Trade Adjustment Assistance Improvement Act of 2005

Mr. President, I rise today to introduce the Trade Adjustment Assistance Improvement Act of 2005.

I want to begin with some simple facts about international trade. The benefits of trade are vast in absolute terms, but so diffuse that individuals are generally unaware of how much they personally gain from trade. By contrast, the harms from trade, while small in absolute terms, are localized and intense.

Research shows that, on average, a worker who loses his job due to trade will make 17 percent less in his new job. The older the worker and the lower his level of education, the larger the lifetime wage cut he is likely to experience.

With statistics like these, is it any wonder that workers who believe their jobs are at risk from international competition are skeptical about trade? With increasing numbers of Americans feeling vulnerable in the global economy--even though many of them will never lose their jobs because of trade--the potential pool of trade skeptics is growing.

There is a solution.

In a June 2002 poll conducted by the Chicago Council on Foreign Relations and Harris Interactive, respondents were asked which of three positions most closely reflects their views on international trade. Nearly three quarters of those surveyed, 73 percent, agreed with this statement: ``I favor free trade, and I believe that it is necessary for the government to have programs to help workers who lose their jobs.'' Sixteen percent said they favored free trade and did not think it necessary for the government to help those who lose their jobs. Nine percent said they do not favor free trade.

The results were even more striking in a 1999 poll conducted by the Program on International Policy and Attitudes at the University of Maryland. In that poll, 87 percent of participants agreed with this statement: ``I would favor more free trade, if I was confident that we were making major efforts to educate and retrain Americans to be competitive in the global economy.'' Only 11 percent disagreed.

If there is a more compelling case to be made for Trade Adjustment Assistance, I do not know what it is.

For more than 40 years, TAA has been providing retraining, income support, and other benefits to workers who lose their jobs due to trade. Montana workers tell me that TAA has been a lifeline, making it possible for them to gain new skills and start new careers rather than merely survive a layoff.

In the Trade Act of 2002, I spearheaded the most comprehensive expansion and overhaul of the TAA program since 1974. We expanded the kinds of workers who are eligible for TAA benefits. We added new benefits like wage insurance and the health coverage tax credit. We also streamlined the application deadlines to get workers enrolled and retraining sooner.

I am proud of this landmark legislation. It unified a splintered TAA program to create a single, comprehensive set of benefits.

Like most successful legislation, however, it was the product of compromise. While TAA was expanded to cover secondary workers, it was not expanded to cover service workers. While we added new benefits, we also added eligibility tests for those new benefits that have proven burdensome and unduly restrictive in practice. While we made more workers eligible for training, we did not provide training funds adequate to serve those workers.

In order for TAA to truly meet the needs of displaced workers, it needs to be a lot more user-friendly. This bill

accomplishes that goal by eliminating barriers to entry that, in practice, defeat the purpose of TAA. The bill's goal is simple: to get every trade-displaced worker who needs a new start into meaningful training and back into the workforce at comparable wages.

The TAA Improvements Act makes the following changes to TAA:

First, it provides that all deadlines and time limits for applying for benefits are suspended when workers are appealing the Department of Labor's denial of a TAA eligibility petition. According to DOL statistics, in 2004 DOL denied approximately 35 percent of the TAA petitions on which it ruled. Among the TAA petition denials appealed to the Court of International Trade in the past several years, the vast majority have been reversed. Numerous judges on the Court have expressed growing impatience with the Labor Department's propensity to stick by denials for years until workers--ultimately vindicated through protracted litigation--lose the ability to receive full benefits. This bill rectifies the problem by allowing workers who successfully appeal denials of their TAA petitions to receive the benefits to which they are entitled regardless of intervening deadlines.

Second, the bill creates a TAA Petition Adviser within the Department of Labor to assist workers and those who prepare TAA petitions on their behalf. Most workers and employers who prepare TAA petitions have no experience with the program and seldom have access to experienced counsel. The petition form itself, while improved over prior versions, provides little guidance on the kinds of factual information upon which DOL bases eligibility determinations. As the Court of International Trade has found on numerous occasions, the Department's practice is to do little, if any, investigation beyond the facts presented on the petition. Accordingly, if an inexperienced group of workers fails to say ``the magic words'', their petition is likely to be turned down. The new Petition Adviser would be responsible for assisting workers to prepare petitions by advising them on the kinds of information that are necessary to demonstrate TAA eligibility--eliminating much of the guesswork that can turn applying for TAA into a game of roulette.

Sadly, not all employers make their best efforts to help their displaced workers qualify for TAA. Employers who prepare TAA applications for their workers may assign the task to Human Resources staff, who may lack sufficient knowledge to provide the appropriate information to the Labor Department. They sometimes provide inaccurate or incomplete evidence that prevents DOL from certifying the workers. The bill addresses this problem by requiring that all information provided to DOL by the petitioning workers' employer be certified as to its completeness and accuracy by counsel or by an officer of the company. This requirement assures that petitions will receive high- level management attention and, in the case of counsel, imposes an external ethical check.

