A bill to amend the Internal Revenue Code of 1986 to modify the credit for the production of fuel from nonconventional sources for the production of electricity to include landfill gas.

Mr. President, the press and some in this body have unfairly defined this legislation as a ``porky'' tax bill. There have been articles in all the major papers following that line of attack.

One Member of the leadership on the other side said on April 20 he is worried that the sheer amount of tax breaks in the bill could end up impeding its progress. ``They've loaded this truck up and the tires are about to explode,'' he said, calling the efforts to pile sweeteners onto the bill ``haphazard.''

That Member went on and cautioned, ``any time you load it up as vigorously as they have, you create as many problems as you solve.''

Well, let's talk about the so-called ``porky'' provisions in this bill. It is a bit irritating that the complaints come from folks who say they support the bill. Every provision in the bill is the result of a joint recommendation of myself and Senator Baucus. We responded to requests from every Senator, including those who are critical of the bill.

I guess I would ask anyone, including the critics a question. That question would be, ``Are you willing to throw aside the provision you asked us to put in the bill?'' Are you willing to go back to your constituents and tell them you don't think their interest has merit?

I don't think I will hear any of the critics respond yes. I haven't had any takers yet and don't think I will by the time the bill's done.

Let's look at the bigger picture.

This bill has about $60 billion dedicated to the replacement of the FSC/ETI benefit. This bill has another $40 billion dedicated to international tax reforms to make our domestic manufacturers more competitive overseas.

There is another roughly $20 billion in domestic manufacturing incentives, including the research and development tax credit.

Some of that package deals with issues such as the unfair tax on bows and arrows which has a domestic job impact. There's another $8 billion dealing with the extenders, including a permanent tax credit directed at hiring hard-to-place workers. There's another $10 billion dealing with housing, rural areas, hard hit urban areas, Indian tribes, and other sectors of our economy. We're directing resources at economic development, plain and simple.

Finally, there's another almost $20 billion for the bipartisan Finance Committee energy incentives package which has passed the Senate twice.

All of this is offset with corporate loophole closers and measures aimed at curtailing tax shelters. The dollars involved in the much- criticized provisions are very small--perhaps less than 3 percent of the total cost of the bill. Members and the ``big city'' press need to keep their eyes on the ball: ending the euro tax and helping domestic manufacturers.

Senator Daniel Patrick Moynihan responded to the New York Times regarding the 1997 bipartisan tax relief bill. The press had made much of a few narrow provisions, such as a provision to provide tax relief for parachuter trainees. There is an excise tax on air travel. The tax is meant to apply to commercial travel. Read literally, the tax applied to parachute training flights even though those flights are not commercial transportation.

Senator Moynihan described the Finance Committee provisions that were designed to deal with these inequities this way: ``You will never see representative government more specific than in the Senate Finance Committee . . . It's a form of accommodation, and in between you think about the national interest, because there are things we all share.''

Like the 1997 tax relief bill, the bill before us includes a number of provisions that, at face value, may seem to be trivial. It is important to keep in mind, however, that each of these provisions was added in response to specific requests from fellow Senators who are looking out for the vital interests of their constituents. That is what representative government is all about.

The Federal tax system is vast. It touches virtually every aspect of life. From birth to grave. There are excise taxes to fund our airports and highways. There is a corporate and individual income tax to fund defense and general welfare. There are payroll taxes to fund Social Security and Medicare benefits. There is an unemployment payroll tax to fund unemployment benefits.

Now, when you go through this bill, you can find some provisions that involve animal manure or windmills. If you don't look beyond the superficial humor of the subject matter, you can have a lot of fun. Of course, big city papers like to make fun of these rural provisions. I always have to remind these folks that food doesn't grow in supermarkets. It grows on farms. The byproducts of those farms can give us clean energy. What's so bad about that?

Part of what we hear out in the heartland is get us some insurance that jobs are coming back. Especially, they say, in the area of manufacturing. The economy is coming back. The U.S. economy, the mightiest in the history of the planet, is adding jobs at a healthy rate. The people want an insurance policy.

Growing jobs in our diverse economy is not a cookie cutter exercise. This bill has general policies for the most part. Some are proactive, like the manufacturing deduction. Others are reactive, like responding to the Euro tax. Still others are particular. They may relate to small isolated communities or a single industry. When you take a look you'll find a common thread through nearly all of them: job creation.

That is what this bill is all about. Creating jobs, plain and simple.

Mr. President, I ask unanimous consent that all time be yielded.

I ask for the yeas and nays.

Mr. President, I ask unanimous consent that following the disposition of the Hollings amendment, the next amendments to be offered are the following in the order provided: Senator Kyl, No. 3127, 60 minutes equally divided; Senator Landrieu, 60 minutes equally divided; Senator Levin, 20 minutes equally divided; further, that there be no second-degree amendments in order to the amendments prior to the vote.

Mr. President, I ask unanimous consent that the Senators from Pennsylvania, the senior and the junior Senators, have 5 minutes apiece to discuss something very personal to their State.

Mr. President, I yield myself such time as I might consume.

Senator Hollings asks us to take $39 billion of international reforms and put it towards more domestic manufacturing relief.

I have told my colleagues so many times I shouldn't have to repeat it. But this bill is all about encouraging domestic manufacturing.

The level of spending in this bill is already over three to one in favor of domestic issues. We dedicate over $75 billion to domestic manufacturing relief.

FSC/ETI currently benefits manufacturing by $50 billion. Obviously, you can see this bill is a much stronger

commitment to manufacturing than the old FSC/ETI bill we are replacing. We have already accelerated the phase-in of the manufacturing tax rate. That is thanks to a bipartisan amendment by Senator Bunning and Senator Stabenow. We have modified the transition rules to provide stronger relief in transition for manufacturing companies which presently get the old FSC/ETI benefits this bill replaces.

I hope it is easy for my colleagues to conclude that there is very little to be gained by the amendment proposed by the Senator from South Carolina.

It is time we had our rational discussion of the international reforms in this JOBS bill because we have been spending so much time on nongermane amendments. The amendment before us is not one of those nongermane amendments but it has kept us from discussing so much which is very basic with this legislation. Maybe people think there is no reason to discuss it because this bill was built from the ground up in a bipartisan way, coming out of our committee on a very overwhelming vote of 9 to 2.

I think Members will be surprised to learn that some of our international tax rules actually harm the domestic operations of U.S. companies. When foreign income is brought home, the United States allows an offset against U.S. tax for any foreign taxes paid on that income. That is why it is called the foreign tax credit. Foreign tax credits ensure that we do not double tax foreign earnings. Accordingly, the foreign tax credit plays a vital role in preserving the international competitiveness of our companies.

In the Tax Reform Act of 1986, Congress enacted a provision that causes foreign tax credits to expire every 5 years. That was done for a reason that is not very well justified because it is often used around here--to make that 1986 tax bill revenue neutral.

Some claim this is a good rule because it forces foreign earnings to be repatriated within 5 years. But that conclusion does not comport with reality. The reason companies don't bring back foreign earnings is because of double taxation. That is what occurs with foreign tax credits expiring.

I will give you an example. A U.S. company sets up new operations in Poland to serve Eastern Europe at this time when Eastern Europe is being integrated with the European Union. That happened last week. For the next 8 years in this hypothetical--quite reasonably--it takes all of the capital generated by the Polish subsidiary to expand the company's presence in Eastern Europe. At the end of 8 years, it finally has some extra cash which it can send home.

What happens? It discovers the taxes it paid to Poland from years 1 through 3 are no longer eligible for the foreign tax credit because they are more than 5 years old. The Polish tax rate is 28 percent. This means if a company repatriates those early earnings, it will pay combined Polish and U.S. taxes of 63 percent. It is really almost confiscatory. That means, of course, the money is not coming home for reinvestment in the United States. We lose the benefit.

If those early tax credits had not expired, the United States would actually pick up some tax revenues. The subsidiary would owe the difference between the 28-percent Polish rate and the 35-percent U.S. rate. That happens to be a gain of 7 percentage points of taxation into our U.S. Treasury from that company.

To ensure that double taxation no longer occurs, our JOBS bill extends the carry-forward period for foreign tax credits from 5 years to 20 years. Twenty years is the amount of time companies have to utilize net operating losses. It is only appropriate, then, that the key mechanism for avoiding double taxation should have the same shelf life.

Our JOBS bill mostly fixes problems in the foreign tax credit area. The only time a company benefits from a foreign tax credit is when it brings that money home.

To repeat a very elementary point, foreign tax credits are a benefit to that company only when that company brings foreign earnings home for reinvestment. When the credit expires, this impedes capital mobility because of double taxation, and it blocks reinvestment of foreign earnings in the United States.

Another example of guaranteed double taxation is our rule that only allows 90 percent of a company's AMT to be offset with foreign tax credits. This rule guarantees that the company will be double taxed on 10 percent of the alternative minimum tax. The JOBS bill allows what is common sense--a 100-percent offset.

To give you a real-life example of how these two changes will help U.S. operations make investments in America and create jobs in America, the largest American manufacturer in this example of a particular automobile part is bringing dividends back from its profitable foreign operations to cover losses in its U.S. operations. Their U.S. losses, when combined with the foreign dividends to fund the U.S. operations, has created huge unused foreign tax credits with a 5-year expiration period. Because of their ongoing U.S. losses, it is unlikely these credits will be used within those 5 years.

This company also has a growing alternative minimum tax because their foreign tax credits can only be offset by 95 percent of their AMT liability.

The limit is creating an annual alternative minimum tax liability because the additional 10 percent of the AMT cannot be offset with the foreign taxes that have already been paid on that income. The company is guaranteed to incur double tax on foreign earnings brought back to support the U.S. operation. This may be unbelievable to anyone listening, but this is actually happening under U.S. tax laws.

