Service to Country Reimbursement Act of 2003

Madam President, under the agreement last night I have up to 30 minutes to speak, and I will be happy to yield additional time to Senator Boxer at a later time because I most certainly want to support her comments and to thank her for her great support of this amendment. Without Senator Boxer and many other Senators, the victory that we have achieved this morning would not have been possible.

Senator Boxer knows, because she represents the largest State in our Union, that 90,000 guardsmen and reservists reside in California. Today, as she and I are on this floor speaking on their behalf, 7,900 are currently on duty from California, having left their homes from Bakersfield--the home of Chairman Thomas, or the center of his district--to San Francisco to Los Angeles, from Louisiana, from Oklahoma, and from Texas. Thousands of Guard and Reserve men and women have left their families, left their children, left their place of employment and gone to the front lines.

We decide where the front line is and we send them. Wherever we say to go, they go, and they have gone in large numbers.

I have spent the last few days speaking about this because it is of such critical importance for us in the Senate and for the Congress to understand that we are asking more and more of our Guard and Reserve. This was not always the case. It was not that way in World War I and World War II. It was not that way in the 1950s, 1960s, 1970s, or 1980s, but it is this way today.

From 1990 to 2004, we have called up 690,500 Guard and Reserve members. The Guard and Reserve now make up 40 percent of our whole force. We have 1.6 million active members of all of our services, and we have 1.2 million men and women in the Guard and Reserve.

Many of these men and women, as my colleagues know because I have said it--and I am sure my colleagues are now aware of this, that when many of our reservists signed up, they expected to make a sacrifice. They knew that one weekend a month they would go on duty, and they knew that in times of crisis they would be sent. What we did not tell them 10 years ago is that there would have been a terrorist attack on 9/11. What we were not able to tell them 10 years ago was that we would make a decision to reduce our Active Forces, thereby putting a greater burden on them.

They signed up under a different paradigm. Yet year after year some of us have come to this floor--not just this week, not just last year, but year after year. I have been here 8 years. There is not a year that I can think of that I have not mentioned this--maybe the first year I was here, but most certainly once I got on the Armed Services Committee and it became apparent to me and many others of the major shifts that we were making, and have argued, sometimes successfully and sometimes not successfully, not because I do not think our arguments are clear and compelling but because they seem to fall on deaf ears, that the Guard and Reserve need help.

I wish I could spend the time reading some of the hundreds, thousands of e-mails that I have received since this filibuster started. The filibuster is no longer in place because basically the amendment we asked for has been agreed to. It is going to be put in another bill. That is how this whole thing started, was to say that I know that it was impossible for us to amend $137 billion. We could not procedurally amend this bill. The only thing we could have done would have been to vote against it or send it to the President and ask him to veto it because the Guard and Reserve were left out. Both of those strategies were probably not going to happen. So I said that I would accept that, and I would stay here until Thursday or Friday, until I had to, with others helping me, to make sure we could find another vehicle that would be appropriate to put this amendment on as much intact as we could, and that is what happened.

There are a lot of Senators to thank, and I think I will spend a moment thanking the Senators before I go into more detail. First, I will just finish this one thought and then I will thank the Senators.

I was explaining how the paradigms changed and we are relying more and more on our Guard and Reserve. So when this bill began to be put together 2 years ago, some of us knew that this bill was going to start out at about $50 billion. But we also knew that it would grow because any time there is a tax bill before this Congress, lots of things get attached. NASCAR racing got attached; ceiling fans are in here; railroad reimbursements for maintenance of tracks is in here. I do not have a complaint about one of those items. That is not why we filibustered the bill.

What we complained about is the only item that was put in the Finance Committee and sent out of the Senate with 100 percent of us supporting it--all of the Republicans and all of the Democrats supported it--was stripped out by the House Republican leadership.

If we cannot find $2 billion of $137 billion in tax cuts to give to the men and women who are taking 100 percent of the risk, 100 percent of the bullets, what are we doing here? That was the point we made. The point was heard loudly and clearly.

So with the help of many colleagues, we have corrected the error. We have sent an amendment, in large measure whole. Senator Boxer is correct that a portion that she and I thought was very important, which was to help public entities that keep those paychecks whole as the Guard and Reserve go to the front line and lose 41 percent of their income, according to the GAO study--that was given to us not last week, not a month ago, this study was given to us 3 years ago. We knew 3 years ago that our Guard and Reserve take a 41-percent pay cut. The soldiers do not mind the pay cut. They are eating rations. They are living in tents. They are sleeping on the ground. This is not--well, it is about the soldiers, but it is more about the families they leave behind, about the children without health care, about the wives who have to take two jobs, about the gasoline that has to be put in the car, the car notes that have to be paid.

If we can find a tax bill and work on it for 2 years, which we did--2 years of work went into this bill. I am not on the Finance Committee, but I have a great member in Senator Breaux. I know how hard he works, and I know how he supported this amendment as well. I have Congressman Jim McCrery and Congressman Jefferson who worked very hard. The Louisiana interests are well represented in this as well as in many other important bills. But what I objected to was that the Guard and Reserve amendment that would have given a tax credit to the thousands of businesses in this country that are doing the patriotic thing, the right thing, the good thing, and they are getting commended by our President and us, we could not provide them a 50-percent tax cut to keep this paycheck whole for those on the front line.

Yes.

No.

Mr. President, I ask unanimous consent to have those letters printed in the Record.

I thank the Chair.

Mr. President, I would like to continue by thanking all of the Members of this body, particularly the members of the Finance Committee, particularly the Senator from Oklahoma, who stepped forward and helped us to negotiate a very good end to this situation. But the original cosponsors of this amendment were Senator Murray, Senator Tim Johnson, Senator Maria Cantwell, Senator Jon Corzine, Senator Kerry, Senator Durbin, Senator Dodd, and Senator Pryor. There were 21 Senators who signed the letter to the conferees and I am going to submit their names to the Record, but among them was Senator Bond, who has been a strong advocate for the Guard and Reserve; Senator Akaka, who came to the floor over the weekend to lend his support and his help; Senator Bill Nelson, who came to the floor as well and gave his help and his support. I also wish to thank the leadership, Senator Daschle and Senator Reid in particular, as well as the Republican leadership, who worked hard through these couple of days to make this good end come to be today; particularly Senator Harkin, who was in the Chamber advocating for a different issue that was his primary focus, but without his help in being able to hold the floor and being able to keep the procedure moving in the direction that helped us to make our point, it would not have happened. I also wish to thank the Senator from Alabama, Mr. Sessions, for spending many hours in the Chamber. He and the Senator from South Carolina, Lindsey Graham, have spoken hour after hour after hour on this floor about the needs of the Guard and Reserve.

Perhaps we are not making our arguments clear enough; I do not know. But they seem to sometimes leave our mouths and fall on deaf ears. I do not think it is complicated; 690,000 Americans have been called up by our Commander in Chief to go to the front line. As we put bills together here, tax bills, health care bills, education bills, transportation bills, could we please not keep them in mind but put them in the bill and not leave them out. They are not asking for much. They are not asking for 100 percent of any tax credit. But surely $2 billion out of 137 is something we could have done. I know there were arguments, and I think somewhat legitimate--perhaps the amendment was not written in the correct way. Perhaps it was a little more complicated. We have successfully cleared up those complications. I have said there were other amendments in here that to me seemed quite complicated.

One in particular was a reimbursement for railroad track maintenance. I guess we trust the railroads to tell us how many miles. I don't think we send out people to walk the tracks and measure the railroad tracks. So I think we trust employers when they say they are paying their Guard and national Reserve and they put that on their tax return. I think most certainly we can trust them and trust the members of our Guard and Reserve. We are trusting them to fight for us and we stand with them. We are honoring the employers, small and large companies that are keeping those paychecks whole, and the least we can do is to provide a 50-percent tax credit.

I also wish to thank the floor staff: Lula Davis and Mary Paone, as well as the Republican staff who helped this weekend, and the Senate Finance Committee staff which helped us to work out the final details. On my own staff: Jason Matthews, Jeffrey Wiener, Kevin Avery, Kathleen Strottman, Brian Geiger, Amy Cenicola, and Linda Cox, and particularly my husband and my children, who were supportive of this effort because it could have gone on for many more days.

I want to, in the few minutes I have remaining, submit a few more things to the Record.

One of them is a letter that came to this Congress, not from the current Secretary of Defense, but from the former Secretary of Defense, Bill Cohen, in 1998, saying basically, while we support the concept of providing incentives to employees of Reserve component members, the Federal Government, we at this time cannot afford such a program, but with the increased use of the Guard and Reserve, particularly for unplanned contingency operations, employers of our Guard and Reserve members are often faced with the unplanned absences of their reservist employees. They may incur additional business expenses associated with the unplanned absences. The report suggests that a financial incentive might be helpful to ameliorate some of the employer problems, particularly for small business owners.

There you have the Secretary of Defense, the former Secretary of Defense, outlining that while they couldn't afford to do it in a Defense bill, we most certainly could afford to do it in a tax bill. That is why we started working with the tax bill and with the Finance Committee. I am pleased to say we have come to a good end. So in a few minutes, by a voice vote, this amendment will be adopted. It will go over to the House and to the House leadership on both the Republican and the Democratic side. I urge them to look carefully at what we have sent over there, to pass it the way it is. If they do, it will become law right away. Perhaps when we come back after this election or perhaps before the election, that could be done. But clearly the Senate has acted with respect, with care, with cooperation, and again I thank the Republican leadership and the Democratic leadership for working so well over the weekend to send this amendment, basically intact as we put it together, over to the House. It is now in their court.

How much time do I have remaining?

Yes.

The Secretary of Defense,

Washington, DC, March 17, 1998.

Hon. Floyd D. Spence,

Chairman, Committee on National Security, House of

Representatives, Washington, DC.

Dear Mr. Chairman: The Department of Defense report,

enclosed, has been prepared in response to the National

Defense Authorization Act for Fiscal Year 1997. Section 1232

of that Act directed submission of a report and draft

legislation to provide tax incentives to employers of members

of Reserve components.

The Department of Defense does not support submission of

legislation at this time but is submitting draft legislation

as a drafting service.

Sincerely,

Bill Cohen.

Enclosure: As stated.

A Report to Congress Concerning Incentives to Employers of Members of

the Reserve Components

This report responds to the requirements of section 1232 of

the National Defense Authorization Act for Fiscal Year 1997

(P.L. 104-201, September 23, 1996), which requires a report

to the Committee on the Armed Services of the Senate and the

Committee on National Security of the House of

Representatives regarding tax incentives to employers of

members of Reserve components to compensate for absences of

Reserve employees due to required training and performance of

active duty.

overview

Increasingly, members of the National Guard and Reserve are

being called upon to augment the active duty forces in the

post-Cold War world. This is a sound use of resources and an

integral part of our national military strategy. More

recently, Reserve component members have responded to the

call in Operation RESTORE HOPE in Somalia, Operation UPHOLD

DEMOCRACY in Haiti, and Operation JOINT ENDEAVOR/JOINT GUARD

in Bosnia.

