H.Res. 638

Mr. Speaker, I yield such time as he may consume to the gentleman from Georgia (Mr. Scott) for a brief personal privilege matter.

(By unanimous consent, Mr. Scott of Georgia was allowed to speak out of order.)

Mourning the Passing of Gloria Aaron

Mr. Speaker, I yield myself such time as I may consume.

(Mr. FROST asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I am pleased to join the gentleman from Texas (Mr. Sessions) today in support of H.R. 4275, legislation to make the expanded 10 percent tax bracket permanent. In my district in north Texas and across America, scores of families work hard every day to make ends meet. By passing this bill, we will provide some much-needed tax relief to these hardworking Americans.

But I must admit, Mr. Speaker, I find it very odd that some Members of this House would champion the tax relief bill before us today when they have also at nearly every opportunity voted against other measures that would have provided significant economic benefits to a great many middle-class taxpayers. I am talking about measures like providing additional tax relief by reinstating the State sales tax deduction and ensuring overtime pay for America's police and firefighters.

I think it is important to consider these sorts of measures now, Mr. Speaker, because many of our constituents are suffering from the recent recession and the outsourcing of good American jobs overseas.

Do not get me wrong, Mr. Speaker, we all want to provide tax relief to our constituents. I voted last week in favor of the bill to provide relief from the Alternative Minimum Tax. I voted the week before to permanently eliminate the marriage tax penalty, and I will vote today to make the expanded tax bracket permanent. The bill on the floor today is a good bill and it is the very least we can do to help families in the country, but I think the American people deserve better than our least effort.

Others may be happy to limit our efforts to help American families to this bill, but I am not, Mr. Speaker. We can improve this bill by amending the rule to allow for the consideration of H.R. 720, a bill introduced by the gentleman from Texas (Mr. Brady). His bill will reinstate the sales tax deduction so that citizens of States without income taxes may deduct their sales taxes from their Federal tax bill. This is a very important issue for many Americans, including my constituents in North Texas who do not pay a State income tax but have been plagued by high sales taxes which may rise even higher if some in the Texas legislature have their way.

Our State comptroller has estimated that the average Texas family would save about $300 a year on their Federal taxes under the bill offered by the gentleman from Texas (Mr. Brady).

Last week, I attempted to bring a similar measure up for consideration, but that effort was defeated on a straight party-line vote.

This is a bipartisan issue, Mr. Speaker, and I want to give the entire House an opportunity to vote on a bipartisan bill. H.R. 720 has 78 cosponsors, 47 Republicans and 31 Democrats. I have cosponsored the bill, the gentleman from Texas who is managing today's rule on the other side of the aisle has cosponsored the bill, and dozens of other well-respected Members from both parties have cosponsored the bill. As a matter of fact, Mr. Speaker, the Republican leadership indicated last week that they too support this bill.

So why do we not vote on it? Is this about politics, or is it about tax relief? Last week, Republicans defeated my amendment and said it was about politics. Well, here is a Republican bill that has strong bipartisan support and will provide millions of families with $300 a year in tax relief.

The American people deserve to find out today whether the majority party will put partisan politics aside for just a minute to pass this badly needed tax relief. I bet our constituents just cannot wait to see how their elected Representatives will vote on this issue.

In the coming weeks, I hope we will have more opportunities to help more families. But in the meantime, if Members are serious about helping their constituents, they will not only vote to extend the 10 percent tax bracket permanently, they will also vote today to defeat the previous question and allow us to consider H.R. 720, to reinstate the sales tax deduction. It is a Republican bill with Democratic support. As my colleagues realize, a no vote will be a vote against tax cuts.

Mr. Speaker, at this point I would like to insert several things in the Record. I am inserting a special report from Carole Keeton Rylander, the Texas Comptroller of Public Accounts. In this report she says, ``Restoration of the IRS sales tax deduction should be one of Texas' main priorities in Congress. The current discriminatory treatment of Texas taxpayers is taking $701 million out of Texas pockets and costing our State more than 16,000 jobs.''

I would also at this point, Mr. Speaker, insert in the record a statement by my colleague, the gentleman from Texas (Mr. Brady), that he presented when he introduced this legislation. ``Washington should treat all States equally,'' Mr. Brady says. ``A broad bipartisan group pushes Congress to end bias against sales tax States.''

[Special Report, March 2002]

Restoration of the IRS Sales Tax Deduction Should Be One of Texas'

Main Priorities in Congress

(By Carole Keeton Rylander)

Currently, the citizens of Texas and eight other states

are discriminated against because they cannot take any tax

deduction comparable to the state and local income tax

deductions enjoyed by the citizens of 41 other states and the

District of Columbia. In an attempt to alleviate this

disparity, Comptroller Rylander proposes to restore much of

the federal sales and motor vehicle sales tax deductions that

citizens of Texas were last able to itemize on their federal

income tax returns for the 1986 tax year.

The Comptroller's plan would grant taxpayers in all states

the option of deducting either their state and local sales

and motor vehicle sales taxes or their state and local

individual income taxes on their Form 1040. While such an

option would not fully restore the original deduction, which

allowed deductions for sales as well as income taxes, it

would go a long way to restoring fundamental equity for

taxpayers in those states that no not impose income taxes on

their residents, and at minimal cost to the federal budget.

There is already legislation before Congress that closely

tracks the Comptroller's plan. Last year, Representative

Brian Baird (D-Washington) introduced H.R. 322, and Sen. Fred

Thompson (R-Tennessee) introduced a similar bill, S. 291, in

the Senate. Both bills would grant taxpayers in all states

the option of itemizing a deduction for either their sales

(including motor vehicle sales) taxes or income taxes paid,

but not for both. Both bills would limit the deduction to a

specific amount prescribed in a table (individualized for

each state) providing deductible amounts by family size and

income group. Taxpayers, however, would not have the option

of deducting actual taxes paid, as they had in 1986 and

before. The main difference between the bills is that H.R.

322 refers to state sales taxes, while S. 291 refers to state

and local sales taxes. The Senate version also would allow

the deduction against the Alternative Minimum Tax. H.R. 322

boasts among its 58 co-sponsors 18 Texans; S. 291 is co-

sponsored by both Texas senators.

Texans lost their sales tax deductions in the last-minute

deal-making behind the Tax Reform Act of 1986. Before passage

of the Tax Reform Act of 1986 (TRA86), all individuals were

allowed to take separate income tax deductions for their

payments of state and local sales taxes and motor vehicle

sales taxes. For the sales tax, they were allowed to deduct

either the actual amount paid, or they could use an optional

sales tax table that provided deductible amounts for each

state (based on its rate and base) by income group and family

size. For example, a family of four with an income of $33,000

was allowed to deduct $306 in state sales taxes in Texas, but

$508 in Tennessee; and in both instances, taxpayers were

allowed to include an additional amount for local taxes paid.

TRA86 was designed to simplify the federal income tax by

eliminating many deductions, exemptions and credits while

increasing personal exemptions and standard deductions and

lowering and compressing tax rates. The deduction of state

and local sales taxes was one of the last (and most

contentious) items considered by the Senate, but the final

efforts to restore at least some vestige of the deduction,

led in part by Sen. Phil Gramm, ultimately failed. The

argument put forth by members from the states that retained

their state and local income tax deduction was that the

losses attributable to the repeal of the sales tax

deduction would be more than made up for by the increased

personal exemption, and that the sales tax deduction only

benefited the rich, because lower-income groups are less

likely to itemize.

