Affordable Small Business Stimulus and Simplification Act of 2003

Mr. President, I come to the floor today to introduce three bills to address the growing needs of small manufacturers, to stimulate the manufacturing sector of our economy, and to put back to work the millions of American workers in the manufacturing sector that have lost their jobs in the past 3 years. The three comprehensive bills are: the Manufacturing Assistance, Development and Education (MADE) in America Act, the Enhance Domestic Manufacturing and Worker Assistance Act, and the Manufacturing Jobs Production Act.

It's no secret that during the past 3 years, manufacturing employment in the United States has declined from 17.3 million to 14.6 million jobs. This loss of manufacturing jobs represents a loss of more than one in every seven such jobs. Over the past 3 years, the United States has lost an average of 80,000 manufacturing jobs a month. The States that rely the most on their manufacturing sector have suffered the most during the past 3 years. Indiana has lost 67,000 manufacturing jobs, California--297,000, Ohio--152,000, Illinois--126,000, Michigan-- 127,000, Pennsylvania--133,000, South Carolina--55,200, and North Carolina--145,300. Even in my home State of Massachusetts, we have lost approximately 80,000 manufacturing jobs since January 2001.

The loss of manufacturing jobs is of great concern because the manufacturing sector is more important than any other sector in supporting overall economic growth, technological innovation, and a high standard of living for Americans. Over the past 10 years, manufacturers have performed nearly 60 percent of research and development in the United States and have paid over one-third of all corporate tax payments to State and local governments.

Further, replacing manufacturing jobs with service sector jobs will not help stabilize the American economy. According to a University of Michigan study, 6.5 spin-off jobs are created as a result of every new job created in manufacturing. Service sector jobs simply cannot generate that type of economic activity. The benefits of manufacturing can also be found in national salary averages. In 2001, salaries and benefits averaged $54,000 in the manufacturing sector, while the average salary and benefits package in the private sector overall was only $45,600.

In 1955, manufacturing jobs were 30.5 percent of all U.S. employment, today they make up just 14 percent. The manufacturing decline has been marked by a relocation of factories abroad along with reduced exports and increased imports of manufactured goods. Both large and small companies have been affected and a continued shrinking of the manufacturing base may shift the manufacturing innovation process to other global centers and most certainly result in a decline in U.S. living standards.

As a member of the Finance and Commerce committees and ranking member of the Senate Committee on Small Business and Entrepreneurship, I have been fighting for the creation of new manufacturing jobs during debate over the President's tax cuts, and I will continue to do so in the months ahead. President Bush has done nothing to address the loss of manufacturing jobs, and many communities across the country are suffering because of it, as more and more plants close and more and more jobs move overseas. This administration is indifferent to these changes, and the pain being felt in million of American households, and that's unacceptable.

In fact, indifferent may be too kind a word. The Bush administration has been downright cruel to working Americans, pursuing billions of tax cuts for the most well-off in our society as their only economic policy, while millions of hard-working Americans have lost their jobs and will be left with the bill from this administration's reckless fiscal policies. In fact, you could argue that the manufacturing jobs picture is actually worse than the hard numbers tell us. While many estimates show that 2.5 million manufacturing jobs have been lost since President Bush took office, in previous postwar recoveries, manufacturing employment had recovered by this point in the business cycle and risen by more than 5 percent. Under the Bush presidency, manufacturing employment has continued to deteriorate steadily, falling so far by 8 percent. Morgan Stanley's respected economists tell us that the difference represents 2.1 million additional manufacturing jobs. More supply-side, trickle-down, ideologically driven tax cuts are not going to turn this around. Congress needs to take action and pass some policies that are meaningful to people, and will actually create jobs, and soon.

The President and his followers insist that his tax cuts are starting to work, basing their claims on a couple of months where the overall job creation numbers were positive. But the truth is that the meager job gains of the last three months have done little to lift most parts of the economy because nearly 80 percent of those small gains have come in just three sectors: government, temporary staffing, and education and health services. Manufacturing is not yet on the mend, and people who are finding new jobs are finding jobs at lower pay. We need to take action.

Small-business owners have made it clear to me, to Congress, and to the administration what actions are needed to reinvigorate the manufacturing sector. Unlike the Bush administration, which has ignored these requests for help, Congress must have the courage to make the tough decisions and not simply pander to wealthy Americans and giant corporations with unbalanced tax cuts. The Nation's gross domestic product may be temporarily up, but manufacturing jobs are still way down. To get those jobs back, and to continue competing on the international stage, our manufacturers, particularly our small manufacturers, need adequate representation and leadership at all levels of government, here and abroad. They need a well-educated, highly skilled, productive labor force; Federal contracting and subcontracting opportunities; greater access to capital; foreign patent protection; trade adjustment, global marketing, and entrepreneurial development assistance; and responsible, targeted tax credits. This legislation addresses those needs, while the President's tax cuts continue to undercut them.

Mr. President, we often receive complaints that the Federal and State small business programs duplicate, rather than complement, each other. While the SBA has stated that it has sufficient systems and programs in place to address the concerns of manufacturers, statistics on small manufacturers, as well as the business owners themselves, prove otherwise. Many state that accessing these programs is often confusing and difficult because they are fragmented, spread out and not tailored to bridge gaps found between State and Federal assistance programs. To address these problems, my bill will create the National Office for the Development of Small Manufacturers at the Small Business Administration, led by an associate administrator. This new office will be responsible for coordinating and strengthening existing programs, as well as establishing new SBA programs to address the needs of small manufacturers and to promote programs throughout the Federal Government that assist small- and medium-size manufacturers. While the President has established a ``new'' manufacturing czar at the Department of Commerce, this action is seen as lateral movement and does nothing to assist those manufacturers that are suffering the most, the Nation's small business manufacturers.

Once established, the National Office for the Development of Small Manufacturers will be responsible for implementing a Manufacturing Corps through block grants to each State that will address the skilled worker crisis in this country by promoting technical education pertinent to the manufacturing sector. First, the Manufacturing Corps would help current manufacturing workers improve their

skill set and advance their technical abilities. Each State's grant would ultimately provide small manufacturers with more highly skilled workers--something that the industry has posed as a global competitive disadvantage--and allow the unemployed and those in declining industries to make the pivotal move back to work or to other manufacturing sectors, respectively.

Second, the Manufacturing Corps would help small manufacturers fill their skilled labor needs by encouraging college and university students studying engineering, computers, and other high-tech fields to work in the small manufacturing sector by offering to repay a portion of their student loans if they do so for a specified period of time. Similar to incentives for students going into the nonprofit or government work, the government would repay the loans of those who commit to working for a small manufacturer for 4 years following graduation if their annual employment compensation does not exceed $60,000.

Third, the Manufacturing Corps would establish a vocational and technology training for students at the high school level to prepare students who are not planning to attend college directly after graduation to enter the manufacturing sector. As in woodshop or auto shop courses, high school students will learn the technical skills to become effective, skilled manufacturing employees, such as machinists or metal workers. Additionally, schools providing such assistance would partner with community manufacturers to address their skilled worker needs and to provide employment opportunities for students after graduation.

