Floor Statements

Mr. Speaker, today I am introducing a bill to add Trade Adjustment Assistance Recipients as a targeted group for the Work Opportunity Tax Credit, thereby permitting employers to receive a tax credit when hiring these individuals. Most importantly, this bill would help address the loss of our manufacturing and other jobs to foreign competitors. The bill I'm introducing is a companion to a bill offered in the Senate by my good friend, Senator Olympia Snowe of Maine.

The Work Opportunity Tax Credit (WOTC) program provides a credit of up to $2,400 based on wages paid in the first year to a new employee for employers that hire workers from one of the targeted groups (welfare recipients, ex-felons, high-risk youths, qualified food stamp recipients, etc.). The WOTC program has been a major factor in moving the unemployed from the welfare rolls into the workforce, serving as a vital component of the welfare reform legislation.

The proposal in the bill is a very targeted approach. A Trade Adjustment Assistance (TAA) recipient is an individual who is unemployed and has been certified to receive benefits under the TAA program. TAA benefits include extended unemployment compensation and worker training.

The latter program provides benefits to individuals who have been laid off by an employer who has been disadvantaged by foreign imports or has shifted production, and jobs, to a country that has a free trade agreement with the United States or is a beneficiary country under certain other trade agreements. Thus, the proposal deals directly with the loss of jobs to countries abroad.

The TAA targeted group would be somewhat different than the other groups. The TAA group has been disadvantaged by foreign trade and competition. Even though the individuals may be skilled, they are unlikely to find jobs in their former industries because the jobs have moved offshore. Accordingly, the TAA recipient may need retraining. Qualifying as a WOTC/TAA recipient would help the person obtain a job, and the credit would contribute to the retraining costs incurred by the new employer. The TAA recipient hired by an employer would no longer receive TAA benefits, thus reducing the cost of that program.

The proposal is not the complete answer to unemployment. Nevertheless, I believe it is a step in the right direction, because it targets those workers who have lost their jobs due to foreign trade and competition. I encourage my colleagues to cosponsor this proposed legislation.

Mr. Speaker, today Representatives Nancy Johnson (R- CT), Charles Rangel (D-NY) and Richard Neal (D-MA) are joining me in introducing legislation to correct a problem that is impairing the liquidity of the market for investments in Low-Income Housing Tax Credit (housing credit) properties. The housing credit has been a remarkably successful incentive for encouraging investment in residential rental housing for low-income families. Under Section 42 of the Internal Revenue Code, a tax credit is available for investment in affordable housing. The credit is claimed annually over a period of ten years. Qualified residential rental projects must be rented to lower- income households at controlled rents and satisfy a number of other requirements throughout a prescribed compliance period (generally, 15 years from the first taxable year the credit is claimed).

Today, virtually all of the equity for housing credit investments comes from widely held corporations investing through housing credit funds. A significant number of corporate investors have transferred these fund interests in recent years, typically due to a change in their income tax status. An investor wishing to dispose of an interest in a Low-Income Housing Tax Credit (``housing credit'') property during its 15-year compliance period is subject to a recapture of housing credits previously claimed unless a bond or U.S. Treasury securities are posted to the Internal Revenue Service (IRS). The amount of the bond to be posted is based on the amount of housing credits claimed and the duration remaining in the compliance period. The purpose of the bond is to guarantee to the IRS that it can collect the appropriate recapture amount in the event that the property is no longer in compliance with the requirements of the housing credit program.

At the time the housing credit program was enacted in 1986, the drafters of the statute were concerned that owners would claim the benefits of the tax credits and then avoid the continuing compliance requirements by transferring the credits to a straw party with minimal assets that the IRS could go after to collect recapture liability. This was a potential

concern because housing credits are provided on an accelerated basis in the sense that they are claimed over a ten-year period, while the property must remain in compliance with the targeting rules over a minimum 15-year period.

