans' Affairs,

                                   Washington, DC, March 15, 1999.
     Hon. Pete V. Domenici,
     Chairman,
     Hon. Frank R. Lautenberg,
     Ranking Minority Member,
     Committee on the Budget, U.S. Senate,
     Washington, DC.
       Dear Pete and Frank: Pursuant to section 301(d) of the 
     Congressional Budget Act of 1974, the Committee on Veterans' 
     Affairs (hereafter, ``Committee'') hereby reports to the 
     Committee on the Budget its views and estimates on the fiscal 
     year 2000 (hereafter, ``FY 00'') budget for veterans' 
     programs within the Committee's jurisdiction. This report is 
     submitted in fulfillment of the Committee's obligation to 
     provide recommendations for programs in Function 700 
     (Veterans' Benefits and Services) and for certain veterans' 
     programs included in Function 500 (Education, Training, 
     Employment, and Social Services).

                               I. Summary

       VA requires over $3 billion in additional discretionary 
     account funding in FY 00 to support its medical care 
     operations: an additional $1.26 billion to meet unanticipated 
     spending requirements; an additional $853.1 million to 
     overcome the effects of inflation and other 
     ``uncontrollables'' in order that it might maintain current 
     services; and at least $1 billion in additional funding to 
     better address the needs of an aging, and increasingly 
     female, veterans population. At

[[Page S9926]]

     this time, however, we limit our request to $1.7 billion in 
     additional FY 00 medical care funding. We believe that this 
     level of additional funding, coupled with ongoing VA efforts 
     to gain efficiencies and passage of VA Medicare subvention 
     legislation this year, will allow VA to meet veterans' 
     medical care needs in FY 00.
       With respect to mandatory account programs, the Budget 
     Committee has already approved provisions of S. 4, the 
     ``Soldiers', Sailors', Airmen's and Marines' Bill of Rights 
     Act of 1999,'' which will raise VA mandatory account spending 
     by $3.8 billion over fiscal years 2000-2004. We do not 
     request ``pay-go'' relief beyond that amount. We will, 
     however, anticipate the availability of such funds in the 
     event that S. 4 falters.

                          II. General Comments

       We note at the outset that the Nation's veterans have 
     already contributed significantly to the cause of fiscal 
     restraint. On the mandatory account side, numerous money-
     saving measures, unanimously approved by the Committee's 
     membership in both 1996 and 1997, were enacted into law as 
     Title VIII of Public Law 105-33, the ``Balanced Budget Act of 
     1997.'' Relative to baseline assumptions then in effect, 
     these measures are resulting in savings of $2.783 billion in 
     mandatory account outlays over fiscal years 1998 through 
     2002. In addition, the statutory bar on VA compensation for 
     disabilities stemming from in-service tobacco use, approved 
     as section 8202 of the ``Transportation Equity Act for the 
     21st Century,'' Public Law 105-178, has resulted in net 
     savings of $15.2 billion during fiscal years 1999 through 
     2003.
       In addition to these mandatory account savings, the 
     Balanced Budget Act froze veterans' programs discretionary 
     spending outlays through fiscal year 2002. This freeze has 
     required--and will continue to require at an accelerating 
     pace--unacceptable cuts in veterans' discretionary spending, 
     particularly medical care spending, even after projected 
     third-party receipt/Medical Care Cost Recovery (MCCF) funds 
     are collected. Whatever the merits of this plan when enacted, 
     it was passed before budgetary surpluses has materialized. 
     The freeze on medical care funding can no longer be 
     justified. It must now be lifted.
       Regrettably, the Administration has proposed a budget that 
     would impose further cuts in veterans' medical care programs 
     by freezing appropriated medical care funding at $17.306 
     billion, the FY 99 appropriation. Since VA anticipates an 
     increase in MCCF receipts of only $124 million in FY 00, 
     overall medical care spending would increase under the 
     Administration's plan by less than \7/10\'s of 1%. This is 
     unacceptable; after three years of flat-line medical care 
     appropriations, VA requires, at minimum, a 10% (or $1.7 
     billion) increase in appropriated funding.

                  III. Discretionary Account Spending


                   a. proposed medical care spending

       The standstill level of funding proposed by the 
     Administration for FY 00 medical care spending is inadequate 
     for VA to fulfill unanticipated spending requirements imposed 
     on VA by events outside the Department's control. Indeed, the 
     proposed flat-line budget will not even allow VA to maintain 
     current services. Clearly, the budget will not permit VA to 
     better address the single most pressing, and least met, 
     medical need of the World War II/Korean War veteran 
     generation: long-term care. Nor is it sufficient for VA to 
     serve the growing cohort of female veterans. Thus, budget 
     relief is imperative.
     1. Unanticipated VA spending requirements--$1.26 billion
       VA will require an additional $1.26 billion in FY 00 to 
     meet care requirements which could not be anticipated when 
     the Balanced Budget Act was enacted.
       Hepatitis C treatment
       Hepatitis C virus (HCV) is today the most common chronic 
     bloodborne infection in the United States. The Centers for 
     Disease Control and Prevention (CDC) reports highest 
     prevalence rates among males aged 30-49 and intravenous drug 
     users. VA studies now indicate that at least 20% of 
     hospitalized veteran-patients test positive for HCV, twice 
     the rate reported among the population generally.
       No vaccine against hepatitis C exits, nor is there a cure. 
     And while it is true that HCV was first identified in the 
     late 1980's no treatment regime was generally recognized 
     until last year, when a recommended drug therapy of 
     interferon and ribavirin was approved. This drug therapy 
     alone cost $13,200 per patient--costs that VA did not 
     anticipate prior to approval of this treatment regime in late 
     1998. Related testing, biopsy and other costs amount to an 
     additional $1,820 per patient.
       VA anticipates that of the 3.3 million patients it will 
     treat in FY 00, 36,300 will be candidates for HCV drug 
     therapy. Taking into account the completion of treatments 
     initiated in FY 99, VA will require an additional $625 
     million in FY 00 to respond to this unanticipated medical 
     challenge.
       Emergency medical services
       VA currently provides enrolled veterans with a full range 
     of hospital care and medical services. It does not, however, 
     generally provide comprehensive emergency care services. 
     Rather, VA patients must rely on insurance they may have to 
     defray such expenses, or pay for such expenses themselves.
       The Administration intends to propose legislation this year 
     declaring that emergency care is a basic right of all 
     Americans. Such legislation would, reportedly, require that 
     all health care plans provide such care, as a matter of 
     right, to the enrollees. In such circumstances, VA will be 
     compelled to offer emergency care services to its enrollees, 
     either directly or more likely, by reimbursing fees charged 
     by other providers. Prior to the development of the 
     Administration's proposal on the issue, VA had not 
     anticipated the assumption of this added responsibility. 
     Legislation requiring VA to pay for emergency care provided 
     to veterans by non-VA medical facilities has already been 
     introduced in the House and will be advanced in the Senate.
       VA estimates the costs of providing emergency care services 
     and subsequent hospital admission to VA enrolles will be $548 
     million in FY 00.
       Weapons of mass destruction preparedness
       In response to Public Law 105-114, VA has enchanced its 
     role in assisting the Department of Health and Human Services 
     (HHS) in stockpiling antidotes and other pharmaceuticals 
     needed for response to potential domestic terrorist attacks 
     with weapons of mass destruction. VA medical facilities 
     are dispersed nationwide and thus, along with Department 
     of Defense hospitals located within the continental U.S., 
     they are natural depositories of drugs, supplies and other 
     materials which might be needed to respond to such 
     emergencies.
       VA participation in preparatory activities is cost-
     efficient--but it is not without costs. Such costs, which had 
     not been anticipated by VA prior to enactment of Public Law 
     105-114, will amount to $14.619 million in FY 00.
       Increased prosthetic costs
       VA expenditures in meeting the prosthetic device needs of 
     its patients--needs which include not only artificial limbs 
     and the like, but also more conventional aids such as hearing 
     aids, eyeglasses, walkers, etc.--have increased markedly 
     between 1993 and 1998, at annual rates of up to 18.90%. A 
     portion of those increases are an unanticipated side effect 
     of ``eligibility reform'' legislation, enacted in 1996, which 
     allows VA to enroll all veterans, subject to available 
     funding, for VA medical care. That legislation appears to 
     have stimulated demand for VA services among persons needing 
     such devices.
       Even after general inflation is factored out, VA 
     anticipates that its prosthetic device expenses will increase 
     by a rate of 14.8%. VA will require an additional $74.075 
     million to defray these expenses in FY 00.
     2. Current services--$853.1 million
       We have closely observed VA's recent efforts to restructure 
     to deliver health care services to the Nation's veterans more 
     efficiently. Generally, we are satisfied with VA's effort, 
     and we acknowledge that fiscal restraints have been--and will 
     continue to be--a stimulus to change. Nonetheless, we believe 
     that a fourth consecutive year of non-growth in the medical 
     care budget would be destructive.
       As anyone who pays medical bills or health insurance 
     premiums knows, medical costs are rising. Payroll inflation, 
     increases in the costs of goods, and other 
     ``uncontrollables'' dictate funding increases of $853.1 
     million in FY 00 just to maintain current service levels.
       Health care is an extremely labor-intensive enterprise; 
     that is why VA is the largest civilian agency, in terms of 
     employment, in the Federal government. Can labor efficiencies 
     be wrung out of health care systems, VA included? Most 
     assuredly so, as demonstrated by the annual shrinkage of VA's 
     medical labor force (from 201,000 in FY 95 to 174,000 in FY 
     00) even as the number of veterans treated during that period 
     increased by almost 40% (from 2.6 million to 3.6 million). 
     But even with the shrinkage of VA's medical labor pool, VA's 
     medical care payroll costs will increase by $562.6 million in 
     FY 00 due to non-optional cost-of-living and within-grade 
     salary and wage adjustments, and increases in Government-paid 
     Social Security, health insurance, retirement, and other 
     benefit costs.
       Other inflation-related cost increases must also be borne 
     by the Veterans Health Administration. While VA has 
     implemented an aggressive pharmaceutical management program 
     which has saved more than $350 million--making VA the model 
     for Medicare, DOD and others to emulate--increases in VA's 
     annual pharmaceutical costs, medical and non-medical supply 
     costs, leased building space costs, and the like, will 
     account for an additional $267.1 million. Finally, the 
     Veterans Health Administration will be required to absorb an 
     additional $23.4 million in other uncontrollable expenses 
     (e.g., State home and CHAMPVA workload increases, storage and 
     space requirements, additional calendar day costs, etc.)
       It is imperative that the Budget Committee understand that 
     requiring VA to absorb such cost increases continually must 
     result, at some point, in cuts in the amount of care--or, 
     more alarmingly, in the quality of care--which VA provides. 
     We have documented serious quality problems, e.g., an 
     increase in dangerous pressure ulcer sores, which appear to 
     be directly associated with inpatient staffing shortfalls. 
     With respect to outpatient care access, waiting times for 
     appointments for routine services have reached 100 days or 
     longer. Mental health services are simply unavailable at 60% 
     of VA's outpatient clinics.
       In short, VA operates in a national environment where 
     medical care cost inflation exceeds the general inflation 
     rate by a factor of more than two; if the medical care 
     inflation rate, 3.6% were to be applied to VA's fiscal year 
     1999 medical care budget, on that