Another duty charged to the National Office for the Development of Small Manufacturers is to create a government-wide ``One Stop Small Manufacturing Shop'' for small manufacturers. This online web portal will serve as the single point of contact for information on entrepreneurial development assistance, access to capital, specific outreach programs, contracting opportunities, and R&D projects. We already have successful programs that can be used as a prototype for the web page such as the National Industrial Manufacturing Assistance Program's Web site at the Office of Industrial Technologies at the Department of Energy.

The greatest challenge to small businesses, as with all businesses, is the ability to obtain contracts. The BusinessLINC program within the SBA has been proven, since its inception, to successfully match small businesses with potential clients. The teaming model has created thousands of jobs and millions of dollars in contracts. The BusinessLINC-M program will also team small businesses with non- governmental organizations that can have a direct impact on their bottom-line through contracting or mentoring. There is a great potential for the BusinessLINC-M program to match suppliers with distributors, offer contracting and subcontracting opportunities, which directly benefits the local economy while allowing access to vendors in the distributors' backyards. The National Office for the Development of Small Manufacturers will create a similar program to foster symbiotic partnerships between small and large businesses to spur contracting opportunities. This BusinessLINC-M program would instead match up small manufacturers with larger firms that could utilize their products, creating subcontracting opportunities and a stronger supply chain.

Finally, the National Office for the Development of Small Manufacturers will develop a manufacturing mentor-protege program to focus on improving the management practices, domestic and foreign marketing abilities, efficiency, and product development of small manufacturers by pairing them with larger, more experienced manufacturers that would provide such guidance.

One of the first things we can do to help small manufacturers is to tailor the SBA's loan and venture capital programs so that they offer small manufacturers affordable, long-term financing in amounts that are truly appropriate for them. This legislation will assist small businesses with fixed-asset costs, working capital, loan dollars to help them export what they have produced in the United States, and venture capital investments to spur expansion and growth.

To provide that capital, we have increased the loan amounts available to small manufacturers, increased venture leverage, and allowed refinancing of certain existing business debt. The maximum 504 loan, for equipment and property, will be raised from $1 million to $4 million, the maximum microloan will be raised from $35,000 to $50,000, and the gross loan amount for 7(a) working capital loans will increase from $1 million to $4 million for small manufacturers.

Investors should be encouraged to devote more of their money to the fastest growing small manufacturers. The SBIC program can provide that venture capital money. Under this bill, if SBICs invest 50 percent in small manufacturers, then a single fund can leverage $150 million instead of $115 million and a manager with several SBICs can leverage $185 million from the SBA. The legislation also restores and increases funding to establish additional New Markets Venture Capital firms and increases the SBA's leverage against private funds raised in the New Markets Venture Capital program from 150 percent to 200 percent so these venture capital firms can invest more in small manufacturers.

For growing small businesses using the loans from the 504 program to buy new equipment or buildings, we raise the limit for lenders so that they must create or retain one job for every $100,000 loaned to manufacturers. This is in place of the $35,000 that is currently in place. For non-manufacturers, it will be raised to $50,000. For manufacturers, the costs of retaining jobs are higher, and we want these jobs to be good living wages and not the $3 per hour or lower that exists in some countries.

After a natural disaster, the already slumping manufacturing industry faces an even greater challenge in returning business to normal and affording the costs of repair. Recognizing that they face these problems, the MADE in America Act changes several provisions to the SBA's disaster loan program. It increases the maximum loan size from $1.5 million to $5 million; allows small manufacturers to consolidate debt by refinancing not just existing disaster loans but any outstanding business loan; waives the principal and interest payments for 6 months; authorizes the administration to waive unreasonable size limitations; and prohibits the SBA from selling all disaster loans to other creditors. Disaster loans, at the most, have an interest rate of 4 percent and terms of up to 30 years. This low rate and long term keeps manufacturers' payments down as well as their debt, particularly when they refinance their more expensive business loans.

To help small manufacturers and small R&D firms, we need to reduce trade barriers, so that they are able to sell their products and technologies in other countries. Small-business owners commonly cited the expense required to secure foreign patent protection as a significant barrier to their ability to operate in international markets. Part of encouraging the spread of their innovations into other countries is decreasing their vulnerability to big foreign corporations that can take their ideas when they try to sell their products around the world. Our small businesses need patent protection. However, the costs associated with filing such patents are often prohibitively expensive.

For example, Mr. Clifford Hoyt, who is vice president and chief technology officer of Cambridge Research and Instrumentation, testified on June 21, 2001, as part of the Committee's hearing on reauthorization of the STTR program that cost of ``patent protection in Europe is $20,000.'' Information from the American Intellectual Property Law Association's meeting shows that the costs of foreign patents range from $7,200 in Canada to $27,200 in Japan. Those costs include fees for filing, examination, translation and attorneys.

With this legislation, to address the intellectual property problem for small exporters, I propose enacting a variation of a bill I introduced 2 years ago. The MADE in America Act would establish a self- sustaining grant fund to help small manufacturers and R&D firms pay for the cost associated with foreign patent protection. Each company would be limited to one grant and, in order to be eligible for the

grant, it must have already filed for patent protection in the United States. Both of these provisions are designed to ensure, to the extent possible, that companies apply for assistance for their most promising technology and therefore are in the best position to return money to the grant fund when their patented technology becomes profitable. By giving the companies only one shot at a grant to protect and make money from their technologies, it forces them to select the one most likely to succeed and have sales. At the same time, requiring companies to have already filed for patent protection in the United States prior to seeking a foreign patent grant is a gauge of the company's confidence in the commercial potential of its technology.

Ultimately, the goal is to create a self-sustaining grant fund. To do so, in return for the grants, each recipient would be obligated to pay 5 percent of its related export sales or licensing fees to the fund, to be known as the ``Small Business Foreign Patent Protection Grant Fund.'' To maintain a reasonable incentive for the small businesses, the total amount recipients would be required to pay would be capped at four times the amount of the grant, which for a $25,000 grant would be $100,000.

When I first introduced this bill a couple of years ago, the grants were limited to companies that participate in the SBA's SBIR and STTR programs. However, this bill opens the grant funding to all small firms, while reserving 50 percent of the money for SBIR and STTR firms through the first three quarters to each year. Intellectual property protection is critical to these small firms that have a great product or invention, and keeping these innovations in the hands of American firms is important to the U.S. economy.

Mr. President, today I am also introducing the Enhance Domestic Manufacturing and Worker Assistance Act. America's manufacturing decline and the associated loss of good, stable manufacturing jobs has been marked by a relocation of factories abroad along with reduced exports and increased imports of manufactured goods. This legislation will respond to the manufacturing crisis in two ways. The proposal recognizes the harmful impact that trade has on small manufacturers and provides assistance to those workers, companies and communities that have suffered through Trade Adjustment Assistance programs. The proposal also provides critical assistance to U.S. domestic manufacturers to ensure that they adjust to the global economy and remain competitive in the 21st century.