The Comptroller's plan could be put in place for less than

1 percent of the costs of existing state and local tax

deductions. The March 26, 2001 cost estimate provided by the

Joint Committee on Taxation estimated that H.R. 322 would

decrease federal receipts by $23.1 billion over the 10-year

period 2002-2011. The annual costs were expected to average

$2.0 billion for the first three years, rising incrementally

thereafter. Putting the federal cost in perspective, the 1999

cost for the current deduction for state and local income and

property taxes was $268.9 billion. As such, reinstatement

would produce an increased cost to the federal government of

0.8 percent.

The Comptroller's plan could be put in place with virtually

no increase in complexity. Although the sales tax deductions

were eliminated in part for reasons of tax simplification,

the proposed legislation before Congress would add only one

more line to Schedule A, for those taxpayers electing to

itemize on their Form 1040. Even if actual taxes paid were

allowed to be deducted there would be an addition of only two

lines: one for general sales taxes paid, and one for motor

vehicle sales taxes paid.

Equity and fairness demand that tax discrimination against

Texans be eliminated. Reinstatement of the deduction for

sales taxes would eliminate the fundamental disparity created

by TRA86, when citizens in states with a personal income tax

were permitted to deduct such taxes, but citizens in states

without an income tax had no corresponding deduction. The net

effect of this disparity is that Texans, as well as the

citizens of the eight other states without a general

individual income tax pay a greater percentage of taxes to

the federal government than do citizens living in their

neighboring states with income taxes. In other words, the

federal tax law currently treats the same individual

differently solely on the basis of residence. Providing

individuals in all states the choice to deduct one or the

other of their sales or income taxes would restore equity and

fairness for all U.S. citizens at minimal cost.

The Comptroller's plan would put more money in Texans'

pockets. As with everything else in the IRS Code, the devil

is in the details, and even subtle differences in proposed

legislation can have major revenue implications, making any

revenue estimates of the ultimate legislation difficult.

Assuming that the federal legislation fairly and accurately

portrayed Texans' sales tax and motor vehicle sales tax

payments, restoration of the sales tax deduction could be

expected to save Texans--in the aggregate--on the order of

$568.7 million (if only state sales taxes were exempted) to

$701.3 million (if state and local sales taxes were exempted)

in the 2002 Tax Year. The corresponding average savings per

itemizing Texas household would be $231 and $284.

While the deduction only would go to taxpayers who itemized

their deductions, more Texans at lower income levels would

find it to their benefit to itemize. Right now, only one in

five tax returns filed by Texans itemizes deductions,

compared to almost one in three nationwide. The chief reason

for this is that citizens of 41 states and the District of

Columbia enjoy a deduction that is not available to Texans.

Restoration of the deduction for sales taxes paid would go a

long way towards bringing Texas closer to the national

average. In other words, the availability of the deduction

would benefit not only those who currently itemize, but an

additional number of slightly lower-income households that

would find it to their benefit to itemize.

The Comptroller's plan would create more jobs, economic

growth, and state tax receipts with absolutely no state tax

or spending increase. Keeping as much as $701.3 million in

the hands of Texas taxpayers would provide a significant

boost to the state economy. Assuming that the legislation

passed this year and that the deduction could be taken on

income taxes filed in 2003 for the 2002 Tax Year, the tax

savings could be expected to generate 16,180 new Texas jobs,

$590 million in new Texas investment, and $874 million in

increased Texas Gross State Product in 2003. The increased

economic activity in turn could be expected to boost general

revenue by $66.5 million in the three-year period 2003-05.

Most of this revenue would come from increased sales and

motor vehicle sales tax collections.

The Comptroller's plan promises a win-win situation for all

Texans, even those who do not itemize. To the extent that

keeping more Texas income in Texas, where it belongs, instead

of sending it off to Washington, all Texans would benefit

from the increased employment opportunities and investment.

In fact, it is difficult to find a downside for Texas to the

reinstatement of the sales tax deduction.

The Comptroller's plan would be a straight-up win for the

state, a victory for tax equity among the states, and it

would provide a desirable, welcome boost to restoring

statewide economic and revenue growth.

salient features

Legislation tracking the Comptroller's plan would cost the

federal government somewhere between $2.0 to $2.5 billion per

year--less than 1 percent of the $268.9 billion 1999

deduction for state and local income and property taxes.

Texans would save as much as $701 million, or $284 per

itemizing household on their 2002 taxes.

The estimated tax savings would be expected to generate

16,180 new Texas jobs, $590 million in new Texas investment,

and $874 million in increased Gross State Product in 2003.

The increased economic activity could be expected to boost

2003-04 general revenue-related state tax receipts for the

three-year period 2003-05 by $66.5 million.

Assuming that the federal legislation fairly and accurately

portrayed Texans' sales tax and motor vehicle sales tax

payments, a family of four with an income of $60,000 would be

able to deduct an additional $1,015 to calculate taxable

income, and a single mother of one with a total income of

$35,000 could deduct an additional $641.

The current system discriminates against Texans and the

citizens of other states that have opted to finance their

budgets without personal income taxes. The Comptroller's plan

is necessary to restore fairness and equity in the treatment

of those state taxpayers who currently do not benefit from

the tax deductions enjoyed by the citizens of the other 41

states and the District of Columbia.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, it is interesting, my colleague from Texas talks about the legislation and, well, we will do that in all due time and all due course, in terms of the righting of the wrong that was committed 18 years ago. The sales tax deduction for my State and for six other States, it is not 17, it is 7, was eliminated by this Congress in 1986, 18 years ago.

Only a few bills come out of the Committee on Ways and Means, only a few favored bills, so we have to take the opportunity to present this very important piece of legislation on the floor today and to give the House an opportunity to vote to right this wrong on the question of the deductibility of State sales tax. There are no other opportunities to present this to the House. That is why we are presenting it today. I hope that the House will give us the opportunity to right that wrong.

Mr. Speaker, I yield 5 minutes to the gentleman from Washington (Mr. Baird).

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, we have a good piece of legislation before us today that I intend to support. I think most Members of the House will support it. My only request is that, at the same time, we provide equity and justice to the residents of seven States who were denied that equity and justice in 1986.

Now, I know my colleague is a relatively junior Member and was not here in 1986 when that legislation was voted on, but I was here, and I voted against the legislation that denied the residents of my State the opportunity to deduct their sales tax, when residents of New York and California and other States could deduct their State income tax.

I feel very strongly about this issue, Mr. Speaker. As Members of this House, we can do so much to lend a helping hand to our constituents. Today we have a chance to do something good for millions of American families. We can pass the bill to make the extended 10 percent tax bracket permanent, and then we can also immediately consider the Brady legislation, H.R. 720, to restore the sales tax deduction for citizens of Texas, Florida and other States lacking a State income tax.

Now, as I mentioned earlier, last week I attempted to bring to the floor a similar bill to reinstate the sales tax deduction, but the Republican leadership indicated a preference for the Brady bill. So now we have a chance to consider the legislation that Republicans preferred. It does not matter to me which bill we consider. This is a bipartisan issue, with wide support on both sides of the aisle.

I just want to get it done.

So today, Mr. Speaker, to get it done, I urge a ``no'' vote on the previous question. If the previous question is defeated, I will offer an amendment to the rule that will allow the House to vote on H.R. 720.

Let me be clear, Mr. Speaker. Voting ``no'' on the previous question will not prevent this House from voting on the underlying bill. It will simply allow for the consideration of H.R. 720. A ``yes'' vote, however, will deny the House the chance to even consider the issue of reinstating the sales tax deduction.

The American people deserve to know where their elected representatives stand on the issue of restoring the sales tax deduction. This is not a partisan issue, and this is not a political issue. This is about whether the citizens of Texas and other States should have to pay for the privilege of living there. I hope Members realize it today, and I hope their votes reflect this as well.

I urge a ``no'' vote on the previous question and ask unanimous consent that the text of the amendment be printed in the Congressional Record immediately before the vote.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I object to the vote on the ground that a quorum is not present and make the point of order that a quorum is not present.