[[Page S9927]]

     basis alone a funding increase of $650 million would be 
     justified. Yet VA is required to--and is succeeding in--
     treating more patients with funding that is declining in real 
     terms. Such a situation cannot persist into a fourth year 
     without drastically affecting quality.
     3. Unmet needs--$1 billion +
       The foregoing discussion has focused on additional funding 
     of $2 billion needed to meet unanticipated requirements and 
     to maintain current services. Further funding increases of $1 
     billion or more are required to address the two largest unmet 
     needs VA faces due to demographic shifts in the veterans' 
     population: long-term care for aging World War II and Korea 
     veterans, and maternity and reproductive health services for 
     the growing number of female veterans.
       Long-term care
       In our view, the health care issue that VA must face over 
     the intermediate term--indeed, the health care issue that the 
     Nation must face over the next decade--is the need for long-
     term care among the aging World War II generation. WWII 
     veterans saved Western civilization. We cannot turn our backs 
     on them now.
       The Budget Committee can anticipate an extended dialog with 
     the Committee on Veterans' Affairs on this issue. For now, we 
     advise that, at minimum, an additional $1 billion per year in 
     funding will be necessary, starting in FY 00, to begin 
     addressing the needs of VA patients who seek long-term care. 
     For the most part, such funding would not be directed to new 
     programs. Rather, it would be devoted to providing VA-
     supplied, State home-supplied, or VA- supported contract/
     community-based care. These programs are, in our view, 
     effective. But they are grossly underfunded and do not 
     begin to meet the WWII generation's need for long-term 
     care services. In addition, we anticipate other 
     initiatives--e.g., increased VA support for State 
     veterans' homes in the form of both increased per diem 
     payments and pharmaceutical supplies, and initiatives to 
     transfer excess VA property in exchange for cash to 
     support medical operations or discounted medical services 
     to VA-eligible patients.
       Maternity benefits and reproductive health services
       Women now make up 13% of the active duty military. At lower 
     ranks, the percentage of women serving is higher. For 
     example, 20% of new recruits to the services other than the 
     U.S. Marine Corps are now women. These women will become 
     veterans, and VA must be prepared to meet their care needs. 
     Such needs invariably include maternity benefits and 
     reproductive health services since 62% of all women veterans 
     are under the age of 45, when childbearing generally ends. 
     Women who are drawn to service with a promise of benefits, 
     and then induced to enroll for VA care with the promise of a 
     full continuum of care, rightfully demand that their basic 
     health care needs be met.


                    b. medical facility construction

       As noted above, we are generally satisfied with VA's 
     efforts to restructure the delivery of health care services. 
     VA's construction programs, however, have not kept pace with 
     changes needed to accommodate the structural reorganization. 
     Older hospitals designed around an outmoded inpatient 
     treatment model lack space to handle increased outpatient 
     demand. In addition, such facilities generally fall far short 
     of modern patient privacy, handicapped accessibility, fire 
     sprinkler, and air conditioning standards. At best, these 
     shortcomings hinder VA's ability to attract veterans into the 
     system. At worst, they seriously compromise patient safety.
       Two construction projects which would rectify such 
     shortcomings warrant particular mention. The first is a $29.7 
     million outpatient clinic expansion at the VA Medical Center 
     in Washington, DC, which was authorized by Public Law 105-
     368. The second is a relatively modest ($10.8 million) 
     environmental improvements project at VA's Medical and 
     Regional Office Center in Fargo, ND. That project would 
     address asbestos removal, fire prevention, patient privacy, 
     and handicapped accessibility needs. We particularly request 
     funding for these projects in FY 00.


    c. general operating expenses--veterans benefits administration

       In a reversal of recent trends, in the last two years the 
     Veterans Benefits Administration (VBA) has experienced 
     increases in both the size of the pending compensation and 
     pension case backlog, and the average ``age'' of cases which 
     comprise the backlog. At the same time, the quality of VBA 
     decision making has not improved sufficiently despite 
     promises of improvements which were the rationale for a 
     slowdown in case processing. Internal VA reviews indicate an 
     error rate of 36%.
       VBA requests $49 million in additional funding to support 
     an FY 00 personnel increase of 164 FTE. These new hires 
     would, according to VBA, join personnel shifted from other 
     duties to yield a net addition of 440 staff devoted to 
     adjudication functions. We have seen no specific plan which 
     identifies the source of the majority of these transferred 
     employees, so we must question whether this plan will 
     actually materialize. We do, however, support VBA's request 
     for an additional $49 million in funding to add new 
     adjudication staff. In addition, we believe that the 
     adjudication backlog must be attacked now using current staff 
     in a one-time, targeted, and carefully controlled overtime 
     effort.

                IV. Projected Mandatory Account Spending


                    a. education assistance programs

       As part of the ``Soldiers', Sailors', Airmens' and Marines' 
     Bill of Rights Act of 1999,'' the Senate has already 
     approved, without objection from the Budget Committee, the 
     following improvements in VA educational assistance programs: 
     An increase in monthly assistance payments (from $528 to $600 
     for veterans who served three-year enlistments, and from $325 
     to $429 for two-year enlistees); a repeal of the requirement 
     that servicemembers contribute $100 per month for 12 months 
     from base pay to ``buy'' eligibility; the allowance of a 
     ``lump sum'' benefit at the beginning of a training term; and 
     a provision allowing veterans to transfer benefits to a 
     spouse and/or children. CBO has estimated that these 
     provisions will result in additional mandatory account costs 
     of $3.8 billion over fiscal years 2000-2004, and $13 billion 
     over fiscal years 2000-2009.
       Had this business been conducted in the regular order, 
     these improvements would have been considered by the 
     Committee on Veterans' Affairs, the committee of primary 
     jurisdiction. Our committee, perhaps would have recommended a 
     different mix of program improvements--e.g., the Commission 
     on Servicemembers and Veterans Transition Assistance had 
     recommended enactment of a tuition-reimbursment benefits 
     program like that in force after World War II. We did not, 
     however, impede these Armed Services Committee-reported 
     measures, and we continue to support them. Of course, we 
     reserve the right to revisit the issue within our committee 
     irrespective of the fate of the ``Soldiers', Sailors', 
     Airmens' and Marines' Bill of Rights Act of 1999.'' We almost 
     certainly will do so should that legislation falter.

                             V. Conclusion

       In summary, VA requires at least $1.26 billion in 
     additional discretionary account funding to meet 
     unanticipated spending requirements that have been thrust 
     upon VA by events beyond VA's control; an additional $853.1 
     million to overcome the effects of inflation and 
     other ``uncontrollables'' and maintain current services 
     for eligible veterans; and at least $1 billion in 
     additional discretionary account funding to begin to 
     better address the needs of an aging, and increasingly 
     female, veterans population. These needs total over $3 
     billion.
       We do not request, however, that discretionary account 
     ceilings be raised $3 billion+ for FY 00. While such an 
     increase would be totally justified to make up for flat VA 
     medical care funding levels over the last three years, we 
     believe that recent budgetary restraints have stimulated 
     needed reform. We believe, further, that VA can squeeze out 
     yet more efficiencies in the way it provides health care, and 
     we would not want to impede such reforms by requesting 
     funding increases beyond VA's ability to absorb them without 
     waste. Thus, we request that VA discretionary spending be 
     allowed to increase by $1.7 billion for FY 00.
       As for mandatory account spending, we do not, at this time, 
     request a five-year ``pay-go'' waiver beyond the $3.8 billion 
     already acceded to by the Budget Committee.
       These views reflect our best judgment as of this date. If 
     we can provide further assistance in your consideration of 
     this report, please feel free to call on us.
           Sincerely,
     Arlen Specter,
       Chairman.
     John D. Rockefeller, IV,
       Ranking Minority Member.

  Mr. ROCKEFELLER. Mr. President, it is a reasonable amount which 
covers $853 million in ``automatic'' costs such as inflation and wage 
increases. It also allows for new initiatives, such as the need to 
address the dramatic increase in deadly hepatitis C, particularly among 
veterans who served in Vietnam; emergency care; and the rising long-
term care needs of World War II veterans.
  The Conference Report on the Budget Resolution includes this number. 
And in an April 30, 1999, letter to the Appropriations Committee, 51 
Senators are on record supporting it.
  Even with the economic prosperity our country has recently begun to 
experience, if we approve the proposed huge tax cuts, or fail to adjust 
the budget caps, there simply will not be money left to increase the 
veterans' health care budget to what it needs to be.
  I can assure my colleagues that further cuts will seriously 
jeopardize the quality of VA health care. Earlier this week, I spoke 
about the erosion of VA's programs to help veterans with special needs. 
Resource shortfalls have imperiled services for the spinal-cord 
injured, for blind veterans, for veterans in need of prosthetics, and 
for veterans in need of mental health care. Health care professionals 
within VA are overworked. Reductions-in-force have also become a 
reality for them.
  In my own state, we are already seeing lapses in the availability of 
health

[[Page S9928]]

care. For example, at the Beckley VA Medical Center, approximately 400 
new veterans are waiting to be seen in primary care. Approximately 500 
veterans already in the system are on a waiting list for hearing 
evaluations. And the caseload in pharmacy has increased over 41 percent 
in the last year, with no increase in staffing, causing many veterans 
to wait two hours or longer to have a prescription filled.
  At the Martinsburg VA Medical Center, veterans are waiting six months 
for a urology appointment. In the PTSD program, the number of beds have 
increased by 14 while the number of staff have been reduced, making 
one-on-one counseling very difficult.
  At the Clarksburg VA Medical Center, current staffing has not kept 
pace with the demand for inpatient care, and veterans are too often 
referred to private hospitals because no beds are available at the VA.
  In outpatient care at Clarksburg, the waiting times for an 
appointment in optometry and dermatology are approximately four months, 
and in urology, veterans are waiting seven months for an appointment.
  There has been a recent proposal to close both the inpatient and 
outpatient surgical programs at the Huntington VA Medical Center and to 
refer veterans to a VAMC in Kentucky, over 130 miles away.
  I can assure my colleagues that if these things are happening in the 
VA medical centers in my state of West Virginia--and trust me, they 
are--then you can be sure that they are occurring in the VA medical 
centers in your states, as well.
  Staff at each of our VA medical centers have been stretched to the 
limit, and without additional funding, staffing will only get worse. 
The erosion of services and the huge reductions in staff have already 
put the veterans' health care system in serious jeopardy, and I cannot 
allow it to continue.
  In summary, there is no doubt that we are at a precipice, and the 
fate of veterans and their families, as well as millions of other 
Americans, are threatened by this rush to enact hugely bloated tax 
giveaways.
  Mr. President, I am pleased that a majority of the Senate recognized 
that the size of this tax bill would have jeopardized veterans' health 
care. As we proceed to conference, I now hope they will come to the 
same conclusion about other critical domestic programs and rethink this 
tax cut.


