State-Based Health Care Reform Act

Mr. President, today I am introducing the Export Products Not Jobs Act of 2006. Tomorrow, the Senate Finance Committee will hold a hearing to tackle the issue of tax reform and will hear from the chairman and vice chairman of the President's Advisory Panel on Federal Tax Reform. The panel's report took a broad look at our current tax law and made numerous recommendations. I agree with some of the recommendations and have concerns about others, but believe that the report provides a good starting place for a thorough discussion of tax reform.

In 1994, the IRS estimated that a family that itemized their deductions and had some interest and capital gains would spend 11\1/2\ hours preparing their Federal income tax return. This estimate has increased to 19 hours and 45 minutes in 2004. It is time for Congress to pass bipartisan tax legislation in the style of Tax Reform Act of 1986, which greatly simplified Tax Code. And our tax reform should be based upon the following three principles: fairness, simplicity, and opportunity for economic growth.

Our Tax Code is extremely complicated. Citizens and businesses struggle to comply with ru1es governing: taxation of business income, capital gains, income phase-outs, extenders, the myriad savings vehicles, recordkeeping for itemized deductions, the alternative minimum tax, AMT, the earned-income tax credit, EITC, and taxation of foreign business income. I believe that our international tax system needs to be simplified and reformed to encourage businesses to remain in the United States. And today, I am introducing legislation that I hope will be fully considered as we begin our discussions on tax reform.

Presently, the complexities of our international tax system actually encourage U.S. corporations to invest overseas. Current tax laws allow companies to defer paying U.S. taxes on income earned by their foreign subsidiaries, which provides a substantial tax break for companies that move investment and jobs overseas. Today, under U.S. tax law, a company that is trying to decide where to locate production or services--either in the United States or in a foreign low-tax haven--is actually given a substantial tax incentive not only to move jobs overseas but to reinvest profits permanently, as opposed to bringing the profits back to re-invest in the United States.

Recent press articles have revealed examples of companies taking advantage of this perverse incentive in our Tax Code. For instance, some companies have taken advantage of this initiative by opening subsidiaries to serve markets throughout Europe. Much of the profit earned by these subsidiaries will stay in Ireland and the companies will therefore avoid paying U.S. taxes. Other companies have announced the expansion of jobs in India. This reflects a continued pattern among some U.S. multinational companies of shifting software development and call centers to India, and this trend is starting to expand to include the shifting of critical functions like design and research

and development to India as well. Some companies are even outsourcing the preparation of U.S. tax returns.

The Export Products Not Jobs Act of 2006 would put an to end to these practices by eliminating tax breaks that encourage companies to move jobs overseas and by using the savings to create jobs in the United States by repealing the top corporate tax rate. This legislation ends tax breaks that encourage companies to move jobs by: (1) eliminating the ability of companies to defer paying U.S. taxes on foreign income; (2) closing abusive corporate tax loopholes; and (3) repealing the top corporate rate. It removes the incentive to shift jobs overseas by eliminating deferral so that companies pay taxes on their international income as they earn it, rather than being allowed to defer taxes.

Last month, the Ways and Means Subcommittee on Revenue held a hearing on international tax laws. Stephen Shay, a former Reagan Treasury official, testified that our tax rules ``provide incentives to locate business activity outside the United States.'' Furthermore, he suggested that taxation of U.S. shareholders under an expansion of Subpart F would be a ``substantial improvement'' over our current system. The Export Products Not Jobs Act of 2006 does just that.

Our current tax system punishes U.S. companies that choose to create and maintain jobs in the United States. These companies pay higher taxes and suffer a competitive disadvantage with a company that chooses to move jobs to a foreign tax haven. There is no reason why our Tax Code should provide an incentive that encourages investment and job creation overseas. Under my legislation, companies would be taxed the same whether they invest abroad or at home; they will be taxed on their foreign subsidiary profits just like they are taxed on their domestic profits.

This legislation reflects the most sweeping simplification of international taxes in over 40 years. Our economy has changed in the last 40 years and our tax laws need to be updated to keep pace. Our current global economy was not even envisioned when existing law was written.

The Export Products Not Jobs Act of 2006 that I am introducing today will not hinder our global competitiveness. Companies will be able to continue to defer income they earn when they locate production in a foreign country that serves that foreign country's markets. For example, if a U.S. company wants to open a hotel in Bermuda or a car factory in India to sell cars, foreign income can still be deferred. But if a company wants to open a call center in India to answer calls from outside India or relocate abroad to sell cars back to the United States or Canada, the company must pay taxes just like call centers and auto manufacturers located in the United States.

Currently, American companies allocate their revenue not in search of the highest return, but in search of lower taxes. Eliminating deferral will improve the efficiency of the economy by making taxes neutral so that they do not encourage companies to overinvest abroad solely for tax reasons.

The Congressional Research Service stated in a 2003 report that, ``[a]ccording to traditional economic theory, deferral thus reduces economic welfare by encouraging firms to undertake overseas investments that are less productive--before taxes are considered--than alternative investments in the United States.'' Additionally, a 2000 Department of Treasury study on deferral stated, ``[a]mong all of the options considered, ending deferral would also be likely to have the most positive long-term effect on economic efficiency and welfare because it would do the most to eliminate tax considerations from decisions regarding the location of investment.''

The revenue raised from the repeal of deferral and closing corporate loopholes would be used to repeal the top corporate tax rate of 35 percent. The tax differential between U. S. corporate rates and foreign corporate rates has grown over the last two decades and the repeal of the top corporate rate is a start in narrowing this gap.

The Export Products Not Jobs Act of 2006 would promote equity among U.S. taxpayers by ensuring that corporations could not eliminate or substantially reduce taxation of foreign income by separately incorporating their foreign operations. This legislation will eliminate the tax incentives to encourage U.S. companies to invest abroad and reward those companies that have chosen to invest in the United States. I urge my colleagues to join me in this effort, and ask for unanimous consent that the full text of the bill be printed in the Record.