Mr. Speaker, I yield myself such time as I may consume.

I stand here in just abject wonder at having 2 hours and 10 minutes to debate this bill over which there is very little controversy, a few dollars here and there; and I was going to ask the gentleman from Louisiana if he might accept a unanimous consent request that we cut the time in half, spend the first hour on this bill and spend the second hour debating whether or not Rumsfeld ordered the torture of prisoners in Iraq, and then we might have some more fun at least in the 2 hours we have got.

Does the gentleman agree?

Mr. Speaker, it is kind of sad that this bill was not worked out in committee because the differences, which I will describe shortly, are simple and there could have been a compromise, it appears to me, and certainly we have a substitute which will come up and we, I think, have to discuss both.

Let us start out by suggesting that I would like to agree with the distinguished gentleman from Louisiana that it is probably a good idea to not encourage people to spend foolishly, to buy two extra pair of eyeglasses or go out for an extra shot of Botox or something at the end of the year just to use up the money in their flexible spending account.

The problem, and where we would disagree, is that the gentleman's bill is not paid for, and this does push us further into debt; and our bill and the differences, and we have some, is paid for. If the gentleman wanted to say let us compromise right now and pay for half of it, we could get this done in 15 minutes. I am easy. But that is basically our difference. The Republican bill creates more of a deficit, and it does discourage people from spending foolishly at the end of the year and it costs, what, 8 billion bucks over 10.

Therein is the major difference. I would like to discuss one minor difference which is complex and which our substitute drops. The gentleman from Louisiana, the Republican bill, allows members of a flexible spending account to transfer money into a health savings account. The only problem with that is that, insofar as the regulations appear now, one cannot have a flexible spending account and a health savings account at the same time, so that to transfer the money from the flexible spending account into the health savings account, they have to drop their flexible spending account, and then the next year they would not have 500 bucks to transfer.

I mean, it is a way to encourage, or perhaps force, people into dropping a flexible spending account and move into a health savings account. I am not sure that was his intention, but that is the reality. And there is almost no one who would qualify to transfer money, the $500, say, from the flexible spending account into a health savings account. As a matter of fact, it is scored at 20 million bucks over 10 years; so if it is $20 at maybe 1 million people who would use it, and if our purpose is to encourage health savings accounts, I would suggest to the gentleman that that is a separate debate and perhaps not really pertinent to the question of whether we should allow people this carryover and repeal the use-it-or-lose-it provision. Had we had a chance to mark this up in committee and work it out in some detail, I think we could have worked out a system, perhaps brought two bills to the floor.

The bill, I know, and I hate to be critical, but I know it is introduced as a centerpiece of the week for the uninsured, and I am afraid that this bill does nothing for the uninsured. We cannot have a flexible spending account and not have access to insurance. So we really are not dealing with the uninsured here. People who have flexible spending accounts, as a matter of fact, probably have very generous and good health insurance coverage. So it is somewhat disingenuous, and that is the harshest thing I can think of, to suggest that this is going to have any effect or impact in Cover the Uninsured Week.

So if I could summarize just for a moment, there is a part of the bill which would help people and prevent them from frivolous spending from their flexible spending accounts. We concur in that, and our substitute includes that. Our major difference is, and we could have a vote, is it worth increasing the deficit by $8.5 billion. We have some simple ways to pay for that. For instance, not letting corporations reincorporate offshore and avoid Federal income tax on their corporate income, a theory that has some bipartisan support.

There are some egregious loopholes that were dreamed up mostly by the Enron Corporation, which we also closed. I do not think anybody would suggest that those loopholes ought to continue. So in a minimal way, we changed the Tax Code to make this, and it is a principle, we ought to pay for things that we are providing, and that is it. We would leave the health savings account portion out. We would allow people to transfer the $500 and carry it forward so they would not have a use-it- or-lose-it, and we would pay for it. Other than that I do not know what we could find to disagree about for the next 2 hours, but in my inimitable way I will be just as disagreeable as the gentleman from Louisiana would like me to be.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, will the gentleman yield?

Mr. Speaker, if I were to stipulate to the gentleman from Louisiana that we keep the HSA portion, would the gentleman agree to pay for it or some of it here, and we will have a compromise right now?

Mr. Speaker, I thank the gentleman.

Mr. Speaker, I am pleased to yield 6 minutes to the distinguished gentleman from California (Mr. Becerra).

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I would like to inquire of the gentleman from Louisiana, it is my understanding that you could use a flexible savings account to, for example, pay for abortion if your employer's health care plan did not provide that benefit. Is that not true?

I yield to the gentleman from Louisiana.

Mr. Speaker, reclaiming my time, there is nothing in this bill that would prohibit a woman from using the benefits of the flexible savings account for an abortion; is that correct?

Mr. Speaker, I yield 3 minutes to the gentlewoman from Texas (Ms. Jackson-Lee).

(Ms. JACKSON-LEE of Texas asked and was given permission to revise and extend her remarks.)

Mr. Speaker, if the gentleman will yield, I will then reserve my time and precede his closing and try and warm up the audience for what I know will be eloquent remarks.

Mr. Speaker, I yield 6 minutes to the gentleman from Washington (Mr. McDERMOTT), as we are blessed with his late arrival.

(Mr. McDERMOTT asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield myself such time as I may consume. I thank the gentleman for his comments and I would close just briefly.

I believe that the Enron employee would not have insurance. He would have some money in that health savings account, but when Enron folded up, the insurance went along with Enron. He could go into the private market and try and buy something.

I would just like to repeat, if I may, that this really does nothing to cover the uninsured. So, if this is Cover the Uninsured Week, we are burning up a couple of valuable hours that we could be discussing how to cover the uninsured with this bill.

The principal disagreement that we had with the bill is that it is not paid for, and we will offer, subsequently to closing this debate, a substitute where we pay for it in very patriotic and simple ways. It is not a lot of money but it is a principle that we Democrats have long adhered to, and that is, that we ought to pay for the wonderful things that are available to us in this country and not put the burden on our children and grandchildren.

So, having said that, and without fear of contradiction that I probably have more children and grandchildren than the combined audience here, I can qualify, if the Speaker will allow me,

as an expert in that area. And maybe I am a little touchy about it, but will conclude our debate on this and I appreciate the gentleman from Louisiana. Next time I hope we can resolve these differences in our committee and come to the floor, as we did in the good old days, with a unified approach to Medicare and health insurance problems.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I offer an amendment in the nature of a substitute.

I am.

Mr. Speaker, I yield myself such time as I may consume.

Our Democratic substitute addresses a real issue of concern with respect to flexible spending accounts in the use-it-or-lose-it rule.

We agree with the author of this legislation that it is unwise to create an incentive for people to spend foolishly or frivolously for a benefit that they might lose, and we have the Washington Business Group and 50 major corporate members are clear on the issue. They want the changes and they want the money carried over into FSAs. The position is shared by their employees. There is some question, and nobody really has raised it previously, as to putting this money into health savings accounts, but because that is such a minor issue it could be overlooked.

The real question here is whether we should pay for this. And it will be expensive. It is $8 billion. That is money that could be used in many programs, education programs, environmental programs, health programs, and it is a principle to which we are dedicated, and that is that we would like to expand health care in this country, but we have never offered a plan that we

will not pay for. And I find it sometimes difficult when my opponents across the aisle will not even give us a plan that costs nothing.

My Republican friends are opposed to expanding COBRA benefits. They are very expensive for people, but some 40 million people have used them since we wrote that bill on a bipartisan basis to expand COBRA benefits until a person gets another job or until they mature into Medicare. Costs zip, nothing, nada. It costs the employer nothing. Why do we object to expanding COBRA benefits? Just because it is a government plan and obviously people on the other side of the aisle do not like the government helping people unless they are very rich, of course.