                       alternative fuel vehicles

  Mr. CHAFEE. I would like to engage the Chairman of the Finance 
Committee, Senator Roth, and the Senator from Utah, Senator Hatch, in a 
colloquy regarding alternative fuel vehicles. As the chairman knows, 
Senator Hatch and I presented an amendment during the finance 
Committee's markup of the tax bill, to provide incentives for the sale 
and use of clean alternative motor fuels and alternative fuel vehicles. 
Although the amendment has not been included in the legislation we are 
considering today, I continue to believe that a tax bill should 
ultimately include these provisions.
  As the Chairman and Senator Hatch know, the increased use of these 
fuels and vehicles will provide substantial environmental and energy 
efficiency benefits. The vehicles targeted for credits by our amendment 
are far less polluting than conventional cars and trucks. So, one 
result of our amendment would be improved air quality. One study of the 
effect of our proposal estimates that the number of natural gas 
vehicles in operation could more than triple by 2004, exceeding 250,000 
vehicles. That number would continue to grow exponentially. These cars 
are so much cleaner than gasoline and diesel vehicles that our proposal 
could eliminate 58,000 tons of smog-forming emissions by 2004. That 
number would more than double by 2009. In order to accomplish that 
without alternative fuel vehicles, we would have to remove 1.5 million 
conventionally-fueled vehicles from the road.
  Furthermore, each gallon of alternative fuel used in such a vehicle 
represents one less gallon of gasoline that we need to obtain from 
imported oil. The Department of Energy estimates that nearly three 
billion gallons of gasoline would be displaced, thus reducing our 
foreign oil dependence.
  Mr. HATCH. The Senator from Rhode Island is correct. Millions of 
Americans live in areas that are not in compliance with air quality 
standards. The increased motor vehicle traffic anticipated in the four 
county Wasatch front in my home state of Utah will certainly push us 
toward non-attainment compliance problems. Promoting the increased use 
of alternative fuel vehicles is a viable option available to help Utah 
achieve our clean air objectives. Alternative fuel vehicles represent 
the cleanest vehicles in the world. Market-based incentives will help 
encourage the use of such vehicles. I am very pleased to be part of 
this effort with my colleagues from the Finance Committee and am 
looking into getting a natural gas car of my own at this very moment.
  Mr. CHAFEE. The legislation Senator Hatch and I have drafted would 
address the problem that currently prevents these fuels and vehicles 
from competing on their own in the market. Incentives to make them less 
costly will stimulate demand and permit the economies of scale that are 
needed in order for them to gain more widespread use. Our proposal has 
been endorsed by a diverse group of stakeholders including the Natural 
Resources Defense council, the Union of Concerned Scientists, virtually 
all the major automobile manufacturers, and the American Gas 
Association. There is growing bipartisan support in the Senate for many 
of these concepts; on the Finance Committee, Senators Rockefeller, 
Bryan, and Robb have all expressed support. I would ask Senator Roth 
whether there might be an opportunity to consider this legislation and 
whether he would work with us toward its inclusion in a future tax 
package.
  Senator ROTH. I thank my colleagues from Rhode Island and Utah for 
their hard work on this legislation. The bipartisan support for this 
proposal is impressive. This is legislation that could make an 
important contribution to the environment. I look forward to working 
with my colleagues on this effort.
  Mr. BIDEN. Mr. President, it has taken a lot of tough choices here in 
Washington--and a lot of hard work and restructuring in the private 
economy--to put our country's budget into the black. For the first time 
in a generation, we have a balanced federal budget. And for the first 
time in our modern history, we can project substantial surpluses for 
the foreseeable future.
  There were times I believed we would never see this day, Mr. 
President, but our official forecasts now call for as much as one 
trillion dollars in surplus over the next ten years. That's on top of 
the two trillion in Social Security surpluses that will build up over 
that same time, money that is already promised to future retirees.
  I want to say something about whether we should count on those 
surpluses actually materializing, Mr. President, but first I want to 
talk about what most families I know would do if they woke up to the 
kind of windfall in their household budgets that we anticipate in our 
federal budget today.
  Take your average family, Mr. President, with a mortgage, maybe 
paying for one or two children already in college, maybe another child 
with college still in his or her future. They have some debts, some 
worries about how to pay for a retirement that gets closer every year, 
some aspirations for their children that they may not be able to 
afford. Maybe Grandma and Grandad have moved in with them, bringing 
with them some health care problems that add to the family's expenses.
  Let's assume that after years of spending more than they took in, our 
family finally turns the corner. Let's borrow a story from today's new 
high-tech economy and say that the stock they hold in their new start-
up company has just jumped in value. They cannot be sure that the stock 
will stay that high next year, or the year after that, but they feel a 
whole lot richer than they did before.
  Now let's picture the discussion around their kitchen table, with 
this new problem to discuss. I'm betting that most of the families I 
know in Delaware would make plans to pay down their past debts, the 
mortgage hanging over their heads, make provisions for their children's 
education, their parents' health needs, and their own retirement. 
Maybe, after they had taken care of those priorities, they would allow 
themselves to relax and enjoy a more affluent lifestyle.

[[Page S9929]]

  Mr. President, I don't claim that this is a perfect analogy to the 
situation before us in the Senate. I certainly don't claim that for 
many hardworking Americans sensible tax relief is some kind of luxury. 
But I think it makes an important point, which is simply that most 
Americans would be a lot more cautious, and a lot more prudent, in 
using any anticipated surplus in their family budget.
  Those are the priorities that I think should guide us in our 
deliberations today. We should take the opportunity given us with the 
expectation of future budget surpluses first to pay down the debt that 
has built up in a generation of deficit finance, then we should restore 
solvency to Social Security and Medicare, and then we should prevent 
further erosion in funding for national security, law enforcement, 
education, and the other basic functions of a space-age, high-
technology, industrial economy.
  I think we can do all that, Mr. President, and still provide tax 
relief to the millions of Americans whose hard work and sacrifice--
through downsizing, restructuring, and all the rest--has been the real 
driving force behind the remarkable economy we enjoy today.
  But as we all know, Mr. President, the forecasts on which our 
projected surpluses are based make a lot of assumptions. That's all 
well and good for making long-term economic projections. But it is not 
good enough, as far as I'm concerned, for making long term economic 
policy.
  I ask my colleagues to listen to some of these assumptions, and to 
answer honestly if our country can really afford the nearly $800 
billion tax cut before us today.
  The surplus that is forecast assumes no major interruption in the 
economic growth we have enjoyed in what is now the longest economic 
expansion in our history. That unprecedented economic growth has 
kept revenues strong enough to meet and exceed our spending plans. But 
as Alan Greenspan has reminded us, it is not a question of if, but 
when, that growth will slow. Still, those who call for an $800 billion 
tax cut are basing policy on the false hope that inevitable day will 
never come.

  Mr. President, the surplus that some of my colleagues want to use to 
pay for this tax cut also assumes that there will be no emergencies--no 
Bosnias, no Kosovos, no Iraqs, no hurricanes, no floods--that could 
increase spending, even though we regularly spend an average of $8 
billion a year on such emergencies.
  The surplus also assumes that we will continue deep cuts in national 
defense, in education, health care, law enforcement, in environmental 
protection. It assumes that we will continue to reduce spending beyond 
the current levels, levels that are already causing gridlock in our 
budget process this year. Right now, Mr. President, spending for the 
basic functions of government--as well as the number of people we pay 
to perform those functions, down more than 340,000 in the past seven 
years--are both at levels we have not seen since 1962.
  We should recognize the hard work that achieved those low numbers, 
Mr. President. They are an important part of how we got to where we are 
today, with a balanced budget in hand, and surpluses in sight. As the 
private sector has become leaner and more efficient, the federal 
government has also moved in the same direction.
  But we must also realize that national defense, the FBI, medical 
research, education, veterans' health care, air traffic control, water 
quality--all of those things we have learned to count on as citizens of 
the richest nation the world has ever known--combined now comprise just 
6.5 percent of GDP. But the surpluses my colleagues expect to be there 
to pay for this tax cut depend on pushing that down to just 5 percent 
of GDP--a further cut of more than 20 percent.
  But after years of defense cuts at the end of the Cold War, the 
Pentagon is asking for substantial increases to meet future threats. I 
agree with those who see the need for further investments in our 
nation's defense. If we actually increase defense spending to meet that 
request, we would have to cut the remaining functions of the federal 
government by almost forty percent.
  Now, Mr. President, I hear a lot of calls for responsible budgeting 
these days, but I don't hear many people calling for cutting forty 
percent from our law enforcement, education, or health care programs. 
For example, cuts of those size would eliminate health care for 
1,430,000 of our country's veterans. Cuts of that size would eliminate 
$6.0 billion from the research into cancer and other diseases at the 
National Institutes of Health. Cuts of that size would require the FBI 
to cut over 4,000 agents from its current force of 10,600.
  That's what a $800 billion tax cut would require, Mr. President--
either cuts of unacceptable size in basic services, or, just as bad, we 
would simply return to the destructive path of deficit spending.
  Mr. President, one thing that ought to sober us up is what Alan 
Greenspan has been saying about delaying any tax cut until the 
surpluses actually materialize, until a downturn in the economy might 
justify the boost that would come from a tax cut. Twice he has come 
here to Congress in the past two weeks, to tell us that he continues to 
be concerned about our economy overheating, and that he is prepared to 
bump interest rates up again to prevent that from happening.
  Every American with a mortgage should think long and hard about the 
trade off between a tax break now and the long term costs that an 
increase in interest rates would mean. The Treasury Department 
estimates that a household in the lower 60 percent of the population--
10 percent above the middle and on down--would get just an average of 
$174 a year from the tax plan before us today. But a one percent 
increase in a 7 percent mortgage on a $250,000 house amounts to over 
$2,000 a year in additional payments. That is not a deal any informed 
American would take, Mr. President.
  If Greenspan thinks the economy is already at risk of overheating, 
imagine his reaction if we throw an $800 billion tax cut into his 
calculations the next time he considers increasing interest rates.
  Everybody here knows that low interest rates and low inflation have 
been the keys that have unlocked the potential of our economy. I can't 
think of anything more likely to throw both of those keys out the 
window than a return to unbalanced budgets.
  That is why I will oppose a tax cut of the size before us here today. 
Not because Americans don't deserve tax relief--of course they do. But 
they also deserve our best judgement about how we manage the public 
finances of their country after so many years of deficit financing. And 
as far as I'm concerned, I'll take my guidance from the common sense of 
the average American family, and put first the priorities of debt 
reduction, Social Security and Medicare, funding national security and 
law enforcement, education and health care, and then, a more prudent, 
sensible tax cut.
  Mr. DOMENICI. Mr. President, pursuant to section 313(c) of the 
Congressional Budget Act of 1974, I submit for the Record a list of 
material considered to be extraneous under subsections (b)(1)(A), 
(b)(1)(B), and (b)(1)(E) of section 313. The inclusion or exclusion of 
material on the following list does not constitute a determination of 
extraneousness by the Presiding Officer of the Senate.