In the Trade Act of 2002, Congress had the wisdom to create a program of wage insurance, called Alternative TAA. Unlike traditional TAA, which requires a worker to remain unemployed until training is completed, wage insurance creates an incentive for workers to return to work sooner and train on the job. It does so by assuring the worker that, if the new job pays less than the old one, he can receive a subsidy equal up to half the wage differential up to $10,000 over two years. This innovative program has the potential to facilitate the most effective kind of training, reduce worker transition time, and reduce the per-worker cost of adjustment assistance.

Experience under the Trade Act of 2002 indicates low participation in this program, both because it is limited to workers over 50 and because the steps a worker needs to take to choose wage insurance have proved difficult to satisfy. This bill streamlines the application process for alternative TAA and lowers the minimum age for participating workers from 50 to 40--the average age of TAA participants.

The Trade Act of 2002 expanded TAA eligibility to include so-called ``shifts in production''--when a plant in the United States closes and moves overseas. The law makes eligibility automatic when production shifts to a country with which the United States has a free trade agreement or a unilateral preference program. But when production shifts to another country--such as China or India--workers must satisfy additional criteria before they are eligible.

This limitation is one of the compromises that shaped the Trade Act of 2002. But I have never thought it fair or equitable. A worker whose plant moves overseas has the same adjustment needs no matter where the plant relocated. The TAA Improvement Act eliminates this distinction, making eligibility for TAA automatic for shifts in production to any country. It also eliminates a similar provision that limits coverage of certain secondary workers to trade with Canada and Mexico.

In a recent review of the TAA program, the Government Accountability Office noted that inflexible training enrollment deadlines have made it difficult for workers to make timely and informed decisions about their training plans and career options. Experience has shown that the deadlines we set may be too short in some cases. Community colleges, the principal providers of TAA training services, often enroll students only twice a year, making it difficult for some workers to enroll in the courses they need within the applicable deadlines. Even the most motivated among laid-off workers find it difficult to do the research and soul-searching necessary to make informed and sensible choices about retraining in the time provided. For these reasons, this bill extends the training enrollment deadline by several weeks.

Perhaps the single most important problem facing the TAA program today is the chronic shortage in training funds. Every year, there are states that run out of training funds and are forced to ration training. In some cases, states have even stopped workers from enrolling, which can reduce the total TAA benefits the worker can receive even if funds later become available. The Department of Labor has wisely issued guidelines to states to help them better manage their training resources. But the truth of the matter is that Congress has failed to provide states with enough training funds to adequately serve the number of people who qualify for retraining. Rather than cap training spending each year at an arbitrary amount arrived at through political negotiations, this bill sets the training budget with reference to program enrollment and average per person training costs.

The bill also gives the Department of Labor flexibility to steer workers into some less traditional but practical training options. Many workers who go through the TAA program ultimately end up self-employed. Under the Workforce Investment Act, a general retraining program for dislocated workers, workers can participate in entrepreneurial training that prepares them for self-employment. This bill extends the same option to workers in the TAA program. More than 10 percent of TAA participants are not native English speakers. Because English proficiency is a prerequisite for most occupational training courses, these workers are generally steered into English language classes and tend to use up their training benefits before receiving occupational training. Under WIA, the Department of Labor has recently begun promoting ``integrated workforce training,'' which combines occupational training with job-related English proficiency. My bill allows the same kind of training to be provided under TAA.

For workers entering the TAA program, the most important service they receive is guidance from case workers provided by the state. These case workers help displaced workers learn about local career options, make informed choices about training programs, prepare necessary paperwork and meet deadlines for TAA income support and other benefits. They keep workers from being taken advantage of by unscrupulous training providers who prey on confused dislocated workers and make sure workers know about all the benefits to which they are entitled.

Because TAA is a federal program delegated to the states, the federal government provides the states with funding to meet the program's administrative costs. According to a survey by the GAO, however, the cost of providing case worker services far exceeds

the amount that the federal government provides. States must either divert money from other training programs or skimp on the services they provide to workers under TAA. The goal of TAA is to have workers make sensible choices about training that will lead to successful new careers. My bill makes that possible by requiring the federal government to provide the states with adequate funds to meet these critical administrative costs.

This legislation requires the Department of Labor to improve its data collection and to disseminate more information about the operation of the TAA program. Better and more accessible data will permit Congress and the public to more accurately assess the program's successes and failures and make it easier for workers to prepare successful petitions.

Finally, this legislation makes some needed changes to the TAA for Farmers program. For many years, Congress and the Labor Department tried--unsuccessfully to shoehorn farmers into the traditional TAA program. But the adjustment issues facing American farmers from global competition are fundamentally different than those facing manufacturing workers. In the Trade Act of 2002, we created TAA for Farmers by modifying the eligibility criteria and benefits package to more closely meet the needs of agricultural producers.