First of all, for those workers, businesses and communities that have been harmed by trade, my bill assists them by reauthorizing our Trade Adjustment Assistance programs for workers and business firms. The bill includes elements of an innovative program to assist similarly situated communities. Recognizing that entire communities experience economic displacement, this proposal will assist harmed communities in exploring new avenues of economic development and job creation. Combined, these programs will assist hundreds of mostly small- and medium-sized manufacturing and agricultural companies that experience loss of jobs and sales due to import competition and other adverse consequences of trade. For example, TAA for workers provides income support, job search and worker relation assistance for affected workers.

Next, my legislation will enhance two programs that have proven effective in assisting domestic manufacturing firms. For example, the bill will strengthen the very effective Manufacturing Extension Partnership program. This program assists struggling small- and medium- size manufacturers to modernize, increase productivity, cut waste, achieve higher profits, and compete in the demanding global market. With increased funding, the MEP program can expand its program reach and decrease the fees paid by small manufacturers to access the assistance. It is exactly this type of program that will make American manufacturers competitive again, allowing them to maintain existing jobs and create additional high-skilled and high-paying jobs in the United States.

In addition, my legislation increases funding for the Advanced Technology Partnership program. This very important program fosters public-private partnerships to accelerate the development of innovative technologies and bridges the gap between the research lab and the market place. The program has been very effective in accelerating the development of innovative technologies that promise significant commercial payoffs and widespread benefits for the Nation. Unfortunately, the Bush administration has sought to eliminate this program, at a time when technological change is faster than ever before and small manufacturers must be technologically competitive.

Strengthening the MEP and ATP programs will go a long way in assisting small domestic manufacturers as they attempt to regain market share lost to international competition and recover from the resulting devastating job losses.

Finally, this bill will also create an ``Office of Small Business'' within the Office of the United States Trade Representative that will focus on the issues affecting small- and medium-size manufacturers as they relate to our international trade policy. This proposal is very similar to a proposal that I offered with Senator Olympia Snowe in the 107th Congress. Small manufacturers are directly impacted by our trade policies--often adversely--yet they do not have a seat at the table and lack the ability to effectively express their concerns. The establishment of this office will ensure that issues important to small manufacturers are taken into consideration as our Nation's trade policy is carried out in the future and will assist small businesses in export promotion and trade compliance.

The final piece of my legislation plan to enhance U.S. manufacturing is my bill titled the ``Manufacturing Job Production Act.'' The bill has four components, all of which are fiscally responsible. None of them will by themselves completely make up for the jobs lost during this administration, but they will each do their part in stimulating new job creation and new investment in manufacturing firms.

The first component of my plan is a Temporary Manufacturing Job Creation Tax Credit. It is a similar proposal to one I introduced earlier this year, when we were debating the President's third major tax cut in 3 years. My idea is straightforward: Any domestic manufacturer would receive an income tax credit based on a percentage of the net increase in taxable Social Security payroll linked to new manufacturing/production jobs, comparing total applicable payroll for one year to the previous year, adjusted for inflation. The credit would apply only to domestic production/manufacturing jobs created in 2004 and 2005, and it would include jobs created in U.S. territories, and those created by foreign-owned companies in the United States or its territories.

Unlike many of the administration's tax cuts, which carry huge costs at the vague promise of a positive economic result, my idea is outcome- based because it only costs money if it actually works. Plus, it has a built-in safety valve to prevent abuse, because it prevents firms from receiving tax credits if they create new manufacturing jobs while simultaneously laying off other workers, and it stops companies from tilting the benefits to high-salary workers because these salaries are already above the Social Security payroll tax cap. By comparing payroll taxes paid over a whole year, it also provides an incentive for firms to hire new workers and keep them on payroll and makes the calculation simple for businesses. It also provides an employment stimulus for U.S. companies with subsidiaries or manufacturing facilities on U.S. possessions, such as Puerto Rico.

My proposal would be in place for 2 years, and the Joint Committee on Taxation estimates that it would cost less than $4 billion. Surely we could pass this proposal and offset its modest cost by finally closing some of the Enron tax loopholes or passing the corporate inversion proposals that have previously passed this body unanimously, only to be opposed by the House. I think the percentage of Americans that would support that tradeoff would be upwards of 80 percent. Paying for this proposal by closing tax loopholes for wealthy corporation makes perfect sense. It will help our economy grow and help slow the flow of manufacturing jobs overseas.

The second element of may plan expands upon a capital gains provision that I have included in other legislation. Section 4 of S. 842, my small business tax stimulus bill, provides that there shall be no capital gains tax applied to new equity investments in small businesses with gross sales under $100 million, if the investments are held for at least 4 years. The zero capital gains tax applies to businesses involved in certain ``critical technologies'' as well as specialized Small Business Investment Companies, or SSBICs. For the Manufacturing Job Production Act, this capital gains proposal is expanded to include new equity investments in small manufacturing firms. Such a proposal should generate new investments in manufacturing, particularly small manufacturing companies that have been so damaged by recent economic trends. And like the job creation credit, it only costs significant money if it has the desired effect. That factor alone makes it far preferable to the Republican ``throw it and see if it sticks'' tax cut strategy.

The third part of my manufacturing plan is a revised BRIDGE Act, designed to give a little extra boost to small manufacturers. The BRIDGE Act stands for Business Retained Income During Growth and Expansion. It will help ensure that rapidly expanding, entrepreneurial businesses have access to the capital they need to continue creating jobs and stimulating the economy.

Each year, the United States economy generates 600,000 to 800,000 new businesses. Most new business start small and stay small--but some evolve into fast-growth companies with the capacity to propel the economy forward. These fast-growing companies create the most new jobs, yet access to financing--particularly in the current economic environment, but also when the economy is strong--presents a pivotal challenge to them. A typical startup may open its doors with a combination of personal savings, credit card borrowing, and family lending. Once a business has grown past a certain size--say, when sales reach $10 million or more--the company is better able to attract external financing at a reasonable cost. However, there are many companies in a middle range, including many small manufacturers, which desperately need additional financing in the range of $250,000 to $1 million. These companies face a severe credit crunch that limits their growth and the number of new jobs they can create.

I believe that if congress does anything to assist small manufacturers, it should take steps to ease the credit crunch for those climbing the economic ladder from small- to medium-size enterprise, thereby generating new ones. The BRIDGE Act addresses this financing gap. As ranking member of the Committee on Small Business and Entrepreneurship, I have been the leading voice for this idea in the Senate, and it is something worth trying. Like my other proposals for tax relief for small manufacturers, it only generates cost to taxpayers if it actually works.

The BRIDGE Act is simple. It would allow a fast-growing business with less than $10 million in sales to temporarily defer up to $250,000 of its Federal income tax liability, but only if the money is reinvested in the company. The 2-year deferral would be repayable wit interest over a 4-year period. For small manufacturers, the maximum tax deferral would be $400,000, and the payback period would be extended to a maximum of 6 years. Thus, the act will free up new investment capital for growing companies by allowing them to use a portion of their Federal tax liability for self-financing. Its revenue cost is minimal-- in fact, if the program is implemented temporarily, as in my bill, it actually raises a small amount in the 10-year budget window--since the deferred taxes are paid back with interest.

