October 22, 2003 - Issue: Vol. 149, No. 149 — Daily Edition108th Congress (2003 - 2004) - 1st Session
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS; Congressional Record Vol. 149, No. 149
(Senate - October 22, 2003)
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[Pages S13055-S13056] From the Congressional Record Online through the Government Publishing Office [www.gpo.gov] STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS By Mr. SANTORUM (for himself and Mr. Carper): S. 1773. A bill to permit biomedical research corporations to engage in certain equity financings without incurring limitations on net operating loss carryforwards and certain built-in losses, and for other purposes; to the Committee on Finance. Mr. SANTORUM. Mr. President, today, I am introducing the Biotechnology Future Investment Expansion Act of 2003. I am pleased that Senator Carper is cosponsoring this important, bipartisan bill. Biotechnology holds great promise for breakthroughs in health care, agriculture and defense against bioterrorism. However, recent years have seen promising biotech medical therapies endangered due to flawed tax treatment and a lack of willing capital. This legislation will level the playing field to encourage further investment and innovation in this vital sector of our economy. The nearly 1,500 biotechnology companies in the U.S. have produced 130 FDA-approved products while another 350 biotech drug products and vaccines are currently in clinical trials. Most biotechnology researchers work in promising, but relatively narrow fields, and only a small number of their peers are qualified to evaluate the theoretical promise of any new idea. On average, it takes these researchers more than 10 years and $500 million to develop a new biotech therapy, and this highly capital-intensive research is more often done at small-to- medium-sized companies that are yet to market a saleable product. These factors combine to create an industry structure that is unique in our economic history. Unfortunately, this unique structure prevents the biotechnology industry from utilizing research incentives intended to promote just the kind of research it engages in. Specifically, net operating loss carryforwards (NOLs), which are meant to allow research- intensive industries like biotechnology to apply current losses against future profits for tax purposes, are routinely made worthless to biotech companies due to an unintended consequence of the tax code. In fact, the current tax treatment of NOLs impairs, rather than fosters, biotechnology research. This is because rules designed to prevent abuse of NOLs through acquisition often inadvertently trigger restrictions on the use of a biotech firm's NOLs, rendering them useless in many cases, when all the company has done is raise more capital. Section 382, which for the most part has proven to be an effective guard against tax abusive NOL trafficking, describes the many circumstances that can be classified as an ownership change. Unfortunately, those circumstances apply to and penalize the frequent biotech practice of raising equity in successive financing rounds. This practice is essential to successfully negotiating the long product development and Food and Drug Administration approval processes. These limitations unintentionally discourage biotechnology research and leave the firms that would otherwise conduct that research in dire financial straits. Without these firms, the money that is being poured into research at the National Institutes of Health (NIH) and elsewhere to combat diseases such as cancer, AIDS, hepatitis, cardiovascular ailments, diabetes, and central nervous system disorders, as well as many rare diseases, will have a significantly reduced potential to lead to new cures. We may never know what cures will be lost without action. Recognizing the unique structure of the biotech industry--a structure that the architects and stewards of the Tax Code likely never imagined--this legislation is narrowly drafted to exempt certain qualified investments in biotechnology from Section 382 restrictions. This change will spur investment in biotechnology, so we can continue the pursuit of innovative and life-saving therapies, all while continuing to prevent the fraudulent use of NOLs, as Section 382 intends. I encourage all of my colleagues to join us in supporting this bill. ______ By Mr. KENNEDY (for himself, Mrs. Clinton, Mr. Corzine, Mrs. Feinstein, Mr. Lautenberg, Mr. Levin, Mr. Reed, and Mr. Schumer): S. 1774. A bill to repeal the sunset provisions in the Undetectable Firearms Act of 1988; to the Committee on the Judiciary. Mr. KENNEDY. Mr. President, it's a privilege to join my colleagues in introducing the Terrorist Firearms Detection Act of 2003. Since the atrocities of September 11, Congress has acted with strong bipartisan support to win the war on terrorism and protect the country from future attacks. We've improved the security of our airports and our borders, strengthened our defenses against bioterrorism, and given law enforcement new powers to investigate terrorist threats and prevent terrorism. But Congress has not yet acted to renew one of the Nation's most