Congress dedicated $90 million annually to this program, with the intention of helping farmers to become more competitive before losing their farms. After several years in operation, however, much of the money provided by Congress has not been spent. The legislation I am introducing today fine tunes the eligibility criteria, based on experience, to eliminate some of the pitfalls that have excluded some crops from the program.

The Trade Adjustment Assistance Improvement Act is the fourth in a series of bills I have recently introduced to improve and reform TAA. The Trade Adjustment Assistance for Firms Reorganization Act, S. 1308, makes needed changes to the management structure of TAA for Firms at the Department of Commerce. The Trade Adjustment Assistance Equity for Service Workers Act, S. 1309, extends TAA to the 80 percent of American workers in the service sector. The Trade Adjustment Assistance for Industries Act, S. 1444, simplifies the TAA petition process and ties TAA more closely to displacements caused by specific trade agreements.

In the future, I plan to introduce additional legislation addressing the TAA health coverage tax credit. HCTC is a critical new benefit added to the TAA package in 2002. As with many new programs, the implementation process for HCTC has been bumpy. Armed with several years of experience and several objective studies of the program, the time has come to start smoothing out those bumps by revisiting the structure and operation of the HCTC. This further legislation should be ready for introduction in the coming months.

Whenever I speak about the need to expand and improve TAA, the first question I usually get is: how much will it cost? Clearly, my proposals will add to the cost of the program and I will ask CBO to provide a score. But the strong implication of this common question is that we cannot afford to add to the cost of the TAA program. I think that is the wrong starting point.

First, we need to put the cost of TAA in perspective. At present, TAA costs around one billion dollars per year to operate. That is a cost of less than $10 per American household per year. By contrast, a study by the Institute for International Economics recently concluded that the American economy is roughly $1 trillion per year better off thanks to global integration, which comes to about $9,000 in extra income every year for each American household. Looking at these figures, we should be embarrassed at the paltry fraction of the economic gains from trade that we are plowing back into adjusting and retraining our workforce.

The truth is, the United States as a country cannot afford not to make these changes. We need to be putting more resources into worker retraining. We need to make sure we do not marginalize an entire generation of manufacturing workers.

Now more than ever, we have to prepare workers for the challenges of the global market. The domestic auto industry faces unprecedented challenges to remain competitive in today's world. In October alone, a major auto parts supplier filed for bankruptcy, General Motors slashed wages and legacy benefits, and the Ford Motor Company announced substantial layoffs. Thousands of specialized workers will be displaced and have to start over.

At the same time, I continue to read warnings of an impending labor shortage--even in the manufacturing sector. Baby boomers will soon begin retiring in large numbers. Our educational system is not turning out enough new workers with the skills our employers need to succeed in global competition. I have seen estimates of a shortage of 20 million workers by 2020--with the most severe shortages in the most skilled jobs.

Economists estimate that increasing the education level of American workers by one year would increase productivity by 8.5 percent in manufacturing and 12.7 percent in nonmanufacturing industries. Is expanding TAA too high a price to pay to address the coming labor shortage and to achieve productivity gains on this order? I certainly do not think so.

Experts with a wide range of views on issues surrounding trade and competitiveness agree that, if our nation is to thrive in the global economy of the 21st century, we must expand our worker adjustment program. From Jagdish Bagwati to Tom Friedman, from Alan Greenspan to the AFL-CIO--there is near universal agreement on this point. I believe the legislation I have introduced today and over the past weeks creates a strong platform to build on and I will work to see these bills enacted into law.

But trade adjustment for workers alone cannot prepare America for the competitive challenges ahead. We must aggressively pursue our interests through the trade agreements we negotiate with other countries, and we must enforce them just as aggressively. Recently I laid out my vision for closer congressional oversight of trade enforcement by the United States Trade Representative. I intend to introdue legislation to address the need for better, more aggressive enforcement of our trade agreements. Finally, I believe that our global competitiveness strategy must go beyond trade negotiations. Over the course of several months, I have highlighted many opportunities to enhance our global competitiveness in areas such as healthcare, energy, education, and savings. We must prepare the American people to take full advantage of these opportunities and many more.

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

Mr. President, I rise today to introduce the Trade Adjustment Assistance Improvement Act of 2005.

I want to begin with some simple facts about international trade. The benefits of trade are vast in absolute terms, but so diffuse that individuals are generally unaware of how much they personally gain from trade. By contrast, the harms from trade, while small in absolute terms, are localized and intense.

Research shows that, on average, a worker who loses his job due to trade will make 17 percent less in his new job. The older the worker and the lower his level of education, the larger the lifetime wage cut he is likely to experience.