       Title III, subtitle E, sec. 345--Protection of Investment 
     of Employee Contributions to 401(k) plans--(b)(1)(A).
       Title III, subtitle F, sec. 351--Periodic Pension Benefits 
     Statements--(b)(1)(A).
       Title III, subtitle F, sec. 356--Notice and Consent Period 
     Regarding Distributions--(b)(1)(A).
       Title III, subtitle G, sec. 369--Annual Report 
     Dissemination--(b)(1)(A).
       Title III, subtitle H, sec. 371--Provisions Relating to 
     Plan Amendments--(b)(1)(A).
       Title IV, sec. 407--Federal Guarantee of School 
     Construction Bonds by Federal Home Loan Banks--(b)(1)(A).
       Title IX, sec. 905--Advance Pricing Agreements Treated as 
     Confidential Taxpayer Information--(b)(1)(A).
       Title X, subtitle C, sec. 1071--Study Relating to Taxable 
     REIT Subsidiaries--(b)(1)(A).
       Title XIV, sec. 1401--Amendments Relating to Tax and Trade 
     Relief Extension Act of 1998--(b)(1)(A).
       Title XIV, sec. 1402--Amendment Related to Internal Revenue 
     Service Restructuring and Reform Act of 1998--(b)(1)(A).
       Title XIV, sec. 1403--Amendments Related to Taxpayer Relief 
     Act of 1997--(b)(1)(A).
       Title XIV, sec. 1404--Other Technical Corrections--
     (b)(1)(A).
       Title XIV, sec. 1405--Clerical Changes--(b)(1)(A).

[[Page S9930]]

  Mr. HELMS. Mr. President, I genuinely appreciate the courtesy of the 
distinguished Chairman of the Finance Committee (Mr. Roth) for allowing 
me to discuss an innovative new technology more readily available to 
the dry cleaning industry.
  Dr. Joe DeSimone, an highly-respected professor on the faculties of 
both the University of North Carolina at Chapel Hill and N.C. State 
University in Raleigh has developed an environmentally safe way to dry 
clean clothes while eliminating the millions of pounds of toxic 
solvents currently now being used to clean clothes, and, at the same 
time, advancing more energy-efficient technology. This procedure would 
dramatically reduce the dry cleaning industry's reliance on hazardous 
chemicals as solvents.
  My amendment will allow for a 20 percent tax credit to new and 
existing dry cleaners who purchase the equipment which uses non-toxic 
solvents. The equipment includes both wet cleaning and liquid carbon 
dioxide cleaning systems which are now readily available. In fact, the 
EPA recently published a case study extolling the benefits of carbon 
dioxide technology.
  The Joint Tax Committee estimates the tax credit would decrease 
revenues by a little more than $500 million during the next 10 years. I 
find this a modest price to pay considering the amount Americans rely 
on dry cleaners and by the fact that so many of these Americans bring 
potentially hazardous chemicals into their homes when they dry clean 
their clothes.
  I believe that clarification of a Treasury regulation's application 
to an international tax treaty would provide an ample offset for this 
tax credit. Let me briefly explain the current situation:
  Just this month, a judge in New York overturned 19 years of tax 
treaty policy. The judge ruled that an existing regulation that permits 
the Treasury to allocate interest based on a company's worldwide 
operations did not comply with the 1980 treaty. I disagree. The 
regulations allowed the U.S. Treasury to disallow abusive tax 
strategies and make sure that these companies pay their fair share of 
taxes. Tax treaties are never intended to be a means to avoid taxes, 
simply a means to prohibit double taxation. This amendment will 
continue this policy and avoid a rush for billions of dollars in tax 
refunds by international corporations.
  Mr. President, I ask unanimous consent that an article from the July 
9 edition of The New York Times entitled ``British Bank Wins Dispute 
With the IRS'' be printed in the Record at the conclusion of my 
remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See Exhibit 1.)
  Mr. HELMS. Unfortunately, Mr. President, under the rules of the 
budget act, my amendment is subject to a point of order. However, I do 
appreciate the willingness of Chairman Roth to work with me to find a 
way to make this tax credit a reality.

                               Exhibit 1

                [From the New York Times, July 7, 1999]

               British Bank Wins Dispute With the I.R.S.


              Judge Rules Tax Treaty Supersedes Regulation

                        (By David Cay Johnston)

       In a stunning defeat for the Internal Revenue Service's 
     efforts to restrict strategies that foreign corporations 
     employ to avoid taxes, a Federal judge ruled in favor of 
     National Westminister Bank P.L.C. of Britain in its demand 
     for a $180 million tax refund.
       Lawyers who specialize in international corporate tax said 
     yesterday that the decision would prompt more foreign 
     companies to challenge the I.R.S. in future cases and to 
     press for favorable rulings on issues currently in dispute.
       Judge James T. Turner of the United States Court of Claims 
     ruled Wednesday that the I.R.S had violated a 1980 tax treaty 
     between the United States and Britain by refusing to allow 
     NatWest to deduct interest on loans from its home office and 
     Hong Kong operations to its American branches from 1981 to 
     1987.
       In effect NatWest was taking money from one pocket, in, 
     say, Hong Kong, and lending it to another pocket in, say, New 
     York. Doing this allowed the bank to reduce its profits, and 
     thus its taxes, in the United States and to shift profits to 
     places, like Hong Kong, where tax rates are lower.
       The 1980 tax treaty allowed NatWest and all other British 
     banks to take such deductions. NatWest contended that under 
     the tax treaty its American branch must be treated as a 
     separate company and not just another pocket in its worldwide 
     operations.
       But the Treasury Department, ever on the alert for abusive 
     tax strategies, issued a regulation shortly after the treaty 
     took effect allowing the I.R.S. to disregard any deductions 
     deemed excessive. The regulation lets the I.R.S. apply a 
     complicated formula to allocate interest based on a company's 
     worldwide operations.
       But, Judge Turner wrote, the Treasury regulation is 
     ``fundamentally incompatible'' with the tax treaty and must 
     be ignored. In his 21-page decision, he also castigated the 
     United States for its conduct, quoting in detail from written 
     promises made during the treaty negotiations and other 
     documents to show that NatWest was justified in relying on 
     the tax treaty in preparing its corporate tax returns for the 
     I.R.S.
       The judge said the regulation ``plainly violates'' the tax 
     treaty and he characterized the reasoning behind it as 
     ``fundamentally flawed.''
       He did not award the $180 million, plus interest, to 
     NatWest, however. Instead, Judge Turner ruled in the bank's 
     favor on the issue in a pretrial hearing.
       Tax lawyers said the United States can now appeal the 
     judge's ruling, continue the case and then appeal the entire 
     case, or go to Congress for relief or give up.
       The case may cause a stampede by other foreign banks to 
     recover billions of dollars in taxes paid when their interest 
     deductions were curtailed. More broadly, the case is an 
     important development in a growing global battle between 
     multinational corporations, which want to take profits and 
     pay taxes in countries of their choice, and national 
     governments that would be protect the integrity of their tax 
     regimes and maximize tax revenues, a variety of tax lawyers 
     said yesterday.
       ``This is a tremendously important decision, although it 
     specifically involves a backwater of the issues about global 
     corporate taxation,'' said Richard E. Andersen of the law 
     firm Jones, Day, Reavis & Pogue. He said the size of the 
     award, expected to ultimately be the full $180 million plus 
     interest that NetWest sought, and the ``drubbing'' the I.R.S. 
     took from the judge ``will force the I.R.S. to think hard 
     about thumbing their nose at this because if they do, they 
     will have to devote a lot of legal resources to fighting 
     other cases on similar issues and they will probably lose.''
       Mr. Andersen and other lawyers said that because of its 
     enormous market the United States had been able to ``get away 
     with'' ignoring tax treaties. ``The fact is no bank has 
     withdrawn from the U.S. because of this issue,'' he said.
       Arthur D. Pasternak, an international tax specialist at 
     Gibson, Dunn & Crutcher, said that ``the I.R.S. has this no-
     cheating concept that, to its credit, it tends to apply 
     evenly to American and foreign corporations operating in the 
     United States.''
       ``And the I.R.S. has become much more aggressive in recent 
     years in fighting what it regards as using tax treaties for 
     aggressive tax avoidance,'' he said. ``The general rule is 
     that the United States Government has been saying that 
     statutes passed by Congress can override existing treaties, 
     but this case shows that mere regulations can't override 
     treaties.''
       Sydney E. Unger, chairman of the tax department at Kaye 
     Scholer Fierman Hays & Handler in New York, said that foreign 
     corporations operating in the United States were a convenient 
     target for American politicians and that the regulation the 
     judge ruled on illustrated this.
       ``Fundamentally, there has been a sense at Treasury and 
     among politicians that foreign entities with operations in 
     the United States are not paying their far share of tax,'' 
     Mr. Unger said. ``Whether that is true or not, certainly it 
     is a wonderful issue for American politicians and for 
     Treasury officials to want to pursue because it's about 
     taxing someone else, who doesn't vote.''
       Inland Revenue, the British tax agency, filed a friend-of-
     the-court brief supporting NatWest.
       Jerome Libin, a tax specialist in the Washington office of 
     Sutherland Asbill & Brennan who filed the brief, said that 
     Inland Revenue believed that even if NatWest's interest 
     deductions were dubious--and that point was not conceded--the 
     deductions still had to be allowed under the tax treaty.
       Mr. Libin won a similar case three years ago in United 
     States Tax Court over a tax treaty with Canada, but that case 
     involved allocating income, while the NatWest case involved 
     allocating deductions.
       He said that in newer tax treaties the United States had 
     sought to reserve a right to disallow deductions if it could 
     show that they were abusive.
       One of NatWest's lawyers, Jerry Snider of Davis Polk & 
     Wardwell, called Judge Turner's decision ``a terrific, 
     thorough and carefully written opinion.''
       The Internal Revenue Service declined to comment or even to 
     make documents available. It referred questions to the 
     Treasury Department, where a spokeswoman, Maria Ibanez, 
     offered to make a senior official available for an interview 
     on condition that he neither be identified nor quoted 
     directly. That offer was declined.
       The Justice Department said last night that senior 
     officials who could discuss the case had left and could not 
     be reached for comment.
       NatWest sold its American retail branches to the Fleet 
     Corporation of Boston in December 1995.
  Mr. ROTH. Mr. President, I appreciate the courtesy of the Senator 
from

[[Page S9931]]

North Carolina in working with us to expedite consideration of the 
Taxpayer Refund Act by not asking for a roll call vote in relation to 
his amendment. This is certainly an interesting idea, and my staff and 
I look forward to working with him in the future to explore the 
possibility of a drycleaning equipment tax benefit.