The company's foreign competitors in the United States are not equally hindered in the same way by the 90-percent alternative minimum tax, foreign tax credit limit. If a foreign competitor loses money, they get a 20-year U.S. net operating loss compared to the 5-year foreign tax credit carryforward. Our Tax Code, then, is harming a company that has operations in all 50 States and employs 38,000 people in 16 different manufacturing facilities.

This example shows why the 20-year foreign tax credit carryforward and the repeal of the 90-percent AMT foreign tax credit limits are in this very important jobs in manufacturing bill. The current rules harm U.S. operations and we need to fix it.

I also have some comments on another provision, the interest allocation provisions, to give another example of how our international rules harm U.S. operations. As I said earlier, foreign tax credits can only offset foreign income; they cannot offset income from U.S. activities. In determining the amount of foreign income, certain U.S. expenses, such as interest expense, are partially allocated to foreign income. This is used in calculating the amount of foreign tax credit a U.S. company is allowed to claim on its return. The United States arbitrarily allocates U.S. interest expense to foreign earnings, but the foreign government does not recognize that interest expense for its tax purposes. It is as if the interest expense somehow disappears into the clear air.

The interest allocation rules artificially reduce the foreign tax credits that can be used, and when the credits cannot be used the credits expire. It may surprise many Senators to hear that our interest allocation rules create a competitive disadvantage for U.S. multinationals that try to expand their operations into the United States and maybe do not get expanded here.

A portion of the interest expense on debt incurred to invest in the United States is allocated to foreign source income. A foreign corporation making the same U.S. investment is not impacted by these interest allocation rules. It gets to fully deduct the interest costs within the United States and thereby has a lower cost of capital than a U.S. company making that same investment. Therefore, the interest allocation rules actually work against U.S. multinational companies that invest in the United States. It has put some at a competitive disadvantage with foreign companies operating in the United States. I hope this is very clear, that this is not the right thing for the U.S. Tax Code to do to foreign manufacturers. Why should we encourage international competition in the United States against our own domestic manufacturer?

We have Senators demonizing the JOBS bill international provisions. This gives me an opportunity to emphasize once again how anything gets done in the Senate--only in a bipartisan way. This is a bipartisan bill.

Democrats and Republicans agree to everything in this bill, and the international provisions we agreed to were provisions that actually help U.S. job creation and help our own economic growth.

I ask the Senate to support Senator Baucus and this Senator in this bipartisan bill. I hope Members will not buy the distortion. None of the international changes caused jobs to go offshore. Just the opposite. These were selected to bring the foreign money back for real investment in the United States, creating jobs in the United States, creating manufacturing jobs in the United States because this is a manufacturing bill. These changes level the playing field between the United States and foreign companies operating inside the United States. They were specifically selected because they tend to help U.S.-based manufacturers more than other sectors of our economy.

The entire JOBS bill is geared towards creating jobs in manufacturing--jobs in the United States, not overseas--because American manufacturing overseas does not benefit from this bill.

It is quite simple. These are the only kinds of international provisions we could ever get bipartisan agreement on because it is so obvious. It is so obvious, it came 19-2 out of our committee. We should not allow international rules to remain in place if they harm U.S. operation. Once again, we are talking about commonsense international tax reform. In fact, if anyone wants to condemn this bill, it is that maybe we do not do anything radical in this bill. We just fix problems. We fix problems with current law. We fix problems with current law that happens to be harming U.S. domestic interests.

So I ask Members to vote against the amendment of the distinguished Senator from South Carolina.

I yield the floor.

Mr. President, I say to the Senator, if you do not have any more time, then I will yield back my time and we can then vote.

Is that OK?

Mr. President, I yield back all time on this side.

Mr. President, I move to reconsider the vote.

Mr. President, I ask unanimous consent that the Senator from Texas, Mrs. Hutchison, have 2 minutes for an amendment that she wants to offer.

Madam President, I can comment very positively about the motivation behind the amendment, and the good policy of giving equity to people who are called away from jobs and away from family to go to a far-off land to defend America in a war against terrorism and doing it in a way that has never been done for guardsmen and reservists to this extent, I think going back to the Korean war. What we are doing now has not been done for a long period of time.

The Senator from Louisiana needs to be complimented on her efforts to recognize that and, particularly, to recognize that through employers who show very patriotic fervor in cooperating in this whole program.

I can say that very positively about the amendment of the Senator from Louisiana. She is asking me to predict what might happen in conference. It is very difficult to do that. I have a reputation for defending the position of the Senate and working as best I can to work through this. Obviously, I cannot make any promises to the Senator from Louisiana.

I ask unanimous consent Senators Hatch and Pryor be added as cosponsors to the Hutchison amendment.

I move to lay the motions on the table en bloc.

The motions to lay on the table en bloc were agreed to.

I promised the Senator from South Carolina we would have a little colloquy on an issue he was concerned about. Could we do that right now?

I ask the Senator from South Carolina be recognized.

As Chairman of the Senate Finance Committee, I join my colleague from South Carolina in expressing concern about the way in which the Chinese currency is valued. I certainly agree that it is a serious problem that needs to be taken seriously. A fairly valued currency is in China's own long-term interests, and is key for moving to a market driven economy. I was pleased to hear that Secretary Snow was assured that interim steps are being taken and that progress in this area will continue.

I do appreciate the importance of this issue. If we do not see substantial progress toward adoption of a market-based currency valuation system, I would support Senate hearings at the appropriate time.

Mr. President, I would like to thank the Senator from Pennsylvania for his commitment to the Section 29 extension to new coke facilities. Although I am supportive of the provision, the most appropriate time to address it is during the conference. I look forward to working with Senator Santorum and the two Senators from Ohio to include this amendment in the conference report.

privacy

I would be pleased to engage in a colloquy with the Senator from Oregon.

The Senator is correct. It is my intent to urge my colleagues to minimize this penalty in the final bill that is sent to the President for his signature.

income forecast method provision

I am happy to confirm the understanding of the distinguished Senator from Louisiana. The provision was adopted to provide needed clarifications in order to eliminate the uncertainties that have arisen regarding the proper application of the income forecast method. I believe the disputes that have arisen regarding the mechanics of the income forecast formula are extremely unproductive and an inefficient use of both taxpayer and limited tax administration resources. By adopting these clarifications, I believe the committee intended to end any disputes and prevent any further waste of both taxpayer and Government resources in resolving these disputes. Any existing disputes should be resolved expeditiously in a manner consistent with the clarifications included in the bill.

Yes.

I agree with the Senator from Tennessee that such an exception to the ``kiddie tax'' would be

good public policy. I commit to you that my staff will work with the Treasury Department, the Social Security Administration and your staff during conference negotiations to craft language that addresses Mr. Domm's concerns but also contains solid anti-abuse language. My hope is that we could place such language in the final version of S. 1637 or another appropriate tax bill.

Mr. President, I want to assure Senator Lincoln that I will continue to work with her to make sure adequate incentives for LFG are included in any final package from the upcoming House-Senate conference. Her concerns are my concerns as well. She has stated them well and I will devote my best efforts to resolving them as we move forward on discussions and deliberations with the House of Representatives.

car provision

I agree with your concerns, Senator Baucus, and I also am in favor of giving Treasury this expanded authority.

Madam President, Senators Kyl and Nickles say that a lower rate just for manufacturing is ``bad tax policy and is virtually without precedent in our history.''

Well, this is just wrong and the evidence is staring them in the face. FSC/ETI itself is a tax cut for manufacturing. FSC/ETI keeps U.S. manufacturing competitive by lowering tax rates on exports. Manufacturers could lower their rates by 3 to 8 points.

The Joint Committee on Taxation says that 89 percent of all FSC/ETI benefits go to manufacturing companies. The Kyl-Nickles Treasury proposal would take money from FSC/ETI and spread it to other industry sectors.

Kyl-Nickles will be a $50 billion tax increase on manufacturing. It will not send the FSC/ETI repeal money back to manufacturing. It is mathematically impossible for their proposal to work any other way.

We know that tax increases do not create jobs. So why would Senator Kyl and Nickles increase manufacturing taxes by $50 billion?

There are other reasons why we did not go the route of the Kyl- Nickles approach. First, their top-level rate cut would only go to the biggest corporations in America. It would not go to family-held S corporations, partnerships, or smaller corporations.

Under the Finance Committee bill, all manufacturers in America, regardless of size, get a 3-point rate cut, including S corporations and partnerships.

S corporations and partnerships benefit under current FSC/ETI law, so the Kyl-Nickles bill takes a benefit away from them and gives it to large corporations.

Kyl-Nickles claim that a manufacturing tax cut ``penalizes all other U.S. businesses.'' I think just the opposite is true. The manufacturing sector should not be a revenue offset to give investment bankers a tax cut. Kyl-Nickles claim that our definition of manufacturing is too difficult to understand. But the definition we use in the JOBS Act is the same definition used for both FSC and ETI. It covers property that is manufactured, produced, grown or extracted within the United States.

This definition is 20 years old, but suddenly no one understands what it means. We did confirm that manufacturing includes computer software, films, and processed agricultural goods. Kyl-Nickles claim that these are special interest definitions of manufacturing. However, all of these activities qualified as manufacturing under the FSC/ETI rules, which have been in place for 20 years.

We also ensured that farm co-ops get the same benefit that they do under current law.

In response to our energy crisis, we provided that refining oil pulled from American wells would qualify as manufacturing.

They claim it is too difficult to allocate income and expenses in determining the amount of manufacturing income. But for 20 years, Treasury has had administrative pricing rules on its books that tell taxpayers how to allocate expenses in figuring FSCETI benefits. Our JOBS bill grants Treasury broad latitude to revise the cost allocation rules, based on existing tax principles.