So here we have just another example of not a bad piece of legislation. It could use some improvement, but it is a freebie and will predominantly benefit people in good jobs, with good health insurance and expand another tax loophole.

It is a modest one, but it is a principle. Left unchecked, we would soon have almost no tax revenue in this country at all, a position which the Club For Growth would applaud, but I am sure that those of us who are on the Federal salary or those people who are defending us now in Iraq would object to.

So I hope that we could reverse this disastrous rush to the bottom of debt and begin to be responsible in how we legislate by paying for these provisions. We will hear more later from my colleagues on the really very useful ways that it will help our economy if, in fact, we did pay for this bill under the provisions of our Democratic substitute.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume, before I recognize the distinguished gentleman from Massachusetts, to remind my good friend from Louisiana that the tax provisions in our substitute were recommended by the bipartisan, bicameral Joint Committee on Taxation; and these provisions have already passed on a bipartisan basis in the other body.

Mr. Speaker, I yield 4 minutes to the distinguished gentleman from Massachusetts (Mr. Neal) 2 minutes for economic logic and 2 minutes for righteous indignation, for a total of 4 minutes.

(Mr. NEAL of Massachusetts asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield 5 minutes to the gentleman from Texas (Mr. Doggett).

Mr. Speaker, I yield 3 minutes to the gentleman from Michigan (Mr. Levin).

(Mr. LEVIN asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I would like to suggest to the gentleman from Wisconsin (Mr. Ryan) that we do not on this side have any objection to the rollover. We think it is a good idea, and all we would suggest is that we have to pay for it. That is the only difference.

I yield to the gentleman from Wisconsin.

Actually, I am opposed to it in general, but I offer to the gentleman from Louisiana (Mr. McCrery) that we would accept that if he would pay for half of the bill. That is compromise.

It only denies the HSA, which they think is going to be a small number. There is still time to negotiate.

Mr. Speaker, I yield 4 minutes to the gentlewoman from Connecticut (Ms. DeLauro).

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I would like to close the debate on our side for our substitute. My belief is these two tax provisions, modest as they are, regardless of the underlying bill, are good tax policy and ought to be considered if for no other reason than that they correct some serious inequities in our Tax Code which have been described by previous speakers.

We are very close to a compromise with our friends on the other side of the aisle. Our substitute would eliminate the health savings account issue. But as I said, it is possible to reinstate that in conference, and if the gentleman would like to support our substitute, we could do the patriotic thing, we could provide good tax policy, we could pay for a very good idea, and we could walk out, arm in arm, saying we have helped a few people, we have paid for it, and we have brought patriotism and corporate responsibility to some of our recalcitrant corporate friends who are not doing their share.

I would urge that this substitute does no harm to the underlying philosophy of the bill of the gentleman from Louisiana (Mr. McCrery). It does add to the coffers of our Nation when it is so desperately needed. This money is contributed by those corporations whose actions are I believe indefensible, and particularly at this time of grave national emergency.

I would not want to suggest that anybody who votes against our substitute is unpatriotic, but I would suggest that it certainly is helpful for our troops and the American economy to support the Rangel substitute.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I demand a recorded vote.

Mr. Speaker, I offer a motion to recommit.

I am, Mr. Speaker, in its present form.

Mr. Speaker, during the past several hours we have had a good debate on this bill, and I think we have agreed to some of the basic principles that the flexible savings accounts should allow a reduction of the use-it-or-lose-it rule. We had attempted to offer a compromise to get our Republican colleagues to just pay for half of the bill, which was turned down. And the bill has, indeed, many supporters.

But what we have seen during the course of this current administration is indirectly a complete raid on the Social Security and Medicare Trust

Funds. Basically, the Republicans have spent all of the surplus in Social Security and Medicare, and that, in my opinion, is indefensible. Whether we agree about flexible savings accounts or medical savings accounts is not the issue. This bill directly, specifically, transfers out of the trust funds $3.4 billion. The Republicans are raiding the Social Security and Medicare Trust Funds.

Now, that may not sound like a lot to my colleagues across the aisle, but to the people who depend on Social Security and Medicare, the idea that they are stealing money out of the Medicare and Social Security Trust Funds blatantly, I think they will find offensive.

This reduction in receipts should not be permitted to occur. It will not harm this bill. The bill will go forward exactly as the distinguished gentleman from Louisiana has outlined it and has prevailed. The only difference is our motion to recommit asks us all to stand up and take the pledge to protect Social Security and Medicare and its trust funds for all of those who depend on their benefits in this country.

This bill takes care of well-employed, well-insured individuals. This does not help any uninsured people at all. It gives an additional benefit to people with first-class medical insurance. Why then should we spoil an otherwise decent bill by taking the first step to destroy Medicare and Social Security for people who are unable to get health insurance? That is wrong.

We have all committed to protect Social Security and Medicare. You cannot oppose this motion to recommit and say you are protecting it. You are stealing almost $3.5 billion over the next 10 years out of these trust funds.

To support our motion to recommit would merely say find it someplace else; take it out of general revenues, take it out of trade, take it out of anything, but do not take it out of the hard-earned benefits that our senior citizens are entitled to. This could be the first step toward destroying the financial viability of Medicare and Social Security.

If you vote for our motion to recommit, you are standing up and suggesting that you will protect the trust funds that underlie Social Security and Medicare. If you vote against it, you are saying, ``We don't care. Take the seniors' money. What the heck. We can spend it. We have spent everybody else's money. We have spent our grandkids' money.''

I ask you, out of compassion, those of us who are seniors might not be able to get a job anyplace else if I am not reelected. My Social Security, please do not steal it. Do not make my little children go out and get an extra paper route to take care of me in my dotage. We need this. Our parents need it. We must protect our children.

So, to repeat, the bill will go through exactly as the Republicans have crafted it; but if you vote for our motion to recommit, you get the added benefit of saying to every senior in your district, I stood up and protected your Social Security and Medicare benefits by protecting the trust funds to which this money would go.

Mr. Speaker, I urge support for the motion to recommit.

Mr. Speaker, I yield 30 seconds to the gentleman from Michigan (Mr. Conyers), the ranking member of the Committee on the Judiciary.

Mr. Speaker, I yield 1 minute to the gentleman from Florida (Mr. Wexler).

Mr. Speaker, I yield myself 6 minutes.

Mr. Speaker, this bill does nothing to improve the system. It does nothing to deal with the insurance rates and the increases in premiums, but it does deny victims compensation when they are victims of malpractice. I think it may be helpful to go a little section by section to see what is actually in the bill to see how it actually does what some of the people are talking about.

Section 3, for example, is entitled ``Encouraging Speedy Resolution of Claims.'' Mr. Speaker, injured parties do not need encouragement to get a speedy resolution of the claim. This section only invalidates bona fide claims that are filed after a set deadline. It also creates a confusing matrix because some State deadlines are preempted. Others are not. And so you have that confusing matrix of deadlines and may even miss the deadline by mistake.

Section 4 is called ``Compensating Patient Injury.'' Actually, that is the section which limits compensation to innocent victims. It also has what is called the ``fair share rule.'' I think most States, but at least Virginia and many States, allow a victim to collect all of the damages from one defendant. That defendant can then seek contribution from others involved. In practice, that contribution is worked out in advance by who pays for what insurance.

This so-called fair share requires the victim not only to prove a separate case against each and every defendant who may be involved but it also requires the plaintiff to decide and prove what percentage each one owes. Often the plaintiff does not know what happened. All they know is they are a victim of malpractice. This provision will require the plaintiff to have a separate case and pay for the expenses of separate cases against each and every person. Otherwise they may be afflicted with the ``empty chair defense'' where everybody in the courtroom starts pointing to an empty chair and says somebody else had 10 percent or 20 percent.