                        republican tax cut plan

  Mr. BYRD. Mr. President, I will vote against this Republican tax cut 
plan. I cannot conceive of a more ill-advised fiscal plan for the 
Nation over the next 10 years than the Republican tax cut bill. I say 
this for a number of reasons.
  Having seen the National debt explode from less than $1 trillion on 
the day that President Reagan took office to over $5.6 trillion today, 
we should have learned that the supply-side economic theories of the 
Reagan-Bush years, which called for massive tax cuts together with a 
massive defense build-up, while at the same time balancing the federal 
budget, are pure, unadulterated hogwash. They didn't work then; they 
won't work now.
  Thankfully, due to a number of factors--for example, the fiscal 
policies of the Federal Reserve, and improvements in the productivity 
of the Nation's businesses--we have been able not only to stem the tide 
of red ink that ran into the triple-digit billion-dollar levels for 
each of the Reagan-Bush years but, if the latest projections of both 
the OMB and CBO pan out, we also can look forward to huge federal 
surpluses each year as far as the eye can see. That's good news, if 
those projections come true and if Congress is able to withstand 
another round of tax cut fever.
  The Congressional Budget Office projects surpluses over the next ten 
years (FY 2000-2009) totaling nearly $3 trillion. Of that amount, about 
$2 trillion would be surpluses in the Social Security Trust Fund, and 
the other $1 trillion ($996 billion to be exact) would be non-social 
security surpluses. However, a closer look at these non-social security 
surpluses projected by CBO over the next ten years, reveals that they 
rest on a very shaky foundation. The fact is, these non-social security 
surpluses which are projected to total $996 billion, are based in large 
part on huge cuts in investments and national priorities--such as 
national security, veterans' medical care, the FBI and other crime-
fighting programs, the environment, agriculture, border patrol agents, 
health research, education, and many other critical programs. Of the 
$996 billion in non-social security surpluses projected by CBO for the 
next 10 years, $595 billion results from real and devastating cuts in 
these national priorities. As if that were not bad enough, the 
Republican tax cut plan calls for additional cuts of some $180 billion 
to these same programs. That makes a total of $775 billion in cuts in 
these national investments over the next 10 years. That is what is 
being proposed in the Republican tax cut bill now before the Senate. 
Furthermore, the Republican tax cuts of $792 billion would, if enacted, 
also result in increased interest on the Federal Debt over the next 10 
years totaling $179 billion. In reality, then, the Republican tax cut 
bill eats up $971 billion of the $996 billion in projected non-social 
security surpluses over the next 10 years, leaving only $25 billion 
remaining.
  We should heed the advice of Federal Reserve Chairman Greenspan in 
his testimony before Congressional Committees when he advised caution 
when considering what to do with these projected surpluses. In the 
first place, it is extremely unlikely that these projections will come 
true. The fact is that CBO's estimates of revenues over the past two 
decades have been off by an absolute average of $38 billion per year; 
their estimates on spending over that period have been off by $36 
billion per year; and their deficit/surplus projections have been off 
by an absolute average of $54 billion per year over the past two 
decades. If these averages hold up over the next 10 years, the 
trillion-dollar non-social security surpluses could be slashed by $540 
billion purely due to mis-estimates by the Congressional Budget Office. 
Further, as CBO states in virtually every report that they publish, 
cyclical disturbances such as recessions, changes in interest rates, 
inflation, etc., could have significant effects on their projected 
surpluses at any time during the projection period.

  Then, there is the question of emergency spending. As Senators are 
aware, under the Budget Enforcement Act, unforeseen emergencies, which 
cannot be predicted accurately and, therefore, are not budgeted, are 
allowed to be funded outside the spending caps that have been in place 
since 1990 and which will remain in place through FY2002. The fact is, 
emergency spending over the past decade (other than spending for Desert 
Storm/Desert Shield and the $21 billion in emergency spending in the 
FY1999 Omnibus Appropriations Act) has averaged $8 billion per year. In 
other words, but for those two instances, Congress has enacted spending 
outside of the budgetary caps for such things as disaster assistance to 
the nation's farmers, relief for victims of floods, hurricanes, 
tornadoes, and earthquakes, as well as assistance for victims of 
similar occurrences overseas.
  That type of assistance has averaged $8 billion per year since 1990. 
There is no indication that these natural disasters will suddenly 
cease. To the contrary, there is substantial evidence that they have 
become more frequent and more severe in the latter part of this 
Century. What does this mean? It means that it is highly likely that 
over the next decade, at least $80 billion in emergency spending will 
be needed. But, keep in mind that the $996 billion in non-social 
security surpluses projected by CBO, the large bulk of which results 
from real cuts in national priorities, does not allow for any emergency 
spending over the next 10 years. That being the case, wouldn't it be 
prudent to reduce the $996 billion projection by at least the $80 
billion historical average per decade that we have seen in the past? 
After so doing, even if Congress and the Administration agreed to the 
$775 billion of cuts in purchasing power for national priorities that 
the Republican tax cut bill requires, there would not be sufficient 
surpluses remaining to cover this Republican tax cut plan without 
either reverting back into deficit spending, or repealing the tax cut, 
or dipping into the Social Security Trust Fund surpluses.
  Next, let's look at the question of whether Congress can, or should, 
stay within the existing spending caps for FY2000, much less the more 
difficult caps of FY2001 and FY2002. One need only pick up the morning 
newspaper on any one of the past several days to find an article or two 
discussing the progress, or lack thereof, that the Appropriations 
Committees are making in completing action on the FY2000 funding bills. 
Recently, it is reported, the House Appropriations Committee found that 
the VA-HUD Subcommittee could not stay within its allocations without 
declaring some $3 billion in funding for VA medical care, as well as 
$2.5 billion in FEMA funding, as ``emergency'' spending, which as I 
have explained earlier, does not count against the spending caps, but 
will, nonetheless, decrease the surplus. Additionally, some $4.5 
billion has been declared emergency spending for the Decennial Census 
by the House Appropriations Committee. Those three items alone, if 
enacted as emergency spending, will cut the projected FY2000 surplus by 
$10 billion. Furthermore, as CBO points out on page 6 of their mid-
Session Review, they have been directed by the Budget Committees to 
reduce their outlay projections in FY2000 by $10 billion for defense, 
$1 billion for transportation, and $3 billion for other non-defense 
programs. That knocks another $14 billion dent in CBO's non-social 
security surplus projections for FY2000. On that same page, CBO also 
points out that their non-social security surplus projections exclude 
some $3 billion per year in spending for the administrative expenses of 
the Social Security Administration. When all of these factors are taken 
into account, for FY2000, actions by Congress to date have already 
added emergency spending of some $10 billion; and have increased 
outlays by $14 billion. This $24 billion, together with the $3 billion 
in administrative expenses for the Social Security Administration, 
means that Congress is likely to not only spend all of the $14 billion 
FY2000 non-social security surplus projected by CBO, but, actually, to 
exceed it by at least $13 billion. In other words, it is highly likely 
that for FY2000 alone, Congress and the Administration will enact 
spending levels which will not only use up the entire $14 billion non-
social security surplus projected for that year,

[[Page S9932]]

but will also eat into the Social Security Trust Fund surpluses by at 
least $13 billion. So much for the Social Security Lock-box! Congress 
has already found the key that unlocks it. What about next year, when 
the spending caps are much tougher to stay within? Is one to believe 
that Congress will make the Draconian cuts in national priorities that 
would be called for to stay within the Republican tax plan? If not, 
further erosion of these projected surpluses will occur. Keep in mind 
that once tax cuts are enacted, those revenues are gone, and can only 
be retrieved by repealing the tax cuts. Does anyone think that Congress 
will do that in an Election Year? If not, then it is a foregone 
conclusion that the surplus projections for even the upcoming three 
fiscal years, to say nothing of the remaining seven years of the next 
decade, will be eaten away because they are based on virtually 
impossible, and extremely unsound, cuts in spending on national 
priorities. Keeping two sets of books, as the Republicans are 
attempting to do, won't fool the American people for very long.

  In closing, Mr. President, let me quote from the text of a recent 
statement by 50 of the Nation's most revered economists, including six 
Nobel laureates, concerning the tax cuts now before the Senate.

       The federal budget is projected to show substantial 
     surpluses over the next 15 years. These surpluses offer an 
     exceptional opportunity to pay down government debt and 
     thereby strengthen Social Security and Medicare in order to 
     prepare for the retirement of the baby boomers. . . .
       In contrast, a massive tax cut that encourages consumption 
     would not be good economic policy. With the unemployment rate 
     at its lowest point in a generation, now is the wrong time to 
     stimulate the economy through tax cuts. Moreover, an ever 
     growing tax cut would drain government resources just when 
     the aging of the population starts to put substantial stress 
     on Social Security and Medicare. Further, the projections 
     assume substantial undesirable reductions in real spending 
     for non-entitlement programs, including important public 
     investments. Given the uncertainty of long-term budget 
     projections, committing to a large tax cut would create 
     significant risks to the budget and the economy.

  Mr. President, it could not be any clearer to any rational human 
being that this Republican tax cut plan is exactly the wrong fiscal 
blueprint for the Nation as we enter the next Millennium. As I have 
shown, it is highly unlikely that these forecasts will come true. Even 
if they do, some $80 billion in emergency spending for natural 
disasters has not been accounted for; another $30 billion in 
administrative costs of the Social Security Administration has not been 
accounted for; and the budget caps for FY2000 alone are likely to be 
exceeded by over $20 billion. Now is not the time to return to the 
failed economic policies that prevailed during the Reagan-Bush years. 
Rosy Scenario in all her splendor could not make their policies work. 
The same is true of the policies that would be undertaken if we were to 
enact this Republican tax cut.
  Mr. KENNEDY. Mr. President, very few decisions we make in Congress 
will have more impact on the long-term economic well-being of our 
nation than how we allocate the projected surplus. By our votes this 
week, we are setting priorities that will determine whether the 
American economy is on firm ground or dangerously shifting sand as we 
enter the 21st century. These votes will determine whether we have the 
financial capacity to meet our responsibilities to future generations, 
and whether we have fairly shared the economic benefits of our current 
prosperity. Sadly, the legislation before us today fails all of these 
standards. We should vote to reject it.
  A tax cut of the enormous magnitude proposed by our Republican 
colleagues would reverse the sound fiscal management which has created 
the inflation-free economic growth of recent years. That is the clear 
view of the two principal architects of our current prosperity--Robert 
Rubin and Alan Greenspan. Devoting the entire on-budget surplus to tax 
cuts will deprive us of the funds essential to preserve Medicare and 
Social Security for future generations of retirees. It will force harsh 
cuts in education, in medical research, and in other vital domestic 
priorities. This tax cut jeopardizes our financial future--and it also 
dismally flunks the test of fairness. When fully implemented, the 
Republican plan would give 75% of the tax cuts to the wealthiest 20% of 
the population. The richest 1%--those earning over $300,000 a year--
would receive tax breaks as high as $23,000 a year, while working men 
and women would receive an average of only $139 a year.
  Republicans claim that the ten year surplus is three trillion dollars 
and that they are setting two-thirds of it aside for Social Security, 
and only spending one-third on tax cuts. That explanation is grossly 
misleading. The two trillion dollars they say they are giving to Social 
Security already belongs to Social Security. It consists of payroll tax 
dollars expressly raised for the purpose of paying future Social 
Security benefits. Using those dollars to fund tax cuts or new spending 
would be to raid the Social Security Trust Fund. The Republicans are 
not providing a single new dollar to help fund Social Security benefits 
for future generations. They are not extending the life of the Trust 
Fund for even one day. It is a mockery to characterize those payroll 
tax dollars as part of the surplus.
  That leaves the $996 billion on-budget surplus as the only funds 
available to address all of the nation's unmet needs over the next ten 
years. Republicans propose to use that entire amount to fund their tax 
cut scheme. Since CBO projections assume that all surplus dollars are 
devoted to debt reduction, the $996 billion figure includes nearly $200 
billion in debt service savings. The amount which is available to be 
spent--either to address public needs or to cut taxes--is only slightly 
above $800 billion. Their $792 billion tax cut will consume the entire 
surplus.
  Even more troubling, the Republican tax cut has been designed to 
expand dramatically beyond the tenth year. The cost between 2010 and 
2019 will dwarf the cost in the first decade. It will rise from $800 
billion to $2 trillion dollars. And the cost of the debt service 
payments necessitated by a tax cut of that magnitude will grow 
exponentially as well. The GOP plan will usher in a new era of 
deficits--just as the baby boom generation is reaching retirement age.
  While the Senate Rules have been invoked to prevent the current tax 
cut from going beyond ten years, the Republican leadership has made 
clear their intent to make these massive cuts permanent. If these tax 
cuts were to become permanent, they would precipitate a genuine fiscal 
crisis.
  Most Americans understand the word ``surplus'' to mean dollars 
remaining after all financial obligations have been met. If that common 
sense definitions is applied to the federal budget, the surplus would 
be far smaller than $996 billion.
  We have existing obligations which should be our first 
responsibility. We have an obligation to preserve Medicare for future 
generations of retires, and to modernize Medicare benefits to include 
prescription drug assistance. The Republican budget does not provide 
one additional dollar to meet these needs.
  The American people clearly believe that strengthening Social 
Security and Medicare should be our highest priorities for using the 
surplus. By margins of more than two to one, they view preserving 
Social Security and Medicare as more important than cutting taxes.
  We should use the surplus to meet these existing responsibilities 
first, in order to fulfill the promise of a secure retirement with 
access to needed medical care.
  If we do nothing, Medicare will become insolvent by 2015. The surplus 
gives us a unique opportunity to preserve Medicare, without reducing 
medical care or raising premiums. The Republican tax cut would take 
that opportunity away. It would leave nothing for Medicare.
  We must seize this opportunity. Senate Democrats have proposed 
committing one-third of the surplus--$290 billion over the next ten 
years--to strengthening Medicare and to assisting senior citizens with 
the cost of prescription drugs. The Administration's 15 year budget 
plan provides an additional $500 billion for Medicare between 2010 and 
2014. Enactment of the Republican tax cut would make this $800 billion 
transfer to Medicare impossible. If we squander the entire surplus on 
tax breaks, there will be no money left to keep our commitment to the 
nations' elderly.
  Unless we use a portion of the surplus to strengthen Medicare, senior 
citizens