Mr. President, I rise today as ranking Democrat on the Committee on Small Business and Entrepreneurship, in support of a bipartisan bill being reported out of our committee, the Small Business Reauthorization and Improvements Act of 2006. This bill, which originated in our committee and which is the product of many Senators' work, was voted out unanimously, 18 to 0. While there are no official cosponsors of the legislation because it is an original bill being reported out of committee, I would have been pleased to be added as an original cosponsor, and Senators Landrieu, Cantwell, Lieberman and Vitter also asked to be added as cosponsors. I would like to thank my colleague from Maine, Senator Snowe, for making this a bipartisan process. This is the fourth Small Business reauthorization bill I have worked on, having been a member of the committee for 21 years. Our committee has the reputation for working across party lines to put what is important for small businesses first, and I appreciate that the Chair and her staff have worked with us on reauthorization with that goal in mind. The result is a comprehensive approach to reauthorizing the SBA for the next 3 years that includes not Republican or Democratic priorities but instead the priorities of America's small businesses.

This reauthorization could not have came at a more opportune time to tackle some of the issues that are eating away at our small business programs and at the core mission of the SBA--which is to foster small business growth and bridge the gaps left by the private sector.

One of the most important things we are here to do today is to address the shortcomings and failures of the SBA's disaster loan program. Nearly a year has passed since Hurricanes Katrina, Rita and Wilma battered the gulf coast, and in that year I have visited New Orleans on three occasions. I can tell you that many of the streets are still covered in debris, and that many of the region's small businesses are barely keeping their doors open. The SBA needs to be prepared to handle an emergency of this magnitude. Thanks in large part to the hard work of Senator Landrieu and her dedicated staff, this bill provides the tools to respond swiftly and effectively following future large scale disasters.

Through federally guaranteed bridge loans, States can offer small businesses short-term access to capital so that they can remain open while they wait for other sources of assistance to come through. We provide the President with the authority to declare a new category of disaster--a catastrophic national disaster--which triggers nationwide economic injury disaster loans for businesses located outside the immediate geographic disaster area. And we improve the way SBA and FEMA coordinate disaster assistance. A greater importance needs to be placed on serving the victims, by making the process of applying for and receiving Federal assistance as painless and user friendly as possible. That is why we give the SBA the authority to work with private lenders to get disaster loans out quickly--an idea that members of our committee tried to get SBA to embrace last year. This will only work if we can ensure that these loans do not come at a high cost to disaster victims. We are hopeful that our approach will keep interest rates down.

This bill also addresses the effects that the energy crisis is having on America's small businesses. Gas prices are once again approaching record highs, and for the small businesses that depend on fuel to put food on the table, rising prices mean more than having to decide whether or not to drive to work. Included in the bill is the bipartisan Small Business Energy Emergency Relief Act, a bill which has passed the Senate before, which provides low-interest loans to small businesses dependent on fuel. The loans are triggered when oil prices increase significantly over the average price from the previous two years. This proposal is complemented by Chair Snowe's 7(a) express loans for small businesses that are willing to invest in renewable energy solutions.

In looking at our core programs, this bill makes a strong statement about the need for the SBA to fill the lending gap in our minority communities. It is unacceptable that since 2001, while numbers of 7(a) loans have gone up for African Americans, the actual dollars loaned have remained stagnant. In the Microloan program, African Americans received 28 percent of the total number of microloans made in 2001 as compared to only 21 percent of the total number of loans made in 2005. Native Americans went from 2 percent of the total number of microloans made in 2001 to less than 1 percent--a mere .93 percent--in 2005. If this trend continues--Native Americans alone will be completely cut out of the Microloan program. The stagnant lending in these communities represents a failure of this administration to expand access to capital to our underserved communities, communities where conventional lending is not meeting the need.

The bill provides an incredible framework for the SBA to reverse this trend. It creates an Office of Minority Small Business Development at the SBA, similar to offices devoted to business development of veterans and women and rural areas, and, it creates a grant program to develop a cross campus curriculum at Historically Black Colleges and Universities, Tribal Colleges, and Hispanic-Serving Institutions to encourage minority students in a wide range of fields to consider entrepreneurship. There is much to be done to bridge the wealth gap in minority communities and this is one approach worth pursuing. Finally, the bill incorporates legislation from my colleague, Senator Johnson, to provide financial assistance to tribal governments, tribal colleges, Native Hawaiian organizations, and Alaska Native corporations to create Native American business centers.

One of the keys to ensuring access to capital is making sure that SBA-backed financing remains affordable to the small business community. As we all know, the administration insisted on eliminating all funding for 7(a) loans and shifting the cost to borrowers and lenders by imposing higher fees. The President's budget reveals that borrowers and lenders already pay too much in fees, generating more than $800 million in overpayments since 1992 because the government routinely overestimates the amount of fees needed to cover the cost of the program. This bill seeks to address overpayments by requiring the SBA to lower fees if borrowers and lenders pay more than is necessary to cover the program costs or if the Congress appropriates money for the program.

The bill also reauthorizes the PRIME program through 2009 and includes a provision that Senator Bingaman and I worked closely to develop that will expand PRIME with a separate $2 million authorization to provide technical assistance and counseling to disadvantaged Native American small business owners. The bill also includes technical yet important changes in the Microloan program such as making loans to persons with disabilities as one of the statutorily enumerated ``purposes'' of the Microloan program and changing the average smaller loan size in the Microloan program from $7,500 to $10,000.