Previous Congresses have viewed legislation that would

provide incentives such as tax expenditures as having a fixed

and recurring budgetary effect. A number of methods could

resolve such a problem.

background

Generally, members of the Reserve components (both National

Guard and Reserve members) are required to attend one weekend

of inactive duty training per month and 14 days of active

duty training annually. Over and above this training, members

are often required to participate in mobilization training,

formal schools, and special training. Additionally,

many Reservists are called upon to provide PERSTEMPO

relief (reducing the active duty Service members time away

from home station). For some individuals, this may exceed

the normal Reserve participation requirements. Some

Reserve members, who support specific weapons platforms,

are actually spending up to 180 days a year on military

duty. This is compounded by involuntary call-ups to

support missions such as Operation DESERT STORM and JOINT

ENDEAVOR, which required the use of the Reserve

components.

In addition to this busy Reserve schedule, the vast

majority of Reserve component (RC)

members are employed full-time in civilian occupations. So,

not only are RC members working full-time in the civilian

community, they are meeting their Reserve obligation, which

has substantially increased beyond the minimum 38 days a year

prescribed by law.

This ``part-time'' Reserve obligation is substantially

different from any other part-time activity in which most

employees participate. They may be involuntarily called to

active duty in times of national emergencies. Although

efforts are made to reduce any conflict these absences may

cause, some conflict is unavoidable. Title 37 U.S.C. section

1008(b) mandates that each Quadrennial Review of Military

Compensation (QRMC) conduct ``a complete review of the

principles and concepts of the compensation system for

members of the uniformed services.'' The Sixth QRMC stated

that conflicts between RC members and their full-time

civilian employers account for nearly one-third of all

personnel losses incurred by the Reserve components.

demonstrated need

Employer concerns

From an employer's viewpoint, unscheduled absences create a

variety of problems.

While Reservists repeatedly demonstrate that their military

training and experience benefit their civilian employers,

budget-minded employers must also consider the impact of

unexpected long-term absences on their businesses. positive

approach to the pressures caused by unplanned employee

absences than simply enforcing Reservists rights.

Department of Defense concerns

Trained and equipped members of the National Guard and

Reserve are an integral part of the national military

strategy. With a smaller active duty force, the Department is

maximizing all available resources to meet mission

requirements. This has increased the day to day use of the

Reserve components. There are substantial economic benefits

to the government to use the Reserve components as they cost

the government less to maintain--anywhere from 25% to 75% of

the cost of their active duty counterparts. This is part of

the rationale for the dramatic shift of missions and force

structure from the active to the reserve forces. It is the

nation's advantage, therefore, to use its Reserve components.

Retention of RC members becomes critical. It is in the

government's best interest to keep well-trained individuals

in the military, rather than incurring the additional

training costs (roughly $26,000 per new recruit). The train-

up time associated with recruiting new individuals into the

force is also considerable. In spite of our efforts to

provide a benefits package that makes continued Reserve

service an attractive proposition, employer conflict is often

cited as the number one reason why individuals decide to

leave Reserve component military service.

department of defense efforts

The DoD has undertaken several initiatives to reduce

conflicts between Reservists and their employees. Since 1970,

the DoD has developed an aggressive program to encourage

employer support. The National Committee for Employer Support

of the Guard and Reserve (NCESGR) is an agency within the

Office of the Assistant Secretary of Defense for Reserve

Affairs that promotes cooperation and understanding between

RC members and their civilian employers. This program has

grown from several hundred employers and professional and

labor organizations to more than 3000 community leaders

nationwide. Despite these efforts, the Sixth QRMC stated that

10 to 20 percent of RC members continue to experience

significant employment-related conflicts.

In an effort to protect Reserve employees, the 103rd

Congress passed the Uniformed Services Employment and

Reemployment Rights Act (USERRA). This legislation protects

``non-career service members'' from job discrimination based

on Uniformed Service. USERRA has simplified statutory

employment protections and provided a system of local

arbitration for individual cases. While protecting the

employee, USERRA does not, however, address any adverse

effects Reserve service may impose upon employers. Employers

are required to provide seven basic entitlements by statute:

prompt reinstatement, status, accrued seniority, health

insurance coverage, training/retraining, special protections,

and other non-seniority benefits.

Despite these efforts, the major employer disincentive to

encouraging employee participation in the Reserve components

is the additional costs and reduced profits stemming from

Reserve participation.

previous legislative proposals

Recognizing the substantial role that employee attitudes

and practices have on Reserve readiness, legislative

proposals granting a monetary incentive (in the form of a tax

credit) to employers of National Guard and Reserve members

have been introduced several times, the most recently in the

103rd Congress. The Department understands that there may be

other methods to soften the employer's burden. The main

points of the most recent legislative proposals are outlined

below.

Summary of past proposals

DoD 100-49 (100th Congress): Credit and deduction; 20

percent of amount paid and 10 percent of amount unpaid; any

training; nonrefundable; and annual maximum of $2000 per

member.

H.R. 71 (103rd Congress): 50 percent of amount paid and 10

percent of amount unpaid of actual compensation paid when

employee was performing qualified active duty; annual maximum

of $2000 per member; and no credit for employee not scheduled

to work.

Additionally, the Sixth QRMC made the following

recommendations:

Nonrefundable credit of 50% paid to Reservist on military

leave and 10% credit for amount unpaid;

Include credit for self-employed individuals; and

Certification of Veterans' Reemployment Rights compliance.

draft legislation

The Department has developed draft legislation, as a

drafting service, for a tax credit program for employers of

Ready Reservists and self-employed Reservists as required by

section 1232 of the National Defense Authorization Act for

Fiscal Year 1997. Because of associated costs in the form of

federal tax receipt losses for such a program, neither the

Department of Defense nor the Administration support

submission of the legislation at this time. Because section

1232 requests the draft legislation, however, the attached

draft is submitted as a drafting service pursuant to

paragraph 7i, Office of Management and Budget Circular A-19,

dated September 20, 1979.

conclusion

Assistance to employers who support National Guard and

Reserve participation by their employees could reduce an

employer's costs associated with employee absence due to

their participation in the National Guard and Reserve on

contingency operations. The Department understands the

loyalty of the employers burdened with the costly and

unanticipated absences of their Reserve employees. We salute

such employers and seek their continued support. Tax or other

incentives for employers might help to ameliorate some of

their problems. Any such plan, of course, must compete for

resources in the ever shrinking availability of Federal

programs.

I will reserve the remainder of my time.

Under the previous order, I think I still have----

Mr. President, I want to take the time to thank the Senator from Oklahoma. I know he has some concerns about some of the details of this amendment. But because of his work and because of other Senators who worked through the weekend on this, we have put a very solid, substantial, largely intact amendment in place that is going to be passed to the House. Now it will be in the hands of the House leadership to decide if they want to pass this amendment, which is a tax bill specifically for the Guard and Reserve. The underlying bill actually will allow the Guard and Reserve a tax benefit to remove the 10-percent penalty if they would want to take money out of their IRA to help them through tough financial times.

According to the hundreds and thousands of e-mails that we have received, myself and many others, we know that our Guard and Reserve are having a tough time.

I would just like to read this for the Record. I know the Senator himself has received notices like this.

This is from--Janice is her name. I will find out where she is from in a moment. She writes,

Senator Landrieu, I have 3 nephews and 2 nieces that are in

our National Guard and they are being sent over to Iraq. I am

so angry right now that I hope that I don't have to see

others go to this war. But let me just say that my nephews

and nieces have left behind 11 children without health

coverage. I am their aunt and my husband is their uncle.

We are taking care of these three children. It is hard for

us. We are tired living on a fixed income.

This is what this amendment is all about--taking on the burden of having the Guard and Reserve on the front line, and paying those paychecks. Yes, it helps the soldier on the front line, but mostly it helps the families back home. That is what the Senator was able to help us come to terms with. That is what the Senate is sending over to the House--supporting this effort on the House side.

I look forward to working with them when we come back in, perhaps after the election--working with the Senators who have spoken up over the weekend and others who were not able to speak up and sent letters in support and cosponsored this effort, Republicans and Democrats, to say let us craft a tax provision, or several tax provisions, that will help our Guard

and Reserve, or let us dig a little deeper in the Defense bill to give them the support they need, whether it is health care, whether it is paycheck protection, whether it is other support services, so they can do the job better we are asking them to do.

Frankly, I don't think they could do it any better, but they could do it with more peace of mind knowing their families are able to pay the bills, are able to keep the roofs over their heads, are able to put gasoline in their automobiles, and pay the extra childcare expenses.

I know other Senators feel as strongly as I do--everyone in this Chamber. But let us not only feel strongly but remember them when we pass these bills. Again, we don't have to remember them only on the Defense bill. Then we end up having to make tough choices and ask the military, Do you want a rifle, or a helmet, or health coverage, or to send a whole paycheck to your family? I don't think our men and women in uniform should be asked to make those decisions, not when we are giving $137 billion in tax cuts to everybody else. That is my point.

I know people may disagree. Maybe this vehicle was the right one. But because we were told 3 years ago there was no money in the Defense bill to do this, what option were we left with? We asked it be included. It was included when it left the Senate.

I am proud of that. Now we have a chance again sometime in the near future to get this fixed. I am proud of the effort.

I reserve the remainder of my time.

I intend to use 2 minutes and yield back the remainder of my time to the leadership.

Mr. President, while the leaders are in the Senate with their final remarks, I take the opportunity again to thank them for their work--Senator Baucus and Senator Grassley as the leaders of the Finance Committee--as we work toward a very significant victory and a conclusion on the issue of a tax credit for the Guard and Reserve. The Senate is going on record again this morning, as we did several weeks ago when this bill left the Senate, to include them in a tax provision. They will not technically be included in this bill, but there will be a bill sent back over to the House, as we said. That would not have happened without the help of Senator Baucus from Montana and Senator Grassley from Iowa. I personally thank them along with thanking Senator Durbin and Senator Boxer for their help on this original amendment.

We have explained it as well as we can, the arguments as to why our Guard and Reserve deserve our focus and attention to provide help to their families while they are serving for all Americans on the front line. I am so pleased we could come together as Members of the Senate to provide that help for them.

Now it is in the hands of the House of Representatives. As we return from this break, however long or short it is, we will then take up this issue as they decide over in the House how they would like to handle it. I hope they will take the bill as we have sent it, pass it, and then it will go to the President's desk for immediate signature because we all want to give them the help and support they most certainly are giving us at this special time.

I yield back the remainder of my time.

Will the Senator yield for 30 seconds?

Mr. President, I see the senior Senator from Louisiana on the floor. I know he will want to respond in a moment. I so appreciate the comments from the Senator. But I would like to add, very briefly, that as you have spoken about the senior Senator from Louisiana, the great consensus builder that he is, and helping us to move very important pieces of legislation, always with the greatest sense of dignity and principle, I want to say, as his partner in the Senate, I could not have a better partner. He is a person who works in such a complementary way with me. We work well together, and it is because of the great spirit he brings to his work. I think because of his spirit, we have been a better team together than we are individually for our State. I learned that from him. I want to give him so many compliments this morning and thank him for his great service.

Mr. President, I am glad that Senator Frist and other Senators were able to work out the parliamentary maneuvering that it takes to get us to finality on this JOBS bill.

We obviously want to encourage the creation of jobs and manufacturing in America. We want to reduce reasons for outsourcing. This bill deals with all of those and some others as well.

Throughout this debate, I feel as though I was whipsawed in arguments trotted out by opponents of this bill. They complain about accommodations we have made to Members. Some of these accomplishments and accommodations have even helped folks in States of the critics. Then they complain about what is not in this bill that should have been included in this bill.