The fourth and final component of my tax relief plan for small manufacturers is to make permanent the increase in Section 179 small business expensing that was passed earlier this year as part of the President's third tax cut. However, this increase is set to expire at the end of 2005. While the recent increase does not help the smallest of small businesses, it can be helpful to small manufacturers who purchase more expensive equipment. It is one element of the various Bush tax cuts that deserves to be made permanent. My proposal would permanently increase the annual expensing limit to $100,000.

Mr. President, we may not have all the answers here in the Congress. Some of these trends in manufacturing employment have taken a long time to develop, and we won't be able to turn them around overnight. But at least we shouldn't ignore the changes and act as if more tax cuts will solve the problem. My manufacturing tax plan contains four reasonable, responsible components--and most will cost money only if they are actually effective. It's time for this administration to get its head out of the sand and start proposing job-creating strategies that will actually work.

Mr. President, nearly 3 million Americans, all across this Nation, have lost their jobs since 2000. We need to act now, with a comprehensive strategy that not only incorporates tax cuts but also includes real job training, business development, capital access, and levels the playing field for U.S. manufacturers. I believe this legislation addresses many of the concerns of the small business community and will take a significant step towards reversing the current trend of economic decline and job loss in the manufacturing sector.

I ask unanimous consent that the text of the MADE in America Act, the Enhance Domestic Manufacturing and Worker Assistance Act, and the Manufacturing Jobs Production Act be printed in the Record, and I urge all of my colleagues to support these bills.

Mr. President, today I am introducing a package of five measures to sustain and, indeed, renew the Federal commitment to restoring the water quality and living resources of the Chesapeake Bay watershed. Joining me in sponsoring one or more of these measures are my colleagues from Virginia, Pennsylvania, and Maryland, Senators Warner, Allen, Mikulski and Specter.

This year marks the 20th anniversary of the Chesapeake Bay Agreement, the historic Federal-State compact that launched the Chesapeake Bay restoration effort. Over the past two decades, we have made important progress both in putting in place the comprehensive, coordinated Federal-State-local and private sector management structure to guide the program and in specific initiatives to address key problems in the watershed. Three subsequent agreements were signed in 1987, in 1992 and in 2000, respectively, setting specific goals and action plans to restore the Chesapeake watershed. There are today over 700 groups and some 40 committees involved in the Bay Program. More than twenty-five Federal agencies are partnering with EPA and the Bay area States and there are numerous State agencies, local governmental organizations and citizen groups actively engaged in the restoration efforts. The level of public support and the degree of cooperation and coordination among all parties is unparalleled.

Despite these efforts, the job of restoring the Chesapeake to levels of quality and productivity that existed earlier in this century is far from complete. In its latest report card issued in November, 2002, the Chesapeake Bay Foundation gave the Chesapeake Bay a score of 27 out of 100--far short of the ``70'' level believed necessary for the Bay to be declared ``saved.'' The index underscores the continuing serious challenges facing the Bay. Nitrogen pollution from farms and city streets, sewage treatment plants, and air deposition, among other so- called non-point sources, continue to overload the Bay. Many of the living resources--oysters, shad, white perch, crabs--which are indicators of the Bay's health, are still in decline. Toxic chemicals are still present in the Bay's surface and bottom waters, having untold impacts on water quality and wildlife. A recent analysis undertaken by the Chesapeake Bay Commission estimates that the costs to clean the Bay and achieve the goals of the Chesapeake 2000 agreement over the course of the next seven years will exceed projected income by nearly $13 billion. Pollution from all sources will have to be further reduced, thousands of acres of watershed property must be preserved, significant efforts must be made to restore living resources, buffer zones to protect rivers and streams need to be created, education and stewardship efforts must be dramatically expanded.

While $13 billion seems like an enormous sum, we should remember that the health of the Chesapeake Bay is vital not only to the more than 15 million people who live in the watershed, but to the Nation. It is one of our Nation's and the world's greatest natural resources covering 64,000 square miles within six States. It is a world-class fishery that still produces a significant portion of the finfish and shellfish catch in the United States. It provides vital habitat for living resources, including more than 3600 species of plants, fish and animals. It is a major resting area for migratory waterfowls and birds along the Atlantic including many endangered and threatened species. It is also a one-of-a-kind recreational asset enjoyed by millions of people, a major commercial waterway and shipping center for much of the eastern United States, and provides jobs for thousands of people. In short, the Chesapeake Bay is a magnificent, multifaceted resource worthy of the highest levels of protection and restoration.

The five measures that we are introducing today are intended to help address some of the highest priority needs in the watershed and provide a Federal blueprint for restoring the Bay in the years ahead. I want to address each of these measures briefly.

The first measure, the Chesapeake Bay Watershed Nutrient Removal Assistance Act, would establish a grants program in the Environmental Protection Agency to support the installation of nutrient reduction technologies at major wastewater treatment facilities in the Chesapeake Bay watershed. I first introduced this measure during the 107th Congress and provisions of the legislation were included as part of S. 1961, the Water Investment Act of 2002, reported favorably by the Senate Environment and Public Works Committee. Unfortunately, no further action was taken on that legislation. Despite important water quality improvements over the past decade, nutrient

over-enrichment remains the most serious pollution problem facing the Bay. The overabundance of the nutrients nitrogen and phosphorous continues to rob the Bay of life sustaining oxygen. Recent modeling of EPA's Bay Program has found that total nutrient discharges must be reduced by more than 35 percent from current levels to restore the Chesapeake Bay and its major tributaries to health. To do so, nitrogen discharges from all sources must be reduced drastically below current levels. Annual nitrogen discharges into the Bay will need to be cut by at least 110 million pounds from the current 300 million pounds to less than 190 million pounds. Municipal wastewater treatment plants, in particular, will have to reduce nitrogen discharges by nearly 75 percent.

There are 304 major wastewater treatment plants in the Chesapeake Bay watershed: Pennsylvania, 123, Maryland, 65, Virginia, 86, New York, 18, Delaware, 3, Washington, D.C., 1, and West Virginia, 8. These plants contribute about 60 million pounds of nitrogen per year--one-fifth--of the total load of nitrogen to the Bay. Upgrading these plants with nutrient removal technologies to achieve nitrogen reductions of 3 mg/ liter would remove 46 million pounds of nitrogen in the Bay each year or 40 percent of the total nitrogen reductions needed. Nutrient removal technologies have other benefits, as well. They provide significant sayings in energy usage, 20 to 30 percent, in chemical usage, more than 50 percent, and in the amount of sludge produced, five to 15 percent. They are one of the most cost-effective methods of reducing nutrients discharged to the Bay.