With statistics like these, is it any wonder that workers who believe their jobs are at risk from international competition are skeptical about trade? With increasing numbers of Americans feeling vulnerable in the global economy--even though many of them will never lose their jobs because of trade--the potential pool of trade skeptics is growing.

There is a solution.

In a June 2002 poll conducted by the Chicago Council on Foreign Relations and Harris Interactive, respondents were asked which of three positions most closely reflects their views on international trade. Nearly three quarters of those surveyed, 73 percent, agreed with this statement: ``I favor free trade, and I believe that it is necessary for the government to have programs to help workers who lose their jobs.'' Sixteen percent said they favored free trade and did not think it necessary for the government to help those who lose their jobs. Nine percent said they do not favor free trade.

The results were even more striking in a 1999 poll conducted by the Program on International Policy and Attitudes at the University of Maryland. In that poll, 87 percent of participants agreed with this statement: ``I would favor more free trade, if I was confident that we were making major efforts to educate and retrain Americans to be competitive in the global economy.'' Only 11 percent disagreed.

If there is a more compelling case to be made for Trade Adjustment Assistance, I do not know what it is.

For more than 40 years, TAA has been providing retraining, income support, and other benefits to workers who lose their jobs due to trade. Montana workers tell me that TAA has been a lifeline, making it possible for them to gain new skills and start new careers rather than merely survive a layoff.

In the Trade Act of 2002, I spearheaded the most comprehensive expansion and overhaul of the TAA program since 1974. We expanded the kinds of workers who are eligible for TAA benefits. We added new benefits like wage insurance and the health coverage tax credit. We also streamlined the application deadlines to get workers enrolled and retraining sooner.

I am proud of this landmark legislation. It unified a splintered TAA program to create a single, comprehensive set of benefits.

Like most successful legislation, however, it was the product of compromise. While TAA was expanded to cover secondary workers, it was not expanded to cover service workers. While we added new benefits, we also added eligibility tests for those new benefits that have proven burdensome and unduly restrictive in practice. While we made more workers eligible for training, we did not provide training funds adequate to serve those workers.

In order for TAA to truly meet the needs of displaced workers, it needs to be a lot more user-friendly. This bill

accomplishes that goal by eliminating barriers to entry that, in practice, defeat the purpose of TAA. The bill's goal is simple: to get every trade-displaced worker who needs a new start into meaningful training and back into the workforce at comparable wages.

The TAA Improvements Act makes the following changes to TAA:

First, it provides that all deadlines and time limits for applying for benefits are suspended when workers are appealing the Department of Labor's denial of a TAA eligibility petition. According to DOL statistics, in 2004 DOL denied approximately 35 percent of the TAA petitions on which it ruled. Among the TAA petition denials appealed to the Court of International Trade in the past several years, the vast majority have been reversed. Numerous judges on the Court have expressed growing impatience with the Labor Department's propensity to stick by denials for years until workers--ultimately vindicated through protracted litigation--lose the ability to receive full benefits. This bill rectifies the problem by allowing workers who successfully appeal denials of their TAA petitions to receive the benefits to which they are entitled regardless of intervening deadlines.

Second, the bill creates a TAA Petition Adviser within the Department of Labor to assist workers and those who prepare TAA petitions on their behalf. Most workers and employers who prepare TAA petitions have no experience with the program and seldom have access to experienced counsel. The petition form itself, while improved over prior versions, provides little guidance on the kinds of factual information upon which DOL bases eligibility determinations. As the Court of International Trade has found on numerous occasions, the Department's practice is to do little, if any, investigation beyond the facts presented on the petition. Accordingly, if an inexperienced group of workers fails to say ``the magic words'', their petition is likely to be turned down. The new Petition Adviser would be responsible for assisting workers to prepare petitions by advising them on the kinds of information that are necessary to demonstrate TAA eligibility--eliminating much of the guesswork that can turn applying for TAA into a game of roulette.

Sadly, not all employers make their best efforts to help their displaced workers qualify for TAA. Employers who prepare TAA applications for their workers may assign the task to Human Resources staff, who may lack sufficient knowledge to provide the appropriate information to the Labor Department. They sometimes provide inaccurate or incomplete evidence that prevents DOL from certifying the workers. The bill addresses this problem by requiring that all information provided to DOL by the petitioning workers' employer be certified as to its completeness and accuracy by counsel or by an officer of the company. This requirement assures that petitions will receive high- level management attention and, in the case of counsel, imposes an external ethical check.

In the Trade Act of 2002, Congress had the wisdom to create a program of wage insurance, called Alternative TAA. Unlike traditional TAA, which requires a worker to remain unemployed until training is completed, wage insurance creates an incentive for workers to return to work sooner and train on the job. It does so by assuring the worker that, if the new job pays less than the old one, he can receive a subsidy equal up to half the wage differential up to $10,000 over two years. This innovative program has the potential to facilitate the most effective kind of training, reduce worker transition time, and reduce the per-worker cost of adjustment assistance.