First of all, I don't know how many times I have to say this, but I think it

needs to be continually said. This bill is revenue neutral. Yes, we decrease taxes for partnerships, family-owned businesses, and corporations that are involved in manufacturing, reducing that from 35 to 32 percent. Obviously, that brings in less revenue, but that does not mean the deficit of the United States is going to be increased. We pay for it by raising revenue from businesses, by closing corporate tax loopholes, and we collect that new revenue coming in to small businesses, especially to any size business that manufactures--large or small.

This bill is basically about manufacturing jobs. That is where the revenue in this bill goes.

There are those who talk about this bill as somewhat of a giveaway to business. You have some businesses not paying taxes because they are abusing the Tax Code through corporate loophole abuse, and they pay more money. Then you have the socially good provisions such as encouraging manufacturing in the United States to create jobs in the United States. I don't think people are correct in saying this is a giveaway to business because it balances out within the business sector of our country--some paying more and some not paying more. Because we are taxing them more, they are paying more because they can't cheat anymore. We are giving some benefits from that same revenue to create jobs in the United States.

Those who call this a giveaway for business need to put on their reading glasses and take a look at revenue tables produced by the nonpartisan Joint Committee on Taxation. These people aren't Republican or Democrat. They are professionals who decide how many changes are in the Tax Code, where revenue comes from. These tables show that this bill is revenue neutral; that financial reductions are paid for in new revenue coming in from the closing of corporate loophole abuse.

For those who are talking about this bill being a giveaway for business, I want them to stop using that argument. One statement was made last night that was egregiously in error. One of the hard-line opponents of this bill claimed that the tobacco buyout was paid for by the taxpayers.

I don't support the tobacco buyout but realize it was necessary to get this bill through the other body. I insisted on one of the Senate's positions in the tobacco buyout, and that position is that tobacco companies pay for this buyout. Opponents need to read this bill and the revenue tables. If they bother to do so they will see the buyout is paid for not by the taxpayers of America but by the companies that produce tobacco.

Now, let's put in context the mischaracterization of this bill as somewhat of a special interest bill. In part, the bill receives such widespread support because many Member items were accommodated. Literally dozens of tax benefits were adopted in committee and on the floor.

Let me define ``Member items.'' Constituents of one State came to their Senator and said: This part of the Tax Code is wrong, it is hurtful; or they said: We think the Tax Code ought to be changed this way. Maybe they do not come to me. Maybe they do not go to the other 99 Senators; they go to 1 Senator. That Senator is a representative of his people. It is his responsibility to bring that issue to the Senate. He does not have to. He can say: I don't agree with you, I will not do that. If he feels his constituents are justified in what they are requesting, then the matter is brought to the committee that has jurisdiction. That is the Senate Finance Committee, which I chair. Somehow there is something negative or derogatory about a Member bringing forth an item for all to consider. If we think that Member is crazy, we do not have to do it. If we think there is some justification to what that Member brings before the Senate, we ought to consider that. That is how our representative system of government works.

Literally dozens of tax changes were adopted in committee or in the Chamber. Before the conference, Senator Baucus and I received letters from virtually every Member of the Senate. In some cases those letters asked for items from the Senate to be retained. In other cases those letters asked for the Senate to accept items from the House bill, and in still other cases Members wrote asking for items that were not in either bill. Finally, some Members asked us to not accept certain provisions not in either bill.

I have a stack of letters with me. These letters are not all the letters, of course. There is no sense carrying a pile of letters out here. But Members representing the interests of their State bring these issues for our consideration.

I will go to the first category and follow up items from the Senate bill.

National care scholarships for nurses--Senator Murray and Cantwell asked for that. It is in the bill.

Sickle cell disease and Medicaid, consideration of sickle cell disease, which is not covered by Medicaid--Senators Talent, Schumer, Campbell, Dayton, Cochran, Bond, Specter, Mikulski, Cantwell, Landrieu, Stabenow, Kennedy, Sarbanes, Voinovich, Lautenberg, Murkowski. It is in the bill.

Some are going to say that Members' provision brought to us under the leadership of Senator Talent should not be considered by this body, and I will explain why this is all in one bill. People watching might think if you have a sickle cell disease issue come before the Senate, maybe it ought to come up as a separate issue. On the next item up is a life insurance taxation issue; maybe it ought to come as a separate bill. Why doesn't it? Because under the rules of the Senate every little bill that comes out here could be amended by anything that is in the Tax Code. Eventually you have a little life insurance bill that becomes a vehicle for every member to bring up any bill they want to bring up.

So we saved the Senate from going through that exercise. That is what committees are about. We consider these issues--not always in committee; sometimes they are discussed when the bill comes to the Senate floor. Most of the time we give them a thorough study in the Senate Finance Committee. Sometimes we reject them and sometimes we include them. If we do not include them, maybe when they come to the Senate Chamber, that Senator is irritated with the chairman of the Senate Finance Committee and they add it on the Senate floor. They always end up in one bill.

Somehow that makes all of our journalists concerned, those who seem to not have an understanding of how the Senate works, pointing out that this bill is full of a lot of little things in it that are unrelated to the underlying bill. That is true, but that is how the Senate works.

The House of Representatives does not work that way. They put a bill together, they adopt a rule, and there is never an amendment. I shouldn't say never, but very seldom is a Member allowed to offer an amendment to a Ways and Means bill on the floor of the House. That is why the House of Representatives is like the House of Lords. That is why the Senate is like a House of Representatives. We allow the people of this country to bring anything they want to the floor of the Senate.

Another item is suspension of section 815, a life insurance company taxation issue. That was brought to us by Senator Specter. It is in the bill.

New York City revitalization tax benefits directly related to the attack of September 11, 2001, and the rebuilding of New York was brought to us by Senators Schumer and Clinton--most of that, but not all of it, is in the bill.

Brownfields, unrelated business income tax relief--Senators Lautenberg, Reed, Jeffords, Stabenow, Specter, Sarbanes Dole, Akaka, Chafee, Inhofe--is in the bill. The use of green bonds for economic development in certain areas is something I was not for, but it is in the bill to satisfy Senators Allard, Schumer, Miller, Clinton, and Chambliss.

We have IRS private debt collection. Senator Allen was pushing this. That is something I very definitely favor because this is one way of getting the private sector bringing in money from people who are tax cheats and are not paying their taxes.

Tribal government bonds--Senator Campbell, very active in the Senate Committee on Indian Affairs--was also a matter of importance to Senator Baucus and others, but it is not in the bill despite being raised in conference.

Comprehensive energy tax relief package--Senator Hutchison--is not in the bill despite being raised in conference because the House of Representatives took the position that

there shouldn't be anything on energy in this bill because they think energy items need to be put together in a bill that ought to be dealt with separately, next session. Quite frankly, the House of Representatives passed a comprehensive energy bill last fall, and we were two votes short in the Senate because of a Democrat filibuster against the bill. They say that instead of doing the energy provisions in this bill before us now, the Senate ought to take up the bill that we obviously have a majority for--but because of a Democrat filibuster we are two votes short--and do the energy stuff there, not in bill before the Senate.

So I cannot blame the House of Representatives because they worked hard to get an energy bill passed, and it comes over here and you get a Democrat filibuster.

By the way, those two votes could be supplied by Senator Kerry and Senator Edwards because now they think we ought to have a national energy policy, and they did not vote last November. If they come in here before we go home and cast the 59th and 60th vote, we would have the comprehensive energy policy, not just little slivers of it that we get in a bill here and a bill there, but we would have a very comprehensive energy policy. They would be fulfilling what they are saying out there on the campaign trail we need to get done: have a national energy policy. We have 58 votes for it. We need a 59th and 60th vote, and they could be that. But at least I am telling you why we do not have the energy provisions in here that a Republican Senator, Senator Hutchison, wanted.

We have a request from Senators Crapo, Bingaman, Voinovich, Biden, Pryor, Talent, Enzi, Chafee, Carper, Clinton, Allard, Bond, Coleman, Sununu, Bennett, Chambliss, Hutchison, Hagel, Nelson of Florida, Dayton, Dole, Reed of Rhode Island, Dodd, Kennedy, and Levin for mortgage revenue bonds liberalization. It is not in the bill, but it was raised in conference.

We have heard a lot about Senator Landrieu's Guard and Ready Reserve amendment. That was raised by Senators Landrieu, Bond, Pryor, Murray, Dodd, Akaka, Cantwell, Dorgan, Schumer, Mikulski, Nelson of Florida, Lautenberg, Johnson, Feingold, Leahy, Dayton, Levin, Sarbanes, Wyden, and Durbin. We discussed that provision a lot, and like the three items above, this item was raised at conference and rejected by the other body.

Mr. President, the letters I have cited reflect items Members raised. On some items we were able to reach agreement with the House, other items the House of Representatives rejected.

Let me point out that I offered three amendments that I filed. I won one and lost two. The House accepted an amendment I put in for rural letter carriers. The House rejected an amendment I had dealing with energy-efficient home appliances. The House rejected another amendment dealing with elderly housing connected to the Warrior Hotel in Sioux City, IA.

As the list above shows, a lot of Members of this body are satisfied because their items are in here; other Members are not satisfied. But that is not an unusual situation when you reach compromise. It also shows that for all of the unfair carping about this bill being a special interest bill, nearly every Member raised narrow-interest provisions. So if there is some fault about different provisions coming up, we all share that. We all do it. There is an old saying. It is: People who live in glass houses should not throw stones. We have a group of Members throwing stones at this JOBS bill. A lot of them are living in glass houses.

I will continue the discussion of Member items. We had the State sales tax deduction. Senators Cantwell and Hutchison wrote Senator Baucus and me asking us to include the House sales tax deduction provision in the conference agreement. We also received letters from delegations of other States where the State tax base is a sales tax base. The House sales tax deduction is in this bill because we decided for our Senators from several States that it ought to be included.

We had timber tax relief provisions: Senators Chambliss, Pryor, Cantwell, Sessions, Shelby, Cochran, Collins, Crapo, Craig, Coleman, Graham of South Carolina, Wyden, Cornyn, Lugar, and Murray.

As many of these Senators know, the timber industry has been hard hit by the tax on our exports going to Europe. By the way, when this bill passes, those taxes go away. The industry is finally recovering from a long recession. Timber mills are reopening. Mill workers are returning to the mills. The House timber provisions are in this bill.

Charitable whaling activities. Senator Murkowski wrote, asking us to accept the House provision that allows a deduction for charitable whaling activities. Now, some will criticize this provision, but it is important to the Natives of Alaska. Senator Murkowski is looking out for the Natives of Alaska. She ought to be applauded for bringing that to our attention. This is in the bill. But it has also passed the Senate several times.

Senator Baucus and I received letters from Members asking us to take Senate provisions out of the conference agreement. One example is Senator Stabenow's letter regarding a revenue raiser involving donations of cars. As you heard yesterday, Senator Hatch shares Senator Stabenow's concerns. The conferees retained the Senate revenue raiser.

There is another category of letters that we received. An example is a letter from Senator McCain and Senator Reed of Rhode Island. In that letter they asked me to keep out a provision dealing with the church tax exemption and political activities. The provision was not in either bill. Chairman Thomas and I kept provisions that were outside the scope of the bill out of the conference entirely. No matter what the merits of that proposal were, we played fair by Senator McCain and Senator Reed of Rhode Island.