My legislation would provide grants for 55 percent of the capital cost of upgrading the plants with nutrient removal technologies capable of achieving nitrogen reductions of 3 mg/liter. Any publicly owned wastewater treatment plant which has a permitted design capacity to treat an annual average of 0.5 million gallons per day within the Chesapeake Bay watershed portion of New York, Pennsylvania, Maryland, West Virginia, Delaware, Virginia and the District of Columbia would be eligible to receive these grants. As a signatory to the Chesapeake Bay Agreement, the EPA has an important responsibility to assist the states with financing these water infrastructure needs.

The second measure, the Chesapeake Bay Environmental Education Pilot Program Act, would establish a new environmental education program in the U.S. Department of Education for elementary and secondary school students and teachers within the Chesapeake Bay watershed. There is a growing consensus that a major commitment to education--to promoting an ethic of responsible stewardship and citizenship among the nearly 16 million people who live in the watershed--is necessary if all of the other efforts to ``Save the Bay'' are to succeed. Expanding environmental education and training opportunities will lead not only to a healthier Chesapeake Bay ecosystem, but a more educated and informed citizenry, with a deeper understanding and appreciation for the environment, their community and their role in society as responsible citizens.

One of the principal commitments of the Chesapeake 2000 Agreement, is to ``provide a meaningful Bay or stream outdoor experience for every school student in the watershed before graduation from high school'' beginning with the class of 2005. Despite important efforts by Bay area states and not-for-profit organizations, only a very small percentage of the more than 3.3 million K-12 students in the watershed have had the opportunity to engage in meaningful outdoor experiences or receive classroom environmental instruction. Many of the school systems in the Bay watershed are only at the beginning stages in developing and implementing environmental education into their curriculum, let alone exposing students to outdoor watershed experiences. What's lacking is not the desire or will, but the resources and training to undertake more comprehensive environmental education programs.

This legislation would authorize $6 million a year over the next three years in Federal grant assistance to help close the resource and training gap for students in the elementary and secondary levels in the Chesapeake Bay watershed. It would require a 50 percent non-Federal match, thus leveraging $12 million in assistance. The funding could be used to help design, demonstrate or disseminate environmental curricula and field practices, train teachers or other educational personnel, and support on-the-ground activities or Chesapeake Bay or stream outdoor educational experiences involving students and teachers, among other things. The program would complement the NOAA Bay Watershed Education and Training Program that we established last year.

The third measure would reauthorize and enhance the Chesapeake Bay Environmental Protection and Restoration Program. This program, which was first established in Section 510 of the Water Resources Development Act of 1996, Public Law 104-303, authorizes the U.S. Army Corps of Engineers to provide design and construction assistance to State and local authorities in the environmental restoration of the Chesapeake Bay. To date, the Corps of Engineers has constructed or approved $9.3 million in projects under the Chesapeake Bay Environmental Restoration and Protection Program including oyster restoration projects in Virginia, shoreline protection and wetland/sewage treatment projects at Smith Island in Maryland and the upgrade of the Scranton Wastewater Treatment Plant in Pennsylvania to reduce the amount of nutrients delivered to the Chesapeake Bay. These projects have nearly exhausted the current $10 million authorization.

This legislation increases the authorization for this program from $10 million to $30 million. Consistent with all other environmental restoration authorities of the Corps of Engineers, it enables States and local governments to provide all or any portion of the 25 percent non-Federal share required in the form of in-kind services. It also establishes a new small-grants program for local governments and nonprofit organizations to carry out small-scale restoration and protection projects in the Chesapeake Bay watershed. The program would be administered by the National Fish and Wildlife Foundation which has extensive experience and expertise in managing these kinds of grants for other Federal agencies. Ten percent of the funds appropriated each year under this program would be set-aside for these grants. In view of the great need and the many requests for assistance from the Bay area states, this legislation is clearly unwarranted.

The forth measure, the Chesapeake Bay Watershed Forestry Act, would continue and enhance the USDA Forest Service's role in the restoration of the Chesapeake Bay watershed. Forest loss and fragmentation are occurring rapidly in the Chesapeake Bay region and are among the most important issues facing the Bay and forest management today. According to the National Resources Inventory, the States closest to the Bay lost 350,000 acres of forest between 1987-1997 or almost 100 acres per day. More and more rural areas are being converted to suburban developments resulting in smaller contiguous forest tracts. These trends are leading to a regional forest land base that is more vulnerable to conversion, less likely to be economically viable in the future, and is losing its capacity to protect watershed health and other ecological benefits, such as controlling storm water runoff, erosion and air pollution, all critical to the Bay clean-up effort.

Since 1990, the USDA Forest Service has been an important part of the Chesapeake Bay Program. Administered through the Northeastern Area, State and Private Forestry, this program has worked closely with Federal, State and local partners in the six-state Chesapeake Bay region to demonstrate how forest protection, restoration and stewardship activities, can contribute to achieving the Bay restoration goals. Over the past 12 years, it has provided modest levels of technical and financial assistance, averaging approximately $300,000 a year, to develop collaborative watershed projects that address watershed forest conservation, restoration and stewardship.

With the signing of the Chesapeake 2000 Agreement, the role of the USDA Forest Service has become more important than ever. Among other provisions, this Agreement requires the signatories to conserve existing forests along all streams and shoreline; promote the expansion and connection of

contiguous forests; assess the Bay's forest lands; and provide technical and financial assistance to local governments to plan for or revise plans, ordinances and subdivision regulations to provide for the conservation and sustainable use of the forest and agricultural lands. To address these goals, the USDA Forest Service must have additional resources and authority, and that is what this measure seeks to provide.

This legislation codifies the role and responsibilities of the USDA Forest Service to the Bay restoration effort. It strengthens existing coordination, technical assistance, forest resource assessment and planning efforts. It authorizes a small grants program to support local agencies, watershed associations and citizen groups in conducting on- the-ground conservation projects. It also establishes a regional applied forestry research and training program to enhance urban, suburban and rural forests in the watershed. Finally it authorizes $3.5 million for each of fiscal years 2004 through 2010, a modest increase in view of the six-State, 64,000 square mile watershed.

The fifth measure, the NOAA Chesapeake Bay Watershed Education, Training, and Restoration Act, would enhance the National Oceanic and Atmospheric, NOAA, Chesapeake Bay Office's authorities to address the living resource restoration and education and training goals and commitments of the Chesapeake 2000 agreement. It builds upon provisions contained in the Hydrographic Services Improvement Act Amendments of 2003, and addresses several urgent and unmet needs in the watershed. To help meet Bay-wide living resource education and training goals, it codifies the Bay Watershed Education and Training or, B-WET, Program-- the first federally funded environmental education program focused solely on the Chesapeake Bay watershed--that we initiated in the Fiscal 2002 Commerce, Justice, State Appropriations bill and establishes an aquaculture education program to assist with oyster and blue crab hatchery production.

To better coordinate and organize the substantial amounts of data collected and complied by Federal, State and local government agencies and academic institutions--data such as information on weather, tides, currents circulation, climate, land use, coastal environmental quality, aquatic living resources and habitat conditions--and make this information more useful to resource managers, scientists and the public, it establishes an internet-based Coastal Predictions Center for the Chesapeake Bay. It also authorizes a shallow water monitoring program to address critical gaps in information on near shore and river area water quality conditions needed for restoration of living resources. And to help meet Chesapeake 2000 living resource restoration goals, it codifies the ongoing oyster restoration program an authorizes a new submerged aquatic vegetation restoration program.