Kyl-Nickles also claims that Canada recently gave up a similar manufacturing rate cut because it did not work. This is not correct. For many years, Canada had a special lower rate for their manufacturing sector. Canada created their manufacturing rate cut in reaction to the U.S. creating FSC back in 1982. They reduced their rate on manufacturing so they could stay competitive with the U.S. Canada recently repealed that provision because they reduced all their corporate rates to the lower manufacturing rate.

Canada did not repeal their manufacturing rate cut because of its complications. Canada ended their manufacturing regime because it worked so well, that they extended it to all sectors. But when Canada reduced their overall tax rates, they did not do so at the expense of their manufacturing sector.

We put together a strong bipartisan bill, with a 19-to-2 vote out of committee, that will cut our manufacturing tax rate this very year. There is no purpose in blocking such a strong bipartisan bill. These days, is it rare that we can reach such strong agreement on anything.

Mr. President, the CBO report says the flat corporate rate cut would yield slightly more long-term growth than the JOBS bill. But the reason has nothing to do with our manufacturing tax cut.

CBO says the antitax shelter provisions and Senator Smith's and Senator Ensign's homeland reinvestment provisions are the cause.

CBO says that because we shut down shelters, corporations' taxes won't be as low and, therefore, their long-term growth is not as high.

CBO also concludes that Senators Smith's and Ensign's temporary 1- year rate cut won't help in the long-term.

The CBO concludes that a flat rate cut could be more ``efficient'' than a manufacturing rate cut. So what do they mean by ``efficient''? They said it means that a manufacturing rate cut would cause more capital to flow into the manufacturing sector.

So I have to ask, what is the problem?

I thought tax cuts were designed to increase capital investment. Isn't that what we want for manufacturing?

If we increase taxes on manufacturing, then capital should flow out of the manufacturing sector. Is that what we want?

I urge adoption of the Levin-Coleman modified amendment.

Mr. President, I rise today to introduce my package of alternative energy and energy efficiency bills. These bills all work in concert toward a single goal--promoting the use of cleaner, renewable energy for this nation.

For several decades, the U.S. has relied on foreign sources of energy supply. Worldwide demand for energy has continued to increase, while our domestic resource base has decreased, leaving the country vulnerable in the event of foreign supply disruptions. This year, the U.S. will import 60 percent of its crude oil needs this year. The events of September 11th have focused attention on the need to develop a new energy policy that focuses on creating new domestic sources. Our Nation needs to explore and develop all possible domestic options as resources for our energy supply. To reduce our dependence on foreign imports, it is imperative that policy makers create incentives to promote technologies that can produce quality alternative products. Our national security demands that the government undertake programs which assure the implementation of real alternative fuel technologies.

It is in the best security interests of our Nation to reduce our reliance on foreign energy suppliers. We can no longer afford to be subject to the whims and manipulations of foreign cartels like OPEC. Added to these threats posed by OPEC and the instability of the Middle East are the even more sinister possibilities that we face in other parts of the world. Developments in many regions of the world where much of today's energy supplies are obtained--West Africa, the Caspian Sea, Indonesia, Venezuela, and so forth--clearly serve notice that our Nation cannot continue to depend on these areas for our future energy needs. These events make it more pressing than ever that we proceed forward with the development of our own domestic alternative energy resources.

In the last Congress, both the House and the Senate passed comprehensive energy bills that would have brought us closer to these goals. In the Senate bill, we were able to strike a delicate balance between using our resources for energy and preserving our environment for future generations. I was pleased with the Senate version of the Energy Policy Act of 2002, and was disappointed that conferees were unable to iron out differences with the House of Representatives before adjournment. We must make energy independence a national priority because it is now essential to our homeland security.

Looking ahead, I will continue my work to build a cohesive national energy policy that ultimately reduces our dependence on foreign oil. To accomplish this goal, we must provide access to more resources, transmit these resources to the consumer, and encourage industrial and individual consumers to use more renewable energy sources. These important steps will lead to greater reliability and lower energy costs for consumers.

We should all work again in the 108th Congress to adopt a comprehensive energy plan that sets America on the road to energy independence and assures consumers of a reliable and affordable energy supply.

The legislation I am introducing today will encourage production of biodiesel and its use in this country; to promote the manufacture of energy efficient home appliances; to encourage the use of fuels produced from animal and agricultural wastes; to encourage the use of our waste sources such as landfill gas and municipal solid waste to produce energy; and to spur the investment in delivering fuels to rural America. These incentives for production and use of clean and renewable fuels can help bridge the investment cost gap between production of petroleum and renewable energy.

Each of these bills were either included or debated in the Senate during last year's Senate consideration and passage of the energy bill. I look forward to their inclusion in the debate and inclusion in any energy bill to be passed by the Senate during the 108th Congress.

The first bill I am introducing today is the Biodiesel Promotion Act of 2003. I am pleased to be joined in introducing this bill by Senators Grassley, Hagel, Dayton, Harkin, Durbin, Coleman, and Johnson. This legislation will provide tax incentives for the production of biodiesel from agricultural oils, recycled oils, and animal fats and will ensure that biodiesel becomes a central component of this nation's automobile fuel market.

This legislation is identical to language authored by myself and Senator Grassley included in the last Congress's Energy Bill. It is intended to be a starting point for our debate and discussion as we draft an energy bill for consideration in this Congress.

This legislation will provide a partial exemption from the diesel excise tax for diesel blended with biodiesel. Specifically, the bill provides a one-cent reduction for every percent of biodiesel from virgin agricultural oils blended

with diesel up to 20 percent. The legislation will also provide a half- cent reduction for every percent of biodiesel from recycled agricultural oils or animal fats.

Also importantly, in the year that we are to reauthorize the Transportation Enhancement Act of 1996, the bill provides for reimbursing the Highway Trust Fund from the USDA Commodity Credit Corporation, CCC. This procedure will protect the Trust Fund from lost revenues due to the biodiesel incentive while providing a much-needed boost to our nation's biodiesel industry. The cost to the CCC would be offset at least initially by the savings under the marketing loan program.

Biodiesel, which can be made from just about any agricultural oil including oils from soybeans, cottonseed, or rice, is completely renewable, contains no petroleum, and can be easily blended with petroleum diesel. A biodiesel-diesel blend typically contains up to 20 percent renewable content. It can be added directly into the gas tank of a compression-ignition, diesel engine vehicle with no major modifications. Biodiesel is completely biodegradable and non-toxic, contains no sulfur, and it is the first and only alternative fuel to meet EPA's Tier I and II health effects testing standards. Biodiesel also stands ready to help us reach the EPA's new rule to reduce the sulfur content of highway diesel fuel by over 95 percent.

Even after years of research and market development, biodiesel is not yet cost-competitive with petroleum diesel. In order to be so, market support and tax incentives are needed. I believe the provisions provided in this bill will help in leveling the field for biodiesel blends and help jumpstart this new industry.

The time is right for this investment. It is right for our rural economy, for our environment, and for our national energy security and I encourage my colleagues to join us in supporting the Biodiesel Promotion Act of 2003.

The second component of my package is the EPACT Alternative Fuel Flexibility Act of 2003. I am pleased to be joined today by Senators Bond and Talent in introducing this legislation.

The purpose of this legislation is to place biodiesel fuel on equal footing with every other alternative motor fuel used in this nation.

The Energy Policy Act of 1992, EPACT, set a national objective to shift the focus of national energy demand away from imported oil toward renewable and domestically produced energy sources. When EPACT was passed in 1992, it recognized ethanol, natural gas, propane, electricity, and methanol as alternative fuels. The original list of alternative fuels did not include biodiesel because the technology had not been fully developed.

EPACT set a goal to replace 10 percent of petroleum-based fuels by 2000 and 30 percent by the year 2010. However, a GAO report issued in July of 2001 noted that ``limited progress has been made in increasing the numbers of alternative fuel vehicles, AFV, in the national vehicle fleet and the use of alternative fuels'' as compared to conventional vehicles and fuels.

We did not meet the original EPACT goals of replacing 10 percent of petroleum-based fuels by 2000. Today we are not on track to meet the goal of 30 percent by the year 2010. In fact, we haven't even come close, and that's partly a result of not allowing all alternative fuels to be used to meet the EPACT alternative fuel mandates.

This legislation will significantly increase the use of alternative fuels by allowing EPACT covered fleets to meet up to 100 percent of the EPACT purchase requirements through the use of biodiesel. Currently, covered fleets can only meet up to 50 percent of purchase requirements with biodiesel.

By offering an additional option for the use of alternative fuels, we will widen the possibilities for these fuels to be made more widely available. Fleets will continue to have the option to choose the complying vehicles and fuels that best meet their needs. This legislation is not expected to affect fleets that are currently using ethanol or natural gas. But this legislation does provide a further option for alternative fuel vehicles. Furthermore, it does not directly displace natural gas or ethanol sales, since biodiesel is used in medium- and heavy-duty trucks rather than light-duty vehicles.

By allowing fleets to meet 100 percent of their AFV requirement by using biodiesel, we'll take a positive step toward moving this country away from dependence on petroleum-based motor fuels and toward alternative motor fuels. I urge all of my colleagues to support this legislation.

The third bill I introduce today as part of my energy independence package is the Animal and Agricultural Waste Renewable Energy Production Act of 2003. I am pleased to be joined today by Senators Hagel, Bond, and Kerry in introducing this legislation.

This legislation would provide a credit under Section 29 of the tax code for the production of fuels from animal and agricultural wastes.

Thanks to new technological developments, we can now produce significant quantities of alternative fuels from agricultural and animal wastes in an environmentally friendly manner. Production incentives are needed to assure implementation and commercialization of this new generation of technology.

Section 29 was originally enacted to provide an incentive to produce alternative and hard-to-reach fuels that could compete with fossil fuels and hopefully reduce the nation's dependence on foreign oil. As originally enacted, a number of ``non-conventional fuels'' were eligible for the credit, including the following: oil from shale; oil from tar sands; natural gas from geo-pressured brine, coal seams, Devonian shale, or tight sands; liquid, gaseous or solid synthetic fuel from coal, including coke and coke by-products; gas from biomass, including wood; steam from solid agricultural by-products; and processed solid wood fuels.