The final category of requests dealt with the opposite of the McCain and Reed of Rhode Island request; that is, we had requests for items to be included that were not in either bill. I will give you a couple of sympathetic examples: a liberalization of tax-exempt rules as applied to charitable hospitals. Senator Akaka raised this issue. Unfortunately, this provision was outside of scope.

Another example is penalty-free withdrawals from IRAs for hurricane victims. Right now, if you are hit by four hurricanes in Florida, who is going to argue with Senator Nelson of Florida bringing that to our conference? He asked us to raise this item. It was not in either the House or Senate bill. It would have been an entirely new item that we could have put in in conference. However, there was no way to address the proposal without then opening the door for a lot of other items that were not in either bill that somebody would want included at the last minute.

So at this point, Mr. President, I ask unanimous consent that these letters be printed in the Record.

Mr. President, I have spent a little time going through a sample of the many items that Members weighed in with at the conference. This is a small sample of those items raised. Many others were brought to the attention of Senator Baucus and this Senator through letters or oral communications. It is safe to say, Senator Baucus and I can relate to what Senator Byrd and Chairman Stevens go through on the appropriations bills.

My point is, those who want to distort this bill by describing it as a special interest bill are ignoring a couple things. One, they are ignoring--perhaps conveniently, perhaps deliberately--their own efforts to advance their interests. Secondly, as I have said before, this bill is paid for by raising revenue, largely by closing abusive corporate tax loopholes.

Let the record be clear that this bill is fair, this bill is balanced. It is a balanced effort at resolving four objectives. One objective is ending the European tax on our exports going to Europe that are legal and legitimate, even though I disagree that it should have been done. I disagree with that decision. The United States lost a

World Trade Organization decision that our previous tax laws were violating the agreements that Congress had made with Europe, Congress made, because we passed these trade agreements as law.

If anybody thinks, well, it is wrong for Europe to levy a tax against us, we won a case against Europe on beef because they don't let our beef into Europe because we use hormones in the development of our beef, in the feed the cattle eat or that they are injected with, and Europe does not like that. But they are violating our right to send beef to Europe because they don't have a scientific basis for doing it. That is what the World Trade Organization said. But they still don't take our beef. So we put a tax on products coming from Europe to the United States to retaliate the same way they are retaliating for the reasons behind this bill.

This bill ends that European tax because we are conforming our tax laws to the international trading agreements Congress passed 10 years ago. We are also going beyond doing away with an impediment to our exports so that we lose jobs here in America because of that tax. We are putting a replacement benefit to manufacturers in the United States so jobs will be created here by lowering the corporate rate from 35 to 32.

No. 3, we are providing international tax reforms that will aid domestic manufacturers so we can compete in the global marketplace.

And lastly, we achieve these policy ends in a revenue-neutral way through the curtailment of abusive corporate tax shelters and abusive corporate loopholes by closing them.

I hope everybody agrees this bill is a well-balanced bill, accomplishing a goal we should have accomplished a year and a half ago, at least no later than March when these European taxes started on our products. I apologize to any Americans who have been laid off because our products are not competitive in Europe because of that tax and why it takes Congress so long to wake up, particularly when there are Members of Congress always complaining about outsourcing.

We started on this bill in March. It took us 15 days, over a period of 3 months, to get this bill through the Senate. And then we were a long period of time before the minority party agreed we could go to conference. But once we got to conference, thanks to the good cooperative working relationship between Senator Baucus and me for the Senate and between Mr. Baucus and me and Congressman Thomas, chairman of the House Ways and Means Committee, we have this bill.

But for those laid-off workers, I am embarrassed this bill couldn't have been passed a long time ago and that we ran up against all of the impediments. Why? Because certain Members of this body don't want a Republican President signing a jobs bill a few days before the election.

I yield the floor.

Mr. President, I yield 4 minutes to the Senator from Texas.

Mr. President, I yield the Senator from Kentucky, our whip, 5 minutes.

Mr. President, today is a historic day in the world of tax policy. We are about to pass the most significant reform of American business taxation since 1986. I am not talking about large corporate reforms. This bill contains some of the most important small business reforms in years. This bill represents the most comprehensive agricultural, small business, rural community tax incentive package ever written by Congress. The bill contains far-reaching measures to revive the manufacturing base in America by cutting taxes and creating incentives to invest and create jobs in the United States. This manufacturing tax goes to large and small corporations, family-held S corporations, partnerships, sole proprietorships, farmers, and co-ops.

This is the football season. With apologies to the Senate's chart expert, my colleague from North Dakota, Mr. Conrad, I am going to use one last chart for this bill. This chart behind me is about the football. It is a chart that I used about 7 months ago. During that time, spring drills were about the only football activity. The chart shows several sets of goalposts. As this important bill has wound its way through the legislative process, at each stage the goalposts were moved and moved and moved. Sometimes we had to call timeout. But at each stage we held on to the ball. We had an overtime regulation goalpost. We had a trade adjustment assistance goalpost. We had an unemployment insurance goalpost. Those were Senate floor goalposts. We passed each goalpost. Then we got to conference. In conference we ran into the Food and Drug Administration tobacco buyout goalpost.

We have passed the final goalpost now. In this bill we had to go straight over the tackle, and we did, just like good old-fashioned Big Ten football. I will see the Senator from Minnesota the last Saturday of November. We are finally now in the end zone.

Now I would like to thank the team that got us over the goal line. The first is Senator Baucus. I am certain that we would not be here without his good work and cooperation. In addition, I thank all other members of the Senate Finance Committee for their time and energy in making this bill a reality.

I would like to point out a special thanks to a couple senior members of the Senate Finance Committee, Senator Nickles and Senator John Breaux.

Senator Nickles has been a Finance Committee member since 1995. He has left a big impact on trade, tax, health care issues that have come before the committee. He and I have not always seen eye to eye on all issues, but he is a hard-working, tenacious Member of the Senate. He takes the work of the committee seriously.

Senator Breaux has been on the Senate Finance Committee since 1990. He succeeded Senator Long in the Senate. Senator Long was a legendary member of the Finance Committee, the longest serving chairman it has ever had, a major architect of much tax legislation. Senator Long left a legacy on the Finance Committee. Senator Breaux followed up on the legacy of Senator Long, taking the practical, constructive, and creative approach of Senator Long. Senator Breaux has blazed his own trail on the Senate Finance Committee.

In many cases, the Senate is paralyzed by partisan politics. I am proud that the Finance Committee is still a workshop of bipartisan problem-solving. Senator Breaux has been a key element at that continuing bipartisan tradition. Hopefully, the Democratic caucus, which has been steadily moving to the left over the years, will replace him with a like-kind pragmatist. The country will be better off for it.

Over the last couple of years, the States of Oklahoma and Louisiana have been well represented on the Finance Committee. Unfortunately, there will be a bit of a vacuum with the departure of Senators Nickles and Breaux. I am pleased that this bill contains many priorities of these two Senators. For Senator Nickles, there was the depreciation change that he has fought for over the years. For Senator Breaux, important priorities for his State of Louisiana included significant changes in the tax treatment of key Louisiana interests such as agriculture, aquaculture, energy production, shipbuilding, forestry, and shipping. It is a fitting tribute to these two members of the Finance Committee.

We are also saying goodbye to Senator Bob Graham of Florida. Senator

Graham has been on the Finance Committee since 1995. In the 1990s, Senator Graham was also a bipartisan bridge builder on tax and trade issues. Senator Graham faithfully attended to Florida's interests during his service on the committee.

I thank also Senator Frist for backing me all the way on this bill. He took months to get it to the Senate floor. At times many of our Republican caucus questioned whether it was worth the price of unrelated controversial amendments that were thrown our way. Our leader stayed the course. I appreciate that very much.

I would like to thank my staff on the Senate Finance Committee as well: Kolan Davis, our staff director; Mark Prater, chief tax counsel, and the other tax counsels--Ed McClellan, Elizabeth Paris, Dean Zerbe, Christy Mistr, and John O'Neill, as well as John's predecessor, Diann Howland. These individuals, along with Adam Freed, the staff assistant for the tax team, have been the workhorses for the committee--keeping the lights burning long into the night to make this bill possible.

Finally, thanks go to the hard-working interns and law clerks. I refer to Casey August, Grant Menke, and Peter Jordan. Grant took the summer off to call balls and strikes as an umpire in the New York-Penn league. Grant helped us with this bill in the spring and returned in time for the conference.

Let me extend my thanks also to George Yin and the staff of the Joint Committee on Taxation for providing guidance in this effort. I want to particularly point out the good work of Ray Beeman, David Noren, and Gray Fontenot. The Finance Committee tax staff refers to this trio of specialists as the ``three amigos.'' The three amigos helped us find a lot of gold out there in corporate loophole land. Brian Meighan recently left the three amigos for the private sector.

I would like to thank the leadership staff for all their assistance. From Senator Frist's staff, I thank Lee Rawls, Eric Ueland, Ronit Kumar, and Libby Jarvis. I also thank our Senate leadership team and their staffs, especially our able whip, Senator McConnell.

Finally my thanks to go Jim Fransen, Mark Mathiesen, Mark McGunable and their capable staff at legislative counsel for taking on our ideas and drafting them into statutory language. These talented lawyers are the true wizards of the legislative process. They handle enormous pressure with professionalism and amazing dexterity.

I invite everybody to relax a bit today. After the vote tonight, everyone should go home and get a good night's sleep. As for me, now we are getting ready to wrap up. I am looking forward to going home to Iowa. It is harvesttime in the fields. I have some work to do on the farm. We also have a bit of an election coming up. God willing, the good folks of Iowa will send me back here to continue to do the people's business.

I yield the floor.

Mr. President, I ask for the yeas and nays.

Mr. President, I rise today to express support for this conference report on the American Jobs Creation Act of 2004. At the outset, I commend Finance Committee Chairman Grassley and Ways and Means Committee Chairman Bill Thomas for their leadership during the conference negotiations and bringing this bill to completion.

We're here, after nearly 2 years of discussion and work on legislation that, once enacted, will jumpstart the manufacturing sector of our economy and create jobs. Indeed, although this legislation is to repeal the FSC/ETI rules and stop the imposition of WTO sanctioned trade tariffs, the real reason we must pass this legislation is to assist our struggling manufacturers throughout the country.

According to the National Association of Manufacturers, between January 2001 through January 2004, manufacturing employment in our Nation declined by 16 percent. In New England, there was a 20 percent decrease in manufacturing employment during that same time period. This means that between January 2001 and January 2004, New England's manufacturing sector employment declined by an alarming 28 percent faster rate than it did nationally.

My home State of Maine has shed manufacturing jobs at an alarming rate over the past decade and all the more so in the past two years. From January 1993 through June 2003, a 10\1/2\ year period, Maine lost 18,900 manufacturing jobs. More specifically, from July 2000 to June 2003, Maine has lost 17,300 manufacturing jobs, the highest loss of any state during that time period.

Our objective was clear: not only must we adopt a conference report that complies with international trade law, but more importantly, we need to offer our country's manufacturers a solution that will jumpstart their production and create jobs, and we must do so now. As a result of our loss at the WTO, certain U.S. goods exported to Europe are being hit with a 12 percent tariff. Critically, this bill will remove that tax on our exports.

Were we to neglect this duty to ensure that our nation's manufacturers are simply given the chance to compete on a level playing field with foreign competitors, we would only be compounding the current situation.