However, the experience with the housing credit over the past 15 years demonstrates that this concern is no longer valid. When the housing credit program was enacted, policymakers thought in terms of previous affordable housing tax incentives that supported an aggressive tax shelter market dominated by individual investors. As it turns out, virtually all (99% today) investment capital in the housing credit program is from publicly traded corporations that pose none of the risks of noncompliance that motivated enactment of the recapture bond rules. Ironically, sales of individual partnership interests in public partnerships with more than 35 investors are exempt from the recapture rules.

There are also other provisions in Code section 42 that adequately address potential noncompliance. In 1989, Congress added the requirement that all state allocating agencies adopt ``extended use agreements'' to be recorded as restrictive covenants on housing credit properties, which require the property to remain in compliance. In addition, the state allocating agencies were given oversight responsibilities to ensure continued compliance through site inspections and property audits.

The requirement to purchase recapture bonds forces investors to incur unnecessary costs and has produced a complex administrative burden on the IRS. Since bond filings are done building by building, and since single sales transactions frequently involve hundreds of properties, each with dozens of buildings, bond filings may involve thousands of separate filings. Worse yet, the few remaining surety companies writing this type of business operate in an inefficient market. Recapture surety bonds are priced in a fashion that does not measure the true risk of non-compliance, but rather relies solely on the credit rating of the company requesting the bond. This is a function of the fact that surety underwriters do not understand the housing credit program in general or the risk of noncompliance in particular.

At the same time, the incidence of non-compliance with housing credit program rules is exceedingly rare. Meanwhile in the aftermath of the September 11th terrorist acts and the spate of corporate accounting scandals, the surety market is in turmoil. Recapture bond premiums, even for highly rated public companies, have more than tripled over the past two years. This has imposed dead weight costs on the housing credit program. By making it more difficult to transfer credit investments, the recapture bond rule impairs the liquidity of housing credit investments, reducing credit prices generally, and undermining the overall efficiency of the program.

The IRS recently responded to a series of questions we posed about the recapture bond requirement. According to the IRS, since just 1997, recapture bonds covering approximately $1.8 billion of tax credits have been posted--but in the 17 years since the requirement was enacted, the Service has never made a claim on a recapture bond. That works out to bond premium payments of about $150 million, to ensure against an event that has never occurred. These costs are unnecessary and are imposing a real drag on the market for investments in housing credit properties.

Our bill will solve this problem by repealing the recapture bond requirement effective for disposition of interests in LIHTC properties after the date of enactment. An owner of a building (or interest therein) (generally, a limited partnership) that has been the subject of a disposition and is still within the remaining 15-year compliance period with respect to such building would be required to submit a report to its former investors when a recapture event with respect to such building occurs. A copy of recapture event forms sent to investors would be required to be filed with the IRS in order to provide the Service with the information necessary to ensure that all recapture liabilities are timely paid. The general statute of limitations applicable to taxpayers would be modified so that investors who dispose of a building after the effective date of the legislation would remain liable for any potential recapture liability for a period extending through the compliance period for such building to provide the IRS with additional time to audit the partnership's return to ensure the building's continuing compliance with the credit's requirements. Taxpayers who disposed of a building (or interest therein) prior to the date of enactment would not be required to maintain existing recapture bonds (or other alternative security), but cancellation of existing bonds would trigger an extension of the statute of limitations provided for in the legislation.

We encourage you to join us in cosponsoring this important legislation.

Mr. Speaker, in any situation where there is an argument at stake, there are two things that are important. First of all, it is to get the facts. Secondly, to face the fact, and I do not mean to oversimplify this, and a lot of people know much more of the details, but it seems to me two things come to the floor. One, Medicare needs an update, seniors need help with their drug costs, and I think this bill does both those things.

I have since learned that virtually any piece of legislation that comes before this body can be argued and attacked and counterattacked to death, but who are the customers? Who are we trying to help and are they being helped? Are the seniors being helped? Yes, probably not enough, but we do not know yet. Are the hospitals being helped? Yes, but they certainly could be helped more, but this is a never ending process. Are the doctors being helped who are opting out of the Medicare program? Yes. Are the ambulance drivers being helped? Yes, and it is about time.