Experience under the Trade Act of 2002 indicates low participation in this program, both because it is limited to workers over 50 and because the steps a worker needs to take to choose wage insurance have proved difficult to satisfy. This bill streamlines the application process for alternative TAA and lowers the minimum age for participating workers from 50 to 40--the average age of TAA participants.

The Trade Act of 2002 expanded TAA eligibility to include so-called ``shifts in production''--when a plant in the United States closes and moves overseas. The law makes eligibility automatic when production shifts to a country with which the United States has a free trade agreement or a unilateral preference program. But when production shifts to another country--such as China or India--workers must satisfy additional criteria before they are eligible.

This limitation is one of the compromises that shaped the Trade Act of 2002. But I have never thought it fair or equitable. A worker whose plant moves overseas has the same adjustment needs no matter where the plant relocated. The TAA Improvement Act eliminates this distinction, making eligibility for TAA automatic for shifts in production to any country. It also eliminates a similar provision that limits coverage of certain secondary workers to trade with Canada and Mexico.

In a recent review of the TAA program, the Government Accountability Office noted that inflexible training enrollment deadlines have made it difficult for workers to make timely and informed decisions about their training plans and career options. Experience has shown that the deadlines we set may be too short in some cases. Community colleges, the principal providers of TAA training services, often enroll students only twice a year, making it difficult for some workers to enroll in the courses they need within the applicable deadlines. Even the most motivated among laid-off workers find it difficult to do the research and soul-searching necessary to make informed and sensible choices about retraining in the time provided. For these reasons, this bill extends the training enrollment deadline by several weeks.

Perhaps the single most important problem facing the TAA program today is the chronic shortage in training funds. Every year, there are states that run out of training funds and are forced to ration training. In some cases, states have even stopped workers from enrolling, which can reduce the total TAA benefits the worker can receive even if funds later become available. The Department of Labor has wisely issued guidelines to states to help them better manage their training resources. But the truth of the matter is that Congress has failed to provide states with enough training funds to adequately serve the number of people who qualify for retraining. Rather than cap training spending each year at an arbitrary amount arrived at through political negotiations, this bill sets the training budget with reference to program enrollment and average per person training costs.

The bill also gives the Department of Labor flexibility to steer workers into some less traditional but practical training options. Many workers who go through the TAA program ultimately end up self-employed. Under the Workforce Investment Act, a general retraining program for dislocated workers, workers can participate in entrepreneurial training that prepares them for self-employment. This bill extends the same option to workers in the TAA program. More than 10 percent of TAA participants are not native English speakers. Because English proficiency is a prerequisite for most occupational training courses, these workers are generally steered into English language classes and tend to use up their training benefits before receiving occupational training. Under WIA, the Department of Labor has recently begun promoting ``integrated workforce training,'' which combines occupational training with job-related English proficiency. My bill allows the same kind of training to be provided under TAA.

For workers entering the TAA program, the most important service they receive is guidance from case workers provided by the state. These case workers help displaced workers learn about local career options, make informed choices about training programs, prepare necessary paperwork and meet deadlines for TAA income support and other benefits. They keep workers from being taken advantage of by unscrupulous training providers who prey on confused dislocated workers and make sure workers know about all the benefits to which they are entitled.

Because TAA is a federal program delegated to the states, the federal government provides the states with funding to meet the program's administrative costs. According to a survey by the GAO, however, the cost of providing case worker services far exceeds

the amount that the federal government provides. States must either divert money from other training programs or skimp on the services they provide to workers under TAA. The goal of TAA is to have workers make sensible choices about training that will lead to successful new careers. My bill makes that possible by requiring the federal government to provide the states with adequate funds to meet these critical administrative costs.

This legislation requires the Department of Labor to improve its data collection and to disseminate more information about the operation of the TAA program. Better and more accessible data will permit Congress and the public to more accurately assess the program's successes and failures and make it easier for workers to prepare successful petitions.

Finally, this legislation makes some needed changes to the TAA for Farmers program. For many years, Congress and the Labor Department tried--unsuccessfully to shoehorn farmers into the traditional TAA program. But the adjustment issues facing American farmers from global competition are fundamentally different than those facing manufacturing workers. In the Trade Act of 2002, we created TAA for Farmers by modifying the eligibility criteria and benefits package to more closely meet the needs of agricultural producers.

Congress dedicated $90 million annually to this program, with the intention of helping farmers to become more competitive before losing their farms. After several years in operation, however, much of the money provided by Congress has not been spent. The legislation I am introducing today fine tunes the eligibility criteria, based on experience, to eliminate some of the pitfalls that have excluded some crops from the program.