Section 5 is ``Maximizing Patient Recovery.'' Actually, that is a provision that limits attorneys' fees making it likely that a plaintiff will not even be able to hire a lawyer. You do not hear any victims groups clamoring for limitation on attorneys' fees. The defendants are not affected by the plaintiff attorneys' fees. They do not pay the plaintiff attorneys' fees. If the award is $100,000 and the plaintiff's attorney charges 50 percent, the defendant pays $100,000. If the lawyer charges 25 percent, still $100,000. If the lawyer does not charge anything at all, just the same, $100,000. The only way that this will help malpractice premiums is if the plaintiff cannot bring the bona fide case at all, cannot bring the case because they cannot hire a lawyer with the fees. That is not fair. It is even more likely when you have this fair share thing where the lawyer has to have five and six cases in the same case.

There is another provision called ``Additional Health Benefits.'' That is a provision that says if the victim has health insurance, the benefit of that health insurance goes to the one who committed the malpractice. In Virginia and many other States, if you have health insurance, you benefit. In other States, the health insurance company can get its money back after the case is settled because the malpractice recovery will pay the health expenses. Presumably under that case, the premiums will be lower. But in this bill, the benefit goes to the one who committed the malpractice. This bill is so bizarre that if you are working for a self-insured employer who is obligated to pay the health expenses of an employee and that employee is a victim of malpractice and runs up a $50,000 hospital bill, the business has to pay that $50,000 bill even though the one committing the malpractice is fully insured and could have paid. I cannot

wait for some small businesses to come to us and ask why they had to pay the bill as a result of malpractice.

Mr. Speaker, there is another provision under ``Punitive Damages.'' This bill provides that if a jury finds by the preponderance of the evidence that the doctor acted with malicious intent to intentionally injure a patient, not just recklessly negligent, acted with malicious intent to injure, that is not enough under the bill, because the evidence does not have to be just by the preponderance of the evidence; it has to be by clear and convincing evidence.

Mr. Speaker, this bill will not help injured victims of malpractice, and it is unlikely to reduce premiums. A chart of States in order of the costs of malpractice premiums shows some States at the top with caps, some with caps at the bottom, some with caps in the middle. There is no pattern to the chart. They are all over the place. The caps apparently did not make any difference at all.

We have heard a lot about the doctor shortage. This is not limited to doctors. This tort reform bill affects the health care provider, a health care organization, an HMO, manufacturer, distributor, supplier, marketer, promoter, a seller of a medical product regardless of the theory of liability on which the claim is based. This does not help victims. It probably will not even reduce premiums.

Mr. Speaker, I would hope that we would defeat the bill so that it will not be enacted. That has been the judgment of the United States Congress for the last 14 months. I hope it is still the judgment of the United States Congress.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 1 minute to the gentlewoman from Colorado (Ms. DeGette).

Mr. Speaker, I yield myself such time as I may consume.

I will enter into the Record an article from the Morning Call newspaper in Pennsylvania, and I will just read the first sentence. April 23, 2004, ``The chairman of the Pennsylvania Medical Society acknowledged Thursday to State lawmakers that the doctors group lacks statistical evidence to support its 3-year claim that doctors are leaving the State in large numbers.''

The whole article will be introduced.

I have the GAO study that was cited June, 2003; and let me just read a couple of points out of it:

``Multiple factors have contributed to the recent increases in medical malpractice premiums in seven States we analyzed. First, since 1998 insurers' losses on medical malpractice claims have increased rapidly in some States,'' and they ``found that the increased losses appeared to be the greatest contributor to increased premium rates, but a lack of comprehensive data at the national and State levels on insurers' medical malpractice claims and the associated losses prevented us from fully analyzing the composition and causes of those losses.

``Second, from 1998 through 2001, medical malpractice insurers experienced decreases in their investment income as interest rates fell on the bonds that generally make up around 80 percent of these insurers' investment portfolios.

`` . . . a decrease in investment income meant that income from insurance premiums had to cover a larger share of insurers' costs. Third, during the 1990s, insurers competed vigorously for medical malpractice business, and several factors, including high investment returns, permitted them to offer prices that in hindsight, for some insurers, did not completely cover their ultimate losses on that business. As a result of this, some companies became insolvent or voluntarily left the market, reducing the downward competitive pressure on premium rates that had existed through the 1990s.''

I say that to say that there are a number of factors that have caused the premiums to go up that have nothing to do with the medical malpractice situation or the laws in medical malpractice and that this bill may or may not have anything to do with future premiums.

[From the Morning Call, April 23, 2004]

Doctors Can't Prove Thinning Ranks

(By John M.R. Bull)

Harrisburg.--The chairman of the Pennsylvania Medical

Society acknowledged Thursday to state lawmakers that the

doctors group lacks statistical evidence to support its

three-year claim that doctors are leaving the state in large

numbers.

``Some data sources show an 800-doctor gain,'' internist

Daniel Glunk of Williamsport testified before the House

Insurance Committee. ``The problem is no one has definitive

numbers . . . and that there is conflicting data.''

That number includes 1,000 medical residents. If those

aren't counted, he said, there would be a net loss of 200

doctors out of 35,500 since 2002.

``How can the medical society, if you can't agree on the

numbers, continue to tout that doctors are leaving'' said

Rep. Thomas Tangretti, D-Westmoreland, his voice rising in

apparent anger. ``You've run ads saying will the last doctor

please turn off the X-ray machine.''

``You've been frightening people, particularly senior

citizens, and now we find it was all probably wrong-headed

and disingenuous,'' Tangretti said, getting louder. ``Before

you continue to frighten people about access to health care,

you better get your numbers right. It's an outrage.''

Other lawmakers voiced irritation at his testimony,

delivered four days after The Morning Call published new and

previously undisclosed figures--some of them from the medical

society itself--that make clear doctors are not leaving in

large numbers.

For three years, the doctors lobby has insisted that

doctors, particularly specialists who perform high-risk

procedures, are leaving the state in droves, putting patient

care in jeopardy.

Among other tactics, the medical society has promoted a

list of 1,700 ``disappearing doctors'' as proof there are

fewer physicians in Pennsylvania.

The Morning Call revealed Sunday that new state Insurance

Department numbers show doctors have not left the state in

waves. There were 35,474 doctors in 2002, as determined by

the number who paid their state-mandated supplemental

insurance. Now the figure is at least 34,997.

The newest number includes doctors who have applied to the

Insurance Department for a piece of $230 million in state tax

dollars recently appropriated to offset their rising

malpractice premiums, along with a separate list of doctors

who had primary insurance coverage at the end of last year

but who haven't yet applied for state money.

That total doesn't include doctors who might have moved to

Pennsylvania in the last year, might not be in Insurance

Department records yet, and who might not know the state has

money set aside for them.

In one of several criticisms of The Morning Call's work,

the medical society has contended it might be misleading to

compare 2002 figures to a list of individual doctors who

recently applied for state money and others known to have

malpractice insurance at the end of last year. But society

officials have not publicly explained why that could be the

case.

The new Insurance Department figures show no appreciable

reduction in the number of high-risk specialists, a maximum

reduction of 56 out of 4,700 since 2002. The medical society

has admitted it has separate statistics that show a reduction

of only 16 specialists--defined as neurosurgeons, general

surgeons, orthopedic surgeons and ob-gyns--during that time

frame.

``This a matter of credibility,'' Rep. Nick Micozzie, R-

Delaware, chairman of the House Insurance Committee, said

after the hearing. ``We've been hearing for three years now

that doctors are leaving in large numbers and there is a

shortage.''

