Floor Statements

Mr. President, I think it was 48 hours ago I opened a discussion with my fellow Senators on the alternative minimum tax. As I pointed out at that time, it is generally recognized that the alternative minimum tax is a policy failure.

Created in 1969, in response to the discovery that 155 wealthy taxpayers--and let me emphasize that I am talking about 155 wealthy taxpayers--were able to eliminate their entire tax liabilities through legal means, the AMT has now evolved into a place where, because it wasn't indexed, it has captured more than 3 million middle-class Americans as of 2004. The AMT was never supposed to affect anyone except the very wealthy people.

I am using 2004 numbers because 2004 is the most recent year we have completed data. Three million people in that year were hit by AMT, even though since 2001 we have had in place a tax policy that no additional people should be hit by the alternative minimum tax.

At the time I was visiting with my colleagues 2 days ago, I cited the widespread observation that the most significant structural flaw afflicting the AMT is the failure to index its rates and exemptions for inflation. This failure, then--and I alluded to this a minute ago--has resulted in the gradual encroachment of the alternative minimum tax to hit middle-class taxpayers who were never intended to pay this tax.

Despite the widespread agreement that something needs to be done with the alternative minimum tax, agreement on what exactly to do is not so widespread. A major factor in the disagreement relates to the massive amount of money the alternative minimum tax brings to the Federal Government. In 2004, from these 3 million taxpayers hit by this tax, more than $12.8 billion was paid into the Federal Treasury. If we don't extend the most recent alternative minimum tax hold-harmless that actually expired at the end of 2006, the amount paid by those 3 million taxpayers is expected to balloon to a much greater amount. And, of course, when you go beyond that, into the long-term budget forecast, it is going to continue to grow and grow, with middle-class taxpayers paying a tax that was meant to be for 155 wealthy people.

When forecasters put their projections together, they are working under the assumption that the hold-harmless that was extended in last year's tax bill will not be extended because they base their assumptions on current law. This means the hold-harmless provisions ended December 31, 2006, and money being earned right now is going to hit millions more people.

People who guesstimate how much money comes into the Federal Treasury--and we have people both in the executive branch and the legislative branch who have that as their responsibility, so we can make good tax policy--take into consideration what is current law, and they are planning on these millions of middle-class taxpayers paying this alternative minimum tax, even though they were never intended to pay it. Because of this, budget planners make the assumption that revenues will be much higher than everyone who is frustrated with the AMT thinks that amount of money ought to be, as well as the number of people who are going to be paying it.

The reason for that is the alternative minimum tax tremendously balloons the revenue base, as it is projected to increase revenues as a percentage of gross domestic product. There is a great deal of evidence to support this.

On a side note, a senior, well-respected tax lawyer on the other side of the aisle in the other body took exception to my use of the term ``ballooning.'' The staffer wrote an article and criticized me for that term. Well, I am not used to staff writing articles criticizing Members of Congress, so I happened to respond to that staffer's criticism through my own staff. The essence of the senior staffer's criticism was that the term ``ballooning'' ignored the accounting for the interaction of bipartisan tax relief with AMT costs. As we pointed out, ballooning revenue from the AMT occurs in the outyears, whether the bipartisan tax relief is extended or made permanent. I will talk more about that in a few minutes.

The nonpartisan Congressional Budget Office has consistently forecast this ballooning year after year. This chart which I have before me now for you to look at, reproduced from the Congressional Budget Office's long-term budget outlook, was published in December 2005 and shows how Federal revenues are expected to push through the 30-year historical average and then keep going up.

You can take that historical average back 30 or 40 years for sure, and maybe longer than that, but the historical average is here and current law is actually going to bring in this much revenue, and that includes the ballooning of the alternative minimum tax.

I want to note that although the Tax Increase Prevention and Reconciliation Act of 2005 was signed into law after this analysis was published, the 2006 tax bill extended the AMT hold-harmless through December 31 last year, and this chart shows Federal revenues all the way through to the year 2050. It is important to note the long-term effects then of the alternative minimum tax on the revenue base.

There may be some doubters who hesitate to attribute this ballooning of revenues to the alternative minimum tax, but this chart illustrates the drastic expansion of the AMT under current law over the next 43 years. Over the next 43 years. This is also from the nonpartisan Congressional Budget Office. You can clearly see that the share of households subjected to the alternative minimum tax is alarmingly around 65 percent.