Other biomass by-products, such as agricultural and animal oils and solids, also should qualify the same as liquid or gaseous synthetic fuels derived from coal.

New technological advances have been developed which will convert these biomass wastes efficiently to alternative fuels. The most readily available of these wastes are agricultural and animal wastes, municipal wastes, plastics, used tires, and forest product wastes. This production incentive opportunity would provide significant new annual quantities of alternative fuel to replace foreign imported oil and should be considered a government investment in the nation's future.

If these incentives are implemented, large marketable quantities of quality alternative fuel products can be produced as a replacement for foreign imported oil. These processes can achieve the desired results in an environmentally positive way that essentially converts all wastes to products and provides an answer for waste disposal problems. To achieve these results, financial incentives need be provided from the government. Section 29 should be extended to include alternative fuels produced from all biomass wastes and I encourage all of my colleagues to join us in supporting this legislation.

The fourth bill I am introducing today is the Capturing Landfill Gas for Energy Act of 2003. This legislation will provide a credit under either Section 29 or Section 45 of the tax code for the production of energy from landfill gas, LFG. It is designed to encourage additional collection and productive use of methane gas generated by garbage decomposing in America's landfills. LFG is a renewable fuel that can be used directly as an energy source for heating, as a clean burning vehicle fuel, as a hydrogen source for fuel cells. Furthermore, it can power generators to produce electricity.

Congress recognized the importance of LFG for energy diversity and national security by providing such a credit in 1980 and extending it for nearly two decades. With today's critical energy needs and emphasis on distributed generation, this incentive makes more sense than ever. Most of the 360 LFG projects that currently are operating were made economically feasible by the ``non-conventional-source fuel'' production tax credit under Section 29 of the tax code.

But since June 30, 1998, that credit to encourage construction of new LFG projects has been unavailable, and few have been constructed since that date. The U.S. Environmental Protection Agency estimates that 600- 700 more LFG projects could be constructed nationwide if there were sufficient economic incentives in place to foster

their development. With such incentives, it is likely that about 55 new projects would be brought on line each year. Just one medium-sized project could provide three megawatts of electrical power capacity-- enough to meet the electricity needs of 3,000 homes each year.

In addition to the value of LFG as an important contribution to our overall energy strategy, there are compelling environmental reasons to encourage these projects. Uncontrolled landfill gas can create fire hazards and odors and can impair air quality. The methane in landfill gas is 21 times more potent than carbon dioxide as a greenhouse gas. Even the large landfills that are required under the Clean Air Act to collect their gas and control non-methane organic compounds often find it more economic to simply flare or otherwise waste the gas rather than use the methane. Some smaller landfills are not required to collect the gas, and may continue to emit it for decades under the Clean Air Act. Thus, LFG projects not only reduce local and regional air pollution while yielding a renewable source of energy, they can also reduce the country's yearly emissions of greenhouse gases by a very substantial amount at a relatively small cost.

Unfortunately, the potential energy and environmental benefits of future LFG projects are substantial, but they will be lost without adequate LFG tax provisions to support project development. On average, the total capital cost of constructing an LFG-fueled electricity generating project is about $1 million per megawatt, and the annual operating and maintenance costs average another $150,000 per megawatt. The average capital cost of a new direct use fuel production and delivery project is about $2.5 million, with annual operation and maintenance costs of about $350,000.

My bill proposes sufficient, yet sensible, tax incentives to encourage these large investments, and I urge my colleagues to join me and support LFG tax credits.

Today I am also pleased to be joined by Senator Akaka in introducing the fifth component of my energy package--the Waste to Energy Utilization Act of 2003. This legislation will provide a credit under Section 45 of the tax code for new waste-to-energy facilities or new generating units at existing facilities. Such a tax credit encourages clean renewable electricity and promotes energy diversity, while helping cities meet the challenge of trash disposal.

Nearly 2000 communities nationwide rely on waste-to-energy facilities to safely dispose of trash and generate clean, renewable energy that meets the power need of more than two and a half million homes. The U.S. Conference of Mayors has repeatedly urged Congress to include provisions that promote waste-to-energy in tax legislation and they are joined by the National Association of Regulatory Utility Commissioners, the Business Council for Sustainable Energy, the U.S. Chamber of Commerce, and the International Brotherhood of Boilermakers.

Arkansas stands with other environmentally conscious States in understanding that waste-to-energy technology saves valuable land and significantly reduces the amount of greenhouse gases that would have been released into our atmosphere without its operation. The volume of waste is reduced by greater than 90 percent in a waste-to-energy facility, and EPA has confirmed that more than 33 million tons of greenhouse gases are avoided annually by the combustion of municipal solid waste. Municipal solid waste is a sustainable source of clean, renewable energy.

Local governments spent about $1 billion over the past five years on air pollution control equipment to comply with EPA's Maximum Achievable Control Technology, MACT, standards required under the Clean Air Act. These retrofits have made waste-to-energy one of the cleanest power generators in the country. In June, EPA announced that these facilities have shown ``outstanding performance'' resulting in ``dramatic decreases'' in emissions, resulting in reductions of mercury emissions of more than 95 percent from a decade ago. Communities with waste-to- energy facilities recycle 33 percent of their trash, on average, and historically have more successful recycling programs than cities without waste-to-energy plants.

We must sustain a level marketplace to achieve energy diversity and economic growth. I believe this Senate should pass tax legislation that includes production tax credits to spur energy generation, and I encourage all of my colleagues to join us and support this legislation.

The sixth bill I introduce today is the Resource Efficient Appliance Incentives Act of 2003. I am pleased to be joined in introducing this bill by Senators Allard, Grassley, Harkin, Stabenow, Hagel, Levin, and DeWine.

This legislation will provide a tax credit for the production of super energy-efficient clothes washers and refrigerators if those appliances exceed new Federal energy efficiency standards. The tax credit would only be available for five years and would be capped for each manufacturer.

In 2001, the Department of Energy issued new energy efficiency standards for clothes washers. This agreement accompanies rules for higher efficiency refrigerators issued by the department two years ago. The new rules are significant because clothes washers, clothes dryers, and refrigerators account for approximately 15 percent of all household energy consumed in the U.S. annually. The tax incentives contained in this legislation are constructed to encourage manufacturers not only to exceed these new efficiency requirements, but to exceed them by up to 35 percent.

Tax incentives are essential to accelerate the production and market penetration of leading-edge appliance technologies that create significant environmental benefits. The need for super energy-efficient appliances is greater this year than at any time in the past 20 years. Over the life of the appliances, over 200 trillion BTUs of energy will be saved. This is the equivalent of taking 2.3 million cars off the road or making available for other uses the energy of six coal-fired power plants for a year.

In addition, the clothes washers will reduce the amount of water necessary to wash clothes by 870 billion gallons, an amount equal to the needs of every household in a city the size of Phoenix, Arizona for two years. The water savings attributable to these new technology machines is not based on some computer generated model but an actual case study that gathered data in the small community of Bern, KS by the Dept. of Energy's esteemed Oak Ridge National Laboratory in 1998.

The Association of Home Appliance Manufacturers estimates these super energy-efficient appliances could save the average family $100 per year--or $1,400 per family over the lifetime of the appliance. This legislation will create the incentives necessary to increase the production and sale of these super energy-efficient appliances in the short term while passing along energy savings to the American consumer.

As a DOE analysis indicates, high efficiency washers and refrigerators are significantly more expensive to manufacture than those that simply meet existing federal standards. Further, market surveys of consumers indicate that they are generally not willing to pay more for high efficiency appliances, even when it can be demonstrated that high efficiency appliances will generate greater savings in utility costs over time. The tax credit will provide an incentive for manufacturers to develop a greater selection of super efficient models that will appeal to consumers at all price points. In addition, to assure increased sales of these appliances, manufacturers will be encouraged to redirect their marketing and advertising resources toward the high efficiency models. Enactment of this legislation will bring immediate, significant, and lasting environmental benefits to the nation, and I encourage all of my colleagues to join us in supporting in this effort.

The final bill I am introducing today is the Gas Distribution Infrastructure Investment Act of 2003. This legislation will amend the Internal Revenue Code to modify the depreciation of natural gas pipelines, equipment, and infrastructure assets from 20 to 10 years.

America's demand for energy is expected to grow by 32 percent during the next 20 years. Consumer demand for natural gas will grow at almost twice that rate, due to its economic, environmental, and operational benefits. That level of natural gas use is almost 60

percent greater than the highest recorded level. To satisfy this projected demand, we must substantially expand our existing gas infrastructure. This is especially true with respect to the delivery sector. Higher capacity utilization of existing infrastructure will meet some of this increased demand, but the delivery sector still will require capital investments of at least $123 billion for infrastructure enhancement and additions.

Shrinking the lifetime over which an asset is depreciated does not change the amount of expense a company is allowed to claim over the asset's useful life, but simply shortens the expensing period for tax purposes. This shortened tax life generates higher cash flows in terms of reduced tax liability during the asset's early useful lifetime. Conversely, the cash flows are decreased, relative to the longer depreciation life, during the later part of the asset's useful life. The overall impact is zero on a gross basis.

I urge my colleagues to support this important legislation. Infrastructure development and expansion is crucial if America's homes are to continue to rely on clean-burning natural gas to heat their homes and fuel their appliances.

I ask unanimous consent that each of the seven bills I am introducing today be printed in the Record.

Mr. President, I call up my amendment No. 3134 and ask the clerk to report.

Mr. President, I ask unanimous consent that the reading of the amendment be dispensed with.

I thank the distinguished Chair.