Mr. President, these measures would provide an important boost to our efforts to save the Chesapeake Bay and a blueprint for the course ahead. They are strongly supported by the Chesapeake Bay Commission, the Chesapeake Bay Foundation, and other organizations in the watershed. I ask unanimous consent that the text of the bills and supporting letters to printed in the Record. I urge my colleagues to join with us in supporting the measures and continue the momentum contributing to the improvement and enhancement of our Nation's most valuable and treasured natural resource.

Mr. President, I rise today to introduce legislation that would increase the likelihood that citizens who live on the American frontier and in other sparsely populated areas will have access to affordable healthcare in their communities.

Since my election to the Senate in 1996, one of my goals has been to educate folks in Washington about what life is like in the West.

Obviously there are rural areas along the East and West Coasts and in the Midwest. But people who live in these places are always surprised when they travel for the first time to places like my home State of Wyoming. They are amazed at just how rural Wyoming is.

Well, Wyoming is more than rural. Most Wyomingites live in the remaining stretches of the American frontier. Now, that's not to say that there aren't plenty of sparsely populated areas elsewhere, even in coastal States. There are many places outside the West that share the characteristics of the frontier. But almost all of Wyoming is sparsely populated. In fact, more people live in the 68 square miles of the District of Columbia than live in the 98,000 square miles of Wyoming.

People who live on the frontier and other sparsely populated areas face some unique challenges, and one of those challenges is access to affordable healthcare. People who live in frontier areas are more likely to lack health insurance than other rural and urban citizens. Also, frontier areas generally do not have population centers that can support the full range of healthcare services available in most urban and some rural areas.

One of the proven ways of improving healthcare in medically underserved areas is through the establishment of federally qualified community health centers, or CHCs. Community health centers are not- for-profit providers of health care to the working poor, the uninsured, and other vulnerable populations. These safety-net providers served ten million people across America in 2001.

Community health centers deliver preventive and primary care to patients regardless of their ability to pay. Almost half of the patients treated at community health centers have no insurance coverage at all. Community health centers set their charges according to income, and they do not collect any fees from their poorest clients.

President Bush has proposed major increases in funding for the establishment and expansion of community health centers, and Congress has begun to provide that funding. Senators across the political spectrum agree that community health centers play an important role in providing health services to the uninsured and underinsured in many medically underserved areas. We all agree that we ought to encourage the development of more sites where those in need but without means can get proper care.

Unfortunately, many frontier areas do not have community health centers. Wyoming, for example, only has one CHC, located in Casper. That center just opened a satellite clinic in Riverton, a town of 9,300 people almost 125 miles away, so now we have two sites.

The Federal Government keeps statistics on the degree of ``health center penetration into the unserved.'' In other words, we keep track of what percentage of those who need access to affordable healthcare can get adequate service through community health centers.

In Wyoming, only 7.9 percent of the unserved had reasonable access to community health center services, based on 2001 data. Lest you think this is just a Wyoming problem, Mr. President, let me share some percentages from other states: Alabama: 15.9 percent; Georgia: 8.9 percent; Indiana: 10.1 percent; Kansas: 10.4 percent; Louisiana: 4.3 percent; Maryland: 15.8 percent; Nebraska: 5.3 percent; Nevada: 7.8 percent; North Carolina: 11.1 percent; Oklahoma: 7.8 percent; Texas: 9.0 percent; and Virginia: 12.2 percent.

Why are these access figures so low? It's not because communities aren't interested in helping their less fortunate neighbors. It's because many communities on the frontier and in other sparsely populated areas can't even apply for community health center funding.

Why can't they apply? Well, believe it or not, the Federal Government doesn't consider many isolated communities to be located in ``medically underserved areas.'' And a community has to be designated as being a ``medically underserved area'' before one can even apply for CHC funding.

The barrier for frontier communities lies in the index that the Federal Government uses to determine ``medical underservice.'' That index looks at four factors: the percentage of people over 65 years of age, and the ratio of primary-care physicians per 1,000 people.

Using these four factors, the agency has calculated that only four Wyoming's 23 counties qualify to be ``medically underserved areas.'' I find this interesting, since Wyoming ranks 46th out of the 50 State in terms of physician-to-population ratio.

I have an idea about the source of this contradiction. When I went to accounting school, one of the things I learned about was a concept called ``statistical validity.'' What I learned was that the statistical validity of a sample is a function of sample size: in other words, the larger the sample, the more accurate the results associated with the sample.

Well, as you can imagine, sparsely populated states like Wyoming offer

less statistically valid samples than other states. Many of our counties score very well on factors like infant mortality. Take Western County, for instance. Weston County has a very low infant mortality rate--in fact, their rate in 2002 was zero. But there were only 59 births in Weston County. Now I'm happy to see that statistic, but it really hurts Weston County's score on the agency index.

Even looking at 5 years of data in sparsely populated counties doesn't provide a statistically valid sample. From 1994 to 1998, Weston County's infant mortality rate was 8.5 per 1000 births, slightly above the national average. From 1995 to 1999, Weston County's rate jumped to 14.7 percent--nearly twice the national average.

Why did the infant mortality rate jump so dramatically in Weston County? The only difference was that in 1999, two of the 60 babies born in the county died soon after birth.

When two deaths have such a dramatic impact on the infant mortality rate, it's because the sample size simply isn't large enough to provide a valid result. Slight variations in small samples can result in huge differences when translated into statistical data. And in my opinion, we shouldn't be making decisions based on statistics that aren't valid indicators of the healthcare status of a community.

I am concerned that the Federal definition of ``medically underserved areas'' does not recognize the unique nature and needs of people who live in the sparsely populated areas of our country. This makes me concerned that frontier communities are going to miss out on a great opportunity to participate in our national expansion of community health centers.

That's why I'm joining today with my distinguished colleagues Senators Bingaman, Thomas, and Craig to introduce the Frontier Healthcare Access Act. We believe that people who live on the frontier and in other sparsely populated areas ought to have a fair shot at competing for federal support as we grow the community health center program.

Our bill would automatically deem ``frontier areas'' to be eligible for Federal funding for the development and expansion of community health centers.

The bill would require no new funding--it would simply designate frontier communities as special populations eligible for federal CHC support. Nor would the bill create a new preference for frontier areas--it would simply allow frontier communities into the competition for funding. The bill would end the application of a statistical formula that doesn't provide a valid assessment of need in sparsely populated areas--but it would still require frontier communities to compete with other communities to receive federal CHC support.

The Frontier Healthcare Access Act also would direct the Federal Government to create a new definition of ``frontier area.'' The bill would require that the new definition go beyond the traditional population-density approach to include important factors like distance in miles and travel time in minutes to the nearest significant healthcare service area or market. This is important, because defining frontier solely by population overlooks some important considerations.