In reauthorizing one of our other core programs, SBA's 504 loan program, I am pleased that we were able to come

up with a bipartisan approach to preserving the local economic development focus of the program. The ability of our certified development companies, CDCs, to expand operations into multiple States, in conjunction with the growing demand for 504 loans, required that we put in place accountability measures. The 504 program was not created for CDCs to expand operations and simply create revenue from one state to another. CDCs are more than lenders and should not act like for- profit banks. This bill allows CDC board members to serve on another CDC board, but institutes safeguards to prevent control of multiple boards.

The bill also incorporates legislation I have introduced to create a Child Care Lending Pilot Program to expand the availability of affordable, quality childcare in this country by using the 504 loan program to spur the establishment and expansion of childcare providers. Right now only for-profit childcare businesses are eligible for 504 loans, yet in some States a majority of affordable childcare is delivered through nonprofit providers and in the neediest communities nonprofits are often the only provider.

I am pleased that our bill reauthorizes the Women's Business Centers and makes permanent the Women's Business Center Sustainability Pilot Program through the creation of 3-year ``renewal'' grants for centers with sustainability grants, and 4-year ``initial'' grants for new centers across the country. We should not be abandoning our existing centers--many of which leverage Federal dollars to do excellent work in our communities--to run and create new ones. Senator Snowe and I have been fighting for this for a long time, since I first introduced legislation in 1999: It is time we get this adopted. Our bill also reauthorizes Small Business Development Centers and builds on this excellent resource by creating a pilot program to provide regulatory assistance to small businesses, in addition to the role SBDCs play in the minority entrepreneurship initiative.

One area of our bill which does not deal with reauthorizing SBA programs is just as critical to small businesses--Federal contracting. Earlier this month, we heard the new SBA inspector general Eric Thorson testify about the largest impediments to small businesses receiving their fair share of prime and subcontracting opportunities. He explained how many of the problems in applying and enforcing small business contracting statutes are simply due to contracting officer error. Contracting officers do not know or do not care about small business requirements, and small businesses suffer the consequences. This bill seeks to do something about the disregard that is shown to small businesses with respect to federal procurement policy.

Procurement center representatives, or PCRs, are responsible for advocating on behalf of small businesses in cases affecting Federal contracting, such as the bundling or consolidation of contracts. Unfortunately, there are not enough of them to effectively get the job done. By requiring the SBA to assign no fewer than one PCR per major procurement center, this bill takes steps to limit the incidence of contractor error referred to by Mr. Thorson. We can no longer tolerate the level of neglect that is currently the norm. It is time for the SBA to staff up and fulfill its responsibility as a watchdog for small businesses.

In addition to mandating adequate staffing levels, this bill takes many significant steps to enforce subcontracting and bundling laws already on the books. Firms bidding for small business contracts are required to certify annually as small businesses so we do not have large businesses taking small business contracts, and large prime contractors are required to certify that subcontracting goals will be met. If subcontractors are not paid on a timely basis, Federal agencies are permitted to withhold payments and to pay subcontractors directly. We must stop fraudulent misrepresentation by large firms, and require the administration to start looking out for the interests of small firms that want to do business with the Federal Government.

The time has also come to implement the women's procurement program. The administration has postponed implementing a women's procurement program that became law 6 years ago. This bill tells SBA to get it done within 90 days. It also makes clear that America's service disabled veteran small businesses deserve the same advantages as other subgroups with respect to sole source contracting. Our veterans are returning from Iraq and Afghanistan, and we owe it to them to give them every opportunity at fulfilling the dream of entrepreneurship.

Another program sorely needing our attention: The 8(a) program was created to assist socially and economically disadvantaged small businesses, but the financial threshold for inclusion in the program is out dated and too restrictive. This bill allows for an inflationary adjustment to be made so that businesses that belong in this program aren't being shut out.

Finally, let me say a few words about SBIR, the Small Business Innovation Research Program. The Small Business Committee had a hearing on SBIR earlier this month, and at that time, I made clear my concern that we were being premature in going ahead with reauthorizing SBIR when the program's authorization doesn't expire until 2008. There is a $5 million National Academy of Sciences study due to come out at the end of this year that I am certain will give us much to consider. Yet, this bill does reauthorize SBIR, making it permanent, and it includes some strong provisions to protect SBIR companies' intellectual property and to reign in excessively large awards--which are a particular problem at NIH. While SBIR Phase IIs are supposed to be $750,000, NIH Phase II are often larger. One Phase II award reportedly equalled $6 million. While the firms getting these large awards may be doing important work, we need to keep in mind that if one firm receives $6 million, there are many firms that are not getting Phase IIs at all. That is why I am glad that we have adopted Senator Bayh's proposal to increase the overall share of SBIR funds from 2.5 percent to 5 percent of Federal research budgets, so that more small businesses will have a chance to compete in this program. I also support several provisions in the bill to encourage commercialization, one of the biggest challenges facing the program.

There is one provision in this bill that was added during our committee markup which concerns me, a provision which gives Federal agencies the option to direct 25 percent of SBIR funds to firms which are majority backed by venture capital investment. The firms which will benefit from this provision are primarily biotechnology firms and no one disagrees that they are doing critical work and should receive Federal support. I am committed to finding a way to help biotechnology firms but I am concerned that this set-aside may crowd out small firms that are not blessed with venture capital. SBIR is the only Federal research and development program devoted to small business and it has been universally praised for fostering innovative technologies and lifesaving therapies and medical devices that may never attract the support of venture capital firms. SBIR serves as seed funding for the companies that are willing to take on these research and development projects. It is important to retain the integrity of this program, and I look forward to working with my colleagues to find a way to strike a balance so that we can continue to support cutting edge research that is at so early a stage it has yet to attract the private sector.

Mr. President, before I close, I want to note that while this bill is truly bipartisan, so was our last reauthorization bill back in 2003, S. 1375. However, the reauthorization bill that was finally adopted back in 2004, was a notably partisan product, attached to an omnibus appropriations bill, with almost all Democratic provisions dropped. I urge the Senate to maintain today's spirit of bipartisanship as we move forward, so that the final reauthorization bill truly reflects all of our efforts.