Mr. President, the underlying bill gives a 5-percent domestic manufacturing deduction to the manufacturing industry. Of course, that is woefully insufficient. My amendment would provide a full 9-percent domestic manufacturing deduction.

The underlying bill slowly phases in the domestic manufacturing provision over a 5-year period, but instantly it gets the full effect of the overseas industry, the outsourcing. They immediately get some tax breaks over the period of the bill covering some 39, almost 40 billion bucks.

Can you imagine that? Here is a bill entitled--this is the committee report--the Jump-Start Our Business Strength, JOBS, Act. It jump-starts the jobs in Shanghai and Guadalajara and not in Philadelphia, PA, I can tell you that right now.

What my amendment does is provide the right incentives. It eliminates the tax breaks for corporations that have moved American jobs offshore and gives those tax breaks to the employers of jobs in America today.

I wish to thank, first, the distinguished ranking member, Senator Baucus, of our Finance Committee and his outstanding staff. They have been very helpful in trying to make this amendment not only relevant but budget neutral. I am not sure about its budget neutrality, but I am told now we do have a relevant amendment. If we have to get into the arcane discussion with respect to budget neutrality, I will be glad to join it.

I want to get to the point. We are still in a post-World War II culture, what they call up here an environment or pedigree. What happened was, after World War II, we had our finest hour with the Marshall plan. We sent money overseas. We sent expertise overseas. We sent equipment overseas. In the cold war, capitalism defeated communism. It worked. All during that almost 50-year period since World War II, we all enjoyed it because we fudged when it came to trade. We treated fair trade more or less as foreign aid, but we knew what we were doing. We had to sacrifice a certain amount of our industry, our jobs, our economic strength to prevail in this cold war.

Now what has occurred is the competition has regeared, they have rebuilt, they have industrialized, and they have become outlandishly competitive. And here amidst a trade war, we hear those in the national Congress running around and saying: Woo, we might start a trade war; free trade, free trade, I am for free trade, when they know free trade is like dry water. There is no such thing. If you trade, you are trading something, you are

swapping an article with various countries, free trade, but we know that is not going to come to pass.

The example we set of a capitalistic free market and our endeavor in the last 50 years, the Japanese did not follow suit. They have the financing, they have the subsidies, they have the nontariff barriers, and we have yet to get into downtown Tokyo with American sales. Come on, quit kidding each other. It worked that way for Japan. Korea followed. And now China is following the same Japanese pattern of restricted and competitive trade, not free trade.

Today we are in real trouble. We are losing jobs like gangbusters overseas. We have lost 68,000 jobs in the little State of South Carolina in the last 3 years, over 3 million jobs nationally. I can tell you, 58,000 of those jobs are our textile jobs, and they are not going to be replaced. You can put all this statistical information from the Federal Reserve and Greenspan about how we are creating jobs, but they are not coming to South Carolina.

As Abraham Lincoln said some years ago: The dogmas of the quiet path are inadequate to the stormy present. As our case is new, we must think anew, we must act anew, we must disenthrall ourselves, and then working together we can save our Nation. That is the reason for this amendment.

One does not put up an amendment to this finance bill with hope. The chairman of the Finance Committee knows there are not going to be any amendments. But we might be able to disenthrall our colleagues because the country has to develop a competitive trade policy in order to subsist and survive.

I can point out survival in the very beginning of this Nation started with Alexander Hamilton. Of course, I will not read the book--Ron Chernow's ``Alexander Hamilton.'' They will not give me that much time, but I recommend to everyone this particular edition. You will find the mother country, England, prevented manufacture in the Colonies, later the United States of America. In fact, they arrested and jailed anyone with any manufacturing talent who would move from England to the Colonies.

We had a veritable struggle in the earliest days, and we had just barely 1 hour of freedom when the mother country said: Under this David Ricardo doctrine of comparative advantage, we will trade with you what you produce best and you trade back with us what we produce best.

As a result, Alexander Hamilton wrote his famous treatise, ``Report on Manufacturers.'' I will not read that and put it in the Record, but I will say in a phrase exactly what Hamilton told the Brits: Bug off. He told the Brits, we are not going to remain your colony, shipping you our timber, iron ore, rice, cotton, indigo, and natural resources, and importing the manufactured articles and remaining a banana republic; we are going to build up our own manufacturing.

It caused me to listen to our friend Akio Morita, the former head of Sony. Some 20 years ago in Chicago, while lecturing third world countries, he said you have to develop a strong manufacturing sector in order to become a nation state. Then he pointed to me and said: Senator, that world power that loses its manufacturing capacity will cease to be a world power.

It is economic strength that counts in this terrorism war. It is diplomacy. It is negotiation. It is not military strength. We have to disenthrall ourselves and realize when we are going around talking about we might start a trade war, it was Hamilton himself and the United States of America some 228 years ago that started the trade war.

The very first bill--well, Pat Moynihan used to correct me on that. He said the first was a resolution for the United States Seal. So let's say the second bill that passed this Congress in its history on July 4, 1789, was a tariff bill, protectionism, a 50-percent tariff on 60 different articles. We started a trade war.

When Abraham Lincoln was President, they were going to build a transcontinental railroad. They said, we are going to get the steel from England. President Lincoln said, we are going to build our own steel plants, and he put import restrictions on that British steel and we built the steel plants.

When Franklin Roosevelt was President in the darkest days of the Depression, we did not practice any comparative advantage. He put on the most successful initiative ever with import quotas and subsidies for America's agriculture. That farm crowd that is now heading up our Finance Committee gets $180 billion worth of all kinds of subsidies. Then they run around here and tell this poor little textile Senator, protectionism, protectionism, you are going to start a trade war.

We do not get a subsidy. We do not have those things the farmers have. I favor what the farmers have, I say in the same breath. I vote for it because I think it is a very successful program.

President Eisenhower, in the mid-1950s, put on oil import quotas. Yes, John F. Kennedy--I sat there with Andy Hatcher and we would grind out the mimeograph machine--and we got the seven-point Kennedy textile program of restrictions on textile imports in 1961.

Who else other than Ronald Reagan, the best of the best, he put import quotas on steel, machine tools, semiconductors, motorcycles. Last night, I was near Myrtle Beach and they told me there were 100,000 motorcyclists--I think I ran into 99,000 of them out on the highway-- but do my colleagues remember what old Ronnie Reagan did? He started a trade war of motorcycles. He put a 50-percent import tariff on motorcycles. Harley Davidson now has recovered its health and we have them all running up and down the beach at Myrtle Beach, SC. So do not come now and tell me about starting a trade war.

We have had that trade war and we know simply and clearly what happens. I want to read starting on page 20 of ``Theodore Rex'' by Edmund Morris, because this is so interesting. I will read what protectionism did at the turn of the century, this is under Teddy Roosevelt, when we did not have an income tax. For the first 100 and some years, we financed this great United States of America with protectionism. I am trying to get that through so this crowd will wake up and quit pulling off this charade of the multinationals, because that is who we are facing. We are facing the U.S. Chamber of Commerce, the Business Roundtable, the National Association of Manufacturers, the Conference Board, the United Federation of Independent Businesses. The newspapers make a majority of their money on retail advertising and grind out this free trade, free trade, do not let us start a trade war.

Well, here is what the trade war gave us:

This first year of the new century found her worth twenty-

five billion dollars more than her nearest rival, Great

Britain, with a gross national product more than twice that

of Germany and Russia. The United States was already so rich

in goods and services that she was more self-sustaining than

any industrial power in history. . . .

More than half of the world's cotton, corn, copper, and oil

flowed from the American cornucopia, and at least one-third

of all steel, iron, silver, and gold.

Here we are having trouble manufacturing steel. We were exporting one-third of the world's steel.

Even if the United States were not so blessed with raw

materials, the excellence of her manufactured products

guaranteed her dominance of world markets. Current

advertisements in British magazines gave the impression that

the typical Englishman woke to the ring of an Ingersoll

alarm, shaved with a Gillette razor, combed his hair with

Vaseline tonic, buttoned his Arrow shirt, hurried downstairs

for Quaker Oats, California Figs and Maxwell House coffee,

commuted in a Westinghouse tram (body by Fisher), rose to his

office in an Otis elevator, and worked all day with his

Waterman pen under the efficient glare of Edison light bulbs.

``It only remains,'' one Fleet Street wag suggested, ``for

[us] to take American coal to Newcastle.'' Behind the joke

lay real concern: the United States was already supplying

beer to Germany, pottery to Bohemia, and oranges to Valencia.

As a result of this billowing surge in productivity, Wall

Street was awash with foreign capital. Carnegie calculated

that America could afford to buy the entire United Kingdom,

and settle Britain's national debt in the bargain. For the

first time in history, transatlantic money currents were

thrusting more powerfully westward than east. Even the Bank

of England had begun to borrow money on Wall Street. New York

City seemed destined to replace London as the world's

financial center.

Well, in the year 2004, we are broke. We have come from the greatest creditor nation to the greatest debtor nation. The Japanese are financing over $460 billion of my deficit. The Chinese are financing my debt--not me financing any other country like we started

with protectionism. The Chinese have over $200 billion of my deficit. We will end up this year in September, in a few short months, with a deficit that will approximate $700 billion.

We are spending around $2 billion a day more than we are taking in. Can you imagine that? In the early 1980s when I talked about budget matters, I spoke about how it took us 200 years of our history to get to $1 trillion in debt. The cost of the Revolution, the Civil War, Spanish-American War, World War I, World War II, Korea War, Vietnam War--it took us 200 years and the cost of all the wars to reach a $1 trillion debt.

In the last 3\1/2\ years--because we don't want to pay for our war and want to give tax breaks instead--we have already piled up $2 trillion in debt; $2 trillion in the last 3\1/2\ years.

