Research Competitiveness Act of 2006

Mr. President, on October 4, 1957, an object the size of a basketball shot into space. And history changed.

The Soviet Union had launched Sputnik. And Americans reacted with fear. That fear quickly turned to determination to win the race to space.

Just one month later, the Russians launched Sputnik II with one precious passenger: a Russian mutt named Laika. Laika became the first living being to orbit earth. Today, a dog in space might seem like a good start for a Disney film. But in 1957, American scientists worried that these events foreshadowed Soviet military and strategic advantage.

By the following summer, Congress had created NASA. Sputnik's launch had provided the catalyst. For years before, scientific organizations and even the White House had declared the exploration of space as a priority. It took Sputnik to move us to action.

Half a century later, we find ourselves waiting for the next Sputnik. Report after report has outlined the risk that America runs by not doing more in research and education. A recent report entitled ``Waiting for Sputnik'' cautions that our workforce must include a greater percentage of ``knowledge workers''--including scientists and engineers--if we are to maintain our technological lead in defense capabilities. And another recent report, ``Rising Above the Gathering Storm,'' expresses fear that America's lead in science and technology can be abruptly lost and difficult or impossible to regain.

What these reports and others are telling us is one thing: We cannot wait for the next Sputnik. We must recognize that our advantage is fleeting. We must begin today with more science, more education, and more commitment to research to prepare for the future.

Asia has recognized this. Asia is plowing more funding into science and education. China, in particular, understands that technological advancement means security, independence, and economic growth. Spending on research and development has increased by 140 percent in China, Korea and Taiwan. In America, it has increased by only 34 percent.

Asia's commitment is already paying off. More than a hundred Fortune 500 companies have opened research centers in India and China. I have visited some of them. I was impressed with the level of skill of the workers I met there.

China's commitment to research, at $60 billion in expenditures, is dramatic by any measure. Over the last few years, China has doubled the share of its economy that it invests in research. China intends to double the amount committed to basic research in the next decade. Currently, only America beats out China in numbers of researchers in the workforce.

Over the last few months, I have offered a series of proposals to improve America's competitiveness. Today, I am pleased to introduce the Research Competitiveness Act of 2006. This bill would improve our research competitiveness in four major areas. All four address incentives in our tax code. Government also supports research through Federal spending. But I am not addressing those areas today.

First, my bill improves and simplifies the credit for applied research in section 41 of the tax code. This credit has grown to be overly complex, both for taxpayers and the IRS. Beginning in 2008, my bill would create a simpler 20 percent credit for qualifying research expenses that exceed 50 percent of the average expenses for the prior 3 years.

And just as important: The bill makes the credit permanent. Because the credit has been temporary, it has simply not been as effective as it could be. Since its creation in 1981, it has been extended 10 times. Congress even allowed it to lapse during one period.

The credit expired again just last December. And another short-term extension is pending in both tax reconciliation bills in conference. Last year, the experts at the Joint Committee on Taxation wrote: ``Perhaps the greatest criticism of the R&E credit among taxpayers regards its temporary nature.'' Joint Tax went on to say, ``A credit of longer duration may more successfully induce additional research than would a temporary credit, even if the temporary credit is periodically renewed.''

Currently, there are two different ways to claim a tax credit for qualifying research expenses. First, the ``traditional'' credit relies on incremental increases in expenses compared to a mid-1980s base period. Second, the ``alternative incremental'' credit measures the increase in research over the average of the prior 4 years.

Both of these credits have base periods involving gross receipts. My bill replaces these with a new credit, known as the ``Alternative Simplified Credit,'' based on research spending without reference to gross receipts. The current formula hurts companies that have fluctuating sales. And it hurts companies that take on a new line of business not dependent on research.

The Senate has passed this alternative formula as an optional credit several times. It is now pending in both versions of the tax reconciliation bill. It has not yet been enacted, though, even on a temporary basis.

I support the 2-year extension of the R&E credit contained in the Senate version of the tax reconciliation bill. That is why this new simpler formula in my bill would not start until 2008. That start date would give companies plenty of time to adjust their accounting.

The main complaint about the existing credits is that they are very complex, particularly the reference to the 20-year-old base period. This base period creates problems for the taxpayer in trying to calculate the credit. And it creates problems for the IRS in trying to administer and audit those claims.

The new credit focuses only on expenses, not gross receipts. And is still an incremental credit, so that companies must continue to increase research spending over time.

A tax credit is a cost-effective way to promote R&E. A report by the Congressional Research Service finds that without government support, investment in R&E would fall short of the socially optimal amount. Thus CRS endorses Government policies to boost private sector R&E.

Also, American workers who are engaged in R&E activities benefit from some of the most intellectually stimulating, high-paying, high-skilled jobs in the economy.

My own State of Montana has excellent examples of this economic activity. During the 1990s, about 400 establishments in Montana provided high-technology services, at an average wage of about $35,000 per year. These jobs paid nearly 80 percent more than the average private sector wage, which was less than $20,000 a year during the same period. Many of these jobs would never have been created without the assistance of the R&E credit.

My research bill would also establish a uniform reimbursement rate for all contract and consortia R&E. It would provide that 80 percent of expenses for research performed for the taxpayer by other parties count as qualifying research expenses under the regular credit.

Currently, when a taxpayer pays someone else to perform research for the taxpayer, the taxpayer can claim one of three rates in order to determine how much the taxpayer can include for the research credit. The lower amount is meant to assure overhead expenses that normally do not qualify for the R&E credit are not counted. Different rates, however, create unnecessary complexity. Therefore, my bill creates a uniform rate of 80 percent.

The second major research area that this bill addresses is the need to enhance and simplify the credit for basic research. This credit benefits universities and other entities committed to basic research. And it benefits the companies or individuals who donate to them. My bill provides that payments under the university basic research credit would count as contractor expenses at the rate of 100 percent.