The Trade Adjustment Assistance Improvement Act is the fourth in a series of bills I have recently introduced to improve and reform TAA. The Trade Adjustment Assistance for Firms Reorganization Act, S. 1308, makes needed changes to the management structure of TAA for Firms at the Department of Commerce. The Trade Adjustment Assistance Equity for Service Workers Act, S. 1309, extends TAA to the 80 percent of American workers in the service sector. The Trade Adjustment Assistance for Industries Act, S. 1444, simplifies the TAA petition process and ties TAA more closely to displacements caused by specific trade agreements.

In the future, I plan to introduce additional legislation addressing the TAA health coverage tax credit. HCTC is a critical new benefit added to the TAA package in 2002. As with many new programs, the implementation process for HCTC has been bumpy. Armed with several years of experience and several objective studies of the program, the time has come to start smoothing out those bumps by revisiting the structure and operation of the HCTC. This further legislation should be ready for introduction in the coming months.

Whenever I speak about the need to expand and improve TAA, the first question I usually get is: how much will it cost? Clearly, my proposals will add to the cost of the program and I will ask CBO to provide a score. But the strong implication of this common question is that we cannot afford to add to the cost of the TAA program. I think that is the wrong starting point.

First, we need to put the cost of TAA in perspective. At present, TAA costs around one billion dollars per year to operate. That is a cost of less than $10 per American household per year. By contrast, a study by the Institute for International Economics recently concluded that the American economy is roughly $1 trillion per year better off thanks to global integration, which comes to about $9,000 in extra income every year for each American household. Looking at these figures, we should be embarrassed at the paltry fraction of the economic gains from trade that we are plowing back into adjusting and retraining our workforce.

The truth is, the United States as a country cannot afford not to make these changes. We need to be putting more resources into worker retraining. We need to make sure we do not marginalize an entire generation of manufacturing workers.

Now more than ever, we have to prepare workers for the challenges of the global market. The domestic auto industry faces unprecedented challenges to remain competitive in today's world. In October alone, a major auto parts supplier filed for bankruptcy, General Motors slashed wages and legacy benefits, and the Ford Motor Company announced substantial layoffs. Thousands of specialized workers will be displaced and have to start over.

At the same time, I continue to read warnings of an impending labor shortage--even in the manufacturing sector. Baby boomers will soon begin retiring in large numbers. Our educational system is not turning out enough new workers with the skills our employers need to succeed in global competition. I have seen estimates of a shortage of 20 million workers by 2020--with the most severe shortages in the most skilled jobs.

Economists estimate that increasing the education level of American workers by one year would increase productivity by 8.5 percent in manufacturing and 12.7 percent in nonmanufacturing industries. Is expanding TAA too high a price to pay to address the coming labor shortage and to achieve productivity gains on this order? I certainly do not think so.

Experts with a wide range of views on issues surrounding trade and competitiveness agree that, if our nation is to thrive in the global economy of the 21st century, we must expand our worker adjustment program. From Jagdish Bagwati to Tom Friedman, from Alan Greenspan to the AFL-CIO--there is near universal agreement on this point. I believe the legislation I have introduced today and over the past weeks creates a strong platform to build on and I will work to see these bills enacted into law.

But trade adjustment for workers alone cannot prepare America for the competitive challenges ahead. We must aggressively pursue our interests through the trade agreements we negotiate with other countries, and we must enforce them just as aggressively. Recently I laid out my vision for closer congressional oversight of trade enforcement by the United States Trade Representative. I intend to introdue legislation to address the need for better, more aggressive enforcement of our trade agreements. Finally, I believe that our global competitiveness strategy must go beyond trade negotiations. Over the course of several months, I have highlighted many opportunities to enhance our global competitiveness in areas such as healthcare, energy, education, and savings. We must prepare the American people to take full advantage of these opportunities and many more.

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

Mr. President, I rise today to introduce the Extending the Child Safety Pilot Program Act of 2005, along with my good friend Senator Hatch.

At the outset, let me thank Senator Hatch and his staff for joining with me in this effort. I can think of no stronger advocate for children's safety than my friend from Utah, and I am so pleased to have him as an original cosponsor of this bill.

When a mom drops her young son or daughter off at the local Boys & Girls Club, when a dad brings his child to little league practice, or when one of our kids is mentored by an older member of the community, we hope and pray that they are going to be safe. They usually are, and youth-serving organizations are constantly vetting new employees and volunteers to ensure there's nothing in their background to indicate that potential workers should not be around our kids.

But these groups can only do so much. They send information and fingerprints on prospective workers to their State criminal identification agencies, and that effort typically results in a comprehensive search of criminal history information on file in the State where the organization is established. But if the worker spent time in another state, or if a State's records are not up to date, kids' safety can be put in jeopardy.

The organization with the most complete set of national criminal history information is the FBI's Criminal Justice Information Services Division, in Clarksburg, West Virginia. Years ago, I was approached by the Boys & Girls Clubs and others and asked whether there would be a way for them to directly access CJIS' records and avoid the then- cumbersome system requiring them to apply for these national background checks through their States.