``I go into my doctor's office and there's a sign that says

``Call Nick Micozzie to Save Our Doctors,'' he said. ``Well,

saving our doctors is a different issue than claiming doctors

are leaving in large numbers.''

In reference to the three-year campaign, Glunk told the

committee that anecdotal evidence indicates there aren't

enough of some kind of specialists in some parts of the

state, and that not enough young doctors are choosing to move

to Pennsylvania.

For three years, the medical society and its associated

group, Politically Active Physicians Association, have waged

an intensive public relations and lobbying campaign to

convince legislators and their constituents that doctors are

fleeing the state en masse.

The effort was triggered by medical malpractice premiums

that started soaring in 2001 and continue to climb. Rather

than pay prices that doubled seemingly overnight, some

doctors did indeed depart, others altered their practices to

avoid high-risk procedures.

As a result, lawmakers have enacted a series of court

reforms sought by doctors as a way to drive down the rising

premiums. A new cigarette tax raises roughly $230 million a

year to help doctors afford malpractice premiums.

Applications for that money are being processed now.

Doctors continue to demand a cap on jury awards on pain and

suffering damages in malpractice lawsuits and have threatened

to leave the state if they don't get them.

On Thursday, Glunk told the panel of lawmakers that the

disappearing doctors list is not actually a list of doctors

who disappeared. It is more of a list of doctors who might

have been impacted by rising malpractice rates and who might

have retired, moved, or curtailed their practices as a

result, he explained.

The list makes no mention of doctors who have relocated to

Pennsylvania since 2002, lawmakers noted.

``Naturally people leave their profession. You don't count

doctors coming in,'' said Rep. Tony DeLuca, D-Pittsburgh told

Glunk. ``If you don't have accurate statistics on the number

of doctors, how can we tell? How can we make policy like

that?''

Lawmakers from both parties say the list--created and

maintained by Donna Rovito, the wife of an Allentown

physician--has been used extensively as a lobbying tool to

support doctor claims.

Democratic House leaders Thursday called for a moratorium

on any more medical malpractice reforms until lawmakers

ascertain

whether doctors are leaving the sate in large numbers, and

whether the medical society deliberately misled lawmakers.

``The data they repeatedly cite, and which served as the

basis for legislative action in the last two years, appears

to be seriously inaccurate and part of a deceptive

campaign,'' said Rep. Mike Veon, D-Beaver, the House Minority

Whip. ``We want the real numbers and there should be no

further action until the deficiencies of the data are

corrected and we know the truth.''

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself 30 seconds.

During the debate, we have talked about how much debate is going on. I just point out that this debate is on a closed rule so that we cannot offer amendments to the bill. We have to take it or leave it. There are a lot of improvements that could be made if we have a full and open debate. That is not happening today because the majority passed a closed rule prohibiting any amendments to the bill.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield the balance of my time to the gentlewoman from Texas (Ms. Jackson-Lee).

Mr. Speaker, pursuant to House Resolution 638, I call up the bill (H.R. 4279) to amend the Internal Revenue Code of 1986 to provide for the disposition of unused health benefits in cafeteria plans and flexible spending arrangements, and ask for its immediate consideration.

Mr. Speaker, I yield myself such time as I may consume.

I rise in support of H.R. 4279, a bill that would update flexible spending arrangements, known as FSAs, to allow up to $500 of unused health benefits to be carried forward to next year's FSA or transferred to a health savings account. Flexible spending arrangements allow employees to set aside money in an employer-established benefit plan that can be used on a tax-free basis to meet their out-of-pocket health care expenses during the year. However, under current law, any money remaining in the FSA at the end of the year must be returned to the employer.

Nearly 37 million private sector employees have access to an FSA. However, only 18 percent of eligible employees take advantage of the pretax health care spending provided by flexible spending arrangements. Many employees cite the fear of forfeiting unused funds as the primary reason why they elect not to participate in an FSA. Those employees who do participate in an FSA often underfund their account rather than risk losing the funds at the end of the year.

Let me expound on that for just a minute because what happens in most flexible spending arrangements is that the employee chooses to take part of his monthly income, set it aside into one of these flexible spending arrangements, and that income that he removes from his paycheck is basically tax-free income, and that is a good thing. The employee likes that. However, it is still his income. And if he is afraid that he will lose some of that income at the end of the year because he has not used it for the specified purpose in the account, then of course that employee is going to be very reluctant to set aside that money.

This use-it-or-lose-it rule does more, though, than discourage widespread participation. It can also lead to perverse incentives such as encouraging people to spend money on health care products and services that they do not necessarily need. In other words, at the end of the year, if there is money left in the account, the employee's incentive is to go out and get an extra pair of sunglasses or whatever it is and spend that money, and that in turn drives up demand, drives up the price of health care for everybody.

H.R. 4279 provides greater flexibility and consumer choice. The bill would allow up to $500 of unused funds at the end of the year to be carried forward in that flexible spending arrangement for use in the next year, or that employee could begin a new HSA, a health savings account, and put up to $500 into that health savings account.

I believe this bill will encourage greater participation in flexible spending arrangements and, to a lesser extent, participation in health savings account benefit plans because people will not be afraid of losing their hard-earned money. The Joint Committee on Taxation estimates that approximately 76 percent of current FSA participants will take advantage of the rollover option each year.

Through this legislation, we can expand access to health care for millions of Americans by making it easier for them to save for their health care costs. This bill would also reduce end-of-the-year excess spending and overuse of health care services, allowing FSA participants to benefit from the prudent use of their health care resources.

Mr. Speaker, I should point out that a nearly identical FSA rollover option was approved by the Committee on Ways and Means as part of H.R. 2351 on June 19, 2003. The provision passed this House last year as part of the Medicare Modernization Act.

Reducing health costs and increasing access to health care are worthy goals that every Member of Congress should support. H.R. 4279 takes an important step in that direction; so I encourage my colleagues to support this legislation.

Mr. Speaker, I reserve the balance of my time.

I object, Mr. Speaker.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I thank the gentleman for his complimentary remarks about expanding, making more versatile the flexible spending arrangements. And I would not disagree with him on his comments about HSAs to the extent that I would agree that this legislation is not designed to encourage HSAs. That is not the intent of this legislation, at least not my intent as the author. My intent is, though, to make it convenient for employees who just may be in a firm that decides to create HSAs, give them kind of a head start on funding their HSA. I agree with the gentleman there will not be many instances of that in the near future; but in those few instances that there may be and an employee has $500 left over in his account, I see no reason why he should not be able to take advantage of using that money, transferring it to the employer's new choice of health insurance for his employees, an HSA.

I yield to the gentleman from California.

Mr. Speaker, I believe we will state our objections to the substitute during the appropriate debate time on the substitute. So I would regretfully reject the gentleman's kind offer at this time.

Mr. Speaker, I yield 3 minutes to the gentleman from California (Mr. Royce).

Mr. Speaker, I yield 4 minutes to the gentleman from Minnesota (Mr. Ramstad), a distinguished member of the Committee on Ways and Means.

Mr. Speaker, will the gentleman yield?

Mr. Speaker, a flexible spending account, health flexible spending accounts can be used for any health care expenses incurred by the employee.

Yes, sir.

Mr. Speaker, I would inform the gentleman from California that I now have two speakers that request time on my side, in addition to my closing. So I just wanted to let him know.

Mr. Speaker, I yield 3 minutes to the gentlewoman from Pennsylvania (Ms. Hart).

Mr. Speaker, I yield 3 minutes to the distinguished gentleman from Iowa (Mr. King).

Mr. Speaker, I yield myself such time as I may consume.

I want to commend the last speaker, the gentleman from Washington, for his efforts year after year in trying to solve the problems in our health care system. I disagree with him occasionally on how we should do that, but I think he is well-intentioned and certainly deserves credit for his efforts.