This crowd has to sober up. We have to get hold of ourselves. We have to disenthrall ourselves and we have to start competing. Remember, it is our standard of living. That is the most frustrating thing around here. Here we add on these requirements: the minimum wage, Social Security, Medicare, Medicaid, plant closing notice, parental leave, safe working place, safe machinery, the old age act, the discrimination act, and this act and that act--all of that goes into the cost of production. It is not just the minimum wage; it is our high standard of living. Every Republican and every Democrat favors clean air and clean water. So we are not going back on our standard of living. So fundamentally we have to protect, and that is the fundamental role of Government.

I will never forget when we swore in President Ronald Reagan for his second term. It was inclement weather and we did it in the Rotunda. He raised his hand to preserve, protect, and defend. We came back and we were debating trade, and we said: Oh, we don't want to protect, we don't want to protect. The fundamental oath that we take as public servants is to protect. We have the Army to protect us from enemies without, the FBI to protect us from enemies within. We have Social Security to protect us from old age, Medicare to protect us from ill- health; clean air, clean water--antitrust laws to protect the freedom of the market. We can go right on down the list. Are we going to pass a wonderful high standard of living and then run around like ninnies hollering: Wait a minute, wait a minute, free trade, free trade. We don't want to start protectionism--they get that garbage from the Business Roundtable and the U.S. Chamber of Commerce.

I talk as one having received all of their awards. In 1992, I was man of the year of the National Chamber of Commerce. By 1998 they were sending out leaflets against me. So I speak advisedly. That crowd is not any longer interested in Main Street America. They are interested in Main Street Beijing. That is where you make the money, and the country can go to hell as far as they are concerned. So it is our duty to protect the economy and open up the markets and everything else like that.

Don't tell us more about retrain, retrain, retrain. I continually hear that. Oh, we have to retrain. I went through another little town yesterday, Andrews, SC. It brings to mind Oneida. I brought that plant in. They make little T-shirts. They closed to go to Mexico. At the time of closure they had 487 employees. The average age was 47 years.

We have done it, Senator, your way. We have retrained them and we have 487 highly skilled computer operators. Are you going to hire the 47-year-old highly skilled computer operator or the 21-year-old highly skilled computer operator? You are not going to take on the retirement, the pension cost of the 47-year-old. You are not going to take on the health cost of the 47-year-old. You are going to get the 21-year-old. So don't tell me about retraining.

We have the most productive economy--that is what Alan Greenspan says. He is sobering up himself. He came down here with this administration saying we were paying down too much debt. ``We are paying down too much debt.'' He sanctioned all these tax cuts. Now he says debt and deficits matter, and he is worried about interest rates now and everything else of that kind, and paying bills.

It is time we speak out as much as we can, early on, so we will know exactly where we stand. Where we stand is that we have to reorganize-- begin to organize, I should say--our trade effort, not just the Department of Commerce, but a Department of Trade and Commerce. I have been serving for almost 38 years on what was originally the Committee of Foreign and Interstate Commerce because article I section 8 says that Congress--not the President, not the Supreme Court--but the Congress of the United States shall regulate foreign commerce.

But, instead, it is over in the hands of a deep six group known as the Finance Committee. What they do is they work out their little deals. You might get a stadium, you might get a courthouse, you might get any kind of visions of sugarplums dancing in their head.

Forget about trade. They put on fast track. After they make their deal, the vote is fixed. Then it comes to the floor of the most deliberative body that cannot, under fast track, deliberate. And we enjoy it. We have tied our hands with fast track because we don't want to take the responsibility. That is what the polls will tell you: Don't say you are for or against, just say you are concerned.

So we say we are concerned and we keep getting reelected and the country goes to hell in an economic hand pot. I can tell you right now we are in real trouble, and we have to disenthrall.

What happens is that we need to organize a Department of Trade and Commerce, take that special Trade Representative, put it under that Secretary, do away with the International Trade Commission, which is a fix. You can find the damage done by the International Trade Administration over in Commerce. Then you go over to the Commission and they find out--oh, there is never any injury because you have growth. The GNP now is 3 or 4 percent, so there is no injury. So we keep sending the jobs out of the country like gangbusters, and we ought to do away with that particular fix of the Finance Committee. Then come in and get an Attorney General--an assistant, let's say, to enforce the trade laws.

Many a trade lawyer in this city has gone all the way to the Supreme Court and found out that, well, politically it is set aside. It was that way in the Zenith case, when they were gathered around the Cabinet table and President Reagan walked in and he said: I have to take care of Nakasone. We are going to have to reverse that decision, after 3 years and millions of dollars of legal costs.

So we ought to put in, like we have for antitrust, like we have for equal employment--we have to put in an Assistant Attorney General to enforce those laws, get the Customs agents, and finally when we get right down to it, do like the others do, play their game. If you are going to sell it here, you have to make it here. Isn't that wonderful? That is exactly what China really controls.

They said, if you want to sell it here you have to make it here. I haven't gotten them that far along, I am just trying to flex their minds so we will get away from this trade war and protectionism nonsense, so we can put in a competitive trade policy and save our industrial backbone.

Mr. President, how much time do I have remaining? My distinguished colleague from Florida, Mr. Bob Graham, wants to be heard.

Let me yield at this time to the proponents and the distinguished leadership of our Finance Committee. I retain the remainder of our time.

Mr. President, I yield 8 minutes to the distinguished Senator from Florida.

Mr. President, how much time is remaining on this side?

Mr. President, I yield whatever time I have to the distinguished Senator from North Dakota.

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

Good.

Yes.

Madam President, I ask unanimous consent that our amendment No. 3120 at the desk be modified and called up.

Madam President, I ask unanimous consent that further reading of the amendment, as modified, be dispensed with.

Madam President, I am offering this amendment along with our colleague, Senator Coleman. I understand the amendment has been cleared now on both sides of the aisle. I very much appreciate the effort that has been put into this matter by Senator Grassley and Senator Baucus. They have been battling abusive tax shelters for years now, and it is a privilege to join them in this fight by providing the IRS with stronger enforcement tools.

Abusive tax shelters are undermining the integrity of our tax system, robbing the Treasury of tens of billions of dollars each year, and shifting the tax burden from high income corporations and individuals onto the backs of the middle class.

The bill before us contains a host of important reforms to combat abusive tax shelters, including codifying and strengthening the definition of when a shelter has ``economic substance.'' But there is an area where the underlying bill falls short and unnecessarily so. That's on the penalties for the people who design and sell the abusive shelters. The bill sets the penalty at 50 percent of the fees earned by these promoters, meaning they get to keep half of their ill-gotten gains.

That is the provision that our amendment addresses, but we significantly toughen this provision in a way which I think this body will totally approve.

The amendment I originally filed proposed raising the penalty on abusive tax shelter promoters and those who aid or abet tax evasion to 150 percent. Today we have reached a compromise, agreeing to set the penalty at 100 percent, which will ensure that those who peddle abusive tax shelters will not get to keep a single penny of their ill-gotten gains.

The issue is whether when you have an abusive tax shelter, one which robs the Treasury of millions of dollars, the people who cook up those tax shelters are going to be penalized in any significant way. Will the accountants or the lawyers or the investment bankers--the people who design these deceptive and sham tax shelters, which are abusive and have no economic purpose, except to avoid taxes--will they be deterred from doing this? And if they do it, will they be penalized, at least to the extent of having their ill-gotten gains being taken back from them? That is the issue.

The current law is like a slap on the wrist. It is like a parking ticket. These abusive tax shelters, which have been designed by the banks and the accounting firms, and which have made them millions of dollars, result in a maximum fine of $1,000 under current law.

What our amendment does is say, if you design and promote an abusive tax shelter which has no economic substance and you are found responsible for doing that, the IRS can get all of your fee that is ill-gotten and wrongfully obtained for cooking up that tax shelter--not $1,000 of the fee, not half of the fee, as was originally proposed in the bill, but the entire fee is going to be recoverable by the IRS.

We can take a quick look at one of these tax shelters. This is called Flagstaff. I am not going to try to explain what that tax shelter you are looking at does. It is obviously inexplicable. It has all of this mumbo jumbo, all of these boxes and arrows that were intended by JP Morgan Chase to create an impression of economic activity when there was none. That is what this bowl of spaghetti is all about: to create a sham impression that there was some economic substance to these transactions when, in fact, there was no economic substance. They were cooked up in order to create the appearance of economic substance and, thereby, obtain a tax deduction for them.

The question is, when that happens, whether we are going to say to these firms that design these tax shelters for Enron, or for whoever: We are not going to let you, the designers, the perpetrators--who are called aiders and abettors in the law, but are really the promoters of the tax shelters--we are not going to let you keep those ill-gotten fees. We are going to recover those for the Treasury of the United States.

That is the only real deterrent we have.

I want to quickly show how some of these firms analyze these fees they get. Again, we are talking about millions of dollars in fees. These are cookie-cutter tax shelters that are designed and sold by the hundreds to people who can use a tax deduction for, usually, their capital gains, but are not engaged in economic activity which would justify the non-payment of tax on these capital gains.

This is what KPMG did when analyzing one of their phony tax shelters: First, they look at the financial exposure to the firm. It is minimal. So what they are saying is: Hey, we can engage in this. We can get away with it because there is no financial exposure.

. . . we conclude that the penalties would be no greater

than $14,000 per $100,000 in KPMG fees. . . . For example,

our average deal would result in KPMG fees of $360,000 with a

maximum penalty exposure of only $31,000.

They do a cost-benefit analysis.

They cook up and design an abusive tax shelter and then say: Now should we really go with this? Shall we peddle this, promote it, look for people who can benefit from it, sell it for hundreds of thousands of dollars and take the risk that we will be caught? Because what happens if we are caught? We are going to be paying a few thousand dollars in penalties and making $100,000. Our maximum exposure, our financial exposure, is minimal.

That is what this amendment changes.