For example, in some large counties, the presence of a city in one corner skews population density and overshadows the existence of many large frontier areas. Furthermore, a key component to frontier life is distance. Even areas with population density as high as 20 people per square mile should be considered frontier if the community is located far from the closest significant service center or market.

The National Rural Health Association and the Western Governors Association have already endorsed a definition using the factors proposed by the Frontier Healthcare Access Act. If the federal government adopts a similar definition, it would ensure eligibility for community health center development and expansion for about ten million citizens who live in more than 800 counties located in 38 states--not just the frontier West.

Mr. President, people in hundreds of cities and towns across the country have access to affordable healthcare services through community health centers. People who live in sparsely populated areas ought to have a fair opportunity to create the same sort of access.

The Frontier Healthcare Access Act would create this opportunity for people who live in isolated communities across our great country. I hope that my colleagues will join me in making this opportunity possible for our citizens who live in every part of our remaining American frontier--whether the buffalo still roam there or not.

I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, today I am introducing a package of targeted, affordable tax relief provisions designed to help the Nation's small businesses during this time of economic stagnation. After the Easter recess, I know that the Finance Committee will be marking up a wide-ranging tax bill whose ultimate size is yet to be determined. I also know, however, that few of the proposals offered by the President will truly stimulate the economy or help the millions of struggling small businesses. Instead, the Bush tax proposal will reward the richest among us and pass the bill to our children. We can and must do better.

As the Ranking Member of the Senate Committee on Small Business and Entrepreneurship, I have drafted legislation that will truly help small businesses and the Nation. It is a tax proposal with meaningful, affordable reforms that will make a difference without sticking our kids with a huge bill. I hope that all of part of this legislation can be incorporated into a Senate economic stimulus package. I have titled the bill that I am introducing today ``The Affordable Small Business Stimulus and Simplification Act of 2003,'' and it builds upon a bill that I introduced in the 107th Congress.

I call my bill an ``affordable'' stimulus package for small business because it targets the policies that can make the biggest difference and uses our limited resources as wisely and efficiently as possible. It does not include everything that I would like to do for small business, but it includes enough to help stimulate this essential component of our economy. Moreover, the bill will help address the tax complexity concerns of small businesses because it includes the Single Point Tax Filing Act that has passed the Senate on two previous occasions and a new standard deduction that will benefit millions of small businesses.

Let me briefly explain the contents of my bill.

First, my bill increases the expensing limitation for small businesses. It raises it to $35,000, rising to $40,000 in 2008, and it increases the phase-out level, above which expensing is not allowed, to $350,000, rising to $400,000 in 2008. I know that others have proposed raising this limit as high as $75,000, but such an increase is simply unaffordable while we face huge budget deficits. Raising it to $35,000 now, rising to $40,000 in 2008, is a more responsible approach and will provide an immediate investment incentive to many small businesses.

Second, my bill creates a new standard deduction of $500 for sole proprietorships. This provision provides tax relief and real tax simplification to the smallest of small businesses because it would relieve these businesses of the paperwork burden of having to itemize the myriad of small expenses on IRS forms. Of course, businesses with expenses greater than $500 would retain the option of full itemization. But for the very smallest businesses, many of them home-based or part- time, this new provision will be a significant step towards tax simplification.

Third, the bill modifies and expands a provision that was signed into law in 1993 regarding new equity investments in small businesses' stock. Under my bill, new investments in companies with capitalization of up to $100 million at the time of investment will have a 75 percent capital gains exclusion if the investments are held at least four years. The exclusion for such investments will be 100 percent if they are made in a business involved in such critical technologies as transportation or homeland security, defense-related technologies, anti-terrorism, pollution control, energy efficiency, or waste management. The 100-percent exclusion would also be allowed for investments in specialized small business investment companies, or SSBICs, whose investments are made solely in disadvantaged small businesses. Both the 75 and 100 percent exclusion levels would be available for investments made by both individuals and corporations. In addition, the rollover period for such investments would be increased from 60 days to 180 days. The provision passed in 1993 was crafted too narrowly to stimulate substantial new investment. I hope that this new, expanded capital gains treatment will prompt new investments in small and entrepreneurial businesses.

Fourth, my bill recognizes that the current depreciation schedules for high-tech equipment and software are out of date, given how quickly such items become obsolete in our fast-changing economy. My bill would reduce the recovery period for computers or peripheral equipment from five years to three, and for software from three years to two. This change would be permanent.

Fifth, my bill would fix a problem with the tax deductibility of health insurance expenses for the self-employed. Under current law, these expenses are fully deductible in 2003 for the first time--but the Internal Revenue Code denies the deduction to taxpayers who are eligible to participate in another plan, such as their spouse's employer's plan. My bill would clarify that the deduction is denied only if the taxpayer actually participates in the other plan.

Sixth, to simplify tax filing, my bill would include the Single Point Tax Filing Act. This section would simplify the tax filing process for employers that choose to participate by allowing the Internal Revenue Service and State agencies to combine, on one form, both State and Federal employment tax returns. This provision has been passed by the Senate twice before, but has not yet become law. There is currently a demonstration project along these lines in Montana, which is working very well. I believe such authority should extend to all States.

Seventh, my bill clarifies that married couples who co-own a business can elect to be sole proprietors for purposes of filing their Federal income taxes. This provision aligns the law with the way many married couples actually do business. Under present law, married couples who co-own a business technically own that business as a partnership for Federal income tax purposes. This treatment carries with it all the complications of the partnership provisions of the Internal Revenue Code, including having to file partnership returns. But in reality, many married couples in this situation consider themselves sole proprietors and are incorrectly filing tax returns as such. While the IRS may not be strictly enforcing the law against these taxpayers, this technical non-compliance can cause trouble down the road. Upon divorce, for example, it may not be clear that the business had been jointly owned. This same ambiguity might complicate a spouse's ability to get the full Social Security and Medicare benefits to which they are entitled. My bill makes clear that for Federal income tax purposes, married couples who co-own a business can be treated as sole proprietors.

Eighth, my bill would extend the existing income averaging provisions to cover fishing as well as farming. In other words, the choice to average income from a farming trade or business under present law would be extended to cover income from the trade or business of fishing as well. Under my bill, a farmer or fisherman electing to average his or her income would owe the alternative minimum tax, AMT, only to the extent he or she would have owed AMT had averaging not been elected. This is an important change that will benefit not only people in my state, but also throughout New England, the Pacific Northwest, the Gulf of Mexico region, Alaska, and in other areas of the country where fishing is an important industry.

Finally, my bill would modify the tax treatment of investments in debenture small business investment companies, or SBICs, so they are less likely to create unrelated business taxable income, UBTI, liability. The current tax treatment of money borrowed from the government by a debenture SBIC creates taxable income for an otherwise tax-exempt investor, which makes it almost impossible to raise capital from these investors. Free to choose, tax-exempt investors opt to invest in venture capital funds that do not create any UBTI liability. Therefore, my bill would assure that money borrowed from the government by an SBIC does not subject tax-exempt investors to UBTI. In so doing, the bill would encourage greater investment in SBICs, which provide critically needed venture capital to emerging small businesses. These venture capital funds are sorely needed in today's stalled economy.