The current formula for calculating the university basic research credit--defined as research ``for the advancement of science with no specific commercial objective''--is even more complex that the regular traditional R&E credit. Because of this complexity, this credit costs less than one-half of 1 percent of the cost of the regular R&E credit. It is completely under-utilized. It needs to be simplified to encourage businesses to give more for basic research.

American universities have been powerful engines of scientific discovery. To maintain our premier global position in basic research, America relies on sustained high levels of basic research funding and the ability to recruit the most talented students in the world. The gestation of scientific discovery is long. At least at first, we cannot know the commercial applications of a discovery. But America leads the world in biotechnology today because of support for basic research in chemistry and physics in the 1960s. Maintaining a commitment to scientific inquiry, therefore, must be part of our vision for sustained competitiveness.

Translating university discoveries into commercial products also takes innovation, capital, and risk. The Center for Strategic and International Studies asked what kind of government intervention can maintain technological leadership. One source of technological innovation that provides America with comparative advantage is the combination of university research programs, entrepreneurs, and risk capital from venture capital, corporations, or governments. Research clusters around Silicon Valley and North Carolina's Research Triangle exemplify this sort of combination.

The National Academies reached a similar conclusion in a 2002 review of the National Nanotechnology Initiatives. In a report, they wrote: ``To enhance the transition from basic to applied research, the committee recommends that industrial partnerships be stimulated and nurtured to help accelerate the commercialization of national nanotechnology developments.''

To further that goal, the third major area this bill addresses is fostering the creation of research parks. This part of the bill would benefit state and local governments and universities that want to create research centers for businesses incubating scientific discoveries with promise for commercial development.

Stanford created the Nation's first high-tech research park in 1951, in response to the demand for industrial land near the university and an emerging electronics industry tied closely to the School of Engineering. The Stanford Research Park traces its origins to a business started with $538 in a Palo Alto garage by two men named Bill Hewlett and Dave Packard. The Park is now home to 140 companies in electronics, software, biotechnology, and other high tech fields.

Similarly, the North Carolina Research Triangle was founded in 1959 by university, government, and business leaders with money from private contributions. It now has 112 research and development organizations, 37,600 employees, and capital investment of more than $2.7 billion. More recently, Virginia has fostered a research park now housing 53 private-sector companies, nonprofits, VCU research institutes, and state laboratories. The Virginia park employs more than 1,300 people.

The creation of these parks would seem to be an obvious choice. But it takes a significant commitment from a range of sources to bring them into being. To foster the creation and expansion of these successful parks, my bill will encourage their creation through the use of tax- exempt bond financing. Allowing tax-exempt bond authority would bring down the cost to establish such parks.

Foreign countries are emulating this successful formula. They are establishing high-tech clusters through government and university partnerships with private industry.

Back in 2000, a partnership was formed to foster TechRanch to assist Montana State University and other Montana-based research institutions in their efforts to commercialize research. But TechRanch is desperately in need of some new high-tech facilities. It could surely benefit from a provision such as this. I encourage my Colleagues to visit research parks in their States to see how my bill could be helpful in fostering more successful ventures.

A related item is a small fix to help universities that use tax- exempt bonds to build research facilities primarily for federal research in the basic or fundamental research area. Some of these facilities housing federal research--mostly NIH and NSF funded projects--are in danger of losing their tax-exempt bond status. Counsel have notified some state officials that they may be running afoul of a prohibition on ``private use'' in the tax code, because one private party has a superior claim to others in the use of inventions that result from research.

The complication comes from a 1980 law. In 1980, Congress enacted the Patent and Trademark Law Amendments Act, also known as the Bayh-Dole Act. The Bayh-Dole Act requires the Federal Government to retain a non- exclusive, royalty-free right on any discovery. In order to foster more basic research through Federal-State-university partnerships, we need to clarify that this provision of the Bayh-Dole act does not cause these bonds to lose their tax-exempt status. And my bill directs the Treasury Department to do so. I understand that the Treasury Department is aware of this significant concern. Whether or not Congress enacts my legislation, I hope that the Treasury Department will clarify the situation later this year.

The fourth major area that my bill addresses is innovation at the small business level. Recently, representatives of a number of small nanotechnology companies came to visit me. They told me that their greatest problem was surviving what they called the ``valley of death.'' That's what they called the first few years of business, when an entrepreneur has a promising technology but little money to test or develop it. Many businesses simply do not survive the ``valley of death.'' I believe that Congress should find a way to assist these businesses with promising technology.

Nanotechnology, for instance, shows much promise. According to one recent report, over the next decade, nanotechnology will affect most manufactured goods. As stated in Senate testimony by one National Science Foundation official earlier this year, ``Nanotechnology is truly our next great frontier in science and engineering.'' It took me a while to understand just what nanotechnology is. But it is basically the control of things at very, very small dimensions. By understanding and controlling at that dimension, people can find new and unique applications. These applications range from common consumer products-- such as making our sunblocks--better to improving disease-fighting medicines--to designing more fuel-efficient cars.

So, to help these small businesses convert their promising science into successful businesses, my bill would establish tax credits for investments in qualifying small technology innovation companies. These struggling start-up ventures often cannot utilize existing incentives in the tax code--like the R&E tax credit--because they have no tax liability and may have little income for the first few years. They need access to cheap capital to get through

those first few research-intensive years.

The credit in my bill would be similar to the existing and successful New Markets Tax Credit. The New Markets Credit has provided billions of dollars of investment to low-income communities across the country. In my bill, entities with some expertise and knowledge of research would receive an allocation from Treasury to analyze and select qualifying research investments. These investment entities would then target small business with promising technologies that focus the majority of their expenditures on activity qualifying as research expenses under the R&E credit.