Let's go through that again. You can see from the new chart which I have put up here that the share of households subjected to the alternative minimum tax increases by the year 2050 to about 65 percent of taxpayers. The reason why this 65 percent--or even going back to here, or even back to here--is significant is because, as I told you 48 hours ago, and as I tell my colleagues now, this alternative minimum tax was put in the tax law to hit wealthy taxpayers, 155 at that year, who didn't pay any tax whatsoever.

It was felt that everybody, particularly wealthy people living in this country and who benefit from this country, ought to pay some sort of a tax. It was never intended to hit this percentage of taxpayers, or this percentage of taxpayers, and surely not this percentage of taxpayers. And if we do nothing, it is going to be 65 percent. I don't know what the population of this country is going to be in 43 years, but I know that 65 percent of the population in 2050 will be more, quite obviously more than the 155 taxpayers the AMT was intended to target.

This chart also shows how the AMT will consume a greater and greater share of the total individual income tax liability. The Congressional Budget Office report states:

By 2050, roughly 15 percent of the individual income tax

liability would be generated by the alternative minimum tax

compared with about 2 percent today.

This is what will happen if we don't do anything. This is going to happen. The analysis done by the Congressional Budget Office clearly shows an upcoming ballooning of Federal revenues, accompanied by a corresponding bloating of the share of households and the share of total liability attributed to a tax that was only intended to hit 155 people 39 years ago.

A particularly wrongheaded argument that has been advocated is that the Bush tax cuts are responsible for increases in the number of people hit by the alternative minimum tax. Some think the Bush tax cuts are increasing some people's income so much that they are subject to the alternative minimum tax and that making the tax cuts permanent will only make those problems worse. This sort of reasoning is deceptive and could not be more wrong. First, the analysis that I presented--done by the Congressional Budget Office--looks forward all the way to 2050, and the Bush tax cuts under current law sunset in 2010. As I previously said, the AMT's greatest flaw is that it is not indexed for inflation, and inflation is going to continue whether the Bush tax cuts are extended or not. Inflation is going to be there.

This next chart from the Congressional Budget Office illustrates how the alternative minimum tax will continue to be a money machine, regardless of any other factors. The bottom line illustrates individual income tax liabilities if the Bush tax cuts are made permanent and the AMT is modified, the middle line illustrates current law with the permanence of the Bush tax cuts, and the very top line--current law. If the Bush tax cuts are allowed to sunset and the AMT is allowed to grow and consume our middle class, the AMT will still balloon revenues anyway. Any argument that making the Bush tax cuts permanent will worsen our AMT problem is completely false, and this chart proves that. The AMT is a problem all by itself.

As I said earlier, the problem with all of the projections showing the AMT ballooning revenues is that these projections are used to put together budgets. This means the central problem in dealing with the AMT is money. There are some people who say we can only solve the AMT problem if offsetting revenue can be found to replace the money that the AMT is currently forecast to collect. Anyone who says this sees the forecasts showing revenue being pushed up as a percentage of GDP--and they are high-tax people and yet higher tax people to satisfy them--and they want to keep it there. These arguments are especially ridiculous when one considers that the alternative minimum tax was never meant to collect so much revenue and collect it from the people who are going to end up paying it, the middle class people, if we don't do something about it.

As a policy instrument, the alternative minimum tax has been and continues to be a complete failure, as I discussed 48 hours ago. The alternative minimum tax was originally conceived as a means to ensure that extremely wealthy taxpayers were not able to game the system and to avoid their entire tax liability. In 1969, the alternative minimum tax was calculated to hit only one out of a half a million people. There is absolutely no way anyone can call the AMT anything close to a success. The alternative minimum tax has even failed in its objective: to ensure that no citizen, regardless of how wealthy, was able to completely avoid paying at least a little bit of Federal income tax because we have this anomaly.

In 2004, the Commissioner of the Internal Revenue Service, Mark Everson, informed the Finance Committee that the same number of taxpayers, as a percentage of the tax-filing population at large, continues to pay no Federal income tax.