Mr. President, I rise today to speak about a crisis facing our country, a crisis that directly affects the lives of 46 million people in the United States, and that indirectly affects many more. The crisis is the lack of universal health insurance in America, and its effects are rippling through our families, our communities, and our economy. It is the No. 1 issue that I hear about in Wisconsin, and it is the No. 1 issue for tens of millions of Americans. Nevertheless, the issue has been largely ignored in the Halls of Congress. We sit idle, locked in a stalemate, refusing to give this life-threatening problem its due attention. We need a way to break that deadlock, and today I am introducing a bill that will do just that--the State-Based Health Care Reform Act.

I believe that health care is a fundamental right, and every American should have guaranteed health care coverage. My bill seeks to move us toward that goal in a way that I hope will be acceptable to many of my colleagues.

Every day, all over our Nation, Americans suffer from medical conditions that cause them pain and even change they way they lead their lives. Every one of us has either experienced this personally or through a family member suffering from cancer, Alzheimer's, diabetes, genetic disorders, mental illness or some other condition. The disease takes its toll on both individuals and families, as trips to the hospital for treatments such as chemotherapy test the strength of the person and the family affected. This is an incredibly difficult situation for anyone. But for the uninsured and underinsured, the suffering goes beyond physical discomfort. These 46 million Americans bear the additional burden of wondering where the next dollar for their health care bills will come from; worries of going into debt; worries of going bankrupt because of health care needs. When illness strikes families, the last thing they should have to think about is money, but I know that for many in our country, this is a persistent burden that causes stress and hopelessness.

It is difficult to do justice to the magnitude of the uninsurance problem, but I want to share a few astounding statistics. Forty-seven percent of the uninsured avoided seeking care in 2003 due to the cost. Thirty-five percent needed care but did not get it. Thirty-seven percent did not fill a prescription because of cost. The uninsured are seven times more likely to seek care in an emergency room. They are less likely to receive preventative care because they cannot afford to see the doctor, and they are more likely to die as a result. Each year, at least 18,000 people die prematurely in this country because of uninsurance. If the uninsured

had access to continuous health coverage, a reduction in mortality of 5 percent to 15 percent could be achieved.

Even for those Americans who currently have health insurance through their employer, the risk of becoming uninsured is very real. Large businesses are finding themselves less competitive in the global market because of skyrocketing health care costs. Small businesses are finding it difficult to offer insurance to employees while staying competitive in their own communities. Our health care system has failed to keep costs in check, and there is simply no way we can expect businesses to keep up. More and more, employers offer sub-par benefits, or no benefits at all. Employers cannot be the sole provider of health care when these costs are rising faster than inflation.

I travel to each of Wisconsin's 72 counties every year to hold townhall meetings. Almost every year, the No. 1 issue raised at these listening sessions is the same--health care. The failure of our health care system brings people to these meetings in droves. These people used to think government involvement was a terrible idea, but not anymore. Now they come armed with their frustration, their anger, and their desperation, and they tell me that their businesses and their lives are being destroyed by health care costs, and they want the government to step in.

Our country can do better, and it will.

Last year, I was pleased to be joined by the Senator from South Carolina, Mr. Graham, in introducing legislation that requires Congress to act on health care reform. It requires Congress to take up and debate universal health care bills within the first 90 days of the session following enactment of the bill. This bill does not prejudge what particular health care reform measure should be debated--it simply requires Congress to act.

Today, I am here to build on the proposal from last year. I am introducing the State-Based Health Care Reform Act. In short, this bill establishes a pilot project to provide States with the resources needed to implement universal health care reform. The bill does not dictate what kind of reform the States should implement; it just provides an incentive for action, provided the States meet certain minimum coverage and low-income requirements.

Over the years I have heard many different proposals for how we should change the health care system in this country. Some propose using tax incentives as a way to expand access to health care. Others think the best approach is to expand public programs. Some feel a national single payer health care system is the only way to go. I have my own preferences, but I don't think we can ignore any of these proposals. We need to consider all of these as we address our broken health care system.

As a former State legislator, I come to this debate appreciating the role that States are playing in coming up with some very innovative solutions to the health care problem. We are already seeing States move ahead of the Federal Government on covering the uninsured. Massachusetts recently passed into law a plan to require health insurance for all residents, and State legislators in my home State of Wisconsin, as well as Vermont, Maine, and California, are working to expand health insurance coverage in their States. The Federal Government should be encouraging these innovative initiatives, and my bill provides the mechanism for this goal to be realized.

This legislation harnesses the talent and ingenuity of Americans to come up with new solutions. This approach takes advantage of America's greatest resources--the mind power and creativity of the American people--to move our country toward the goal of a working health care system with universal coverage. With help from the Federal Government, States will be able to try new ways of covering all their residents, and our political logjam around health care will begin to loosen.

Under my proposal, States can be creative in the State resources they use to expand health care coverage. For example, a State can use personal or employer mandates for coverage, use State tax incentives, create a single-payer system or even join with neighboring States to offer a regional health care plan. The proposals are subject only to the approval of the newly created Health Care Reform Task Force, which will be composed of health care experts, consumers, and representatives from groups affected by health care reform. This task force will be responsible for choosing viable State projects and ensuring that the projects are effective. The Task Force will also help the States develop projects, and will continue a dialog with the States in order to facilitate a good relationship between the State and Federal Governments.

The task force is also charged with making sure that the State plans meet certain minimal requirements. First, the State plans must include specific target dates for decreasing the number of uninsured, and must also identify a set of minimum benefits for every covered individual. These benefits must be comparable to health insurance offered to Federal employees. Second, the State plans must include a mechanism to guarantee that the insurance is affordable. Americans should not go broke trying to keep healthy, and health care reform should ensure that individual costs are manageable. The State-Based Health Care Reform Act bases affordability on income.