In sum, my bill would boost both applied and basic research. It would boost research by businesses big and small. And it would foster research by for-profit and non-profits alike.

There is no clear answer to how to address the concerns raised in the ``Waiting for Sputnik'' report. But the answer is clear that we must try--and soon.

A noted environmentalist once said: ``Every major advance in the technological competence of man has forced revolutionary changes in the economic and political structure of society.'' From telephones to rockets to computers, I believe that this is true.

Let us work to see that the next big technological advance is discovered here in America. Only through continued commitment to research can we ensure that it is.

Mr. President, on October 4, 1957, an object the size of a basketball shot into space. And history changed.

The Soviet Union had launched Sputnik. And Americans reacted with fear. That fear quickly turned to determination to win the race to space.

Just one month later, the Russians launched Sputnik II with one precious passenger: a Russian mutt named Laika. Laika became the first living being to orbit earth. Today, a dog in space might seem like a good start for a Disney film. But in 1957, American scientists worried that these events foreshadowed Soviet military and strategic advantage.

By the following summer, Congress had created NASA. Sputnik's launch had provided the catalyst. For years before, scientific organizations and even the White House had declared the exploration of space as a priority. It took Sputnik to move us to action.

Half a century later, we find ourselves waiting for the next Sputnik. Report after report has outlined the risk that America runs by not doing more in research and education. A recent report entitled ``Waiting for Sputnik'' cautions that our workforce must include a greater percentage of ``knowledge workers''--including scientists and engineers--if we are to maintain our technological lead in defense capabilities. And another recent report, ``Rising Above the Gathering Storm,'' expresses fear that America's lead in science and technology can be abruptly lost and difficult or impossible to regain.

What these reports and others are telling us is one thing: We cannot wait for the next Sputnik. We must recognize that our advantage is fleeting. We must begin today with more science, more education, and more commitment to research to prepare for the future.

Asia has recognized this. Asia is plowing more funding into science and education. China, in particular, understands that technological advancement means security, independence, and economic growth. Spending on research and development has increased by 140 percent in China, Korea and Taiwan. In America, it has increased by only 34 percent.

Asia's commitment is already paying off. More than a hundred Fortune 500 companies have opened research centers in India and China. I have visited some of them. I was impressed with the level of skill of the workers I met there.

China's commitment to research, at $60 billion in expenditures, is dramatic by any measure. Over the last few years, China has doubled the share of its economy that it invests in research. China intends to double the amount committed to basic research in the next decade. Currently, only America beats out China in numbers of researchers in the workforce.

Over the last few months, I have offered a series of proposals to improve America's competitiveness. Today, I am pleased to introduce the Research Competitiveness Act of 2006. This bill would improve our research competitiveness in four major areas. All four address incentives in our tax code. Government also supports research through Federal spending. But I am not addressing those areas today.

First, my bill improves and simplifies the credit for applied research in section 41 of the tax code. This credit has grown to be overly complex, both for taxpayers and the IRS. Beginning in 2008, my bill would create a simpler 20 percent credit for qualifying research expenses that exceed 50 percent of the average expenses for the prior 3 years.

And just as important: The bill makes the credit permanent. Because the credit has been temporary, it has simply not been as effective as it could be. Since its creation in 1981, it has been extended 10 times. Congress even allowed it to lapse during one period.

The credit expired again just last December. And another short-term extension is pending in both tax reconciliation bills in conference. Last year, the experts at the Joint Committee on Taxation wrote: ``Perhaps the greatest criticism of the R&E credit among taxpayers regards its temporary nature.'' Joint Tax went on to say, ``A credit of longer duration may more successfully induce additional research than would a temporary credit, even if the temporary credit is periodically renewed.''

Currently, there are two different ways to claim a tax credit for qualifying research expenses. First, the ``traditional'' credit relies on incremental increases in expenses compared to a mid-1980s base period. Second, the ``alternative incremental'' credit measures the increase in research over the average of the prior 4 years.

Both of these credits have base periods involving gross receipts. My bill replaces these with a new credit, known as the ``Alternative Simplified Credit,'' based on research spending without reference to gross receipts. The current formula hurts companies that have fluctuating sales. And it hurts companies that take on a new line of business not dependent on research.

The Senate has passed this alternative formula as an optional credit several times. It is now pending in both versions of the tax reconciliation bill. It has not yet been enacted, though, even on a temporary basis.

I support the 2-year extension of the R&E credit contained in the Senate version of the tax reconciliation bill. That is why this new simpler formula in my bill would not start until 2008. That start date would give companies plenty of time to adjust their accounting.

The main complaint about the existing credits is that they are very complex, particularly the reference to the 20-year-old base period. This base period creates problems for the taxpayer in trying to calculate the credit. And it creates problems for the IRS in trying to administer and audit those claims.

The new credit focuses only on expenses, not gross receipts. And is still an incremental credit, so that companies must continue to increase research spending over time.

A tax credit is a cost-effective way to promote R&E. A report by the Congressional Research Service finds that without government support, investment in R&E would fall short of the socially optimal amount. Thus CRS endorses Government policies to boost private sector R&E.

Also, American workers who are engaged in R&E activities benefit from some of the most intellectually stimulating, high-paying, high-skilled jobs in the economy.

My own State of Montana has excellent examples of this economic activity. During the 1990s, about 400 establishments in Montana provided high-technology services, at an average wage of about $35,000 per year. These jobs paid nearly 80 percent more than the average private sector wage, which was less than $20,000 a year during the same period. Many of these jobs would never have been created without the assistance of the R&E credit.

My research bill would also establish a uniform reimbursement rate for all contract and consortia R&E. It would provide that 80 percent of expenses for research performed for the taxpayer by other parties count as qualifying research expenses under the regular credit.