Instead, this conference report will ``reallocate'' the nearly $50 billion in revenues that replacing the FSC/ETI rules will generate and provides an additional $25 billion towards a tax deduction for our manufacturers. I am pleased that the conference report follows the Senate manufacturing deduction that is available to all domestic manufacturers and does not discriminate based on the manufacturers entity classification.

Indeed, the original legislation in the House would have extended the tax relief benefits solely to regular corporate entities, or C- corporations. In the Senate, I fought to secure the benefits for S- corporations and partners in partnerships as well.

This decision to provide a manufacturing deduction that is not entity specific, rather than a corporate income

tax cut, is cruial because the ETI rules applied not only to corporations but also to S-corporations. As small business manufacturers constitute over 98 percent of our nation's manufacturing enterprises, employ 12 million people, and supply more than 50 percent of the value-added during U.S. manufacturing, it is imperative that we do not increase taxes on our country's job creators--small businesses.

In the face of record deficits, this bill also maintains our fiscal responsibility by including offsets that will crack down on abusive tax cheats. Both the Senate and House bills contain a variety of provisions that stop the proliferation of abusive tax shelters. Enacting these rules and other revenue offsets will ensure that we will be able to pay for this bill without adding to the deficit. This was a key priority for me during this conference and I am pleased that the conference supported a revenue neutral final bill.

I am also pleased that the conference report includes a provision that will restore equity and fairness into the tax code for our country's naval shipbuilders.

Quite simply, this provision would put navy shipbuilders on par with commercial shipbuilders in that they would be able to pay a portion of their income taxes upon delivery of the ship rather than during construction. Currently, navy shipbuilders must estimate profits during the construction phases of the shipbuilding process, and they must pay tax on those estimated profits--a process known as the ``percentage of completion method'' of accounting.

The major shortcoming of this method is that shipbuilders must report progress payments as ``revenue'' rather than as a source of financing, whch had been recognized and permitted for the 64 years between 1918 and 1982. Additionally, this accounting method creates a ``legal fiction'' of an ``interim profit,'' when in reality a profit or loss is not reasonably known until after a ship is completed. This places a financial burden on shipbuilders during the critical construction phase, reduces the resources available to invest in facilities and process to reduce construction costs, places a burden on the cash flow management of the shipbuilder, and weakens the financial health of the defense shipbuilding industrial base.

The provision in the conference eport will permit navy shipbuilders to pay 40 percent of their estimated income tax during the contract and pay the remaining 60 percent in the year in which construction is completed. In addition, shipbuilders will be able to report their taxes on a ship-by-ship basis rather than on a contract-by-contract basis, which therefore reduces the potential for abuse.

Now, naval shipbuilders will be able to pay their income taxes in a manner similar to how commercial shipbuilders pay their taxes. The main difference, though, is that commercial shipbuilders are permitted to utilize this 40/60 treatment for only 5 years rather than the 8-year period under my amendment. This 5-year period for commercial shipbuilders is appropriate for them because most commercial ships take no more than three years to build. However, as many navy shipbuilders spend at least 8 years when building submarines, aircraft carriers, and destroyers, a 5-year window for them is simply inadequate. Consequently, this amendment provides for an 8-year window because that is the necessary time to assist the majority of our navy shipbuilders.

Let me stress that this provision in no way reduces the amount of taxes that these shipbuilders ultimately pay. Rather, it merely allows them to defer paying their taxes until their profit is actually known, just as commercial shipbuilders are already permitted to do.

Not only does this change embody sound tax policy, but so too does it improve our National Security. Indeed, this provision is limited exclusively to naval shipbuilders, that are charged with building our Navy's fleet of ships that protect our homeland. During this time of war, the last thing we should do is allow an inequity in the tax code to cause these companies financial hardship that might affect their production and output. I am certainly not saying these companies should get a free pass, and this provision in no way provides them with one, but what I am saying is that they deserve to be treated fairly given the instrumental role they play for our Nation, and this amendment will do just that.

This conference report contains a great many benefits for small businesses that will play a vital role in improving our economy. For example, the report includes an amendment I offered that will extend the current $100,000 small business expensing limitation and $400,000 phase-out through the end of 2007. Although the Jobs and Growth Tax Act increased these levels from their previous $25,000 limitation and $200,000 phase-out, these limits will sunset at the end of 2005 and return to those lower levels. I believe it is imperative to inject certainty into the tax code so our small business owners can plan accordingly in purchasing the capital and equipment they need to run their operations, and this amendment will go a long way toward doing so.

It was imperative that Congress take action to extend these benefits for our Nation's small businesses. By doing so, qualifying businesses will be able to deduct more of their equipment purchases in the current tax year rather than waiting 5, 7, or more years to recover such costs through depreciation. This change represents substantial savings both in tax dollars and also in the time small businesses would otherwise have to spend complying with the complex depreciation rules.

For example, the IRS estimates that a taxpayer should expect to invest nearly 50 hours in order to learn the law, perform the necessary bookkeeping, and complete the forms in order to claim a depreciation deduction for an average amount of depreciable property. That is valuable time that the owner must take away from running the business. And in too many cases, it translates into additional fees for accountants to figure out these indecipherable depreciation rules.

By maintaining the $100,000 limitation, small businesses will save time and accounting costs, freeing them to spend their scarce time and resources on what they do best--running successful businesses and creating jobs in America.

I am also pleased that the report includes my amendment to modify the unrelated business taxable income rules to allow small business investment companies to receive investments from tax-exempt entities. By enacting this provision into law, small businesses will have better access to capital through the Small Business Investment Company Program.

Small Business Investment Companies are government licensed, government regulated, privately managed venture capital firms created to invest only in original issue debt or equity securities of U.S. small businesses that meet size standards set by law. In the current economic environment, the SBIC program represents an increasingly important source of capital for small enterprises.

While Debenture SBICs qualify for SBA-guaranteed borrowed capital, the government guarantee forces a number of potential investors, namely pension funds and university endowment funds, to avoid investing in SBICs because the woul be subject to tax liability for unrelated business taxable income UBTI. More often than not, tax-exempt investors opt to invest in venture capital funds that do not create UBTI. As such, an estimated 60 percent of the private-capital potentially available to these SBICs is effectively ``off limits.''

The amendment I offered corrects this problem by excluding government-guaranteed capital of Debenture SBICs from debt for purposes of the UBTI rules. This change would permit tax-exempt organizations to invest in SBICs without the burdens of UBTI record keeping or tax liability.

As a result, small businesses will have greater access to capital, enabling them to grow and hire new employees. According to the National Association of Small Business Investment Companies, a conservative estimate of the effect of this amendment would be to increase investments in Debenture SBICs by $200 million per year from tax-exempt investors. Together with SBA-guaranteed leverage, that will mean as much as $500 million per year in new capital assets for Debenture SBICs to invest in U.S. small businesses.

Moreover, as people know, Maine is a rural State. In that light, I am pleased that this bill contains important to the

timber industry patterned after S. 1381, the Reforestation Tax Act, a bill I introduced last year.

Under the conference report, owners of timber lands would be able to elect to immediately deduct their reforestation expenditures on their timber property--up to $10,000 per year. This change would allow taxpayers to recoup more of their investments in qualifying timber property at a more rapid pace, thereby encouraging investments in reforestation and strengthening the future growth of our forests. The bill provides other relief important to the timber industry, such as the ability to treat outright sales of timber as a capital gain and be taxed at a lower rate. Likewise, it contains a provision to allow real estate investment trusts that own timberland to avoid a 100 percent penalty tax when they sell timber land in the ordinary course of their business. With foreign competition in the timber industry fierce, these provisions will enhance the ability of U.S. timber companies to compete.

Furthermore, I am pleased that tax credits for biomass facilities are included, which are similar to the ones I introduced. For the first time, the current production tax credit will be available to biomass facilities that use waste products to produce energy. This will put the industry, currently at a competitive disadvantage, on a more equal footing with other renewable power, such as wind. The biomass facilities in my state of Maine are not only an alternate electricity- producing source, but they supply good paying jobs in rural areas of the state and are a large source of tax revenues.

The Maine biomass industry uses forest waste, such as those unused portions of trees--tops and limbs--that are not put into making paper products, to produce electricity at their biomass plants. This helps to lessen the use of fossil fuel to make electricity. Since a barrel of crude oil has gone over $50 a barrel for the first time in history in recent days, these savings help what is becoming a critical--and expensive--situation. Using the forest waste also helps avoid an environmental and safety problem the mills would have if they had to store the wood waste on site.

Additionally, the report contains a provision that co-sponsored that will greatly benefit our domestic film industry, which is an industry that plays a vital role in the economy of our country and also in my home state of Maine.

Film makers will now be able to deduct up to $15 million of qualified costs during the first year of production. The remaining costs incurred will then be amortized over a 7-year period. Similar to the small business expensing provision, it is critical that we provide taxpayers with opportunities to recover their costs in a more expeditious manner rather than under the time-consuming and cumbersome depreciation rules. This film provision provides just that, and will in turn provide a key incentive for film makers to make their products in the United States.

Another ``job-creating'' provision contained in the bill is a provision that I was pleased to cosponsor that will potentially increase the number of taxpayers that are eligible to claim new markets tax credits. Without question, the new markets tax credit program has had a profound impact on my home state. This conference report will further improve that program by extending the geographic area to low- income communities regardless of whether they fell under the previously-designated census tracts. Indeed, this provision will benefit rural communities throughout America, particularly those in Maine, because now areas will qualify for this critical investment opportunity based on their income and not on an arbitrary ``census tract'' determination.

This report contains even more tax incentives to encourage job creation throughout America. For example, rail operators will not be able to claim a tax credit based on the amount of expenses incurred to maintain and upgrade short-line railroad tracks. Insurance companies will now not incur a penalty tax on old policy holder income when they restructure their operations, which in turn will permit them to save this money and reinvest it in their operations.

Clearly, the provisions in this bill to assist our manufacturing base are numerous, deserved, and long overdo. Fortunately, however, we were also able to provide other sectors of our economy with much needed tax relief. For example, the bill contains a provision to permit rural letter carriers to deduct more of their carrier expenses. In addition, the report contains a provision that will allow fishermen to ``average'' their income over a period of several years to account for the cyclical nature of their industry and to ensure they will be able to fully take advantage of the losses that unfortunately often arise in their business.

I am also pleased that the conference report includes measures I cosponsored to assist our Nation's shipping industry. For example, the Report includes a provision to permit shippers that adhere to the ``two ship'' rule to avoid falling under the complex, cumbersome subpart F rules. While the subpart F rules have an important role under the tax code in preventing the deferral of passive investment income, shippers should not be subject to them regarding their profits earned from their active shipping business.

An additional provision that will benefit our shippers is one that will permit them to satisfy their tax liability in a manner similar to how shippers in other countries pay their taxes. Specifically, the report contains a provision to permit shippers to elect to pay tax on the ``tonnage'' of weight of their freight, rather than a tax based on their income. Providing for this election will increase the competitiveness of domestic shippers because it allows them to pay their taxes in a more efficient, less complicated manner, which in turn will allow them to spend less time and money in trying to navigate the complicated Tax Code.

Notwithstanding all of the considerable benefits contained in this conference report, I want to take a moment to lament the report's coverage of tobacco legislation.