Will the companies be helped who are thinking about whether to drop programs for their retirees? Absolutely. Will those purchasing drugs be helped? According to the arithmetic I read, there is absolutely no question about this.

I would rate this bill a B+, and the reason I do this is I do not think there is any bill that can come before this body that can get an A, not with the attack and counterattack process we use.

One of the great poets of this country, Ralph Waldo Emerson, used to say history is no more than a biography of a few stout individuals. It is the few stout individuals, Mr. Speaker, that we need tonight.

Mr. Speaker, today I am joined by my colleague from New York, Mr. Rangel, in introducing a bill to extend the period that the New York Liberty Zone bonds can be issued by New York State and New York City, and to make other changes that would enhance the tax provisions that were included in the original New York Liberty Zone Benefits legislation. The provisions were part of the Job Creation and Worker Assistance Act of 2002, enacted on March 9, 2002, in order to aid in the rebuilding of downtown New York City after the devastation caused by the September 11, 2001, terrorist attack.

A loud thank you to the Congress for passing the original legislation. The benefits contained in the package were important and needed. The Liberty bonds have been an invaluable tool for those developments already assisted. They have been utilized, but not to the full extent, primarily due to the economic downturn that was underway and accelerated after the tragedy. While the market for new commercial real estate has been weak, it is estimated the bond allocation for residential projects will be exhausted by the end of next year.

The changes requested include: (1) extend the Liberty bonds expiration date to December 31, 2009 from December 31, 2004 to reflect a more realistic time line for the recovery of the commercial real estate market in New York City, (2) increase the amount of the Liberty bonds that can be used for residential development projects from $1.6 billion to $3.0 billion to provide more flexibility to accommodate greater than expected demand for new housing in Lower Manhattan, (3) eliminate the 100,000 square foot minimum for non-public utility projects outside the Liberty Zone, which has greatly hindered the development of much needed smaller utility projects, and (4) a technical correction to Section 1400L(c), which would permit eligible entities to ``opt out'' of the mandatory provision stating that taxpayers must depreciate their Liberty Zone leasehold improvements over an accelerated five year term. The latter change would be retroactive and would be consistent with other similar accelerated depreciation laws, and allows taxpayers to depreciate property over the normal depreciation period.

These changes are in the spirit of the original legislation. They merely reflect the different conditions, which exist now that did not exist in March of 2002. So in essence, we believe they are important to the recovery of New York City. They will help to ensure the full utilization of the tax benefits provided in the original Liberty Zone legislation. We urge our colleagues to support this important legislation.

Mr. Speaker, I thank the gentleman very much for those kind words. I will not take a lot of time because so much has been said, and much of it is felt even though the

words have not been there, but it is clear when I stand up here, I am going to support this bill, and I encourage everyone else who knows anything about the issues here to support it.

We started this bill back in July of last year, and it has finally come to the finish line after many trips back and forth between here and the Senate. What the bill does is, as I am sure as has already been spoken, provides a number of tax benefits for the active military, as well as the Reservists. Also, we made modest improvements to help the families of the members of the military who have given the supreme sacrifice.

I am not going to go into the details, Mr. Speaker, of this bill. We have discussed these over the past year. We have discussed them ad infinitum. So those are really behind us, and furthermore, the most important thing is the bill is paid for.

I was in Iraq several weeks ago, and it was an impressive time for a variety of reasons, not the least of which is the fact that I met people from not only my own district but from other districts, and with all the problem of the greed and the discussion about the economic system here, here these people are laying their lives on the line, they are getting underpaid, they are tired, they go out in this absolutely crushing heat. The only thing they asked of us when we were there was are you with us, are you supportive of us, and this is one small thing I can do to say, yes, we are.

Mr. Speaker, I thank the gentleman for yielding me time.

Mr. Speaker, I want to encourage my fellow Members to support H.R. 7. There are lots of provisions in the bill which I think are good and I appreciate the comments by the former speaker in terms of what the Committee on Ways and Means has done; but there is a particular provision that would help many Americans who are literally struggling to stay alive.