Currently, when a taxpayer pays someone else to perform research for the taxpayer, the taxpayer can claim one of three rates in order to determine how much the taxpayer can include for the research credit. The lower amount is meant to assure overhead expenses that normally do not qualify for the R&E credit are not counted. Different rates, however, create unnecessary complexity. Therefore, my bill creates a uniform rate of 80 percent.

The second major research area that this bill addresses is the need to enhance and simplify the credit for basic research. This credit benefits universities and other entities committed to basic research. And it benefits the companies or individuals who donate to them. My bill provides that payments under the university basic research credit would count as contractor expenses at the rate of 100 percent.

The current formula for calculating the university basic research credit--defined as research ``for the advancement of science with no specific commercial objective''--is even more complex that the regular traditional R&E credit. Because of this complexity, this credit costs less than one-half of 1 percent of the cost of the regular R&E credit. It is completely under-utilized. It needs to be simplified to encourage businesses to give more for basic research.

American universities have been powerful engines of scientific discovery. To maintain our premier global position in basic research, America relies on sustained high levels of basic research funding and the ability to recruit the most talented students in the world. The gestation of scientific discovery is long. At least at first, we cannot know the commercial applications of a discovery. But America leads the world in biotechnology today because of support for basic research in chemistry and physics in the 1960s. Maintaining a commitment to scientific inquiry, therefore, must be part of our vision for sustained competitiveness.

Translating university discoveries into commercial products also takes innovation, capital, and risk. The Center for Strategic and International Studies asked what kind of government intervention can maintain technological leadership. One source of technological innovation that provides America with comparative advantage is the combination of university research programs, entrepreneurs, and risk capital from venture capital, corporations, or governments. Research clusters around Silicon Valley and North Carolina's Research Triangle exemplify this sort of combination.

The National Academies reached a similar conclusion in a 2002 review of the National Nanotechnology Initiatives. In a report, they wrote: ``To enhance the transition from basic to applied research, the committee recommends that industrial partnerships be stimulated and nurtured to help accelerate the commercialization of national nanotechnology developments.''

To further that goal, the third major area this bill addresses is fostering the creation of research parks. This part of the bill would benefit state and local governments and universities that want to create research centers for businesses incubating scientific discoveries with promise for commercial development.

Stanford created the Nation's first high-tech research park in 1951, in response to the demand for industrial land near the university and an emerging electronics industry tied closely to the School of Engineering. The Stanford Research Park traces its origins to a business started with $538 in a Palo Alto garage by two men named Bill Hewlett and Dave Packard. The Park is now home to 140 companies in electronics, software, biotechnology, and other high tech fields.

Similarly, the North Carolina Research Triangle was founded in 1959 by university, government, and business leaders with money from private contributions. It now has 112 research and development organizations, 37,600 employees, and capital investment of more than $2.7 billion. More recently, Virginia has fostered a research park now housing 53 private-sector companies, nonprofits, VCU research institutes, and state laboratories. The Virginia park employs more than 1,300 people.

The creation of these parks would seem to be an obvious choice. But it takes a significant commitment from a range of sources to bring them into being. To foster the creation and expansion of these successful parks, my bill will encourage their creation through the use of tax- exempt bond financing. Allowing tax-exempt bond authority would bring down the cost to establish such parks.

Foreign countries are emulating this successful formula. They are establishing high-tech clusters through government and university partnerships with private industry.

Back in 2000, a partnership was formed to foster TechRanch to assist Montana State University and other Montana-based research institutions in their efforts to commercialize research. But TechRanch is desperately in need of some new high-tech facilities. It could surely benefit from a provision such as this. I encourage my Colleagues to visit research parks in their States to see how my bill could be helpful in fostering more successful ventures.

A related item is a small fix to help universities that use tax- exempt bonds to build research facilities primarily for federal research in the basic or fundamental research area. Some of these facilities housing federal research--mostly NIH and NSF funded projects--are in danger of losing their tax-exempt bond status. Counsel have notified some state officials that they may be running afoul of a prohibition on ``private use'' in the tax code, because one private party has a superior claim to others in the use of inventions that result from research.

The complication comes from a 1980 law. In 1980, Congress enacted the Patent and Trademark Law Amendments Act, also known as the Bayh-Dole Act. The Bayh-Dole Act requires the Federal Government to retain a non- exclusive, royalty-free right on any discovery. In order to foster more basic research through Federal-State-university partnerships, we need to clarify that this provision of the Bayh-Dole act does not cause these bonds to lose their tax-exempt status. And my bill directs the Treasury Department to do so. I understand that the Treasury Department is aware of this significant concern. Whether or not Congress enacts my legislation, I hope that the Treasury Department will clarify the situation later this year.

The fourth major area that my bill addresses is innovation at the small business level. Recently, representatives of a number of small nanotechnology companies came to visit me. They told me that their greatest problem was surviving what they called the ``valley of death.'' That's what they called the first few years of business, when an entrepreneur has a promising technology but little money to test or develop it. Many businesses simply do not survive the ``valley of death.'' I believe that Congress should find a way to assist these businesses with promising technology.

Nanotechnology, for instance, shows much promise. According to one recent report, over the next decade, nanotechnology will affect most manufactured goods. As stated in Senate testimony by one National Science Foundation official earlier this year, ``Nanotechnology is truly our next great frontier in science and engineering.'' It took me a while to understand just what nanotechnology is. But it is basically the control of things at very, very small dimensions. By understanding and controlling at that dimension, people can find new and unique applications. These applications range from common consumer products-- such as making our sunblocks--better to improving disease-fighting medicines--to designing more fuel-efficient cars.