Last November, the Permanent Subcommittee on Investigations, on which Senator Coleman is the chairman and I am the ranking member, held hearings that provided an inside look at how respected accounting firms, banks, investment advisors, and lawyers have become high-powered engines behind the design and sale of abusive tax shelters.

These hearings were the culmination of a year-long investigation into abusive tax shelters, which first began by pulling the curtain away from one of Enron's sham tax transactions. At the November hearings, we released a report by my subcommittee staff on four case histories of abusive tax shelters developed and marketed by KPMG. At the hearings themselves, we heard from a number of accounting firms, banks, investment firms, and others.

One of the key findings of the subcommittee investigation was that it was not taxpayers visiting their tax advisors that provided the engine for the

creation of abusive tax shelters, but rather hordes of tax advisors cooking up one complex scheme after another, and then peddling them to potential customers. There are legitimate tax shelters and abusive ones. The abusive shelters are marked by one characteristic: there is no real economic or business rationale other than a tax reduction. We found the abusive shelters being packaged up as generic ``tax products'' with boiler-plate legal and tax opinions, followed by elaborate marketing schemes to peddle these products to literally thousands of taxpayers across the country.

It is the insight gained during our close look at these shelters that led me and Senator Coleman to introduce the Tax Shelter and Tax Haven Reform Act, S. 2210. While the Levin-Coleman bill addresses a wide range of tax shelter issues, our amendment focuses on one key issue: the woefully inadequate penalties that are now on the books for the tax shelter promoters who concoct and peddle abusive shelters.

Existing tax shelter penalties are a joke. They provide no deterrent at all. The story begins with Enron, and I think the Enron scandal has shown us one reason this amendment is so important. The Flagstaff example I talked about earlier was designed to save Enron more than $60 million in taxes. The whole scam was built around a sham $1 billion loan that was issued to Enron but was repaid in nanoseconds, and then used to claim various tax benefits as well as creating a false impression of profits on the balance sheet. JP Morgan Chase designed and sold this concoction to Enron for more than $5 million. After Enron collapsed and this scam came to light, we learned that JP Morgan had sold the same abusive tax shelter to at least one other company as well.

Under Section 6700 of the tax code prohibiting the promotion of abusive tax shelters, JP Morgan was subject to a whopping $1,000 penalty. Let me repeat: For one tax shelter which was abusive because it was a sham and a deception, JP Morgan Chase's ill-gotten gain from one company, Enron, was $5 million. Its penalty exposure to the IRS under current law was $1,000.

As IRS Commissioner Mark Everson said when he testified at our tax shelter hearings, the current tax shelter promoter penalty is ``chump change.'' To continue quoting Commissioner Everson: ``We need significantly increased penalties to hit the promoters who don't get the message where it counts, in their wallets.''

Our tax shelter investigation found some fascinating documents as well, including one I have shown here today in the KPMG memo that shows a particular tax shelter promoter performing a specific cost-benefit analysis when deciding whether or not to take the risk of peddling an abusive shelter. The third paragraph of this KPMG memo says:

First, the financial exposure to the Firm is minimal. Based

upon our analysis of the applicable penalty sections, we

conclude that the penalties would be no greater than $14,000

per $100,000 in KPMG fees. . . . For example, our average

deal would result in KPMG fees of $360,000 with a maximum

penalty exposure of only $31,000.

The fact that all KPMG could lose if caught was a small part of its fee was a driving consideration in KPMG's decision to take the risk. This memo is proof that weak penalties encourage tax shelters and that tough penalties would deter them. Congress needs to enact meaningful, tough penalties to deter promoters from pocketing any gains from designing and peddling abusive tax shelters. We need to deter folks from making a cost-benefit analysis that encourages the promotion of a tax shelter they know is not likely to withstand scrutiny.

Our amendment would do just that by strengthening penalties for promoting abusive tax shelters.

Our amendment focuses on two key penalties. The first is the penalty for promoting an abusive tax shelter under Tax Code section 6700. The second is the penalty for aiding and abetting tax evasion under Tax Code section 6701. It would increase the penalty for both types of misconduct.

Currently, the penalty under section 6700 of the Tax Code is the lesser of $1,000 or 100 percent of the promoter's gross income derived from the prohibited tax shelter. That means in most cases, the maximum fine is $1,000. That figure is laughable, when many abusive tax shelters are selling for $100,000 or $250,000 apiece. Our investigation uncovered tax shelters that were sold for millions each. The Enron tax avoidance scam sold for more than $5 million. We also saw instances in which the same so-called tax product was sold to more than 100 clients. A $1,000 fine is like a parking ticket for raking in millions illegally.

The bill before us is an improvement over the status quo, but an unnecessarily modest one. It would increase the penalty for promoting an abusive tax shelter to 50 percent of the promoters' gross income from the prohibited tax shelter. Why should anyone who pushes an abusive tax shelter--an illegal tax shelter that robs our Treasury of much needed revenues--get to keep half of his ill-gotten gains? And what deterrent effect is created by a penalty that allows promoters to keep half of their fees if caught, and all of them if they are not? That half-hearted penalty is not tough enough to do the job that needs to be done.

At the very least, a meaningful penalty for those who peddle abusive tax shelters must ensure that the tax shelter promoter does not profit from its wrongdoing. It must require the wrongdoer to disgorge every penny of the income obtained from selling the shelter. Our amendment would do just that.

My original amendment would have gone further. It would have created a maximum penalty equal to 150 percent of the promoter's gross income from the prohibited tax shelter. Under that penalty, the first 100 percent would have forced the disgorgement of the ill-begotten gains, and the remaining 50 percent would have imposed what I consider to be an actual penalty on top of that. But today, our amendment does not go that far. It stops at 100 percent. While that is not as tough as called for in the Levin-Coleman bill, it is a reasonable compromise and will ensure that those who promote abusive tax shelters will lose 100 percent of their ill-gotten gains.

The underlying bill has the same problem in the way it addresses many professional firms the accountants, law firms, banks, and investment advisors that aid and abet the use of abusive tax shelters and enable taxpayers to carry out abusive tax schemes. The underlying bill takes the same half-hearted approach of denying only 50 percent of the gross income obtained by the aider and abettor, and allowing the wrongdoer to keep half of its ill-gotten gains. Just as we do with tax shelter promoters, our amendment would raise the penalty under tax code section 6701 to 100 percent of the aider or abettor's gross income, thereby denying them 100 percent of their ill-gotten gains. In addition, our amendment would make an important change to section 6701 itself by eliminating a provision which limits the penalty to persons who prepare tax returns. Instead, our amendment would apply the penalty to all wrongdoers who knowingly aid and abet the understatement of tax liability, not just tax return preparers.

Finally, while I am pleased that today we have reached agreement to accept a 100 percent penalty, I would like to take this opportunity to observe that penalties that cause wrongdoers to not only disgorge their ill-gotten gains, but also pay a monetary fine on top of that are fair and provide a meaningful deterrent.

There is no reason why those who concoct and peddle these shenanigans should get off any easier than the taxpayers who use them. Just last week the IRS came out with an initiative to allow taxpayers who used a tax shelter known as ``Son of Boss'' to come clean. This tax shelter was marketed beginning in the late 1990s and was one of the tax shelters we looked at during our investigation. Under the terms of the IRS initiative, taxpayers are required to come forward and pay 100 percent of the tax they tried to escape. On top of that, the IRS can impose a penalty that ranges up to an additional 40 percent. That means the taxpayer faces up to a 140 percent penalty.

Son of Boss is a hellaciously complicated tax shelter that was dreamed up and carried out by tax shelter promoters and other professionals. The taxpayers who bought this shelter have to cough up 100 percent plus. It is only fair that the tax shelter promoters who made so many millions of dollars in profit on these schemes should do no less.

It is also important to realize that Congress has frequently set penalties for corporate misconduct and financial crimes that require wrongdoers to disgorge 100 percent of their ill-gotten gains plus pay a penalty on top of that, and courts have upheld those penalties as both constitutional and enforceable. For example, under current law, violation of the federal securities laws results in 100% disgorgement plus a civil fine of up to 100 percent, for a total civil penalty equal to 200 percent. In the special case of insider trading, violations result in 100 percent disgorgement plus a civil fine of up to 300 percent, for a total civil penalty equal to 400 percent. Manipulation of commodity markets results in a civil fine of up to 300 percent. False claims submitted to the Federal Government result in a civil fine of up to 300 percent. Even the tax code has penalties of this magnitude; for example, personally profiting from a charity results in a civil fine of up to 200 percent.

Men and women in our military are putting their lives on the line every day for our nation. To make sure we can provide them with the resources they need, all Americans need to contribute their fair share in taxes. While the bill before us improves the tax shelter penalties over current law, we can and should do much better. We need penalties that truly deter those who make a profit from peddling abusive tax shelters and aiding and abetting tax evasion, not penalties that would allow the promoters to keep half of their ill-gotten gains.

It is long past time to stop in their tracks the shelter abusers and the promoters who push them. This amendment would send the message to promoters that their tax schemes are unfair and unpatriotic. Again, I appreciate the bill managers accepting it into the bill.

I also thank Senator Coleman for being such a strong advocate of this approach, putting in the law a real deterrent to end these abusive tax shelters which have cost the Treasury and the average taxpayers of this country, who have to share the burden, so many tens of billions of dollars. That is now hopefully going to end.

Again, I thank the chairman and ranking member of the Finance Committee for the way they have worked with us to adopt this amendment.

I yield the balance of my time to my friend from Minnesota.

Mr. President, I rise today to introduce the ``Clinical Social Work Medicare Equity Act of 2003.'' I am proud to sponsor this legislation that will include clinical social workers among other mental health providers that are exempted from the Medicare Part B Prospective Payment System. This bill will ensure that clinical social workers can receive Medicare reimbursements for the mental health services they provide in skilled nursing facilities.