As you all know, the Senate reached an important compromise on the issue of tobacco in order to get this bill to conference by adopting both an industry-funded buyout of tobacco growers' quotas and a grant of authority to the Food and Drug Administration to regulate tobacco. The agreement crafted by my colleagues, Senators DeWine, Kennedy, and McConnell, would have given the FDA the authority to require tobacco manufacturers to list the ingredients on all of their packaging; to submit specified health information to the FDA for analysis; to regulate sale, distribution, and advertising related to tobacco; and to force the cigarette makers to substantiate, through scientific testing, any labels they might use to indicate that their product posed a lower health risk, such as ``light,'' ``mild,'' or ``low.''

I believe FDA regulation of tobacco is imperative because we simply cannot afford to ignore the toll that smoking has taken on our society. Every year 400,000 Americans die as a result of cigarette smoking, and approximately 8.6 million people suffer from smoking-related illnesses or conditions. In addition to the human cost, these staggering numbers have taken a financial toll on our country's health care system as well: annual public and private health care expenditures caused by smoking amount to over $75 billion, $23.5 billion of which is shouldered by federal and state governments.

Even more disturbing is the fact that the next generation is being targeted by ``Big Tobacco'' while they are still in middle and high school. Virtually all of my colleagues have been visited in the past several weeks by members of the Coalition for Tobacco Free Kids, who brought in samples of new candy-flavored cigarette packs such as ``Caribbean Chill,'' ``Midnight Berry,'' and ``Mocha Taboo.'' Everyone knows that lifelong adult smokers have no interest in buying these flavored cigarettes. That kids are the targets of this marketing is consistent with a Brown & Williamson memorandum uncovered 6 years ago which stated, ``It's a well known fact that teenagers like sweet products. Honey might be considered.''

In the final analysis, I wanted to vote for a conference report that contained the Senate's tobacco provisions. As we know, the Senate conferees agreed and voted 15-8 to include FDA regulation in the conference report--but the House rejected its adoption. Failing that, I would have wanted the buyout provision stricken as well, and I voted for an

amendment in conference to do just that, but that was also rejected. In short, at every opportunity I supported FDA regulation. At the end of the day, the conference report--designed to create jobs, bolster our exports overseas, and end the penalties against Maine's and America's manufacturers--was simply too critical to the economic future of our nation, and therefore I voted for this vital jobs bill.

Likewise, I am disappointed that this conference report failed to include an important provision in the Senate bill that would have benefitted our military reservists. Under the Senate bill, businesses would have received a tax credit for payments made to an employee who was called to active military reservist duty. Proudly, I supported this provision when it was offered to the Senate bill, and I supported it during the Senate and House conference. Nevertheless, the final report, regrettably, failed to include this sensible, deserved tax relief. While we must pass this conference report to stop the imposition of World Trade Organization tariffs, I am deeply disappointed we did not take this opportunity to compensate our military reservists and their employers for their sacrifices. Unquestionably, I hope and expect that addressing this issue will be one of the first items we consider when Congress reconvenes next year.

Finally, the bill before us today is silent on an issue of great importance to working Americans--the administration's new regulations updating overtime eligibility requirements that could deny millions of workers the overtime pay protections guaranteed by the Fair Labor Standards Act, FLSA. In May, I was one of 52 Senators who voted in support of the Harkin amendment to the Senate FSC/ETI bill which would clarify that the administration's regulations can result in no worker losing their overtime eligibility. In September, both the House of Representatives and the Senate Appropriations Committee voted decisively to overturn the new overtime regulations.

At issue is a Department of Labor regulation, which went into effect in August, updating the so-called ``white collar exemptions'' to the FLSA overtime protection. While DOL asserts that 107,000 middle- and upper-income workers will lose their overtime eligibility under the proposal, other sources put the number of affected workers as high as six million. Whatever the final impact of the DOL's changes on American workers, I have serious concerns as to whether this is the right time to take steps to jeopardize the right to overtime pay, which provides economic security for so many American families. As such, I was disappointed that the Harkin amendment was not included in the FSC/ETI conference report.

This bill is a historic achievement and will benefit our economy. Many of these changes to the tax code are long overdue. In the end, the provisions of this bill will bolster our manufacturing base, increase the attractiveness of doing business in the United States and give a jumpstart to business, particularly small businesses, to create jobs.

I urge my colleagues to support this conference report.

Mr. President, I voted against cloture on this measure yesterday because it is loaded with corporate pork and special interest tax provisions. This conference report, at 633 pages and $148 billion, serves as a sad example of the way business is done around here. The special interests continue to rule at the expense of the hardworking American taxpayer.

The original intent of this legislation was laudable. Earlier this year, we missed a golden opportunity to pass a good, clean bill that would have brought us back into compliance with World Trade Organization, WTO, agreements and stop the burdensome tariffs now imposed on our manufacturers. Simply repealing the extraterritorial income, ETI, exemption tax benefit for exports would have saved $50 billion. Instead, because this was known to be a ``must pass'' piece of legislation, it was loaded up with billions and billions of dollars in tax breaks for big corporations and special interests of all types. I recognize the need to pass legislation to bring the United States back into compliance with the WTO, and I am more than willing to support a bill that accomplishes that goal. Unfortunately this legislation's worthy purpose has taken a back seat to a host of special interest tax provision add-ons and a big buyout for tobacco farmers.

In an editorial on the issue, The Washington Times, noted that ``the ideal solution would have been a quick, simple repeal of FSC-ETI, which is bad economic policy in any case. The $50 billion in savings could then have been used to streamline and simplify the corporate tax code.'' I couldn't agree more. The Tax Code is far too complex and is in dire need of reform. While campaigning in recent months, the President has stated, with tremendous approval from every audience, that reforming and simplifying the Tax Code would be one of the main objectives of his second term. I will support him in that effort, and I encourage him to take the first step in that reform by vetoing this bill.

We have a deficit that is quickly approaching $500 billion--that is half of a trillion dollars. The proponents of this bill say that it's ``revenue neutral.'' Well, I doubt that, and I am not alone in my skepticism. The Center for Budget and Policy Priorities has figured that the bill would actually cost $80 billion if the temporary tax cuts are extended for the full 10 years. Sadly, I have no doubt that those extensions will happen--because we simply don't say no to anyone anymore. We are told that this bill is offset by closing tax loopholes, and I will be the first person to say that I support closing those loopholes, but can anyone explain to me the rationale behind closing loopholes in order to raise revenues to open more loopholes? It is remarkable. It makes no sense.

As I have said many times in the past, we need to start making some very tough decisions around here about our fiscal future. We need to be thinking about the future of America and the future generations who are going to be paying the tab for our continued spending. It is simply not fiscally responsible for us to continue to load up bills with good deals for special interests and their lobbyists. We have had ample opportunities to tighten our belts in this town in recent years, and we have taken a pass each and every time. We can't put off the inevitable any longer.

Here is the stark reality of our fiscal situation. According to the General Accounting Office, the unfunded Federal financial burden, such as public debt, future Social Security, Medicare, and Medicaid payments, totals more than $40 trillion or $140,000 per man, woman and child. To put this in perspective, the average mortgage, which is often a family's largest liability, is only $124,000--and that is often borne by the family breadwinners, not the children too. Instead of fixing the problem, and fixing it will not be easy, we only succeeded in making it bigger, more unstable, more complicated, and much, much more expensive.

The Committee for Economic Development, the Concord Coalition, and the Center on Budget and Policy Priorities jointly stated that, ``without a change in current (fiscal) policies, the federal government can expect to run a cumulative deficit of $5 trillion over the next 10 years.'' They also stated that, ``after the baby boom generation starts to retire in 2008, the combination of demographic pressures and rising health care costs will result in the costs of Medicare, Medicaid and Social Security growing faster than the economy. We project that by the time today's

newborns reach 40 years of age, the cost of these three programs as a percentage of the economy will more than double--from 8.5 percent of the GDP to over 17 percent.''

Additionally, the Congressional Budget Office has issued warnings about the dangers that lie ahead if we continue to spend in this manner. In a report issued at the beginning of the year, CBO stated that, because of rising health care costs and an aging population, ``spending on entitlement programs--especially Medicare, Medicaid and Social Security--will claim a sharply increasing share of the nation's economic output over the coming decades.'' The report went on to say that, ``unless taxation reaches levels that are unprecedented in the United States, current spending policies will probably be financially unsustainable over the next 50 years. An ever-growing burden of federal debt held by the public would have a corrosive . . . effect on the economy.''

So what do we do when we are faced with these problems? We pass a tax bill that is loaded with corporate pork.

This conference report is called the JOBS Act, but I think we should call it what it truly is: ``the corporate tax haven act.'' I doubt it will create any new jobs but it will certainly allow a few lucky folks, who have extremely well paying jobs, to make even more at the expense of the taxpayers. I'm sure the energy corporations are pleased that they won't have to wait for the energy bill to add to their over- flowing coffers.

Yesterday we passed a bill to address the issue of FDA regulation of tobacco products. Essentially, the consideration of a free standing bill to address this issue at this stage means nothing. We're supposed to be appreciative that the FDA bill was taken up and passed quickly-- we all know that passing a controversial Senate bill on a Sunday at the end of the session is meaningless. The House will not move the bill, and, even if by some miracle they did, there certainly would be no conference held. This is a sham--plain and simple. The Senate had already addressed the issue of FDA regulation of tobacco. Sadly, the conferees on the FSC/ETI bill stripped that provision from this conference report.

What the conferees did was unconscionable. They turned their backs on the health of our nation's youth and opted to strike the DeWine-Kennedy amendment that would have granted authority to the Food and Drug Administration, FDA, to regulate tobacco products. It is a very sad day for public health. They have used the FDA tobacco authority language as a linchpin to effectuate the passage of the underlying tax bill. It was nothing more than a sweetener to them and now that it is no longer of use, the conferees have discarded the language, and with it, who knows how many lives.

In striking this historically important provision, the conferees ignored the public and medical health community, child health advocates, and registered voters who in a recent poll overwhelmingly, 69 percent favor FDA authority over tobacco. Even in the six leading tobacco growing states, support for FDA authority is above 65 percent.

Without FDA authority over tobacco, there will be no regulation of tobacco marketing, no information disclosure such as nicotine and carcinogenic content, no requirement that can force the tobacco industry to remove harmful components from their products, and no pre- market approval of ``new products'' marketed as ``safer cigarettes.''

Tobacco-related illnesses and deaths in this country have reached epidemic proportions, but according to the Surgeon General, tobacco use is ``the single most preventable cause of death and disease in our society.'' The Surgeon General estimated 400,000 U.S. citizens lose their lives each year as a result of a smoking-related illness. This figure translates into approximately 1,200 smoking-related deaths per day. This loss of life has a significant economic impact accounting for an estimated $75 billion per year in health care expenses. Most tragically, however, the Surgeon General estimates that approximately 2,000 kids start smoking every single day, and that one third of them will die from a smoking-related illness.

I thank Senators DeWine and Kennedy for their commitment to our Nation's youth, and I am certain that they will continue to fight for FDA authority over tobacco because it is simply too important not to continue to fight. We must protect the public health and hold the tobacco industry accountable for the production and marketing of its products, particularly as their business practices affect children, but I fear we have lost yet another opportunity.

Not only have the conferees jeopardized the health of our Nation's youth by striking the FDA authority provisions of this bill, they left provisions that would eliminate the quota system and channel $10 billion--into the pockets of tobacco farmers--many of whom no longer even farm tobacco--and disguised the money as a buyout to encourage such ``farmers'' to shift their crops to something other than tobacco. According to the Wall Street Journal, among these ``tobacco farmers'' who would benefit from a tobacco buyout are Larry Flynt and his brother, who admittedly abandoned the ``blood, sweat, and tears'' of the tobacco business to pursue pornography.