I looked into the issue and discovered that a patchwork of statutes and regulations govern background checks at the State level. There are over 1,200 State statutes concerning criminal record checks. In different States, different agencies are authorized to perform background checks for different types of organizations, distinct forms and information are required, and the results are returned in various formats that can be difficult to interpret. Youth-serving organizations trying to do the right thing and keep the kids in their charge safe were being forced to navigate an extremely cumbersome system.

Indeed, in 1998, the FBI's Criminal Justice Information Services Division performed an analysis of fingerprints submitted for civil applicant purposes. CJIS found that the average transmission time from the point of fingerprint to the State bureau was 51.0 days, and from the State bureau to the FBI was another 66.6 days, for a total of 117.6 days from fingerprinting to receipt by the FBI. The worst performing jurisdiction took 544.8 days from

fingerprinting to receipt by the FBI. In a survey conducted by the National Mentoring Partnership, mentoring organizations waited an average of 6 weeks for the results of a national criminal background check to be returned. In a New York Times article published this past August, the Boys & Girls Clubs of America's vice president of club safety, Les Nichols, was quoted as saying that about a third of the criminal records that Clubs' checks turned up were from states other than the one where the applications were submitted. ``It can take as long as 18 months to retrieve those records,'' Mr. Nichols said, ``and that time lag works against us, particularly because we are in a business where we have a lot of seasonal staff and volunteers.''

Not only was the national criminal history background check process slow, but it was often too expensive to be useful to youth-serving organizations. In 2000, I introduced comprehensive legislation designed to plug these security holes. No action was taken on my National Child Protection Improvement Act that year. The following year, I re- introduced the bill as S. 1868. That bill cleared the Senate unanimously but was never acted on by the House. It would have set up an office in the Justice Department to coordinate background check requests from youth-serving organizations, and would have required the results of these checks to be forwarded from the FBI to the requesting groups quickly and affordably.

Finally, in 2003's PROTECT Act, we were able to make some progress on this critical issue. Along with Senator Hatch and Chairman Sensenbrenner of the House Judiciary Committee, I authored section 108 of the PROTECT Act conference report. Section 108 of Public Law 108-21 established an 18-month pilot program for certain organizations to obtain national criminal history background checks. When he signed the PROTECT Act into law, the President noted ``this law creates important pilot programs to help nonprofit organizations which deal with children to obtain quick and complete criminal background information on volunteers. Listen, mentoring programs are essential for our country, and we must make sure they are safe for the children they serve.''

The Child Safety Pilot Program created in the PROTECT Act was extended for another 12 months by a provision in last year's Intelligence Reform and Terrorism Prevention Act, but the initiative is scheduled to expire at the end of January 2006. Although the Department of Justice has yet to submit a status report on the Child Safety Pilot Program, as required by law, data provided by groups using the program demonstrate its effectiveness and the need for it to be extended.

At last check, over 10,000 background checks have been conducted through the pilot program. In those performed checks, 7.5 percent of all workers screened had an arrest or conviction in their record. Crimes discovered were serious: rape, child sexual abuse, murder, and domestic battery. Half of those individuals were not truthful in their job application and instead stated they did not have a criminal record. Over one-quarter, 28 percent, of applicants with a criminal record had crimes from States other than where they were applying to work. In other words, but for the existence of the Child Safety Pilot Program, employers may not have known that their applicants had a criminal record.

The bill Senator Hatch and I introduce today will extend the Child Safety Pilot Program for an additional 30-month period. It will also change the original program so that more youth-serving organizations can participate, and will shorten the timeframe given to the FBI in which to return the results of the background check. We are pleased that our bill has been endorsed by the Boys & Girls Clubs of America, the National Mentoring Partnership, and the National Center for Missing and Exploited Children.

I would like to thank those who have made this program such a success. Specifically, Ernie Allen and his team at the National Center for Missing and Exploited Children have generously provided staff and equipment and have served as a clearinghouse to process background check requests. Robbie Callaway and Steve Salem of the Boys & Girls Clubs of America originally came up with this idea, and have provided tireless advocacy on its behalf. And Margo Pedroso of the National Mentoring Partnership has been invaluable in making Members of Congress and the general public aware of the need for an affordable, efficient national criminal history background check system. Without her, this program would never have been created.

I urge my colleagues to support the Child Safety Pilot Program Act, and I look forward to its prompt consideration.

Mr. President, every year, the cost of higher education and vocational education increases dramatically. College tuition and fees have been rising more rapidly than household income over the past two decades. The divergence is particularly pronounced for low-income households. The sad result is that with every year more students and families are forced to decide whether they can afford higher education while knowing their choice is limited by price. It is imperative that Congress work to make higher education more accessible to all.