Another provision in this legislation requires that the States contribute to paying for their new health care programs. The Federal Government will provide matching funds based on enhanced FMAP--the same standard used for SCHIP--and will then provide an additional 5 percent. States that can afford to provide more are encouraged to, but in order to ensure the financial viability of the bill and to ensure State buy- in, this matching requirement provides a starting point. Other than these requirements, the States largely have flexibility to design a plan that works best for their respective residents. The possibilities for reform are wide open.

One of the main criticisms of Federal Government spending on health care is that it is expensive and increases the deficit. My legislation is fully offset, ensuring that it will not increase the deficit. The bill doesn't avoid making the tough budget choices that need to be made if we are going to pay for health care reform.

One of the offsets in the bill was proposed by the Congressional Budget Office: an increase in the flat rebate paid by drug manufacturers for Medicaid prescription drugs. Currently, Medicaid recoups a portion of its drug spending through a rebate paid by the manufacturer. The savings mechanism would set a flat rebate, and provide funding for the States' health care reform projects.

Additional funding for the bill comes from the President's fiscal year 2007 budget proposal to extend the authority of the Federal Communications Commission to auction the radio spectrum and the authority of Customs and Border Protection to collect multiple different conveyance and passenger user fees through fiscal year 2016. My bill proposes similar extensions of these established authorities. Also, my bill proposes to both simplify and reduce the federal subsidy of airline passenger screening costs by replacing the current variable fee, which is capped at five dollars per one-way trip, with a flat five dollar fee. This proposal is similar to one in the President's fiscal year 2007 budget and would decrease federal subsidies to about thirty percent of passenger security costs, without reducing aviation security spending.

I also pay for this bill with an offset modeled on legislation introduced in the House by my good friend and fellow Wisconsinite Tom Petri and in the Senate by the senior Senator from Massachusetts that seeks to save money by encouraging higher education institutions to shift from private lenders to the direct loan program, which is most cost-effective for taxpayers. Currently, the Federal Government subsidizes private lenders for the loans they issue to students and this offset would end the current taxpayer-funded subsidies while increasing financial aid to students.

We can say that it is time to move toward universal coverage, but it is empty rhetoric without a feasible plan. I believe that this is the way to make universal coverage work in this country. Universal coverage doesn't mean that we have to copy a system already in place in another country. We can harness our Nation's creativity and entrepreneurial spirit to design a system

that is uniquely American. Universal coverage doesn't have to be defined by what's been attempted in the past. What universal coverage does mean is providing a solution for a broken system where millions are uninsured, and where businesses and Americans are struggling under the burden of health care costs.

It has been over 10 years since the last serious debate over health care reform was killed by special interests and the soft money contributions they used to corrupt the legislative process. The legislative landscape is now much different. Soft money can no longer be used to set the agenda, and businesses and workers are crying out as never before for Congress to do something about the country's health care crisis.

We are fortunate to live in a country that has been abundantly blessed with democracy and wealth, and yet, there are those in our society whose daily health struggles overshadow these blessings. That is an injustice, and it is one we can and must address. Martin Luther King, Jr. said, ``Of all the forms of inequality, injustice in health care is the most shocking and inhumane.'' It is long past time for Congress to heed these words and end this terrible inequality. I urge my colleagues to support the State-Based Health Care Reform Act.

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

Mr. President, I rise today to speak about a crisis facing our country, a crisis that directly affects the lives of 46 million people in the United States, and that indirectly affects many more. The crisis is the lack of universal health insurance in America, and its effects are rippling through our families, our communities, and our economy. It is the No. 1 issue that I hear about in Wisconsin, and it is the No. 1 issue for tens of millions of Americans. Nevertheless, the issue has been largely ignored in the Halls of Congress. We sit idle, locked in a stalemate, refusing to give this life-threatening problem its due attention. We need a way to break that deadlock, and today I am introducing a bill that will do just that--the State-Based Health Care Reform Act.

I believe that health care is a fundamental right, and every American should have guaranteed health care coverage. My bill seeks to move us toward that goal in a way that I hope will be acceptable to many of my colleagues.

Every day, all over our Nation, Americans suffer from medical conditions that cause them pain and even change they way they lead their lives. Every one of us has either experienced this personally or through a family member suffering from cancer, Alzheimer's, diabetes, genetic disorders, mental illness or some other condition. The disease takes its toll on both individuals and families, as trips to the hospital for treatments such as chemotherapy test the strength of the person and the family affected. This is an incredibly difficult situation for anyone. But for the uninsured and underinsured, the suffering goes beyond physical discomfort. These 46 million Americans bear the additional burden of wondering where the next dollar for their health care bills will come from; worries of going into debt; worries of going bankrupt because of health care needs. When illness strikes families, the last thing they should have to think about is money, but I know that for many in our country, this is a persistent burden that causes stress and hopelessness.

It is difficult to do justice to the magnitude of the uninsurance problem, but I want to share a few astounding statistics. Forty-seven percent of the uninsured avoided seeking care in 2003 due to the cost. Thirty-five percent needed care but did not get it. Thirty-seven percent did not fill a prescription because of cost. The uninsured are seven times more likely to seek care in an emergency room. They are less likely to receive preventative care because they cannot afford to see the doctor, and they are more likely to die as a result. Each year, at least 18,000 people die prematurely in this country because of uninsurance. If the uninsured

had access to continuous health coverage, a reduction in mortality of 5 percent to 15 percent could be achieved.

Even for those Americans who currently have health insurance through their employer, the risk of becoming uninsured is very real. Large businesses are finding themselves less competitive in the global market because of skyrocketing health care costs. Small businesses are finding it difficult to offer insurance to employees while staying competitive in their own communities. Our health care system has failed to keep costs in check, and there is simply no way we can expect businesses to keep up. More and more, employers offer sub-par benefits, or no benefits at all. Employers cannot be the sole provider of health care when these costs are rising faster than inflation.