This provision would expand the current deductions to all businesses, not just C corporations, and I believe this expansion would substantially increase the donation of food to food banks and other organizations. It is that simple.

What these groups do is to provide the obviously daily nourishment to homeless and others that are down on their luck and just cannot provide for all their needs themselves.

The bill also includes the provisions of H.R. 807. This is something that I introduced with the gentleman from Georgia (Mr. Lewis) and previous to last year Tony Hall. As many know, Tony Hall is now in Rome doing a wonderful job for the United Nations agencies for food and agriculture.

But this bill would open up the deduction for all businesses, as I mentioned earlier, not just the larger corporations, and allow those businesses a deduction for the fair-market value of the food at the time they donate it.

This is a good provision. I urge everybody to support the bill.

Mr. Speaker, on Saturday evening, I had the honor of giving out several medals to WW II Veterans and their families--Nick Cavallaro, Leon Andrews, Frank Barber, and Charlie Giardina in Corning,

Mr. Chairman, I thank the gentleman for yielding me this time.

Mr. Chairman, I would say to the gentleman from Vermont (Mr. Sanders), wherever he is, I am going to suggest a vote against his amendment. I have been around business many years, and I have been in and out of pension plans in many different corporations, and this is a dangerous amendment. I am not going to talk a long time on this thing; I just have to tell my colleagues how I feel.

Also, I am on the Committee on Ways and Means, and I would like to feel that we would have an opportunity to understand this and look at it. There has been no notice on this thing whatsoever.

But the bottom line is this: the Cooper ruling threatens to drive employers out of the pension system. Pension plans nationwide will be burdened with huge additional liabilities, leaving workers worse off. Is that what we want?

As a result of the Cooper decision, we understand the voluntary pension system itself would be in danger. Is this the protection workers need? I do not think so.

Frankly, I would urge people to vote against the Sanders amendment. It is not going to help the people I know, the people I have worked with, particularly the senior employees of various corporations who are so dependent upon our defined benefit plan.

Mr. Speaker, I am not going to take my two minutes because there have been many figures cited, there have been many comparisons. There are always problems in trade agreements, whether they are labor conditions or environmental or currency or intellectual property rights.

The only thing I can say is, I have been there. I have done business in Chile. I have manufactured, I have sold, and I have never had a situation where they have abused the trading privilege.

There are two issues here: one is to protect the jobs, and we all do that. The gentleman from Michigan (Mr. Levin) and I were down at the International Trade Commission talking about section 201 and the steel case. Of course, we are trying to protect our jobs, and we have got to do it, and we have got to do more. But at the same time we have got to open up markets. Because, as everybody knows, 95 percent of the world's population is outside of the United States, and we cannot build a wall around us.

This is a good agreement. It is not a perfect agreement, but it is a good agreement with a good country, and I urge Members to support it.

Mr. Speaker, I have been listening to all of the discussion on the other side; and I may be missing something, but I think this bill makes sort of sense.

I believe in Head Start. I work with the people who have taught and been in it. My kids have been a part of the program. It works the way it should in some areas. In other areas it does not. Where it works, the kids compete and succeed and it is fine. Where it does not work, we find those kids as they move into kindergarten no better off than the kids who do not go to Head Start. That is not right. If we have a program we spend money on, it ought to work.

This new program, at least to me, is a win-win situation. If a State wants to take a look at its programs, it can. If it needs help, it can get it. The bill adds over $200 million to that. If on the other hand the State likes what it has, does not want to change, it does not apply for the demo project. It does not

have to do it. And if it does, every single one of those demo projects is guaranteed to have the full 5-year funding.

I think the program makes sense, and I hope I am not missing something essential.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I respect the gentleman from Maryland as an individual, I hear what he has to say; but I must say I disagree with some of these points that he has made. We have passed our own bill. Why should we go and pass the Senate bill? Our own bill is our own bill. That is what we want.