So, to help these small businesses convert their promising science into successful businesses, my bill would establish tax credits for investments in qualifying small technology innovation companies. These struggling start-up ventures often cannot utilize existing incentives in the tax code--like the R&E tax credit--because they have no tax liability and may have little income for the first few years. They need access to cheap capital to get through

those first few research-intensive years.

The credit in my bill would be similar to the existing and successful New Markets Tax Credit. The New Markets Credit has provided billions of dollars of investment to low-income communities across the country. In my bill, entities with some expertise and knowledge of research would receive an allocation from Treasury to analyze and select qualifying research investments. These investment entities would then target small business with promising technologies that focus the majority of their expenditures on activity qualifying as research expenses under the R&E credit.

In sum, my bill would boost both applied and basic research. It would boost research by businesses big and small. And it would foster research by for-profit and non-profits alike.

There is no clear answer to how to address the concerns raised in the ``Waiting for Sputnik'' report. But the answer is clear that we must try--and soon.

A noted environmentalist once said: ``Every major advance in the technological competence of man has forced revolutionary changes in the economic and political structure of society.'' From telephones to rockets to computers, I believe that this is true.

Let us work to see that the next big technological advance is discovered here in America. Only through continued commitment to research can we ensure that it is.

Mr. President, I rise today, along with my colleague, Senator Christopher Bond, to introduce the Dam Safety Act of 2006. This legislation is designed to help prevent such tragic failures as the collapse of the privately owned Ka Loko Dam in Kauai last March in which seven people died. The legislation complements legislation that I introduced with Senator Inouye, S. 2444, the Dam Rehabilitation and Repair Act of 2006, which assists in securing and repairing publicly owned dams. Both of these bills are critical to preventing the type of devastating collapse which occurred on Kauai.

This legislation is vitally important not only to my State but to every State. There are approximately 79,000 dams registered in the National Inventory of Dams. However, there are many more dams that are small and unregulated. This bill provides funding for State dam safety programs to enhance their oversight and support abilities.

The Dam Safety Act of 2006 reauthorizes the National Dam Safety Program, NDSP, which was first established as part of the Water Resources Development Act of 1996 Public Law 104-303. In 2002, the NDSP was reauthorized for another 4 years by the enactment of the Dam Safety and Security Act of 2002 Public Law 107-310. It expires at the end of this fiscal year, so its reauthorization is imperative.

The National Dam Safety Program delivers vital Federal resources to State governments to improve their dam safety programs by providing funds for training, technical assistance, research, and support. Federal incentive grants are awarded to States to enhance their dam safety programs. In addition, funds have been used to hire staff for inspections, pay for specialized training, and develop specialized mapping in the event that a dam failure necessitates evacuation.

Of the approximately $12 million authorized for each fiscal year, $8 million is divided among the States to improve safety programs and $2 million is allocated for research to identify more effective techniques to assess, construct, and monitor dams. In addition, $700,000 is available for training assistance for State engineers, and $1 million is used for the National Inventory of Dams.

The costs of failing to maintain dams properly are extremely high. There have been at least 29 dam failures in the United States during the past 2 years causing more than $200 million in property damages. The failure of the Silver Lake Dam in Michigan in 2003 caused more than $100 million in property damage. A December 2005 dam collapse in Missouri injured three children and destroyed several homes. People caught in the path of a dam collapse are often helpless to escape.

Such was the tragic situation in Hawaii when, in March, the Ka Loko Dam, a 116-year earthen dam, on the island of Kauai suddenly collapsed during heavy rains, killing seven people. When a dam collapses, destruction is often swift and uncontrollable. In the case on Kauai, local, State, and Federal officials quickly responded to the tragedy, assisting citizens while engineers from both the State Department of Land and Natural Resources and the U.S. Army Corps of Engineers inspected the over 50 dams on Kauai. Neighbors worked together to help neighbors, and our Governor quickly requested more funds, which the legislature approved, for cleanup and additional inspections.

While most of the responsibility is at the State and local level, there is a role for the Federal Government in supplementing State resources and developing national guidelines for dam safety. The funds Hawaii receives under the program help the State's staff to acquire and maintain equipment and software to assess dam safety. It is a small amount but vitally important to my State and to every State.

I urge my colleagues to join Senator Bond and me in supporting the reauthorization of the National Dam Safety Program.

I ask unanimous consent to insert in the Record at this point a letter from the Dam Safety Coalition endorsing this legislation.

Mr. President, today I rise with my good friend and colleague, Senator Craig from Idaho, to introduce legislation to establish at least five Amputation and Prosthetic Rehabilitation Centers within the Department of Veterans Affairs (VA). Through progressive and specialized expertise in the area of prosthetics and rehabilitation, the visible reminders of the sacrifices made by our wounded warriors will become less evident and hopefully less of a factor in their everyday lives.

Specialty care for amputees has become an even more pressing concern because of the types of injuries our brave soldiers have sustained in Operation Iraqi Freedom and Operation Enduring Freedom. Many would agree that this is not the same kind of war that other generations of veterans have fought. The use of body armor and improvements in battlefield medicine have saved more lives, but in many cases have left our soldiers with traumatic injuries. Servicemembers in the current conflicts have suffered from twice as many amputations as those who fought in past wars. Unfortunately, the incidence of multiple amputations from bomb blasts is higher in this war.

The VA health care system has only begun to see the men and women from Operation Enduring Freedom and Operation Iraqi Freedom who are in need of long-term rehabilitation. Indeed, these veterans are young and plan on being active for a long time. VA is well poised to take on this challenge. An ongoing study at the Providence VA hospital is looking at ``biohybrid'' limbs which are implanted into tissue and later become an integral part of the patient.