I travel to each of Wisconsin's 72 counties every year to hold townhall meetings. Almost every year, the No. 1 issue raised at these listening sessions is the same--health care. The failure of our health care system brings people to these meetings in droves. These people used to think government involvement was a terrible idea, but not anymore. Now they come armed with their frustration, their anger, and their desperation, and they tell me that their businesses and their lives are being destroyed by health care costs, and they want the government to step in.

Our country can do better, and it will.

Last year, I was pleased to be joined by the Senator from South Carolina, Mr. Graham, in introducing legislation that requires Congress to act on health care reform. It requires Congress to take up and debate universal health care bills within the first 90 days of the session following enactment of the bill. This bill does not prejudge what particular health care reform measure should be debated--it simply requires Congress to act.

Today, I am here to build on the proposal from last year. I am introducing the State-Based Health Care Reform Act. In short, this bill establishes a pilot project to provide States with the resources needed to implement universal health care reform. The bill does not dictate what kind of reform the States should implement; it just provides an incentive for action, provided the States meet certain minimum coverage and low-income requirements.

Over the years I have heard many different proposals for how we should change the health care system in this country. Some propose using tax incentives as a way to expand access to health care. Others think the best approach is to expand public programs. Some feel a national single payer health care system is the only way to go. I have my own preferences, but I don't think we can ignore any of these proposals. We need to consider all of these as we address our broken health care system.

As a former State legislator, I come to this debate appreciating the role that States are playing in coming up with some very innovative solutions to the health care problem. We are already seeing States move ahead of the Federal Government on covering the uninsured. Massachusetts recently passed into law a plan to require health insurance for all residents, and State legislators in my home State of Wisconsin, as well as Vermont, Maine, and California, are working to expand health insurance coverage in their States. The Federal Government should be encouraging these innovative initiatives, and my bill provides the mechanism for this goal to be realized.

This legislation harnesses the talent and ingenuity of Americans to come up with new solutions. This approach takes advantage of America's greatest resources--the mind power and creativity of the American people--to move our country toward the goal of a working health care system with universal coverage. With help from the Federal Government, States will be able to try new ways of covering all their residents, and our political logjam around health care will begin to loosen.

Under my proposal, States can be creative in the State resources they use to expand health care coverage. For example, a State can use personal or employer mandates for coverage, use State tax incentives, create a single-payer system or even join with neighboring States to offer a regional health care plan. The proposals are subject only to the approval of the newly created Health Care Reform Task Force, which will be composed of health care experts, consumers, and representatives from groups affected by health care reform. This task force will be responsible for choosing viable State projects and ensuring that the projects are effective. The Task Force will also help the States develop projects, and will continue a dialog with the States in order to facilitate a good relationship between the State and Federal Governments.

The task force is also charged with making sure that the State plans meet certain minimal requirements. First, the State plans must include specific target dates for decreasing the number of uninsured, and must also identify a set of minimum benefits for every covered individual. These benefits must be comparable to health insurance offered to Federal employees. Second, the State plans must include a mechanism to guarantee that the insurance is affordable. Americans should not go broke trying to keep healthy, and health care reform should ensure that individual costs are manageable. The State-Based Health Care Reform Act bases affordability on income.

Another provision in this legislation requires that the States contribute to paying for their new health care programs. The Federal Government will provide matching funds based on enhanced FMAP--the same standard used for SCHIP--and will then provide an additional 5 percent. States that can afford to provide more are encouraged to, but in order to ensure the financial viability of the bill and to ensure State buy- in, this matching requirement provides a starting point. Other than these requirements, the States largely have flexibility to design a plan that works best for their respective residents. The possibilities for reform are wide open.

One of the main criticisms of Federal Government spending on health care is that it is expensive and increases the deficit. My legislation is fully offset, ensuring that it will not increase the deficit. The bill doesn't avoid making the tough budget choices that need to be made if we are going to pay for health care reform.

One of the offsets in the bill was proposed by the Congressional Budget Office: an increase in the flat rebate paid by drug manufacturers for Medicaid prescription drugs. Currently, Medicaid recoups a portion of its drug spending through a rebate paid by the manufacturer. The savings mechanism would set a flat rebate, and provide funding for the States' health care reform projects.

Additional funding for the bill comes from the President's fiscal year 2007 budget proposal to extend the authority of the Federal Communications Commission to auction the radio spectrum and the authority of Customs and Border Protection to collect multiple different conveyance and passenger user fees through fiscal year 2016. My bill proposes similar extensions of these established authorities. Also, my bill proposes to both simplify and reduce the federal subsidy of airline passenger screening costs by replacing the current variable fee, which is capped at five dollars per one-way trip, with a flat five dollar fee. This proposal is similar to one in the President's fiscal year 2007 budget and would decrease federal subsidies to about thirty percent of passenger security costs, without reducing aviation security spending.

I also pay for this bill with an offset modeled on legislation introduced in the House by my good friend and fellow Wisconsinite Tom Petri and in the Senate by the senior Senator from Massachusetts that seeks to save money by encouraging higher education institutions to shift from private lenders to the direct loan program, which is most cost-effective for taxpayers. Currently, the Federal Government subsidizes private lenders for the loans they issue to students and this offset would end the current taxpayer-funded subsidies while increasing financial aid to students.

We can say that it is time to move toward universal coverage, but it is empty rhetoric without a feasible plan. I believe that this is the way to make universal coverage work in this country. Universal coverage doesn't mean that we have to copy a system already in place in another country. We can harness our Nation's creativity and entrepreneurial spirit to design a system

that is uniquely American. Universal coverage doesn't have to be defined by what's been attempted in the past. What universal coverage does mean is providing a solution for a broken system where millions are uninsured, and where businesses and Americans are struggling under the burden of health care costs.