Since my first days in Congress, I have been fighting to protect and strengthen the safety for our Nation's seniors. Making sure that seniors have access to quality, affordable mental health care is an important part of this fight. I know that millions of seniors do not have access to, or are not receiving, the mental health services they need. For example, depression affects nearly 6 million seniors, but only one-tenth ever get treated. This is unacceptable. Clinical social workers

may also be the only mental health providers in some rural areas. Protecting seniors' access to clinical social workers can help make sure that our most vulnerable citizens get the quality, affordable mental health care they need.

Clinical social workers, much like psychologists and psychiatrists, treat and diagnose mental illnesses. In fact, clinical social workers are the primary mental health providers for nursing home residents. But unlike other mental health providers, clinical social workers cannot bill directly for the important services they provide to their patients. This bill will correct this inequity and make sure clinical social workers get the payments and respect they deserve.

Before the Balanced Budget Act of 1997, clinical social workers billed Medicare Part B directly for mental health services provided in nursing facilities to each patient they served. Under the Prospective Payment System, services provided by clinical social workers are lumped, or ``bundled,'' along with the services of other health care providers for the purposes of billing and payments. Psychologists and psychiatrists, who provide similar counseling, were exempted from this system and continue to bill Medicare directly. This bill would exempt clinical social workers, like their mental health colleagues, from the Prospective Payment System, and would make sure that clinical social workers are paid for the services they provide to patients in skilled nursing facilities. The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act addressed some of these concerns, but this legislation would remove the final barrier to ensuring that clinical social workers are treated fairly and equitably for the care they provide.

This bill is about more than paperwork and payment procedures. This bill is about equal access to Medicare payments for the equal and important work done by clinical social workers. It is also about making sure our Nation's most vulnerable citizens have access to quality, affordable mental health care. Without clinical social workers, many nursing home residents may never get the counseling they need when faced with a life threatening illness or the loss of a loved one. I think we can do better by our nation's seniors, and I'm fighting to make sure we do.

The Clinical Social Work Medicare Equity Act of 2003 is strongly supported by the National Association of Social Workers. I ask unanimous consent that a letter of endorsement from the National Association of Social Workers be printed in the Record. I also want to thank Senators Johnson, Murray, Stabenow, Corzine, Inouye, and Bingaman for their cosponsorship of this bill. I look forward to working with my colleagues to enact this important legislation.

Mr. President, today, I rise to talk about an issue that is very important to me, very important to my constituents in Maryland and very important to the people of the United States of America.

For the fifth Congress in a row, I am joining in a bipartisan effort with my friend and colleague, Senator Olympia Snowe, to end an unfair policy of the Social Security System.

Senator Snowe and I are introducing the Social Security Family Protection Act. This bill addresses retirement security and family security. We want the middle class of this Nation to know that we are going to give help to those who practice self-help.

What is it I am talking about? I was shocked when I found out that Social Security does not pay benefits for the last month of life. If a Social Security retiree dies on the 18th of the month or even on the 30th of the month, the surviving spouse or family members must send back the Social Security check for that month.

I think that is a harsh and heartless rule. That individual worked for Social Security benefits, earned those benefits, and paid into the Social Security trust fund. The system should allow the surviving spouse or the estate of the family to use that Social Security check for the last month of life.

This legislation has an urgency. When a loved one dies, there are expenses that the family must take care of. People have called my office in tears. Very often it is a son or a daughter that is grieving the death of a parent. They are clearing up the paperwork for their mom or dad, and there is the Social Security check. And they say, ``Senator, the check says for the month of May. Mom died on May 28. Why do we have to send the Social Security check back? We have bills to pay. We have utility coverage that we need to wrap up, mom's rent, or her mortgage, or health expenses. Why is Social Security telling me, `Send the check back or we're going to come and get you'?''

With all the problems in our country today, we ought to be going after drug dealers and tax dodgers, not honest people who have paid into Social Security, and not the surviving spouse or the family who have been left with the bills for the last month of their loved one's life. They are absolutely right when they call me and say that Social Security was supposed to be there for them.

I've listened to my constituents and to the stories of their lives. What they say is this: ``Senator Mikulski, we don't want anything for free. But our family does want what our parents worked for. We do want what we feel we deserve and what has been paid for in the trust fund in our loved one's name. Please make sure that our family gets the Social Security check for the last month of our life.''

That is what our bill is going to do. That is why Senator Snowe and I are introducing the Family Social Security Protection Act. When we talk about retirement security, the most important part of that is income security. And the safety net for most Americans is Social Security.

We know that as Senators we have to make sure that Social Security remains solvent, and we are working to do that. We also don't want to create an undue administrative burden at the Social Security Administration--a burden that might affect today's retirees. But it is absolutely crucial that we provide a Social Security check for the last month of life.

How do we propose to do that? We have a very simple, straightforward way of dealing with this problem. Our legislation says that if you die before the 15th of the month, you will get a check for half the month. If you die after the 15th of the month, your surviving spouse or the family estate would get a check for the full month.

We think this bill is fundamentally fair. Senator Snowe and I are old-fashioned in our belief in family values. We believe you honor your father and your mother. We believe that it is not only a good religious and moral principle, but it is good public policy as well.

The way to honor your father and mother is to have a strong Social Security System and to make sure the system is fair in every way. That means fair for the retiree and fair for the

spouse and family. We strongly feel that the current system is an injustice to spouses and families across the Nation. Just because a beneficiary passes away, it does not mean that their bills can go unpaid. Join us to correct this policy and to ensure that families and recipients are protected during this difficult time. That is why we support making sure that the surviving spouse or family can keep the Social Security check for the last month of life.

We urge our colleagues to join us in this effort and support the Social Security Family Protection Act. I ask unanimous consent that the text of my bill be printed in the Record.

Mr. President, I rise today to talk about an issue that is very important to me, very important to my constituents in Maryland and very important to government workers and retirees across the Nation. I am reintroducing a bill to modify a cruel rule of government that is unfair and prevents current workers from enjoying the benefits of their hard work during retirement. My bill has bipartisan support and the House companion bill

had nearly 300 cosponsors last year. With this strong bipartisan support, I hope that we can correct this cruel rule of government this year.

Under current law, a Social Security spousal benefit is reduced or entirely eliminated if the surviving spouse is eligible for a pension from a local, State or Federal Government job that was not covered by Social Security. This policy is known as the Government Pension Offset.

This is how the current law works. Consider a surviving spouse who retires from government service and receives a government pension of $600 a month. She also qualifies for a Social Security spousal benefit of $645 a month. Because of the Pension Offset law, which reduces her Social Security benefit by 2/3 of her government pension, her spousal benefit is reduced to $245 a month. So instead of $1245, she will receive only $845 a month. That is $400 a month less to pay the rent, purchase a prescription medication, or buy groceries. I think that is wrong.

My bill does not repeal the government pension offset entirely, but it will allow retirees to keep more of what they deserve. It guarantees that those subject to the offset can keep at least $1200 a month in combined retirement income. With my modification, the 2/3 offset would apply only to the combined benefit that exceeds $1200 a month. So, in the example above, the surviving spouse would face only a $30 offset, allowing her to keep $1215 in monthly income.

Unfortunately, the current law disproportionately affects women. Women are more likely to receive Social Security spousal benefits and to have worked in low-paying or short-term government positions while they were raising families. It is also true that women receive smaller government pensions because of their lower earnings, and rely on Social Security benefits to a greater degree. My modification will allow these women who have contributed years of important government service and family service to rely on a larger amount of retirement income.

The last time Congress passed a bill significantly effecting Social Security benefits was in 1999. At that time, the Senate unanimously voted for and passed H.R. 5, The Senior Citizens' Freedom to Work Act of 1999. This legislation ensured that senior citizens who choose to work or who must work can earn income after retirement without losing a portion of their Social Security benefit. That law helps senior citizens who earn above $17,000 per year. In contrast, my bill specifically targets those with much lower retirement incomes around $13,000 per year and less. I believe that we must work to ensure a safety net for all of our seniors--including those retired federal employees who every day are forced to make difficult choices between rent, food, and prescription drugs due to the drastic effects of the government pension offset.

Why do we punish people who have committed a significant portion of their lives to government service? We are talking about workers who provide some of the most important services to our community--teachers, firefighters, and many others. Some have already retired. Others are currently working and looking forward to a deserved retirement. These individuals deserve better than the reduced monthly benefits that the Pension Offset currently requires.

Government employees work hard in service to our nation, and I work hard for them. I do not want to see them penalized simply because they have chosen to work in the public sector, rather than for a private employer, and often at lower salaries and sometimes fewer benefits. If a retired worker in the private sector received a pension, and also received a spousal Social Security benefit, they would not be subject to the Offset. I think we should be looking for ways to reward government service, not the other way around. I believe that people who work hard and play by the rules should not be penalized by arcane, legislative technicalities.

Frankly, I would like to repeal the offset all together. But, I realize that budget considerations make that unlikely. As a compromise, I hope we can agree that retirees who have worked hard all their lives should not have this offset applied until their combined monthly benefit, both government pension and Social Security spousal benefit, exceeds $1,200.

I also strongly believe that we should ensure that retirees buying power keeps up with the cost of living. That's why I have also included a provision in this legislation to index the $1,200 amount to inflation so retirees will see their minimum benefits increase along with the cost of living.

The Social Security Administration recently estimated that enacting the provisions contained in my bill will have a minimal long-term impact on the Social Security Trust Fund--about 0.01 percent of taxable payroll. Additionally, my bill is bipartisan and is strongly supported by CARE, the Coalition to Assure Retirement Equity with 43 member organizations including the National Association of Retired Federal Employees, NARFE, the American Federation of Federal State County and Municipal Employees, AFSCME, the National Education Association, NEA, and the National Treasury Employees Union, NTEU.

I urge my colleagues to join me in this effort and support my legislation to modify the Government Pension Offset. I ask unanimous consent that the text of my bill be printed in the Record.