We cannot, however, forget about the war our current veterans continue to fight everyday against time and their health. Veterans struggling with diseases such as diabetes are often faced with amputation. The establishment of the Amputation and Prosthetic Rehabilitation Centers will provide advanced care to those who have endured the loss of a limb, which will help them regain full function and a better quality of life.

The centers will provide VA regional clinical facilities with cutting edge expertise in prosthetics, rehabilitation with the use of prosthetics, treatment, and coordination of care for a veteran with an amputation. By placing these centers in locations with the highest concentrations of veterans, those in need will truly benefit from these specialized services.

VA has always been a leader in progressive treatment and care. These centers will maintain VA as a leader by providing the tools and staff necessary to do so. The legislation requires that the centers must have a well-equipped and appropriately certified laboratory facility necessary to provide the most state-of-the-art and complex prosthetic devices.

With experienced prosthetists trained and certified in the area of new techniques, an accredited Physical Medicine and Rehabilitation service with trained staff in the most current prosthetic services, and a permanent modern gait laboratory located within each center, veterans are sure to receive the most advanced treatment and care.

A critical part of this legislation is that these centers will serve as resources for smaller VA hospitals which may not have all of the expertise but will certainly have the patients.

As Ranking Member of the Committee on Veterans' Affairs, I urge my colleagues to join Chairman Craig and myself in support of providing treatment to those in need so they can stand on their own.

Mr. President, I rise proudly today to introduce legislation that would provide assistance to those who care for our Nation's veterans. These caregivers provide a great service to our country and play a vital role in providing non-institutional long-term health care for veterans.

There is deep concern regarding the anticipated number of veterans that will need long-term care by the year 2010. In 2005, there were almost one million veterans age 85 and over, and by 2010, it is anticipated that the number of veterans in this age category will grow to 1.3 million. The Department of Veterans Affairs (VA) will be faced with a crisis related to the demand for care of this population, and we must help VA prepare for this situation.

VA has been disturbingly inactive in instituting the long-term care provisions of the 1999 Millennium Health Care Act. The General Accounting Office has been the most critical, citing major inconsistencies across the VA system in the implementation of non- institutional care. During the Committee on Veterans' Affairs' oversight work in Hawaii, we found that the Kauai clinic lacked a home care specialist and the Maui clinic was arbitrarily limiting non- institutional care. Caregivers are crucial in bridging these gaps in non-institutional long-term care services.

With more veterans returning from combat with severely debilitating injuries, young spouses and parents have been forced to take on an unexpected role as caregivers. Many have interrupted their own careers to dedicate time and attention to the care and rehabilitation of loved ones. These caregivers do not plan for this to happen and are not prepared mentally or financially for their new role. Therefore, we must protect, educate, and lend a helping hand to the caregivers who take on the responsibility and costly burden of caring for veterans, both young and old.

This legislation serves to provide comprehensive assistance to these caregivers. By providing such services as respite care, caregivers can have time to run errands and attend to their own health concerns. They can rest easier knowing that there is someone there to care for their disabled veteran while they are out. Another service provided through this legislation is adult-day care for veterans. This serves a dual purpose in that it provides short-term supervision and also gives veterans a place to go for some camaraderie.

The last years of a veteran's life can be difficult for both the veteran and for the caregiver. This legislation would also provide hospice services so that this period is one of peace and comfort.

Other services that would support caregivers under this legislation include education, training, transportation services, readjustment services, rehabilitation services, home care services, and any other new and innovative modalities of non-institutional long-term care.

I cannot try to quantify the invaluable service that caregivers provide.

What can be done is to make funds available to carry out programs to assist them. The legislation authorizes $10 million to be allocated to individual medical facilities within VA, especially to those in rural areas without a long-term care facility, based upon the proposals submitted by the facilities. In efforts to evaluate the improvements made in caregiver assistance services, a report shall be submitted to Congress by the Secretary no later than a year after enactment of this bill. The report should include information on the allocation of funds to facilities and a description of the improvements made with the funds.

Let us meet these caregivers halfway by giving them the assistance they need to care for the veterans that depend on them. I ask my colleagues to join me in supporting this effort.

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

Mr. President. I rise today to introduce two energy bills: the Enhanced Energy Security Act of 2006; and the Enhanced Energy Security Tax Incentives Act of 2006.

All of us know that we face a challenging energy situation in this country in both the short term and the long term. The world market price of crude oil is above $72 per barrel. We have seen gasoline prices above $3 per gallon in many parts of the country. In my home State of New Mexico, these prices are a real hardship to the many New Mexicans who are forced to drive long-distances to work, without the prospect of car pooling or public transportation. The steep rise in the price of gas at the pump is putting a nearly unbearable squeeze on family budgets in New Mexico and all across America.

So, we have a major national problem and not much time left in this Congress to make progress on it. The question is, what can we do in the remaining weeks of this Congress that would be bipartisan, that could be signed into law by the President, and that would hold out the prospect of eventually helping to moderate the price of gasoline at the pump?

I have thought for some time that the most effective way of approaching the real issues driving the high prices that consumers find unacceptable is through a four-part strategy focusing on 1. increasing consumer protection, 2. increasing supply, 3. increasing efficiency of oil and gas use, and 4. providing incentives for forward-looking energy choices in the market.

A fair number of bills have already been introduced that deal with the first two parts of that strategy. What has been lacking is a bipartisan path forward to consensus on increasing energy efficiency and on stimulating forward-looking investments in energy efficiency and renewable energy technologies.

Today's bills are intended to fill that gap. Each of these two bills is designed to go to a single committee with jurisdiction over most, if not all, of its contents.

The first bill, the Enhanced Energy Security Act of 2006, is comprised of provisions that generally fall in the jurisdiction of the Committee on Energy and Natural Resources.

The second bill, the Enhanced Energy Security Tax Incentives Act of 2006, is comprised solely of provisions in the jurisdiction of the Senate Finance Committee.