I fear that the conferees have failed to realize that, by not setting domestic production restrictions, and not restricting new market entrants from farming tobacco, they may be creating new opportunities for more tobacco farming. In doing so, they create the possibility that a greater supply of tobacco will result in reduced prices thereby making tobacco products more accessible to kids. Studies have shown that increases in the cost of cigarettes directly correlate to reduced youth smoking rates. Greater youth accessibility to tobacco products coupled with a lack of FDA authority over the marketing and information disclosure of these cheaper products is the most invidious combination possible. By turning their backs on FDA tobacco authority while simultaneously making it easier to grow and sell tobacco, the conferees may be exposing kids--not to mention adults--to an even greater health risk than they are today.

As if the lack of FDA language wasn't bad enough, let me go through some of the other ridiculous items contained in this conference report.

Many provisions in this bill remind me of the golden oldies we saw in the energy bill. One of the more generous tax breaks in this bill is a creative provision that allows energy companies to reclassify energy production as a manufactured good in order to qualify for potentially tens of billions of dollars in new tax deductions. The manufacturing tax deduction is currently available only to traditional manufacturing industries as an incentive for job creation. While this change in the tax code may not create manufacturing jobs, it does create a tax balloon, which increases to a maximum of 9 percent of a company's production income after 2009. The total estimated cost of this golden parachute is $76.5 billion. Other industries that will now be considered to be ``manufacturers'' are movie studios, real estate development, and construction companies. But the greatest share of this tax break will go to the oil and gas industry and electric utility companies.

Fear not, not all of the largess goes to oil and gas companies. There are equal opportunities for other corporate and special interests to make profits at the expense of the taxpayers. An article in the Wall Street Journal on October 6, refers to the legislation as ``a trove of obscure breaks and perks'' and identifies four companies in Houston that were singled out for special treatment. These companies recently changed their addresses to the Cayman Islands and Bermuda when the Senate proposed a retroactive crackdown on businesses that incorporate offshore to shave their U.S. tax bills. Fortunately for them, the provision in this bill is no longer retroactive. Not only does the bill allow these companies to slip comfortably away, but others contemplating such actions will be heartened by the fact that the bill doesn't include a provision that would have supported Federal judges and the IRS in bringing companies that indulge in these improper tax shelters to justice.

This bill also contains a tax credit totaling more than $2 billion over 9 years for industries generating electricity from alternative fuel sources. Let me be clear that I support clean renewable energy technologies as a

means to reduce greenhouse gas emissions and increase energy independence, but most of these subsidized technologies aren't clean. No matter how you look at it, chicken droppings simply are not a clean alternative fuel. Just how, exactly, does the public benefit from the subsidies provided for the burning of municipal trash and poultry waste, both which create significant air pollution?

The most outrageous provision in this section could be easily missed. It defines ``refined'' coal as a qualifying renewable resource. According to the Tax Code, refined coal is just another name for synthetic fuel. I would be greatly relieved if my colleagues could document that this is not the case, but it appears to me that the synthetic fuel credit has been snuck in here along with so-called renewable sources of electricity.

I have spoken before about the synthetic fuel tax credit scam that was revealed by Time reporters in October 2003. It is shameful for Congress to perpetuate this expensive hoax, which has cost taxpayers $4 billion since 1999. The IRS followed up the Time report with a November 2003 bulletin stating, ``The Service believes that the processes approved under its long standing ruling (that a synthetic fuel must differ significantly in chemical composition from the substance used to produce it) do not produce the level of chemical change required.'' Incredibly, it goes on to say, ``Nevertheless, the Service continues to recognize that many taxpayers and their investors have relied on its long-standing ruling to make investments.'' So, basically, we should just ignore the fact that chemical change isn't occurring. They should have just said that if Congress wants to continue this shameful scam, then the IRS will let it pass.

The original intent of the synthetic fuels tax credit was not sheer folly. It is just that, for a variety of reasons, a synthetic fuel industry never materialized in the United States. Canada invested heavily in synthetic fuel production over the past decades and sells millions of barrels of synthetic crude oil to the United States annually. The only evidence of a U.S. synthetic fuel industry is this gigantic tax shelter. One doesn't need to be in the oil or gas business to strike it rich with synthetic fuels either--one of the greatest beneficiaries of this tax shelter--and that is all that it is--a tax shelter, is a very profitable hotel chain, Marriott. This is an equal opportunity bill for wealthy corporate interests.

Wait, we can't forget ethanol! $77 million from this bill will go to ethanol manufacturers. No tax break bill would be complete without subsidies for this synthetic fuel, ethanol gasohol, created and perpetuated by Congress. And it all starts with corn. Ten percent of the corn grown in this country is used to produce ethanol. Of course, corn producers, like producers of other major crops, receive farm income and price supports. In the 107th Congress, this body passed the Farm bill which appropriated more than $26 billion in direct assistance to corn-growers over 6 years. That is an average of $4.3 billion in direct subsidies each year just to corn-growers!

In addition to the subsidies going primarily to agribusiness corporations, the public pays for ethanol in other ways as well. More energy is used in the production of ethanol than it provides to consumers, it increases the per gallon cost of gasoline, and it results in environmental degradation. Finally, to add to all these insults, ethanol subsidies increase the public's grocery costs. Subsidized corn results in higher prices for meat, milk, and eggs. This happens because about 70 percent of corn grain is fed to livestock and poultry in the U.S. Increasing ethanol production further inflates corn prices and subsequently food prices.

So the American public provides billions to create this artificial market for ethanol, and then pays more for their groceries and what do they get in return? I will tell you what they get in return--absolutely nothing. No reduction in petroleum fuel use. No reduction in air pollution. There is one reduction, however, consumers are rewarded with--reduced fuel economy. More gasohol must be used to go the same distance as conventional fuel. So no one can honestly claim that subsidizing ethanol is in the public interest or an element of sound national energy policy.

Another objectionable provision is the ``green'' bond program. The original form of this provision prompted the ``hooters'' part of my ``hooters and polluters'' reference to the energy bill. Well, the hooters is gone, but this program is still top-heavy with tax breaks-- $231 million for the real estate corporations that are going to develop these projects. With or without a hooters, I don't see how it's in the public's interest to pay for enormous commercial facilities in three or four States. These projects all sound like enterprises that can stand or fall on their own--they don't need the taxpayers throughout the country giving them a big boost.

Let me give you a sense of the ``public works'' that benefit from this provision:

Destiny USA in Syracuse, NY is an entertainment and retail

development touted as an economic stimulus for upstate New

York. The primary developer has committed to 3.2 million

square feet of space with a price of close to $700 per square

foot. They estimated these green bonds would save them close

to $100 million.

Belmar in Lakewood, CO is a $500 million redevelopment of a

mall, which will include many restaurants, clothing stores,

shops, and office space.

Atlantic Station in Atlanta GA is a 138-acre redevelopment

of a former steel mill which will include 12 million square

feet of retail, office, hotel space, and parks.

Riverwalk Development in Shreveport, LA, minus the Hooters,

this $150 million project will feature stores, restaurants,

movie theaters, hotels, and entertainment spots.

These all sound like grand, money-making ventures to me--they don't need taxpayer support. Pork called ``green bonds'' is still pork.

Some of the other notable giveaways in this grab bag of corporate tax delights are:

The ``hummer in every home'' provision is still intact. It

is just not quite as expensive as it has been the past. This

provision extends the existing $100,000 tax deduction for the

purchase of vehicles weighing over 6,000 pounds. The original

intent of this deduction was to benefit farmers and other

business owners in need of heavy-duty vehicles.

Unfortunately, some individuals unscrupulously seized on this

loophole in order to purchase Hummers, Escalades and other

expensive, gas guzzling SUVs. Thankfully, due to the

insistence of Senator Nickles, those purchasing luxury sport

utility vehicles can no longer take advantage of the $100,000

deduction. However, they can still take a deduction of up to

$25,000. This could cost our Treasury $350 million for every

100,000 taxpayers who take advantage of this loophole. Again,

it is not as bad as it used to be, but it is still too

expensive and should be eliminated. The cost of foreign

oil is about $53 a barrel. Shouldn't we, as a practical

matter, be encouraging the use of smaller, more fuel

efficient vehicles?

There is a tax break for ``small refiners'' of oil to

improve clean air standards. Unfortunately, ``small'' is

defined as those with refining capacity below 205,000 barrels

per day, so some of the large oil companies can get in on

this one too.

Three of the world's richest energy companies--BP, Exxon

Mobil, and Conoco Phillips--stand to be the primary

recipients of two tax breaks, totaling $445 million, for

building an Alaskan natural gas pipeline and for processing

natural gas for the project. Considering that these three

companies have enjoyed after-tax profits of $95 billion since

2001, the wealthy shareholders of these companies--not

taxpayers--should foot this bill. In addition, these three

companies are allowed to depreciate their natural gas

pipeline over seven years, costing taxpayers another $150

million.

There is $27 million for dog and horse race tracks to help

lure more foreigners to gamble at U.S. horse and dog racing

facilities; $995 million for the treatment of aircraft

leasing and shipping income. This provision would provide a

tax exemption on income derived from an aircraft or vessel

leasing business.

There is $28 million for a cruise ship tax break. This

provision would allow the cruise industry to delay paying

taxes on airplane tickets, hotels, and other excursions it

sells in the United States. The delay would save the Carnival

Corp. $15 million, and Royal Carribean would save anywhere

from $8 million to $10 million.

There is $9 million for a tax break on archery products;

$11 million for a provision that would reduce the excise tax

on fishing tackle boxes; $44 million for the importers of

Chinese ceiling fans; $4 million to repeal the excise tax on

sonar devices that are used for finding fish; $247 million

for a provision that is designed to help the producers of

small jets and planes, 60% of which are built in Kansas. Lear

Jet and Cessna benefit greatly from this provision; $27

million for providing tax-free treatment if farmers replace

livestock because of weather related conditions; $101 million

for NASCAR track owners; $57 million for a tax break for

shipping companies; $501 million for a tax credit for the

maintenance of railway tracks; $336 million for a tax break

for Hollywood studios; $234 million for a tax break for the

producers and

marketers of alcoholic beverages; and $495 million for Naval

shipbuilders.

Where is it going to end? We have to face the facts, and one fact is that we can't continue to cater to wealthy corporate special interests any longer. The American people won't stand for it, and they shouldn't--they deserve better treatment from us. I strongly encourage my colleagues to vote against this conference report.

Mr. President, I will vote against this FSC/ETI conference report and I want to explain why.

The original purpose of this legislation was simple and clear--to bring the United States into compliance with a World Trade Organization, WTO, ruling which said that portions of our Federal Tax Code run counter to international trade regulations.

It is critical that we fix this problem, or U.S. companies will face increased European tariffs, costing U.S. jobs.

This conference report, however, goes far beyond the simple legislative fix needed to bring the U.S. into compliance with the WTO ruling.

In fact, the cost of bringing the U.S. into compliance with the WTO is $49 billion, while the cost of the final bill is $145 billion. The difference is $96 billion in benefits to special interests paid for with certain revenue fixes that should be used to balance the budget.