However, his comments about the Enron employees, I cannot help but stand up and point out to him that had those employees had HSAs, instead of Enron providing first-dollar coverage insurance, they would still have insurance today. They would have their HSAs because they are fully portable and an employee can take an HSA from job to job. If he loses his job, he can use what is in his HSA to pay premiums on a new health insurance policy. So I just wanted to point out to the gentleman that those employees would have been a lot better off if they had HSAs rather than the Enron-provided health insurance.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

The bill before us today is a very simple bill. It will provide employees, whose employers give them the opportunity to participate in flexible spending arrangements, more flexibility to utilize those arrangements and, indeed, encourage employees to do just that, and if they have money left in their account at the end of the year, under the bill, up to $500 can be rolled over into their next year's flexible spending arrangements or rolled into a new health savings account, thereby avoiding the discouraging factor in the law today of use it or lose it.

Right now, today, if there is money left over at the end of the year, the money goes back to the employer. That is why employees do not want to participate because they do not want to lose part of their income, and that is understandable. It is kind of silly that Federal law would dictate that.

We are trying to correct that today. It is very simple. I urge the Members to vote in favor of this good bill today.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I rise to claim the time in opposition, and I yield myself such time as I may consume.

Before I get into the specifics of objections to the ``pay fors'' on the Democratic substitute, I would point out to the gentleman from California that it was under the leadership of this committee and on a bipartisan basis 2 years ago to, in fact, expand COBRA in the Trade Adjustment Assistance Act whereby we, the government, now will pay up to I believe 65 percent of the premium for someone's COBRA benefits when they are unemployed due to trade adjustments. So, in fact, I agree with the gentleman that we should indeed encourage people to continue their health insurance when they become unemployed, and we have endeavored to do that with taxpayer dollars.

With respect to the bill at hand and the substitute offered by the gentleman from California, it is true that most of the cost of the bill is paid for; not all the cost of the bill, but most of the cost of the bill is paid for by the minority's substitute, but the manner they choose to pay for this health care benefit I think is quite objectionable.

About half, in fact, maybe a little over half, of the revenue that would be produced by the Democratic substitute is produced by a retroactive application of a change in the law which would affect companies that made a determination which was legal 30 or 40 years ago. And I do not know of anyone who thinks that that is a fair result, to impose suddenly a penalty on a company that in good faith operated under a law 30 or 40 years ago and have been operating that way ever since. So I would hope that this body would not suddenly choose to use a punitive, retroactive change in the law to penalize companies operating in good faith for decades under the United States Tax Code.

So that is the most objectionable part of their ``pay for.'' The other parts simply amount to a tax increase on business in this country. Those changes, in fact, could result, and it has been estimated by Treasury and testified to by Treasury officials, that these changes in the Democratic substitute would actually encourage foreign takeover of United States companies, and I do not think that is the result we want in this body for the American people or for American companies.

So, Mr. Speaker, while I may have some sympathy for the minority's desire to pay for legislation, I think the manner they have chosen to pay for this particular bill is ill-advised, and I would hope that this House would reject the substitute and pass the underlying bill.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 3 minutes to the distinguished gentleman from Pennsylvania (Mr. English), a member of the Committee on Ways and Means.

Mr. Speaker, I yield 3 minutes to the gentleman from Wisconsin (Mr. Ryan), a distinguished member of the Committee on Ways and Means.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, while I would relish the opportunity to walk out of the Chamber arm in arm with the gentleman from California (Mr. Stark) in complete agreement on a compromise on this legislation, I am afraid that the ill-advised tax changes contained in the gentleman's substitute would likely result in increased takeover of American corporations by foreign companies, so I will not be able to do that; but perhaps another day.

This substitute admits that the underlying policy in the bill under consideration is appropriate, that is allowing employees to roll over up to $500 at the end of the year into next year's flexible spending arrangement. They do object to rolling money over into a health savings account, but the other part of the substitute which makes dramatic changes in tax policy in this country I think are indeed ill-advised, and I would urge this House to reject that.

I just want to go over a couple of things that have been mentioned by previous speakers, one of whom said we are now experiencing the largest deficit in the history of the country. Of course, he is speaking in nominal terms, not in real terms. In fact, the appropriate measurement of a deficit is against the national income; what percent of our national income is the deficit. And the deficit we are running now is not even close to the largest deficit in history measured in those terms.

He also said the economy is in the ditch, or something like that. No, the economy was in the ditch in 2000, but we have succeeded in dragging the economy out of the ditch thanks to the three tax cuts that another gentleman mentioned earlier. We now have a very vibrant, growing economy. We now see jobs being created at a remarkable clip for the last 2 months, so I would disagree with the gentleman's characterization of the economy being in the ditch. In fact, it is very much alive, and we hope it will continue that way.

The subject of American companies moving offshore is indeed a delicate one and one that we would like to address. In fact, we do address that unfortunate phenomenon in a bill that passed the Committee on Ways and Means back in 2002 and a different version was just passed yesterday by the Senate, and we will have another opportunity to address it here in the House. Since we introduced that bill

and passed it through the Committee on Ways and Means in 2002, there has not been a single company that has gone offshore. So the remedy that we prescribed for this deplorable action by some American companies we believe to be the correct remedy, the good tax policy remedy, and it is already working even though we have not even passed it. We just passed it through the Committee on Ways and Means. I would urge this House to reject the ill-advised course of action in the substitute and instead look forward to voting on a much more progressive treatment of that problem which will not encourage foreign takeover of American companies.

Mr. Speaker, while again I commend the minority on supporting the major provision of the underlying bill, I am afraid we must ask for a rejection of their substitute.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, pursuant to House Resolution 638, I call up the bill (H.R. 4280) to improve patient access to health care services and provide improved medical care by reducing the excessive burden the liability system places on the health care delivery system, and ask for its immediate consideration.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and to include extraneous material on H.R. 4280, currently under consideration.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, the national medical insurance crisis, driven by unlimited lawsuits, is devastating our Nation's health care system to the detriment of patients everywhere. Medical professional liability insurance rates have soared, causing major insurers to either drop coverage or raise premiums to unaffordable levels. Doctors are being forced to abandon patients and practices or to retire early, particularly in high-risk specialties, such as emergency medicine, brain surgery, and obstetrics and gynecology. Women are particularly hard hit, as are low-income and rural neighborhoods.

H.R. 4280, the HEALTH Act, is modeled after California's highly successful health care litigation reforms enacted in 1975 and known under the acronym MICRA. California's reforms, which are included in the HEALTH Act, include reasonable limits on unquantifiable damages, limits on the contingency fees lawyers can charge, and authorization for defendants to introduce evidence to prevent double recoveries. The HEALTH Act also includes provisions creating a fair share rule, by which damages are allocated fairly in direct proportion to fault; reasonable guidelines on the award of punitive damages; and a safe harbor from punitive damages for products that meet applicable FDA safety requirements.

Information provided by the National Association of Insurance Commissioners shows that since 1975, premiums paid outside of California increased at five times the rate they increased in California. The Congressional Budget Office has concluded ``under the HEALTH Act, premiums for medical malpractice insurance ultimately would be an average of 25 percent to 35 percent below what they would be under current law.'' If California's legal reforms were implemented nationwide, we could spend billions of dollars more annually on patient care, meaning helping sick people get better.

We all recognize that injured victims should be adequately compensated for their injuries, but too often in this debate we lose sight of the larger health care picture. This country is blessed with the finest health care technology in the world. It is blessed with the finest doctors in the world. People are smuggled into this country for a chance at life and healing, the best chance that they have in the world. The Department of Health and Human Services issued a report recently that includes the following amazing statistics: during the past half century, death rates among children and adults up to age 24 were cut in half, and the infant mortality rate plummeted 75 percent. Mortality among adults between the ages of 25 and 64 fell nearly as much, and dropped among those 65 years and older by a third. In 2000, Americans enjoyed the longest life expectancy in our history, almost 77 years.