Some of the provisions in these two bills have been drawn from other bills, including S. 2025, the Vehicles and Fuels Choices for American Security Act, which was introduced last year by Senators Bayh, Coleman, Lieberman and Brownback along with others. I appreciate their leadership and their support for this effort. What is newsworthy here today is that we are putting a large body of good policy ideas in a form that will facilitate committee action here in the Senate.

Relying on the Energy and the Finance committees to do the necessary homework to come up with bipartisan solutions to our energy challenges is the best way for us to make progress in this Congress. Both committees have leaders, in Senators Domenici and Senator Grassley, who demonstrated their commitment to bipartisan engagement on energy issues during the enactment of last year's Energy Policy Act of 2005. I am looking forward to working with both Committee Chairs to move forward with the ideas in these bills on a bipartisan basis.

The basic idea behind the first bill, which is coming to the Energy Committee, is that if we want, in the long term, to moderate the prices that consumers are seeing in today's markets from oil and natural gas, we need to focus more strongly on increasing energy efficiency, and particularly increased efficiency of our use of oil and natural gas.

That's an area where we were unable to do much in the last Energy bill. But, there is a lot that needs to be done.

Among the most important provisions we are taking from S. 2025 and putting in the new bill, is an emphasis on an expanded plan for economy-wide oil savings. The President is to come up with a plan that will cut our oil use, from projected levels, by 2.5 million barrels of oil per day by 2016, 7 million barrels of oil per day by 2026, and 10 million barrels of oil per day by 2031.

The new bill, also like S. 2025, includes a number of initiatives designed to reduce our nearly total reliance on petroleum products in the transportation sector. These include: programs that will speed the development of new vehicle technologies such as ``plug-in hybrids'' and the use of advanced light weight materials in vehicles; expanding the authority of the Secretary of Energy to provide loan guarantees and competitive grants to auto manufacturers and parts manufacturers for converting existing facilities or building new facilities for manufacturing fuel-efficient vehicles and vehicle components; increasing the availability of alternative fuels, such as E85, across the country by providing funding for alternative fuel fueling stations; and providing incentives for the production of cellulosic ethanol-- including loan guarantees and a reverse auction for production payments.

The new bill will also include a number of provisions aimed at relieving demand and price pressure on natural gas. These include: strengthening the Federal purchase requirement for renewable energy; the 10 percent renewable portfolio standard that has passed the full Senate 3 times in the past 4 years; encouraging States to strengthen their programs on demand-side management; and better educating consumers about energy efficiency measures that they can take.

The basic idea behind the second bill, the Enhanced Energy Security Tax Incentives Act of 2006, is to create fiscal incentives that help forward-looking energy technologies to enter the market. As is often the case with technological advancements, many of the energy technology alternatives that are poised to enter the marketplace will not be able to successfully compete without some transitional help.

The first set of provisions in the bill extends, through 2010, the various alternative fuel, efficiency and renewable energy tax provisions we passed last year. These existing tax incentives will work best if investors, manufacturers and consumers know that the government is committed and that they can plan for these tax incentives being there for a few years. The tax provisions we are extending include provisions to encourage the purchase of energy efficient housing and office materials, as well as the generation of electricity from alternative sources such

as biomass, fuel cells, the wind and the sun. It will be nearly impossible for Congress to create a comprehensive national energy policy if important energy tax incentives such as these are in a perpetual state of uncertainty over the long term. If we extend these tax incentives through 2010 now, we will see a great increase in their usefulness in an industry that needs a few years lead-time to plan and build major energy projects.

The second set of provisions in the new tax bill will create new incentives to encourage our country to move towards more fuel efficient vehicles, such as hybrids. It accomplishes this in several ways.

First, as the President has suggested, we lift the current cap on the number of vehicles per manufacturer that are eligible for a consumer tax credit. This proposal was also part of the package unveiled last week by Senators Domenici and Frist. Under the bill I will be introducing, this modified version of the tax credit will be also extended until 2010.

Next, we create a 35 percent tax credit for manufacturers on the expenses involved in retrofitting or setting up manufacturing facilities to make these fuel efficient vehicles.

To encourage businesses with fleets of vehicles, we create a 15 percent tax credit for the purchase of more than 10 fuel efficient vehicles in a year.

In order to encourage alternative fueling stations, we expand the current 30 percent tax credit to 50 percent and allow it to be operative until the end of 2010.

Finally, we create a 25 percent tax credit for the purchase of qualified idling reduction equipment so that vehicles currently on the road are not running their engines any more than necessary.

While this is a rather large expansion of the currently available tax incentives for fuel efficient vehicles, it is what is going to be necessary to get our vehicle policy headed in the right direction.

The legislation also contains new provisions to encourage the purchase of fuel efficient technologies for residences and businesses. It creates a 10 percent tax credit for the purchase of energy efficient combined heat and power units as well as provides for three year depreciation on the purchase price for ``smart meters.'' These provisions have broad support in the Senate but were regrettably dropped in last year's conference on the Energy Bill. I think is important that we look at these provisions anew.

A question that usually arises when you talk about expanding tax incentives is whether they are going to be paid for. Many of us here in the Senate are worried about the deficit, so the tax bill that I am describing contains several revenue offsets, such as the provisions contained in last year's reconciliation tax bill that get rid of tax benefits in the oil and gas industry that are unnecessary and a waste of taxpayer dollars. This legislation would also close the SUV tax loophole that provides a windfall for the purchasers of inefficient cars at a time when the nation needs to be discouraging this activity.

I look forward to working with the Chairman and Ranking Member of the Finance Committee on both these new tax incentives but also on ways of paying for them, so that we are acting in a way that is fiscally responsible.