It has been over 10 years since the last serious debate over health care reform was killed by special interests and the soft money contributions they used to corrupt the legislative process. The legislative landscape is now much different. Soft money can no longer be used to set the agenda, and businesses and workers are crying out as never before for Congress to do something about the country's health care crisis.

We are fortunate to live in a country that has been abundantly blessed with democracy and wealth, and yet, there are those in our society whose daily health struggles overshadow these blessings. That is an injustice, and it is one we can and must address. Martin Luther King, Jr. said, ``Of all the forms of inequality, injustice in health care is the most shocking and inhumane.'' It is long past time for Congress to heed these words and end this terrible inequality. I urge my colleagues to support the State-Based Health Care Reform Act.

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

Mr. President, as chair of the Senate Committee on Small Business and Entrepreneurship, I rise today to introduce a bill, The Small Business Reauthorization and Improvements Act of 2006, that was reported by the committee on a vote of 18 to 0.

I strongly believe we must do everything possible to sustain prosperity and job creation throughout Maine and the United States. To achieve that goal, I have long fought to expand the reach of Small Business Administration programs that have helped millions of aspiring entrepreneurs and existing small businesses.

Today is a pivotal time for the SBA. A new Administrator, Steven C. Preston, has been sworn in, and I have held hearings on the reauthorization of the agency's programs that are set to expire September 30, 2006. The reauthorization and funding of SBA programs is vital to the continued growth of the economy and the small business community. My goal is for the process to conclude with a renewed SBA that is completely dedicated to fostering small business ownership and job creation in America.

The SBA's fundamental purpose is to ``aid, counsel, assist, and protect the interests of small-business concerns.'' The methods for carrying out this congressional mandate include a wide array of financial, procurement, management, and technical assistance programs tailored to encourage small business growth and expansion. As the economy continues to grow, it is essential that Congress affirms long- term stability in the programs the SBA provides to the small business community. The American economy needs a strong and vibrant SBA because small businesses represent 99 percent of all employers, create nearly 75 percent of all net new jobs, and employ 51 percent of the private- sector workforce.

There is no doubt that SBA's technical assistance programs have demonstrated impressive growth. During fiscal year 2005, the SBA provided 56,739 small businesses with technical assistance. That was an astounding 46.4 percent increase from the 38,754 small businesses assisted in fiscal year 2004.

If there is truth in numbers, the SBA has numerous ``truths'' it can and should tout. Its record of achievement for fiscal year 2005 alone includes:

Counseling 1.5 million entrepreneurs through the agency's Small Business Development Centers, Business Information Centers, SCORE and Women's Business Centers;

approving over 89,000 business loans through the 7(a) and 504 lending programs;

funding 74,307 7(a) program loans to small businesses for a total of more than $l4 billion; and

a doubling of small business lending since 2001, with nearly a third of SBA-backed loans being made to minority-owned small businesses.

Despite a drastically declining share of the Federal budget, the data clearly indicate that the SBA's programs have created or retained a significant number of jobs over the last several years. Between fiscal year 1999 and fiscal year 2004, the SBA's Offices of Advocacy and Legislative Affairs report that the SBA's lending and technical assistance programs enabled participating small businesses to create or retain 4.4 million new jobs. In addition, the SBA's programs have helped to create or retain more jobs during each passing year. In fiscal year 2004, the SBA's programs created or retained 51.2 percent more jobs than they did in fiscal 1999.

Our goal is to build on these tremendous successes. The building blocks for a successful reauthorization are a bipartisan bill: The Small Business Reauthorization and Improvements Act. It is cosponsored by Ranking Member Kerry, Senator Vitter, Senator Landrieu, Senator Cantwell, Senator Lieberman and Senator Isakson. This legislation will:

Reform the SBA's largest small business financing program, the section 7(a) loan program, which provided almost $15 billion in loans to small businesses last year, by increasing the maximum size of a loan from $2 million to $3 million.

Require the SBA to implement a more efficient test for loan eligibility that measures businesses' revenues, rather than merely their number of employees.

Establish a national preferred lender program to increase small businesses' access to capital by reducing duplicative administrative burdens on small business loans.

Restructure the Small Business Investment Company Program, an innovative public-private venture capital partnership that has provided more than $25 billion in financing to small businesses.

Expand the SBA's capability to assist disaster victims by allowing private lenders to make loans at lower interest rates.

Increase Federal authority to prosecute, suspend, and debar large corporations which obtain government contracts by misrepresenting themselves as small businesses.

Create a stronger system of SBA size standards to ensure that Federal agencies respect SBA decisions on whether a company that receives a government contract is truly a small business.

Address the small business health insurance crisis by creating a competitive pilot grant program for Small Business Development Centers, SBDCs, to provide counseling and resources to small businesses about health insurance options in their geographic areas.

The legislation also rejects new loan fees. I strongly oppose SBA's proposal to increase fees for these programs. The fees would be charged against every loan that is greater than $1 million. In the 7(a) program, this is 3 percent of loans; in the 504 program, it is 15 percent of loans; and in the SBIC program it's 100 percent of the loans. A fee increase is not the way to balance the budget and it remains wholly unacceptable, to put it mildly.

Increasing fees charged to small businesses end up hurting--not helping our Nation's small businesses. When we consider that the SBA's budget represents less than 3/100ths of a percent of the total Federal budget, is this really the place for the administration to find additional savings? Congress must always strive to ensure that all small businesses are able to access SBA's financing programs without additional penalties.

In 2005, SBA programs disbursed recordbreaking totals of loans to small businesses, both in the number of loans and total dollar value provided to small businesses. During the last fiscal year, the SBA guaranteed over $24 billion in loans and venture capital for small businesses, the highest level of capital ever provided. This included over $1 million in 90 loans to Mainers through the Microloan program, which is an inexpensive program the Bush administration has targeted for elimination.