These amazing statistics just did not happen. There are faces behind the statistics, and they are our doctors. These statistics happen because America produces the best health care technology and the best doctors to use it. But now there are fewer and fewer doctors to use that miraculous technology or to use that technology where their patients are. We have the best brain scanning and best brain operation devices in history and fewer and fewer neurosurgeons to use them.

Unlimited lawsuits are driving doctors out of the healing profession. They are making us all less safe, all in the name of unlimited lawsuits and the personal injury lawyers' lust for their cut of unlimited awards for unquantifiable damages. But when someone gets sick or is bringing a child into the world, and we cannot call the doctor, who will we call? When you pick up the phone and call the hospital because someone you love has suffered a brain injury, and you are told, sorry, lawsuits made it too expensive for brain surgeons to practice here, who will save your loved one? You cannot call a lawyer. A lawyer cannot perform brain surgery.

We all need doctors. And we, as our Nation's representatives, have to choose, right here and today. Do we want the abstract ability to sue a doctor for unlimited, unquantifiable jackpot damage awards when doing so means that there will be no doctors to treat ourselves and our loved ones in the first place? Of course not. So on behalf of all 287 million Americans, all of whom are patients, let us pass this bill.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 1\1/2\ minutes to the gentlewoman from Tennessee (Mrs. Blackburn).

Mr. Speaker, I yield 1 minute to the gentleman from California (Mr. Cox).

Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from Iowa (Mr. King).

Mr. Speaker, I yield myself 1 minute.

Mr. Speaker, what the gentlewoman from Colorado did not tell us is what is not getting media attention, and that is that doctors are closing up their practices. When the Committee on the Judiciary heard testimony on this issue, the wife of a man named Tony Dyess came and spoke. Mr. Dyess was involved in an automobile accident. He had a spinal cord injury, and because there were no neurosurgeons left in southern Mississippi, it took 6 hours to airlift him to a hospital in Louisiana that has some better medical liability laws, and the golden hour for neurosurgery had passed; and as a result Tony Dyess is a quadriplegic simply because malpractice insurance costs chased the neurosurgeons out of southern Mississippi.

This is an issue of access to health care, and we cannot have liability insurance costs force doctors to close their practices and not have access to people who need doctors and need them desperately.

Mr. Speaker, I yield 1 minute to the gentleman from Pennsylvania (Mr. Shuster).

Mr. Speaker, I yield 1 minute to the gentleman from Arizona (Mr. Shadegg).

Mr. Speaker, I yield 1 minute to the gentleman from Illinois (Mr. Crane).

Mr. Speaker, I yield 1 minute to the gentleman from Pennsylvania (Mr. Greenwood).

Mr. Speaker, I yield 1 minute to the gentleman from Texas (Mr. Burgess).

Mr. Speaker, I yield 1 minute to the gentleman from Pennsylvania.

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, during the course of the debate we have heard a string of red herrings from people who do not wish this bill to pass. I would like to rebut those from the study that the General Accounting Office made on the whole topic of our medical liability crisis.

First, as the gentleman from Pennsylvania (Mr. Greenwood) has eloquently stated, patient access to care is being harmed. He recounted the case of a pregnant woman who went to at least two OB/GYN practices to get a doctor to deliver her baby and was told that as a result of the medical liability crisis, they were shutting down the doors to their practice.

The GAO confirmed instances in the five States selected for study where actions taken by physicians in response to malpractice pressures have reduced

access to services affecting emergency surgery and newborn deliveries. When the baby comes, you cannot wait. When someone has an accident and needs emergency surgery, you cannot wait. And if the malpractice insurance crisis closes down those practices, people are going to be harmed, and they will die, and this bill will stop that.

Secondly, doctors do practice defensive medicine. The GAO report found that in response to rising premiums, ``the fear of litigation research indicates that physicians practice defensive medicine in certain clinical situations, thereby contributing to health care costs.''

The gentleman from Texas (Mr. Burgess) said that if unnecessary defensive medicine does not have to be practiced by reforming our liability laws, Medicare alone will save $50 billion a year, which is more than enough to pay for the prescription drug benefit, whether it is by the GAO study or the OMB study.

Third, insurers are not to blame for skyrocketing premiums. The gentleman from Ohio (Mr. Brown) seemed to think they are.

But the GAO found that insurers are not to blame. The report states that insurer ``profits are not increasing, indicating that insurers are not charging and profiting from excessively high premium rates,'' and that ``in most States the insurance regulators have the authority to deny premium rate increases they deem excessive.''

Fourth, rising litigation awards are the problem, not insurer investments. What did the GAO say? The GAO found that losses on medical malpractice claims which make up the largest part of insurers' costs appear to be the primary driver of rate increases in the long run.

``Since 1998, insurers' losses on medical malpractice claims have increased rapidly in some States. However, none of the studied companies experienced a net loss on investments, at least through 2001, the most recent year such data were available. Additionally, almost no medical malpractice insurers overall experienced net investment losses from 1997 to 2001.'' So much for that red herring.

Finally, liability reform does have a real impact. The GAO concludes that data indicate that rates of growth in malpractice premiums and claims payments have been slower on average in States that enacted certain caps on damages for pain and suffering, referred to as noneconomic damage caps, than in States with more limited reforms and that average per capita payments for malpractice claims against all physicians tended to be lower on average in States with noneconomic damage caps than in States with limited reforms.

This bill is a good one, and it ought to be passed.

Mr. Speaker, I yield back the balance of my time.

I do, Mr. Speaker.

Mr. Speaker, yes, it is time for a change, and it is time for a real change. This motion to recommit does not provide a real change, and it should be defeated. It should be defeated because it contains zero legal protections for doctors beyond current law.

Legal reforms are essential to solving the current crisis in the medical professional liability insurance area and increasing access of health care to all. Here is what the president of the National Association of Insurance Commissioners said: ``To date, insurance regulators have not seen evidence that suggests medical malpractice insurers have engaged or are engaging in price-fixing, bid-rigging, or market allocation. The evidence points to rising loss costs and defense costs associated with litigation as the principal drivers of medical malpractice rates.''

The underlying bill, and not the motion to recommit, is the only proven legislative solution to the current crisis. According to the CBO, under H.R. 4280 ``premiums for medical malpractice insurance ultimately would be an average of 25 to 30 percent below what they would be under current law.''

The motion to recommit, on the other hand, besides including zero legal protections for doctors beyond current law, sets up an advisory commission to study a problem that is already patently obvious to the most casual observer and to report back sometime in the future when even more patients will have lost access to essential medical care.

Opponents of the bill claim there is no enforcement mechanism to make sure that medical professional liability rates go down. That is completely false. An enforcement mechanism already exists throughout all 50 States, namely, State insurance commissioners who are required by State law

to turn down rates that are excessive, unfairly discriminatory, or otherwise unjustified. On the other hand, the motion to recommit creates a system of price controls linked to savings that without the legal protections in this bill will be nonexistent. Without legal reforms, there will be no cost savings, and the motion to recommit contains zero legal protections beyond the current law.

Along with creating a commission to further study a problem that is obvious, the motion simply throws more Federal money at it. H.R. 4280, on the other hand, contains solid legal reforms that have been proven successful over 28 years in California and will save billions of dollars in taxpayers' funds, according to the CBO. The choice is clear: oppose the motion to recommit, support H.R. 4280, and let us make sure that doctors are there to care for the 287 million Americans.

Mr. Speaker, I urge defeat of this motion and passage of the bill.