[[Page S9933]]

will be confronted with nearly a trillion dollars in health care cuts 
and premium increases. We know who the people are who will be asked by 
the Republicans to carry this enormous burden.
  The typical Medicare beneficiary is a widow, seventy-six years old, 
with an annual income of $10,000. She has one or more chronic 
illnesses. She is a mother and a grandmother. Yet the Republican budget 
would force deep cuts in her Medicare benefits, in order to pay for new 
tax breaks for the wealthy. As a result, elderly women will be unable 
to see their doctor. They will go without needed prescription drugs, or 
without meals or heat, so that wealthy Americans earning hundreds of 
thousands of dollars a year can have additional thousands of dollars a 
year in tax breaks.

  The projected surplus also assumes drastic cuts in a wide range of 
existing programs over the next decade--cuts in domestic programs such 
as education, medical research, and environmental cleanup; and cuts in 
national defense. We have an obligation to adequately fund these 
programs. If existing programs merely grow at the rate of inflation 
over the next decade and no new programs are created and no existing 
programs are expanded, the surplus would be reduced by $584 billion 
dollars. That is the amount it will cost to merely continue funding 
current discretionary programs at their inflation-adjusted level. In 
fact, the real surplus over the next ten years is only slightly above 
$200 billion, roughly one-quarter the size of the proposed Republican 
tax cut.
  In other words, the Republican tax cut would necessitate more than a 
twenty percent across the board cut in discretionary spending--in both 
domestic and national defense--by the end of the next decade. If 
defense is funded at the Administration's proposed level, and it is 
highly unlikely that the Republican Congress will do less, domestic 
spending would have to be cut 38% by 2009. No one can reasonably argue 
that cuts that deep should be made, or will be made.
  We know what cuts of this magnitude would mean in human terms by the 
end of the decade. We know who will be hurt: 375,000 fewer children 
will receive a Head Start; 6.5 million fewer children will participate 
in Title I education programs; 14,000 fewer biomedical research grants 
will be available from the National Institutes of Health; 1,431,000 
fewer veterans will receive V.A. medical care; and there will be 6,170 
fewer Border Patrol agents and 6,342 fewer FBI agents insuring safer 
communities. These are losses that the American people are not willing 
to accept.
  The Democratic alternative would restore $290 billion, substantially 
reducing the size of the proposed cuts. A significant reduction would 
still be required over the decade. One thing is clear--even with a bare 
bones budget, we cannot afford a tax cut of the magnitude the 
Republicans are proposing.
  Our Republican friends claim that these enormous tax cuts will have 
no impact on Social Security, because they are not using payroll tax 
revenues. On the contrary, the fact that the Republican budget commits 
every last dollar of the on-budget surplus to tax cuts does imperil 
Social Security.
  First, revenue estimates projected ten years into the future are 
notoriously unreliable. As the Director of the Congressional Budget 
Office candidly acknowledged:

       Ten year budget projections are highly uncertain. In the 
     space of only six months, CBO's estimate of the cumulative 
     surplus has increased by nearly $300 billion. Further changes 
     of that or a greater magnitude are likely--in either 
     direction--as a result of economic fluctuations, 
     administrative and judicial actions, and other developments.

  Despite this warning, the Republican tax cut leaves no margin for 
error. If we commit the entire surplus to tax cuts and the full surplus 
does not materialize, Social Security revenues will be required to 
cover the shortfall.
  Second, even if the projected surplus does materialize, the cost of 
the Republican budget exceeds the surplus in five of the next ten 
years--2005, 2006, 2007, 2008, and 2009. Unless the Republican proposal 
is restructured, Social Security revenues will be required to cover the 
shortfall in each of those years.
  Third, the Republican tax cut leaves no money to pay for emergency 
spending, which has averaged $9 billion a year in recent years. Over 
the next decade, we are likely to need approximately $90 billion to 
cover emergency needs. That money has to come from somewhere. With the 
entire surplus spent on tax cuts, the Social Security Trust Fund will 
have to fund these emergency costs as well.
  The three threats to Social Security I have described are very real. 
However, there is an even greater impact of the Republican plan on the 
future of Social Security. As I noted earlier, that plan does not 
provide Social Security with a single new dollar to fund future benefit 
payments.
  In contrast, the Administration has proposed using a major portion of 
the surplus to strengthen Social Security for future generations of 
retirees. Beginning in 2011, the President's budget allocates to Social 
Security the savings which will result from debt reduction. Between 
2011 and 2014, the Social Security Trust Fund would receive 543 billion 
new dollars from the surplus, and it would receive an additional $189 
billion each year after that. As a result, the solvency of Social 
Security would be extended for a generation, to well beyond 2050.
  The Republican tax cut proposal, which costs over $2 trillion between 
2010 and 2019, will consume all of the surplus dollars which were 
intended for Social Security. There will be nothing left for Social 
Security. As a result, no new dollars will flow into the Trust Fund, 
and the future of Social Security will remain clouded.
  For two-thirds of America's senior citizens, Social Security 
retirement benefits provide more than 50% of their annual income. 
Without Social Security, half the nation's elderly would be living in 
poverty. Social Security enables millions of senior citizens to spend 
their retirement years in security and dignity. A Republican tax cut of 
the magnitude proposed here today will put their retirement security in 
serious jeopardy.
  The votes which we cast this week--the choices which we are required 
to make--will say a great deal about our values. We should use the 
surplus as an opportunity to help those in need--senior citizens living 
on small fixed incomes, children who need educational opportunities, 
millions of men and women whose lives may well depend on medical 
research and access to quality health care. We should not use the 
surplus to further enrich those among us who are already the most 
affluent. The issue is a question of fundamental values and fundamental 
fairness.
  The Republican tax cut would consume the entire surplus, and 
distribute the overwhelming majority of it to those with the highest 
incomes. The authors of the Republican plan have highlighted the 
reduction of the 15% tax bracket to 14%. They have pointed to this as 
middle class tax relief. But that relief is only a small part of the 
overall tax breaks in their bill. It accounts for only $216 billion of 
the $792 billion in GOP tax cuts. Most of the remaining provisions are 
heavily weighted toward the highest income taxpayers.
  If the Republican plan were enacted and fully implemented, nearly 50% 
of the tax benefits would go to the richest 5% of taxpayers, and more 
than 75% of the benefits would go to the wealthiest 20%. Those with 
annual incomes exceeding $300,000 would receive tax breaks of $23,000 
per year. The lowest 60% of wage-earners would share less than 11% of 
the total tax cuts--they would receive an average tax cut of only $139 
per year. That gross disparity is unfair and unacceptable.
  This is not the way the American people want to spend their surplus. 
I urge my colleagues to reject this bill. The American people deserve 
better than this.
  Mr. DASCHLE. Mr. President, as the debate on the Senate's version of 
the reconciliation tax bill winds down, I wanted to come to the floor 
and say a few words about where we are in this process, how we got 
here, and where I think we ought to go.
  Let me begin by saying that the discussions we have seen on the 
Senate floor these past few days should lead all of my colleagues--
Democratic and Republican alike--to agree on one thing: the issues 
affected by this bill--Social Security, Medicare, education, tax 
relief--are serious and should not fall prey to political gamesmanship. 
It is not an overstatement to say that the nation's economic and fiscal 
health are