In fact, this bill provides billions of dollars in benefits to special interests at a time of unprecedented budget deficits. Let me give you a few examples cited in Thursday's Washington Post, ``Conferees Agree on Corporate Tax Bill'':

NASCAR racetrack owners get a provision to write off $101

million worth of improvements over ten years.

Foreign gamblers at U.S. horse and dog racing tracks would

no longer have to pay taxes on their winnings upfront. This

is estimated to be worth $27 million.

Home Depot would secure a temporary suspension of tariffs

it owes for imported Chinese ceiling fans. This is estimated

to be worth $44 million.

At a time when we are facing unprecedented Federal deficits and a mounting debt, it is simply unconscionable to approve this giveaway to special interests. Although the 10-year cost is offset, these offsets could well be used to bring down the deficit.

Policymakers should be taking steps to reduce the deficit and improve the economy, not eroding it further by doling out tax breaks to special interests. But one industry was singled out for penalty in this bill. I cannot accept that--and that industry happens to be the film industry.

In fact, this final conference report will cost the motion picture industry $5 billion over the next 10 years--because they will have to make changes in the way they account for revenues.

The film industry employs 750,000 people nationwide, and the major motion picture studios are publicly owned and pay annual dividends to shareholders.

Rather than allowing the industry to account for its activities on a product line-by-product line basis as was done in the Senate bill, this conference report means that the industry will have to adopt unified accounting.

For example, the Disney film called The Alamo was produced in the United States and did not perform as well as expected.

Under the final conference report, the losses from The Alamo are lumped with all other company revenues--TV, DVD sales, theme parks, merchandise, and music. This is known as unified accounting.

In the Senate version of the bill, Disney would have been able to account for this loss within its film division, separate from its other divisions. This is known as product line-by-product line accounting.

If you assume a $50 million loss, requiring unified accounting will cost the studio an additional $2.6 million in additional taxes.

If you assume a $75 million loss, requiring unified accounting will cost the studio an additional $3.9 million in additional taxes.

So the bottom line is that unified accounting will mean that Disney, and other entertainment companies, will have to pay significantly more in taxes as much as $5 billion over the next 10 years.

I cannot believe that we would in effect raise taxes on an industry that does so much to help our economy.

This simple accounting change would have significantly helped reduce the impact from this legislation.

But in the end, this provision was stripped from the final conference report.

What is worse are reports that this was not due to the merits of the provision, but out of base, political concerns.

A story in yesterday's edition of Roll Call, ``Studios Take Hit in Tax Bill'', asserts that lawmakers stripped the Senate film amendment in retribution for the film industry's decision to hire a Democrat--a former Cabinet Secretary in fact--to head its trade association.

Let me quote from the article:

One GOP Lobbyist for the industry said:

The Glickman thing is going to cost them. No Republican

will fight for the movie industry.

Another Republican Lobbyist added:

They were not overly helpful to Republicans, so Republicans

don't want to be overly helpful to them.

Ordinarily, I do not believe much of what I read on many days and so there would be reason perhaps to dismiss this.

But I also know that the word has been put out on K Street that only Republicans are welcome as lobbyists so this article takes on new credibility.

This is especially egregious given the fact that the film industry was not even involved in the unfair trade practices that led the WTO to declare that U.S. international tax rules were unfair.

I have the opinions of two former U.S. Trade Representatives--one Republican and one Democrat--Carla Hills and Mickey Kantor--which make the case.

Carla Hills wrote:

Having previously served as [U.S. Trade Representative], I

would like to share with you my views regarding the

consistency of your amendment with applicable trade law The

[General Agreement on Tariffs and Trade] does not apply to

`audiovisual services' and does not include any general

prohibition against export contingent subsides.

Mickey Kantor wrote:

Audiovisual services are . . . not within the purview of

the WTO FSC/TTI decisions In my view the adoption of [your

amendment] . . . would not violate or contravene the WTO

rulings in the FSC/ETI case.

As one can see, two former U.S. Trade Representatives agree that the entertainment industry was not involved in the unfair trade practices.

However, the entertainment industry is being singled out for a tax increase in this bill in order to pay for tax cuts going to multinational firms that hold their profits overseas in order to avoid paying taxes.

The bill allows many of these companies having profits overseas to repatriate these billion at a 5.25 percent tax rate.

These are the multinational firms which now will be allowed to bring those foreign-earned profits back to the United States at one half the rate that the poorest American's are required to pay on their income under this bill. This is not fair and equal treatment.

I cannot believe that the other House would utilize political vengeance to disadvantage a sector of American business, while so advantaging other sectors.

Another major flaw with this bill is that it removes the Senate language permitting long-sought FDA regulation of tobacco. The Senate voted overwhelmingly--78 to 15--in favor of a carefully crafted amendment to allow FDA regulation of tobacco.

This amendment linked FDA regulation with a 5-year, $12 billion buyout of tobacco growers. Regulatory authority over tobacco would have allowed the FDA to begin to reduce the addictive and carcinogenic elements of these products. It would have made a difference and, over the long run, it, alone, could have saved millions of lives.

Despite the broad, bipartisan support for this provision, the House rejected a proposal by Senator Kennedy to provide an additional $2 billion for tobacco growers as long as it was linked with FDA regulation of tobacco. Even Philip Morris supports FDA regulation of tobacco. Let me quote from two letters

from senior executives from Altria, the parent company of Philip Morris.

Steven Parrish, Senior Vice President, Corporate Affairs, Altria Group wrote that the provision on FDA regulation of tobacco ``is the result of many difficult choices and compromises by all those involved, and it reflects a balance of the perspectives of many stakeholders. We believe the bill embraces the core principles that are necessary to provide the Food and Drug Administration with comprehensive, meaningful and effective regulatory authority over tobacco products.

Together with our domestic tobacco operating company, Philip Morris USA, we enthusiastically support passage of your bill in its entirety.''

John Scruggs, vice president, Government Affairs, Altria Group wrote separately that the provision on FDA regulation of tobacco ``address[es] nearly all'' of the ``issues relating to retailers'' and we should ``disregard the strident and unfounded arguments of those who refuse to look to the future and the need for change in the tobacco industry.''

Congress had the opportunity to finally allow the FDA to regulate tobacco--but it failed to do so. This is deeply disappointing and shows the true colors of the House Republicans.

You may ask, what would FDA regulation of tobacco do to help stop smoking and prevent these premature deaths? FDA regulation of tobacco would do two important things.

First, it would control the deceptive and manipulative advertising used by cigarette companies. Young people across the country are bombarded every day with deceptive advertising and misleading claims made by cigarette manufacturers.

The tobacco industry spends $11 billion on marketing their products. Their latest campaign involves cigarettes that come in fruit flavors and bright colors to target adolescents and women. The cigarettes are given names such as California Dreams, Midnight Madness and Kauai Kolada. The cartons are a different shape and size so as to be hidden from unsuspecting parents and teachers.

And the manufacturer describes them by saying: `Each is as enchanting and mysterious as the darkest night. And, live in color with California Dreams `cigarettes in color' for your individual taste and attitude.' This is truly a new low. These slogans, these flavors, and these colored wrappers cannot hide the fact that cigarettes kill more than 400,000 American each year--and that's the second reason that FDA regulation is so important.

FDA regulation, over time, would ratchet down the carcinogenic and addicting ingredients of tobacco products. Just think how many fewer Americans--young people, old people would avoid the addiction.

Today, 42 million Americans today are addicted to cigarettes and other tobacco products. A number of these will end up with lung disease and many of them will die.

Lung cancer is the number one cancer killer--and the number one cause of lung cancer is smoking. Today and every day, 4,000 children under the age of 18 will try smoking for the first time, 2,000 of these children will become regular smokers, and 1,300 will die prematurely because of smoking.

The bottom line is this: Congress had the opportunity to take a major step forward in improving the health of America's children. But the Republican members of the House chose the tobacco industry over our children--and they should be held accountable for that choice.

There is one more item that did not make it into this bill, which I find deeply troubling. The Senate language to protect overtime rights was removed from the bill. This means that millions of American workers may very well lose long-guaranteed job overtime protection. This is a setback for the American worker.

There are a number of items contained within this conference report that I do support. This bill will provide an expansion of the production tax credit for renewable energy including open-loop biomass, geothermal energy, and solar energy; a provision to eliminate the preferential treatment for ethanol-blended gasoline. Without this provision, California would lose $2.7 billion in highway funds over the next 5 years; and a provision that removes a business tax deduction for the purchase of gas-guzzling SUVs.

These provisions do not make up for the rest of the bill. I think we all would have supported a straight fix to the WTO ruling, but this bill goes too far. It fixes the WTO problem, but then it contains all these other giveaways.

So what was a $49 billion problem to solve becomes a $145 billion bill. This is just plain wrong. I hope in the future that we can remedy some of the shortcomings of this bill, but on balance, this is a deeply flawed billed which I simply cannot support.''

Mr. President, I ask unanimous consent to print in the Record a ``Roll Call'' article, to which I referred, and three letters dealing with different provisions of the FSC/EIT bill.

A September 22, 2004 report by the Citizens of Tax Justice and the Institute of Taxation and Economic Policy reveals that 82 of the 275 (30 percent) large and profitable, Fortune 500 companies studied paid no tax on federal income or received rebates from the Treasury in at least one year from 2001 to 2003.

In the years they paid no income tax, these 82 companies reported $102 billion in pretax U.S. profits. Moreover, instead of paying $35.6 billion in income taxes as the statutory 35 percent corporate tax rate required, these companies received tax rebate checks from the U.S. Treasury totaling $12.6 billion. These rebates meant that the companies made more after taxes than before taxes in those no-tax years.

Twenty-eight corporations enjoyed negative federal income tax rates over the entire 2001-2003 period. These companies, whose pretax U.S. profits totaled $44.9 billion over the 3 years, included: Pepco Holdings (-59.6 percent tax rate), Prudential Financial (-46.2 percent), ITT Industries (-22.3 percent), Boeing (-18.8 percent), Unisys (-16.0 percent), and CSX (-7.5 percent), the company previously headed by Secretary of the Treasury Snow. General Electric topped the corporate tax breaks recipients with $9.5 billion in tax breaks over 3 years.

The average effective rate for the 275 Fortune 500 companies was only 17.2 percent in 2002-2003, though the corporate tax rate is 35 percent.

How is this happening? Accelerated depreciation. Legislation adopted in 2002 and 2003 vastly increased corporate write-offs for ``accelerated depreciation'' and made it easier for corporations to use their excess tax subsidies to generate tax-rebate checks from the U.S. Treasury, at a 3-year cost of $175 billion.

Offshore tax sheltering. Over the past decade, corporations and their accounting firms have become increasingly aggressive in seeking ways to shift their profits, on paper, into offshore tax havens, in order to avoid their tax obligations. Corporate offshore tax sheltering is estimated to cost the U.S. Treasury anywhere from $30 to $70 billion a year.

Senator Levin has been aggressive in trying to close these loopholes and some of his ideas were adopted in the Senate version of the Jumpstart Our Business Strength (JOBS) bill.

Stock options. Of the 275 corporations studied, 269 received stock- option tax benefits during the 2001-2003 periods, which lowered their taxes by a total of $32 billion over three years. Microsoft had the largest tax savings with $5 billion.

Tax credits. The federal tax code provides tax credits for companies that engage in research, exporting, hiring low-wage workers, affordable housing, and enhanced coals usage. For example, Bank of America cut its taxes by $590 million over 2001-2003 by purchasing affordable-housing tax credits.