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

Mr. President, I rise to introduce the Silk Road Strategy Act of 2006. Joining me as original cosponsors are Senators Kyl and Hutchison. I would like to extend my thanks to both of my colleagues and their staff for their assistance and guidance on many of the provisions in the bill.

The original Silk Road Strategy Act of 1999 saw the countries of the Caucasus and Central Asia--specifically, Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan--as a distinct region bound by history and common interests with a shared potential that was of critical importance to the United States.

The goals of that legislation were as follows: to promote independent, democratic government; to promote the protection of human rights, tolerance, and pluralism; to aid in the resolution of conflicts and support political, economic, and security cooperation in order to foster regional stability and economic interdependence; to promote financial and economic development based on market principles; to aid in the development of communications, transportation, health and human services infrastructure; to promote and protect the interests of U.S. businesses and investments.

These basic policy goals have not changed; however, historic events since 1999 have had a significant impact on the region's political systems, economic conditions, and security situation which affect U.S. perceptions of and interests in the region. These changes include: the September 11, 2001 terrorist attack on the United States, which clarified the nature and source of the key threats facing this country; the Operation Enduring Freedom in Afghanistan and the removal of the Taliban regime; the series of ``colored revolutions'' in Georgia, Ukraine and Kyrgyzstan; Deteriorating relations between the U.S. and certain regional leaders, especially Uzbekistan's President Islam Karimov, and the closure of the U.S. base in that country; the growing influence of regional powers, namely Russia and China; greater U.S. oil and gas interests in the Caspian region; and the threat posed by Iran, which is seeking to develop a nuclear potential.

In light of these changes, the Silk Road Act needs to be updated and revised to better address some of the new challenges the U.S. faces in its relations with Central Asia and the Caucasus.

The U.S.'s vital interests in the Caspian region include: ensuring the independence and security of Azerbaijan and Georgia, through which critical oil and gas pipelines transit; containing Iran; ensuring access to oil and gas reserves; maintaining good relations with Kazakhstan; promoting peaceful resolution of conflicts; and keeping Russian geopolitical ambitions in check.

Further East, U.S. interests include: helping Kyrgyzstan to make its Tulip Revolution a success; the political stabilization of Afghanistan and enhancement of its security by defeating the Taliban and Al Qaeda and its satellite organizations; political reform and liberalization in the countries of Central Asia to neutralize radical Islamic movements, such as Hizb-ut- Tahrir al-Islami, HUT--Islamic Army of Liberation; reduction of drug production and exports; creation and/or support of the U.S. military base network; and social and economic development in the states of Central Asia.

To these ends, among other priorities, this bill emphasizes the importance of East-West gas and oil pipelines, such as the Baku- Tbilisi-Ceyhan pipeline, BTC. BTC ensures Azerbaijan's security and economic future, and binds the country with neighboring Georgia and Turkey, anchoring Azerbaijan in the network of Western states and institutions.

The bill also includes Afghanistan as a Silk Road country and promotes the integration of Afghanistan with neighboring Central Asian states in terms of security, trade, infrastructure and energy grids.

In all the states of Central Asia and the Caucasus, it is critical to promote democratic development. Among this bill's initiatives are calls for supporting independent media outlets, especially electronic media, and also for satellite TV programming, to provide authoritative news and more diverse opinions than are otherwise available. Specifically, it supports satellite TV broadcasting into Uzbekistan, Turkmenistan and Iran and the activities of their diasporas in the United States. Furthermore, the bill offers assistance for the establishment of civil service institutes to train civil servants at all levels in the rule of law, conduct of elections, respect for citizens' rights, and the needs of a market economy.

No less important is the need to accelerate and broaden economic reform and modernization in the Silk Road countries. Accordingly, this bill provides assistance in the privatization of state enterprises and deregulation of the economy.

The bill also calls for assistance with the establishment of the Caspian Bank of Reconstruction and Development, CBRD, to help Silk Road states address problems caused by increased revenues from energy exports, and dangers to macroeconomic stability and overheating of the economy infrastructure, as well as promote development in the region.

In light of Trans-Caspian Oil and Gas Pipelines, this bill encourages the governments of Azerbaijan, Kazakhstan and especially Turkmenistan to improve their business climate and investor confidence by fully disclosing their internationally audited hydrocarbon reserve.

The bill strongly supports activities that promote the participation of U.S. companies and investors in the planning, financing, and construction of infrastructure for communications, transportation, including air transportation, and energy and trade including highways, railroads, port facilities, shipping, banking, insurance, telecommunications networks, and gas and oil pipelines.

Furthermore, the bill would assist in the removal of legal and institutional barriers to continental and regional trade and the harmonization of border and tariff regimes, including improved mechanisms for transit through Pakistan to Afghanistan and the rest of Central Asia.

With respect to the World Trade Organization, the bill offers support to Silk Road countries seeking WTO accession, providing assistance in reform as needed. Recognizing that PNTR status, through graduation from the Jackson-Vanik Amendment of 1974 Trade Act, and WTO membership have been extended to Armenia, Georgia and Kyrgyzstan, the bill calls for extending the same status to the other two most advanced economies of the region, Azerbaijan and Kazakhstan, by graduating them from the Jackson-Vanik Amendment, extending PNTR status and aiding in WTO accession. But before that support is offered, it is important for the two countries to demonstrate that they are capable of dealing with the demands of a vibrant economy in a democratic setting.

A detailed examination of this bill will reveal many more initiatives. But as you can see, Mr. President, the Silk Road Strategy Act of 2006 takes a comprehensive approach to the region, encompassing security, economic development, democratic governance and human rights. I believe it targets the key issues that U.S. policymakers must address in our ever more important effort to establish solid, long-lasting relationships with the countries of the Silk Road. I hope my colleagues will support this bill and I look forward to discussing it with them.