[[Page S9934]]

at stake. What we do on these issues will affect the lives of millions 
of Americans for decades to come.
  The discussion has also revealed another truth. The debate on the 
proper course for this nation and its people as we head into the 21st 
century is really a tale of two paradigms.
  The Republican vision for the future is to replay the past. They 
would have us follow their economic policies of the 1980s, a course 
that can best be characterized as one of both wishful thinking and 
fiscal disaster. This is a course of irresponsible tax breaks for the 
wealthiest among us. This is a course of voodoo economics, where 
providing huge tax breaks to the wealthiest was to somehow benefit 
everyone and reduce government deficits.
  As history demonstrates, this really was a course of rosy scenarios 
and disastrous results. The benefits of their tax breaks were, not 
surprisingly, essentially confined to the wealthiest. Small deficits 
turned into massive ones. Government debt exploded, quadrupling in the 
1980s. Unemployment averaged 7.1 percent in the previous decade. Median 
family income fell $1,825 in just four years. Welfare rolls were up 22 
percent.
  The Democratic vision for the future is to continue along the path we 
set forth in 1993, a path marked by fiscal responsibility and economic 
prosperity. Just to remind my colleagues of what we have accomplished 
since we embarked on this road, let me talk about the state of our 
economy when President Clinton took office. The deficit in 1992 was 
$290 billion and projected to grow to over $500 billion by the end of 
the decade and to continue rising each year thereafter. Again, 
unemployment was up, and family income was down. Welfare rolls were 
growing.
  The Democratic-led Congress enacted a comprehensive economic plan in 
1993. This plan was approved without a single Republican vote. And 
today, the results are clear. Economists have said this is the 
strongest U.S. economy they have seen in a generation. The record 
deficits have turned into record surpluses--$120 billion this year and 
larger every year thereafter for at least a decade. We are experiencing 
the longest peacetime economic expansion in this nation's history and, 
if it continues for several additional months, the longest in history, 
period. Economic growth during this period has averaged 3.5 percent--
nearly double that experienced during the Reagan-Bush years. 
Unemployment is just over four percent--roughly one-half the level 
during the Reagan-Bush years. Median income for a family of four is up 
$3,500 since 1993. Welfare rolls are down 35 percent since 1994.
  These are the two choices presented during this debate--whether we 
step back into a past filled with record deficits and debt or continue 
moving forward to sustain the economic and fiscal progress we have 
achieved since 1993. The question for the Congress and the American 
people is which road will we take--the dangerous one or the responsible 
one? Will we build on our success or put our national health at risk?
  After carefully listening to the debate, it is apparent to me that 
many on the other side of the aisle would like to do it all over again. 
I have heard some of the same old, dangerous rhetoric and false rosy 
scenarios I heard in the early 1980s. Like then, I have heard 
misleading representations of government spending--both current and 
future. I have again heard talk of irresponsible tax cuts tilted to the 
wealthy and special interests. Once again, my Republican colleagues are 
proposing that we give short shrift to Medicare and, in a new twist, a 
prescription drug benefit as well. And finally, Republicans are again 
proposing massive cuts in education, veterans' health, defense and 
agriculture. These cuts are as unprecedented as they are unrealistic. 
If one assumes the Republicans simply match the President's defense 
spending proposals, all remaining discretionary programs would have to 
be cut by 38 percent below today's levels. If we follow the new, 
phantom baseline created expressly for the floor debate by Senators 
Domenici and Frist, and again exempt defense, the cuts to all remaining 
programs will easily exceed 50 percent.
  Mr. President, it is all the more disappointing to me that in the 
face of the historic opportunity afforded this body by our unmatched 
fiscal strength, the Senate is about to fail on three counts. The 
Republican majority is about to prevail and pass an irresponsible 
fiscal policy. Their tax cuts would reverse the progress of the 1990s 
and lead to us back to huge deficits and more debt. The Republican 
position also constitutes irresponsible national policy. The cost of 
the Republican tax cut would explode in the second decade of the 21st 
century--precisely when the baby boomer generation is retiring and 
resources are needed if the federal government is to keep its 
commitments on Social Security and Medicare. Finally, the majority has 
chosen to pursue this course in the face of a certain Presidential 
veto, should the bill reach the President's desk in something even 
close to its current form.
  Instead of wasting the precious time of this Congress and the 
American people, it would have been better if Republicans had opted to 
work together with Democrats to develop a fiscally responsible plan 
that could get the President's signature. Democrats have offered the 
major parts of such a plan during the debate. Our plan consists of five 
components. Democrats protect the entire $1.9 trillion Social Security 
surplus; every dollar, every year. Democrats strengthen and modernize 
Medicare by setting aside a portion of the on-budget surplus to extend 
solvency and provide a prescription drug benefit for Medicare 
beneficiaries. Democrats pay down the federal government's publicly 
held debt, and, if our course is followed, eventually eliminate it. 
Democrats invest some of the non-Social Security surplus in critical 
priorities, such as defense, education, veterans' health, agriculture, 
and NIH. Finally, Democrats believe in a significant, responsible tax 
cut.
  It is projected there will be sufficient resources to do all of this. 
Yet, Republicans refuse to do most of it. Instead, they choose to 
follow a course that has become all too familiar to Americans. 
Republicans again choose to pursue ideologically extreme positions that 
best serve special interests instead of the needs of ordinary, hard-
working Americans. The Senate has seen this before, on the overall 
budget plan, on juvenile justice, and, most recently, on the Patients' 
Bill of Rights.
  This is not a political game. We face serious challenges and historic 
opportunities. We have wasted precious time. The list of unresolved 
items that the Senate should address is a long one. And time is short. 
I hope that when we come back next week and in September, Republicans 
will discard their agenda written by special interests and pursue the 
people's agenda. If they do so, we can accomplish much together. If 
they do not, the American people will be the losers.
  Mr. ROTH. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. ROTH. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ROTH. Mr. President, we are now ready for final passage.
  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. The question is on the engrossment and third 
reading of the bill.
  The bill was ordered to be engrossed for a third reading and 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 are ordered, and the clerk will call the roll.
  The legislative clerk called the roll.
  The result was announced--yeas 57, nays 43, as follows:

                      [Rollcall Vote No. 247 Leg.]

                                YEAS--57

     Abraham
     Allard
     Ashcroft
     Bennett
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Campbell
     Chafee
     Cochran
     Collins
     Coverdell
     Craig
     Crapo
     DeWine
     Domenici
     Enzi
     Fitzgerald
     Frist
     Gorton
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kerrey
     Kyl
     Landrieu

[[Page S9935]]


     Lott
     Lugar
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Roberts
     Roth
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Stevens
     Thomas
     Thompson
     Thurmond
     Torricelli
     Warner

                                NAYS--43

     Akaka
     Baucus
     Bayh
     Biden
     Bingaman
     Boxer
     Bryan
     Byrd
     Cleland
     Conrad
     Daschle
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kerry
     Kohl
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Moynihan
     Murray
     Reed
     Reid
     Robb
     Rockefeller
     Sarbanes
     Schumer
     Specter
     Voinovich
     Wellstone
     Wyden
  The bill (S. 1429), as amended, was passed.
  Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
  Mr. ROTH. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. ROTH. Mr. President, I want to give my thanks to the many staff 
members on both sides of the aisle, including my good friend and 
colleague, Pat Moynihan, and all the many people who made this 
possible. This afternoon, I think we took a giant step toward getting 
the American people a tax break.
  I would like to thank the following staff on this bill; Frank Polk, 
Joan Woodward, Mark Prater, Brig Pari, Jeff Kupfer, Bill Sweetnam, Tom 
Roesser, Ed McClellan, John Duncan, Connie Foster, and Jane 
Butterfield.
  I also thank:
  Frank Polk, Chief of Staff and Chief Counsel;
  Joan Woodward, Deputy Staff Director;
  Mark Prater, Chief Tax Counsel;
  Alexander Vachen, Chief Social Security Analyst;
  Brig Pari, Tax Counsel;
  Tom Roesser, Tax Counsel;
  Bill Sweetnam, Tax Counsel;
  Jeff Kupfer, Tax Counsel;
  Ed McClellan, Tax Counsel;
  Kathy Means, Chief Health Analyst;
  DeDe Spitznagel, Health Analyst;
  Monica Tencate, Health Analyst;
  Darcel Savage;
  Jane Butterfield; and
  Mark Blair.
  Further, I wish to thank:
  Carolyn D. Abraham, Secretary;
  Robert (Greg) Bailey, Legislation Counsel;
  Carl E. Bates, Refund Counsel;
  B. Jean Best, Secretary;
  John H. Bloyer, Chief Clerk;
  Michael E. Boren, Administrative Assistant;
  Mary Ann Borrelli, Economist;
  Norman J. Brand, Senor Refund Counsel;
  Tanya Butler, Secretary;
  William J. Dahl, Senior Computer Specialist;
  Debbie A. Davis, Secretary;
  Kathleen Dorn, Executive Assistant;
  Timothy Dowd, Economist;
  Patrick A. Driessen, Senior Economist;
  Christopher P. Giosa, Economist;
  Robert C. Gotwald, Refund Counsel;
  Richard A. Grafmeyer, Deputy Chief of Staff;
  H. Benjamin Hartley, Senior Legislation Counsel;
  Robert P. Harvey, Economist;
  David P. Hering, Accountant;
  Harold E. Hirsch, Senior Legislation Counsel;
  Thomas Holtmann, Economist;
  Melani M. Houser, Statistical Analyst;
  Allison M. Ivory, Economist;
  Deidre James, Legislation Counsel;
  M.L. Sharon Jedlicka, Secretary;
  Ronald A. Jeremias, Senior Economist;
  John L. Kirkland, Jr., Staff Assistant;
  Leon W. Klud, Special Assistant;
  Gary Koenig, Economist;
  Thomas F. Koerner, Associate Deputy Chief of Staff;
  Debra L. McMullen, Senior Staff Assistant;
  Neval E. McMullen, Staff Assistant;
  David R. Macall, Intern/Tax Policy;
  Laurie A. Matthews, Senior Legislation Counsel;
  Pamela H. Moomau, Senior Economist;
  Tracy S. Nadel, Director of Tax Resources;
  John F. Navratil, Economist;
  Joseph W. Nega, Legislation Counsel;
  Diana L. Nelson, Computer Specialist;
  Hal G. Norman, Computer Specialist;
  Melissa A. O'Brien, Tax Resource Specialist;
  Samuel Olchyk, Legislation Counsel;
  Christopher J. Overend, Economist;
  Lindy L. Paull, Chief of Staff;
  Oren S. Penn, Legislation Counsel;
  Cecily W. Rock, Senior Legislation Counsel;
  Lucia J. Rogers, Secretary;
  Paul Schmidt, Legislation Counsel;
  Bernard A. Schmitt, Deputy Chief of Staff;
  Mary M. Schmitt, Deputy Chief of Staff;
  Melbert E. Schwarz, Accountant;
  Todd Simmens, Legislation Counsel;
  Christine J. Simmons, Secretary;
  Carolyn E. Smith, Associate Deputy Chief of Staff;
  Thomas A. St. Clair, Jr., Staff Assistant;
  William T. Sutton, Senior Economist;
  Peter M. Taylor, Senior Economist;
  Melvin C. Thomas, Jr., Senior Legislation Counsel;
  Michael A. Udell, Economist;
  Carolyn (Morey) Ward, Legislation Counsel;
  Barry L. Wold, Legislation Counsel; and
  Joanne Yanusz, Secretary.
  Mr. MOYNIHAN. Mr. President, I first express my great appreciation to 
the chairman. Members may have seen the affection with which he is held 
on our side of the aisle. I have said I will never fail to seek 
opportunities to congratulate his generosity.
  I have the names of members of our staff we thank, including David 
Podoff, Russell Sullivan, and Maury Passman, who is leaving, and others 
who have worked so hard. I particularly thank Frank Polk and Joan 
Woodward on your side.
  I also wish to thank
  Dr. David Podoff, Staff Director and Chief Economist;
  Russell Sullivan, Chief Tax Counsel;
  Chuck Konigsberg, Chief Health Counsel and General Counsel;
  Maury Passman, Tax Counsel;
  Stan Fendley, Tax Counsel;
  Anita Horn, Tax Professional Staff Member;
  Mitchell Kent, Tax Legislative Research Assistant;
  Kristen Testa, Medicaid Professional Staff Member;
  Jon Resnick, Health Legislative Research Assistant;
  Liz Fowler, Medicare Professional Staff Member;
  Julianne Fisher, Assistant to the Minority Staff Director;
  Jewel Harper, Receptionist; and our interns: Alison Egan, Patricia 
Daugherty, and Noam Mohr.