This is not a new issue or a new motion from our colleagues in the House. I once again urge my associates and my Members here to reject the motion to instruct conferees. We have debated this issue for several days now. I will not prolong the debate, particularly with the lateness of this hour and the discussion, the turmoil we had earlier for those who are seeking to return to their districts.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I reserve the balance of my time.

How much time remains, Mr. Speaker?

Mr. Speaker, I reserve the balance of my time.

No, I do not, Mr. Speaker.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, as the Senior Marine in the Congress, I rise to pay tribute to Lieutenant Colonel David Byrnes, United States Marine Corps, on the occasion of his retirement from active duty. Lieutenant Colonel Byrnes has served our Marine Corps and our great Nation for more than a quarter of a century.

A native of my home state, Lieutenant Colonel Byrnes grew up in Stoneybrook, New York. After graduating from Smithtown High School in 1977, a young David Byrnes followed in the footsteps of several great generations of New Yorkers and enlisted in the military. Like a few good New Yorkers before him he chose a challenging path--the Marine Corps. Lieutenant Colonel Byrnes' service as an enlisted aircraft technician took him from Memphis, Tennessee, to Beaufort, South Carolina, and eventually to Jacksonville, North Carolina.

In 1981, after these successful tours, Lieutenant Colonel Byrnes continued to excel and take on greater challenges, transferring to the reserves to attend Dowling College in Oakdale, New York, where he was awarded a Bachelors of Arts degree in 1982. By 1984 he had earned a commission as an Officer of Marines. From 1985 to 2000, Lieutenant Colonel Byrnes served in many of my colleagues' home states including South Carolina, New York, Kansas, Oregon, Virginia, and Louisiana. As a testament to his talent and versatility Lieutenant Colonel Byrnes earned three military occupational specialties during these tours, including Aircraft Maintenance Officer, Adjutant, and Legal Officer. He served with distinction and honor in all of these roles. In 2000, Lieutenant Colonel Byrnes was selected to attend the Naval War College in Newport, Rhode Island, where he earned a Masters Degree in National Security and Strategic Studies. He immediately put this education to use serving in the J8 Forces Division on the Joint Staff, where he had responsibilities for the Secretary of Defense's Annual Report to the President and the Congress.

After his joint staff tour, Lieutenant Colonel Byrnes began his last tour of duty in the Marine Corps--serving in the Marine Corps' Office of Legislative Affairs. In this position he interacted with the Congress to explain Reserve Affairs to Congressional Members and their staffs. This was a position of enormous responsibility, made all the more so because of the ongoing War on Terror, Operation Enduring Freedom and Operation Iraqi Freedom, which have all called for a large measure of devotion from our reserve forces. Lieutenant Colonel Byrnes has performed this highly challenging and difficult task flawlessly, always providing wise counsel and plain speaking. We have been fortunate to have such a capable Marine officer interact with us.

Throughout his career, Lieutenant Colonel Byrnes has demonstrated strong character, discerning wisdom, and a sincere, selfless sense of duty to his Marines. In recognition of his devotion to duty and exemplary performance Lieutenant Colonel Byrnes was awarded

the Defense Meritorious Service Medal, Meritorious Service Medal with 1 star, Navy and Marine Corps Commendation Medal with 2 stars and a Navy and Marine Corps Achievement Medal.

On behalf of all my colleagues, I would like to recognize Lieutenant Colonel Byrnes' accomplishments and his devoted service to the Nation. Congratulations to Dave, his wife Quinn, and son Charlie, on the completion of a long and distinguished career. I wish them all the best as they continue to live life beyond our beloved Corps.

Mr. Speaker, will the gentleman yield?

Mr. Speaker, I would like to underscore the point made by my colleagues, the gentleman from New Jersey (Mr. Holt) and the gentleman from Georgia (Mr. Kingston) and the gentleman from Virginia (Mr. Moran), that Congress as a whole currently lacks the scientific base to assess the technologies that are crucial for our national security, economic prosperity and personal and environmental health of this Nation.