essential protections against terrorism. The Undetectable Firearms Act--also known as the ``plastic gun'' law--makes it illegal to manufacture, import, possess, or transfer a firearm that is not detectable by walk-through metal detectors or airport x-ray machines. Only firearms necessary for certain military and intelligence uses are exempt. This law was first enacted in 1988, long before the attacks on 9/11, and it is more important than ever now. It has been extended once since it was first enacted, but it is now scheduled to expire on December 10. The administration has made no public statements on the need to renew it, and neither has the Republican leadership of the House or Senate. Unless Congress and the President act soon, Americans will find themselves needlessly vulnerable to terrorist attacks and other gun violence in airlines, airports, schools, and office buildings. The gun industry clearly has the technology to manufacture firearms that cannot be detected by metal detectors and x-ray machines. As early as 1986, Congress's Office of Technology Assessment found that ``technology does exist to manufacture certain firearms which would be completely or almost completely non-metallic,'' and that ``plastic handguns may be available on the commercial market quite soon.'' A 1985 report by the American Firearms Industry emphasized the profitability of plastic guns for the industry: ``The American plastic gun will shortly make its appearance. Plastic is the `common' word, but it's really liquid crystal polymer. . . . [I]n the long run, if a 100% plastic gun works, this would be great for sales. What this does is make everything that has been produced in this century obsolete. That is exactly what our industry desperately needs. This will give us a whole new, and real reason to resell every hunter and shooter in America.'' In 1986, Libyan dictator Muammar Qaddafi tried to purchase more than 100 handguns produced in Austria and made almost entirely of hardened plastic. The technology of gun manufacturers has clearly improved since the 1980's--and the desire of terrorists to attack Americans has soared. We know that terrorists are exploiting the weaknesses and loopholes in U.S. gun laws. In 2000, a member of the Middle East terrorist group Hezbollah was convicted in Detroit on gun charges and conspiracy to ship guns and ammunition to Lebanon. He had bought many of those guns at gun shows in Michigan. In 2001, American soldiers found a terrorist training manual entitled ``How Can I Train Myself for Jihad'' in a house in Afghanistan. It stated: ``In other countries, e.g., some states of USA. . . . it is perfectly legal for members of the public to own certain types of firearms. If you live in such a country, obtain an assault rifle legally . . . learn how to use it properly and go and practice in the areas allowed for such training.'' What could be clearer? We know what's coming. Terrorists are eager to exploit weaknesses in our gun laws, and there is no doubt that Americans will be at much greater risk if Congress fails to renew the Undetectable Firearms Act. Just last week, Admiral James M. Loy of the Transportation Security Administration testified that, according to U.S. intelligence, terrorists are more likely to try to hijack a commercial airliner than attempt to shoot [[Page S13056]] down an aircraft with shoulder-fired missiles. The December 2001 arrest of attempted ``shoe bomber'' Richard Reid showed just how committed terrorists are to smuggling undetectable plastic explosives onto airplanes. Reid was stopped at the last minute by alert passengers and crew, not by any detection machinery. The legalization of undetectable guns will clearly increase the danger to flight crews, passengers and other citizens exponentially. The need for action is urgent. The Terrorist Firearms Detection Act will renew the Act and make it permanent. The danger to security from plastic firearms will not sunset, and the law that bans them shouldn't sunset either. The Terrorist Firearms Detection Act is supported by Americans for Gun Safety, the Brady Campaign to Prevent Gun Violence United with the Million Mom March, the Coalition to Stop Gun Violence, and the Violence Policy Center. The only organization to have opposed the ban on plastic guns in the past is the National Rifle Association, and it's fair to ask, ``Whose side are they on?'' If they insist on another sunset, perhaps we can sunset the NRA instead. The bill we are introducing today is only one of several steps that Congress should take to protect our people from gun violence. Senator Lautenberg's Homeland Security Gun Safety Act will close the loopholes in our gun laws that allow rogue gun dealers to evade the law and sell guns illegally to criminals and terrorists. That's how the D.C. snipers acquired their Bushmaster rifle. Congress should also act to strengthen criminal background checks for gun purchases under the Brady Law, renew the assault weapons ban, and close the ``gun show loophole'' once and for all. Each of these gun- safety measures is needed to protect our people in communities across the country, and I urge my colleagues to support them. ____________________