The SBA's programs demonstrate how Congress can play a positive role in enhancing private-sector financing

for start-up companies. Since 1953, nearly 20 million small business owners have received direct or indirect help from one of the SBA's lending or technical assistance programs, making the agency one of the government's most cost-effective instruments for economic development.

SBA loan and investment programs have produced success story after success story, which include assisting the founders of Intel, Staples, and Federal Express, as well as thousands of other successful businesses. This bill will build upon these past successes and make the SBA even more effective.

The American economy needs a strong and vibrant Small Business Administration. This committee is here to help improve the SBA in any way possible to ensure the success of tomorrow's entrepreneurs. Of course, the agency has been subjected to criticism, including my own. We can move beyond criticism and find solutions to the problems that have plagued the SBA and transform it into an agency that is led with the same dedication to excellence found in the entrepreneurs it serves. The Small Business Reauthorization And Improvements Act will help us achieve that goal.

Mr. President, I rise to talk about a related area of security. The Defense appropriations bill is extremely important, but I believe that there is another matter we should be considering. I appreciate the courtesy of the managers of the bill for allowing me to present this.

This is legislation that was passed by the Intelligence Committees in 2000. It

had been adopted by unanimous vote, but it was vetoed at the time. This bill very simply provides, for the first time, a simple, clear statement of penalties for Government employees and contractors with access to classified information, who have signed agreements to keep it classified, who knowingly and willfully leak America's most important secrets. Over the past few years, we have seen unauthorized disclosures of classified information at an alarming rate. Each one of the leaks gravely increases the threat to our national security and makes it easier for our enemies to achieve their murderous and destructive plans. Each leak is a window of opportunity for terrorists to discover our sources and methods. Each violation of trust guarantees chaos and violence in the world.

Time and time again, we have witnessed leaks that told our enemies not only that we were watching them and listening to them but how and whom we are cooperating with and how we are getting the information. These leaks have threatened to erode the trust and confidence of the American people and the members of the intelligence community, as well as our allies, built upon years of work. What if during World War II, Americans had seen a leak of the Enigma Program that allowed us to decipher enemy communications and if major media outlets had joined in blowing our most sensitive secret?

Over the past year, there has arisen an apparent absence of fear of punishment in regard to arbitrary divulging of classified information. These are individuals who took solemn vows to protect our Nation. In taking a vow to protect classified information, one should acknowledge that being privy to it establishes a solemn trust. I and all of my colleagues are under obligations as Senators. And as a member of the Intelligence Committee, I have a higher standard to protect classified information. Having that access is a privilege and a trust. There are a number of stinging examples of how these leaks have compromised security. I will not call attention to them because the people who are benefiting from knowing the leaks don't need to know more about it. But a litany of intelligence officials over the past year have told me how much it hurts their efforts.

The former Director of the CIA, Porter Goss, stated in open session that there has been ``very severe'' damage to our national security. He repeated ``very severe.'' I asked the same question to current CIA Director Michael Hayden in his open confirmation hearing about the leaks and he said: We have applied the Darwinian theory to terrorists. Unfortunately, we are only catching the dumb ones because the smart ones who watch the media understand what we are doing and will escape. And many others have repeated that refrain. That was before the leakage of our ability to track terrorist financing efforts occurred in papers.

As I have traveled throughout the world and talked with cooperating overseas officials, they have asked me why they should continue to work with us when we can't keep secrets. Our intelligence chiefs abroad tell me that sources now think twice before speaking with U.S. officers. They fear their information leaking. They said: How can I give you this information if it might be leaked?

What they are really worried about is that leaking their information will identify them and put themselves and their families at risk. This is something which we cannot tolerate if we are to get the intelligence we need.

This is language which has been passed before. It is very simple. It just applies to former or retired officers or employees of the United States or any person who has authorized access and who has agreed to keep it confidential.

First, let me be clear about a couple of things this legislation does not do. It only affects Government employees and contractors who have signed a nondisclosure agreement. It doesn't affect the media, businesses, or private citizens.

Second, it only regards information properly and appropriately classified, not frivolously or inappropriately classified. If there is an overclassification, then I think the courts would easily throw out the prosecution. It doesn't cover the new categories of information developed since 9/11, like sensitive but unclassified or unclassified for official use only. It limits the subject of prosecution to those knowingly and willfully disclosing to someone they know is not authorized to receive it. It is not a ``gotcha'' tool; it is for deliberate leakers.

Well, a Federal judge has pointed out that there is no one piece of legislation that brings together all of our outdated and disparate provisions on the law. The judge has stated that ``the merits of the law are committed to Congress. If it is not sensible, it ought to be changed.'' This is why we are doing this.

Some of my colleagues said it is an insult that you have to pass a bill to protect classified information. One said:

If they have taken an oath, they don't need the threat of

law hanging over them to maintain that oath.

My answer to that one is, where have you been over the past year? I am sorry to inform you that some people need laws to hold them in check. More important, they need prosecution under those laws. There is nothing like an orange jumpsuit on a deliberate leaker to discourage others from going down that path.

I have heard that some say Attorney General Ashcroft recommended that the executive branch not pursue leaks legislation. That is true, but not because it wasn't needed. He said that the onus is on the executive branch to take care to instill a sense of loyalty in its employees to track down leakers and to prevent leakers. He was right. He also said that leaks legislation had value.

I am more than happy to work with my colleagues. I believe it is appropriate to have this debate at a time when Osama bin Laden and al- Zawahiri are warning the United States of future terrorist attacks. It is important to provide protection so that our men and women in the field in places of active hostility, such as Iraq and Afghanistan, can be protected by intelligence that is not compromised.

I ask unanimous consent to have printed in the Record a letter dated 31 July from the Association for Intelligence Officers, a group of 4,500 current and former intelligence military and homeland security officers supporting passage of this legislation.