I believe that ``The Affordable Small Business Stimulus and Stimulus Act of 2003'' will provide a much-needed stimulus to small business in a way that we can afford, particularly if we can find offsets to pay for the bill. I look forward to working with the Chairman and Ranking Member of the Finance Committee to have some or all of its provisions enacted into law.

Mr. President, today I am introducing a package of targeted, affordable tax relief provisions designed to help the Nation's small businesses during this time of economic stagnation. After the Easter recess, I know that the Finance Committee will be marking up a wide-ranging tax bill whose ultimate size is yet to be determined. I also know, however, that few of the proposals offered by the President will truly stimulate the economy or help the millions of struggling small businesses. Instead, the Bush tax proposal will reward the richest among us and pass the bill to our children. We can and must do better.

As the Ranking Member of the Senate Committee on Small Business and Entrepreneurship, I have drafted legislation that will truly help small businesses and the Nation. It is a tax proposal with meaningful, affordable reforms that will make a difference without sticking our kids with a huge bill. I hope that all of part of this legislation can be incorporated into a Senate economic stimulus package. I have titled the bill that I am introducing today ``The Affordable Small Business Stimulus and Simplification Act of 2003,'' and it builds upon a bill that I introduced in the 107th Congress.

I call my bill an ``affordable'' stimulus package for small business because it targets the policies that can make the biggest difference and uses our limited resources as wisely and efficiently as possible. It does not include everything that I would like to do for small business, but it includes enough to help stimulate this essential component of our economy. Moreover, the bill will help address the tax complexity concerns of small businesses because it includes the Single Point Tax Filing Act that has passed the Senate on two previous occasions and a new standard deduction that will benefit millions of small businesses.

Let me briefly explain the contents of my bill.

First, my bill increases the expensing limitation for small businesses. It raises it to $35,000, rising to $40,000 in 2008, and it increases the phase-out level, above which expensing is not allowed, to $350,000, rising to $400,000 in 2008. I know that others have proposed raising this limit as high as $75,000, but such an increase is simply unaffordable while we face huge budget deficits. Raising it to $35,000 now, rising to $40,000 in 2008, is a more responsible approach and will provide an immediate investment incentive to many small businesses.

Second, my bill creates a new standard deduction of $500 for sole proprietorships. This provision provides tax relief and real tax simplification to the smallest of small businesses because it would relieve these businesses of the paperwork burden of having to itemize the myriad of small expenses on IRS forms. Of course, businesses with expenses greater than $500 would retain the option of full itemization. But for the very smallest businesses, many of them home-based or part- time, this new provision will be a significant step towards tax simplification.

Third, the bill modifies and expands a provision that was signed into law in 1993 regarding new equity investments in small businesses' stock. Under my bill, new investments in companies with capitalization of up to $100 million at the time of investment will have a 75 percent capital gains exclusion if the investments are held at least four years. The exclusion for such investments will be 100 percent if they are made in a business involved in such critical technologies as transportation or homeland security, defense-related technologies, anti-terrorism, pollution control, energy efficiency, or waste management. The 100-percent exclusion would also be allowed for investments in specialized small business investment companies, or SSBICs, whose investments are made solely in disadvantaged small businesses. Both the 75 and 100 percent exclusion levels would be available for investments made by both individuals and corporations. In addition, the rollover period for such investments would be increased from 60 days to 180 days. The provision passed in 1993 was crafted too narrowly to stimulate substantial new investment. I hope that this new, expanded capital gains treatment will prompt new investments in small and entrepreneurial businesses.

Fourth, my bill recognizes that the current depreciation schedules for high-tech equipment and software are out of date, given how quickly such items become obsolete in our fast-changing economy. My bill would reduce the recovery period for computers or peripheral equipment from five years to three, and for software from three years to two. This change would be permanent.

Fifth, my bill would fix a problem with the tax deductibility of health insurance expenses for the self-employed. Under current law, these expenses are fully deductible in 2003 for the first time--but the Internal Revenue Code denies the deduction to taxpayers who are eligible to participate in another plan, such as their spouse's employer's plan. My bill would clarify that the deduction is denied only if the taxpayer actually participates in the other plan.

Sixth, to simplify tax filing, my bill would include the Single Point Tax Filing Act. This section would simplify the tax filing process for employers that choose to participate by allowing the Internal Revenue Service and State agencies to combine, on one form, both State and Federal employment tax returns. This provision has been passed by the Senate twice before, but has not yet become law. There is currently a demonstration project along these lines in Montana, which is working very well. I believe such authority should extend to all States.

Seventh, my bill clarifies that married couples who co-own a business can elect to be sole proprietors for purposes of filing their Federal income taxes. This provision aligns the law with the way many married couples actually do business. Under present law, married couples who co-own a business technically own that business as a partnership for Federal income tax purposes. This treatment carries with it all the complications of the partnership provisions of the Internal Revenue Code, including having to file partnership returns. But in reality, many married couples in this situation consider themselves sole proprietors and are incorrectly filing tax returns as such. While the IRS may not be strictly enforcing the law against these taxpayers, this technical non-compliance can cause trouble down the road. Upon divorce, for example, it may not be clear that the business had been jointly owned. This same ambiguity might complicate a spouse's ability to get the full Social Security and Medicare benefits to which they are entitled. My bill makes clear that for Federal income tax purposes, married couples who co-own a business can be treated as sole proprietors.

Eighth, my bill would extend the existing income averaging provisions to cover fishing as well as farming. In other words, the choice to average income from a farming trade or business under present law would be extended to cover income from the trade or business of fishing as well. Under my bill, a farmer or fisherman electing to average his or her income would owe the alternative minimum tax, AMT, only to the extent he or she would have owed AMT had averaging not been elected. This is an important change that will benefit not only people in my state, but also throughout New England, the Pacific Northwest, the Gulf of Mexico region, Alaska, and in other areas of the country where fishing is an important industry.

Finally, my bill would modify the tax treatment of investments in debenture small business investment companies, or SBICs, so they are less likely to create unrelated business taxable income, UBTI, liability. The current tax treatment of money borrowed from the government by a debenture SBIC creates taxable income for an otherwise tax-exempt investor, which makes it almost impossible to raise capital from these investors. Free to choose, tax-exempt investors opt to invest in venture capital funds that do not create any UBTI liability. Therefore, my bill would assure that money borrowed from the government by an SBIC does not subject tax-exempt investors to UBTI. In so doing, the bill would encourage greater investment in SBICs, which provide critically needed venture capital to emerging small businesses. These venture capital funds are sorely needed in today's stalled economy.

I believe that ``The Affordable Small Business Stimulus and Stimulus Act of 2003'' will provide a much-needed stimulus to small business in a way that we can afford, particularly if we can find offsets to pay for the bill. I look forward to working with the Chairman and Ranking Member of the Finance Committee to have some or all of its provisions enacted into law.