Our Nation must make a solid commitment to ensure that every individual has the opportunity to pursue higher education, and our policies should reflect this commitment. Education has always been the great equalizer in our society that provides every American the same opportunity to succeed. That is why today I, along with Senator Schumer, am introducing legislation that would provide for a simpler, more borrower-friendly method for reporting and deducting capitalized interest and origination fees in connection with qualified education loans.

In May 2004, the Treasury Department issued final regulations with respect to the student loan interest deduction under the tax code. Among other things, these Treasury regulations provide that the ``original issue discount rules'' (OID) shall apply for purposes of students claiming this deduction. In particular, they would apply to the portion of the student loan that relates to federally mandated student loan origination fees and the capitalized interest that does not accrue on the loan while the student attends school (i.e., the government essentially pays this interest for the student on the loan during the years the student attends school).

OID rules are complicated and confusing. In general, these rules attempt to prevent taxpayers from claiming inflated interest deductions stemming from debt obligations. When a borrower issues a debt obligation at a discount, that is the note's face amount exceeds the amount that the lender advances to the borrower, the amount of the discount represents additional interest on the obligation. The OID rules reflect Congress' attempt to square the tax treatment of this unstated or disguised interest into conformity with economic reality.

The OID rules, then, ``limit'' a borrower's tax deduction because whereas the tax code generally permits borrowers to deduct the interest they pay on debt obligations, such as student loans, the tax code generally prevents borrowers from deducting any OID they might pay on such debt.

For example, assume that a corporation issues thirty-year bonds with a face value of $1,000 each and, according to their terms, paying 10 percent interest each year. Assume, though, that the corporation actually sells these bonds to investors for $850 because the 10 percent interest rate is below market rates. Under these facts, there is $150, $1,000 - $850, that the corporation essentially is ``re-classifying'' as interest that it will pay to the investor; that is, the investors would not be satisfied with a 10 percent return upon giving the corporation $1,000 so that the corporation essentially treats a portion of the principle, $150, as interest.

The tax code classifies this $150 as OID. The $150 of OID serves the same function as the stated annual interest of $100, 10 percent of $1,000. As such, the $150 of OID is an additional cost to the corporation in borrowing $850 from the investor, and it is additional compensation that the corporation pays to the lender for lending that amount. The only differences to the parties are that the corporation is not required to pay the OID of $150 until the bond matures and that the investor does not receive the discount in cash until then, unless the bond is sold in the interim.

As I noted earlier, the OID rules prevent borrowers from deducting the entire amount of ``interest'' they pay to a borrower on a loan. Specifically, in the previous example, although the parties treat the loan principle as being $850, the application of the OID rules treats the loan as $1,000, which is significant because it means the IRS classifies the $150 of OID as not being interest. In turn, the borrower cannot deduct this $150 payment to the borrower because it is a return of principle on the loan rather than interest.

Consequently, applying OID rules to student loans would have several negative effects. First, with respect to students, they would not be able to deduct the entire amount of ``interest'' they pay to their lender. In general, whereas the tax code generally permits students to deduct student loan interest, subject to certain limitations, it does not permit taxpayers to deduct OID. The Treasury regulations, then, will reduce the cash flow of students who are repaying student loans by limiting their student loan interest deduction.

In addition, applying the OID rules will have an enormous impact on the compliance burden. Indeed, the interaction of the OID rules and the loan provisions of the Higher Education Act greatly magnifies the complexity of rules that lenders must follow. As such, lenders and servicers will be forced to create accounting systems, at enormous expenses that ultimately will be passed on to student borrowers, to enable them to track and report the origination fees and capitalized interest in accordance with the OID rules. Furthermore, given that there is no track record of applying the OID rules to student lenders, there is no guarantee that they can preform these tasks accurately.

Congress enacted the OID rules to prevent taxpayers, mostly large corporations, from altering the terms of loan agreements to claim inflated interest deduction. Clearly, applying them to student loans is unreasonable and frankly unintended.

To remedy this problem, my legislation would permit lenders to account for the OID treatment of student loans under the ``immediate accrual method, which colloquially is referred to as the ``bucket method.'' Under this approach, the origination fee would accrue as soon as it is charged to or paid by the borrower, and capitalized interest would accrue under the terms of the promissory note. Accrued origination fee and capitalized interest would go into a ``bucket'' as soon as they accrue, until such time as the borrower begins to make payments on the loan. Amounts in the ``bucket'' would be applied against principal payments until the bucket is empty. Capitalized interest and origination fees would be reported to and deductible by the eligible taxpayer in the year in which they are paid.

My legislation would, as I stated, provide for a simpler, more borrower-friendly method for reporting and deducting capitalized interest and origination fees in connection with qualified education loans. Consequently, it would not reduce the need to engage in the burdensome task of calculating the OID on loans, and the student borrowers would be able to deduct more of the interest they pay.

This bill is good policy and common sense. Senator Schumer and I look forward to working with Finance Committee Chairman Grassley and Ranking Member Baucus in seeking swift action to resolve this issue.