               Further Modification to Amendment No. 1426

  Mr. ROTH. Mr. President, I ask unanimous consent that the Coverdell-
Torricelli previously agreed to amendment be modified as follows, and I 
send it to the desk.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 1426), as further modified, is as follows:
       On page 32, strike lines 6 through 11, and insert:
       (1) In general.--Subparagraph (E) of section 56(b)(1) is 
     amended to read as follows:
       ``(E) Special rule for certain deductions.--The standard 
     deduction under section 63(c) shall not be allowed and the 
     deduction for personal exemptions under section 151 and the 
     deduction under section 642(b) shall each be allowed, but 
     shall each be reduced by $_____.''
       On page 32, strike lines 12 through 14, insert the 
     following:
       (2) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. __. LONG-TERM CAPITAL GAINS DEDUCTION FOR INDIVIDUALS.

       (a) General Rule.--Part I of subchapter P of chapter 1 
     (relating to treatment of capital gains) is amended by 
     redesignating section 1202 as section 1203 and by inserting 
     after section 1201 the following new section:

     ``SEC. 1202. CAPITAL GAINS DEDUCTION FOR INDIVIDUALS.

       ``(a) In General.--In the case of an individual, there 
     shall be allowed as a deduction for the taxable year an 
     amount equal to the lesser of--
       ``(1) the net capital gain of the taxpayer for the taxable 
     year, or
       ``(2) $1,000.
       ``(b) Sales Between Related Parties.--Gains from sales and 
     exchanges to any related person (within the meaning of 
     section 267(b) or 707(b)(1)) shall not be taken into account 
     in determining net capital gain.
       ``(c) Special Rule for Section 1250 Property.--Solely for 
     purposes of this section, in

[[Page S9936]]

     applying section 1250 to any disposition of section 1250 
     property, all depreciation adjustments in respect of the 
     property shall be treated as additional depreciation.
       ``(d) Section Not To Apply to Certain Taxpayers.--No 
     deduction shall be allowed under this section to--
       ``(1) an individual with respect to whom a deduction under 
     section 151 is allowable to another taxpayer for a taxable 
     year beginning in the calendar year in which such 
     individual's taxable year begins,
       ``(2) a married individual (within the meaning of section 
     7703) filing a separate return for the taxable year, or
       ``(3) an estate or trust.
       ``(e) Special Rule for Pass-Thru Entities.--
       ``(1) In general.--In applying this section with respect to 
     any pass-thru entity, the determination of when the sale or 
     exchange occurs shall be made at the entity level.
       ``(2) Pass-thru entity defined.--For purposes of paragraph 
     (1), the term `pass-thru entity' means--
       ``(A) a regulated investment company,
       ``(B) a real estate investment trust,
       ``(C) an S corporation,
       ``(D) a partnership,
       ``(E) an estate or trust, and
       ``(F) a common trust fund.''
       (b) Coordination With Maximum Capital Gains Rate.--
     Paragraph (3) of section 1(h) (relating to maximum capital 
     gains rate) is amended to read as follows:
       ``(3) Coordination with other provisions.--For purposes of 
     this subsection, the amount of the net capital gain shall be 
     reduced (but not below zero) by the sum of--
       ``(A) the amount of the net capital gain taken into account 
     under section 1202(a) for the taxable year, plus
       ``(B) the amount which the taxpayer elects to take into 
     account as investment income for the taxable year under 
     section 163(d)(4)(B)(iii).''
       (c) Deduction Allowable in Computing Adjusted Gross 
     Income.--Subsection (a) of section 62 (defining adjusted 
     gross income) is amended by inserting after paragraph (17) 
     the following new paragraph:
       ``(18) Long-term capital gains.--The deduction allowed by 
     section 1202.''
       (d) Treatment of Collectibles.--
       (1) In general.--Section 1222 (relating to other terms 
     relating to capital gains and losses) is amended by inserting 
     after paragraph (11) the following new paragraph:
       ``(12) Special rule for collectibles.--
       ``(A) In general.--Any gain or loss from the sale or 
     exchange of a collectible shall be treated as a short-term 
     capital gain or loss (as the case may be), without regard to 
     the period such asset was held. The preceding sentence shall 
     apply only to the extent the gain or loss is taken into 
     account in computing taxable income.
       ``(B) Treatment of certain sales of interest in 
     partnership, etc.--For purposes of subparagraph (A), any gain 
     from the sale or exchange of an interest in a partnership, S 
     corporation, or trust which is attributable to unrealized 
     appreciation in the value of collectibles held by such entity 
     shall be treated as gain from the sale or exchange of a 
     collectible. Rules similar to the rules of section 751(f) 
     shall apply for purposes of the preceding sentence.
       ``(C) Collectible.--For purposes of this paragraph, the 
     term `collectible' means any capital asset which is a 
     collectible (as defined in section 408(m) without regard to 
     paragraph (3) thereof).''
       (2) Charitable deduction not affected.--
       (A) Paragraph (1) of section 170(e) is amended by adding at 
     the end the following new sentence: ``For purposes of this 
     paragraph, section 1222 shall be applied without regard to 
     paragraph (12) thereof (relating to special rule for 
     collectibles).''
       (B) Clause (iv) of section 170(b)(1)(C) is amended by 
     inserting before the period at the end the following: ``and 
     section 1222 shall be applied without regard to paragraph 
     (12) thereof (relating to special rule for collectibles)''.
       (e) Conforming Amendments.--
       (1) Section 57(a)(7) is amended by striking ``1202'' and 
     inserting ``1203''.
       (2) Clause (iii) of section 163(d)(4)(B) is amended to read 
     as follows:
       ``(iii) the sum of--

       ``(I) the portion of the net capital gain referred to in 
     clause (ii)(II) (or, if lesser, the net capital gain referred 
     to in clause (ii)(I)) taken into account under section 1202, 
     reduced by the amount of the deduction allowed with respect 
     to such gain under section 1202, plus

       ``(II) so much of the gain described in subclause (I) which 
     is not taken into account under section 1202 and which the 
     taxpayer elects to take into account under this clause.''

       (3) Subparagraph (B) of section 172(d)(2) is amended to 
     read as follows:
       ``(B) the deduction under section 1202 and the exclusion 
     under section 1203 shall not be allowed.''
       (4) Section 642(c)(4) is amended by striking ``1202'' and 
     inserting ``1203''.
       (5) Section 643(a)(3) is amended by striking ``1202'' and 
     inserting ``1203''.
       (6) Paragraph (4) of section 691(c) is amended inserting 
     ``1203,'' after ``1202,''.
       (7) The second sentence of section 871(a)(2) is amended by 
     inserting ``or 1203'' after ``section 1202''.
       (8) The last sentence of section 1044(d) is amended by 
     striking ``1202'' and inserting ``1203''.
       (9) Paragraph (1) of section 1402(i) is amended by 
     inserting ``, and the deduction provided by section 1202 and 
     the exclusion provided by section 1203 shall not apply'' 
     before the period at the end.
       (10) Section 121 is amended by adding at the end the 
     following new subsection:
       ``(h) Cross Reference.--

  ``For treatment of eligible gain not excluded under subsection (a), 
see section 1202.''
       (11) Section 1203, as redesignated by subsection (a), is 
     amended by adding at the end the following new subsection:
       ``(l) Cross Reference.--

  ``For treatment of eligible gain not excluded under subsection (a), 
see section 1202.''
       (12) The table of sections for part I of subchapter P of 
     chapter 1 is amended by striking the item relating to section 
     1202 and by inserting after the item relating to section 1201 
     the following new items:

``Sec. 1202. Capital gains deduction.
``Sec. 1203. 50-percent exclusion for gain from certain small business 
              stock.''
       (f) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     beginning after December 31, 2005.
       (2) Collectibles.--The amendments made by subsection (d) 
     shall apply to sales and exchanges after December 31, 2005.


                           AMENDMENT NO. 1496

              (Purpose: To provide a manager's amendment)

  The PRESIDING OFFICER. Under the previous order, amendment No. 1496 
is agreed to.
  (The text of the amendment is printed in today's Record under 
``amendments submitted.'')
  Mr. ROTH. I ask unanimous consent that the Senate proceed to the 
consideration of the House companion bill, Calendar No. 234, H.R. 2480. 
I further ask consent that all after the enacting clause be stricken, 
and the text of the Senate bill be inserted in lieu thereof, the bill 
then be read for the third time and passed, with a motion to reconsider 
laid upon the table. I also ask consent that the Senate then insist on 
its amendment and request a conference with the House. I finally ask 
consent that the passage of S. 1429 be vitiated and the bill be placed 
back on the calendar.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The bill (H.R. 2480), as amended, was passed.
  (The bill will be printed in a future edition of the Record.)
  Mr. BIDEN. Mr. President, I rise first to compliment my senior 
colleague from Delaware on his effectiveness. We agree on an awful lot 
of things. We disagreed on this tax bill, but that in no way diminishes 
my admiration for his effectiveness. As a matter of fact, this is one 
of the few occasions I wish he were not as effective as he has been.
  I compliment him and I echo the comments of my friend from New York 
who said he is held in affection by Members on both sides of the aisle. 
I am first among those. I congratulate him for his success. I will not 
use the word ``deplore,'' but I disagree strongly with the outcome. 
However, I admire the way in which he--and maybe only he--could have 
been able to put this together.
  Mr. ENZI. Mr. President, I congratulate the chairman of the Finance 
Committee and the ranking member of the Finance Committee for the 
outstanding work they have done together through this week to bring 
together a bill that could have bipartisan support in the Senate.
  I particularly thank Senator Roth for the depth of understanding he 
has on tax issues, the way he has worked across the aisle, the way he 
has worked through such a variety of measures. There were over 126 
amendments we have just done. He understood and worked through and 
negotiated those into a package that I hope will be accepted by the 
House and signed by the President.
  As the accountant in the Senate, I have been fascinated by the debate 
we have had this week. I volunteered to serve late a couple of nights. 
For us accountants, what we have seen here this week has been live 
entertainment--some of the finest stuff you can see on television.
  I know my fellow accountants across the Nation have been watching. 
While we did not get the simplification we would have liked to have 
had, and that simplification is necessary for the American people, we 
have gotten some

[[Page S9937]]

very exciting, necessary provisions, some provisions where all 
Americans taxpayer will receive back part of the overpayment they paid 
in.
  We have made a dent in the death taxes. We fixed the marriage 
penalty--eventually, with a start immediately, and a myriad of other 
provisions in there that will affect the lives of literally every 
person in the United States.
  I thank the chairman of the committee who has been a part of the last 
great tax relief that was done as well as this great tax relief.
  I thank the chairman and my colleagues who worked on and supported 
this measure.
  I yield the floor.
  Mr. HUTCHINSON. Mr. President, I also associate myself with the 
remarks of the Senator from Wyoming commending Senator Roth and the 
Finance Committee for their work on this very important landmark tax 
relief legislation the Senate passed today. I believe, in taking the 
step we did today, in lowering the tax burden upon the American people 
from 21 percent of GDP to 20 percent of the gross domestic product, we 
have taken a modest but a very important step in providing relief to 
all Americans. I commend the Senate today, and the staff, and ask the 
President to reconsider his proposed veto.

                          ____________________