I would also like to underscore that scientific expertise is unique in that it can be provided in an inherently nonpartisan way; and I can attest to that personally, having been on the OTA board. The OTA board was governed by a bipartisan technology assessment board. There were six House members, six Senate members, both parties equally represented, and the OTA had a reputation for producing reports that were often cited by both sides of a debate; and they were very, very helpful.

In essence, we need to start, I think, in getting serious about rebuilding the capacity in the legislative branch to provide this nonpartisan technical expertise to Congress in a timely manner.

Mr. Speaker, in reply to my friend on the Democratic side, I am a Republican and I am aware and I am old, but I do not quite remember Teddy Roosevelt.

What I would like to do is just to talk a little bit about this whole issue of eliminating the death tax. I do not know where this is going. I do not know whether it has got momentum, but I assume it has.

It sounds appealing. One pays taxes all their life and then why when one should be honored in more does the IRS is swoop in and take another bite of out of their estate? But if we look at the great estate taxes from a different angle, I have a sense of what this country is all about, that democracies are not where one gets a free ride and stand on another's shoulders forever.

I have two specific worries. One, the corrosive effect this tax would have an a subsequent generation who no longer has to work or earn. That has all been taken care of, and I have seen this effect on other countries where there is an establishment of a landed gentry, a privileged entitled class, and that is not good, and that is not what has made the United States what it is today.

The second issue I have is the first question one asks in planning an estate is what flexibility do I have? What should I protect so the bulk of what I have earned will not be siphoned off by the Government? It is at this great point that the great philanthropic gifts are considered. So, believe me, absent a death tax, the question would not even be raised. So I can see nothing bad from this bill. The assets we have, the ability we have, the motivation to give less, anyway, I do not think it is a great bill, and I hope people vote against it.

Assets we have--the ability, the motivation, to give to those less fortunate than we. This is not a good bill. It should be defeated.

Increase the exclusion dramatically. Protect the family farm or business. But do not wipe out and make permanent the repeal of the estate taxes.

Mr. Speaker, I thank the gentleman for yielding me this time, and I thank also the gentleman from North Dakota.

The theme of this bill, and I, of course, support it, is to improve the IRS. Before I give a few quick examples, I do want to say that I have stood up here at least three times, and my script is getting musty because I have used the same words year after year. I hope that somehow we are going to be able to pass this legislation this year.

But, basically, some of the examples are this. We allow the IRS to waive unfair penalties for honest taxpayers who make mistakes. We allow that. For example, a taxpayer who mails his return on April 15 with a check for $5,000, with a balance due, and he mistakenly puts the wrong stamp on it, he is in trouble. And the IRS cannot waive any penalties to people who make an honest mistake. I know of this personally because of a friend in my area who did this; owed lots and lots of money. There was no maneuverability on it.

Another example is when the IRS erroneously assesses or levies a taxpayer's assets. There is a limited time during which the service can provide relief to the taxpayer. And this is, of course, especially unfair if the IRS ends up levying the taxpayer's retirement account.

So let us say the IRS, just to take this a little more, misapplies a tax payment and consequently levies on a taxpayer's IRA account taking away $25,000. The IRS then later realizes its mistake, but it is unable to restore the IRA balance. That is problem we have here. Very, very inflexible rules. So the result under current laws does not make any sense at all.

Now, this bill requires the IRS to extend the time limit for taxpayers to contest levies and requires the IRS to provide relief to taxpayers whose retirement accounts are affected.

Lastly, and the gentleman from Louisiana, my good friend, also referred to the ten deadly sins that try to strike a balance between making sure that IRS employees are not engaging in improper behavior on the one hand and not placing a straitjacket on IRS employees and the commission on the other hand. These changes are strongly supported by former Commissioner Rossotti, who did an extraordinary job in reorganizing and putting more life into the IRS, and have the support of the National Treasury Employees Union.

So I guess the only thing I can say to sum up, Mr. Speaker, is that this a good bill. I am honored to be able to join these gentlemen in urging my colleagues to support this legislation.