So even to hit the people who were supposed to be hit, there are people in a tax situation, legally, able to avoid not only the regular income tax but to avoid the alternative minimum tax. So it is a failure by its own reason for existence.

According to an IRS analysis of the tax year 2003 data, we had 2,366 taxpayers with incomes above $200,000 or more who did not use the medical or dental expense deduction and had no income tax.

The AMT has failed in every way except for the ability to raise very large sums of money, and it was never intended to be a tax-producing machine. It was only intended to hit people who were not going to pay any income tax and ought to pay a little bit for the privilege of living in America. While it may be hard for some to turn down taxpayers' money, whether we are supposed to collect it or not, no one seems to have trouble spending it. This means that some want the taxpayer to pay the price for a tax that was designed poorly and through the comedy of errors was allowed to flourish.

It is simply unfair to expect taxpayers to pay a tax they were never intended to pay--and that means middle class America. And it is even more unfair to expect them to continue paying for that tax once we get rid of it. The reform or repeal of the AMT should not be offset because it is money we were never supposed to collect in the first place.

The way to solve this problem is to look on the other side of the ledger, the spending side. Budget planners need to take off their rose- colored glasses when looking at long-term revenue projections that include a tax by middle class people who were never intended to pay that tax, the alternative minimum tax, and to read the fine print. In general, it is a good idea to spend money within your means. That is true in this case as well. If we start trying to spend revenues we expect to collect in the future because of the AMT, from people who were never expected to pay it, it was never supposed to come in the first place, we will be living beyond our means. We need to stop assuming that record levels of revenue are available to be spent and to recognize that the AMT is a phony revenue source.

As we consider how to deal with the AMT, we must first remember that we do not have the option of not dealing with it unless we want to kill the middle class. The problems will only get worse every year and make any solutions more difficult. We must also be clear that the revenue the AMT would not collect as a result of repeal or reform should not be offset as a condition for repeal or reform. We should not call

it lost revenue because it is revenue that the middle class was never expected to pay. Making the offsetting of the AMT's ill-gotten gains a condition of the AMT fix is to punish the American taxpayers for an ill-conceived and poorly executed policy that has been a total failure.

Aside from not increasing the proportion of wealthy taxpayers who pay income taxes, the AMT is projected to balloon Federal revenues over historical averages and to become a greater source of revenue than even the regular income tax. Budget forecasters need to recognize that the AMT is not a legitimate source of revenue, and Congress needs to be disciplined enough to show restraint on spending so that an AMT solution doesn't boil down to the replacement of one misguided policy by another misguided policy.

I yield the floor.

I think the Senator from North Dakota wanted to be recognized.

Mr. President, lately we have heard a lot about the alternative minimum tax and the difficulties involved in fixing it. Right now is tax time so a lot of people are going through the process of determining whether they owe the alternative minimum tax. I will visit with taxpayers about that. At another time I will go into greater detail regarding some of these problems and what we need to do to fix the alternative minimum tax.

Right now I want to explain how we got into this situation. Of course, as with anything, it would be foolish to go forward on this issue without looking back to see how we got to where we are now, after 40 years of the alternative minimum tax. The alternative minimum tax, then, obviously has been with us for that long a period of time.

The individual minimum tax was the original name of the alternative minimum tax and was enacted first in 1969. This chart I am displaying highlights a few of the important and most recent milestones in the evolution of the AMT. I will not go into each of those milestones in detail, but by looking at the chart you can see the AMT has not been a constant. There has been an alternative minimum tax, but it has had some changes in the last 38 years.

First, the history of the AMT. In the 1960s, Congress discovered only 155 taxpayers--all people with incomes greater than $200,000 a year-- were not paying any taxes whatever. These taxpayers were able to use legitimate deductions and exemptions to eliminate their entire tax liabilities--all legally. To emphasize, what they were doing was not illegal, but Congress could not justify this at that time and it determined at that time that wealthy Americans ought to pay ``some'' amount of tax to the Federal Government regardless of the amount of legal ways of not paying tax.

When Congress decided to do this, it was calculated only 1 in 500,000 taxpayers would ever be hit by the alternative minimum tax. According to the Bureau of Census, we had at that time about 203 million people compared to 300 million today. Making the assumption that every single American was a taxpayer, the individual minimum tax was originally calculated to affect only 406 people. We get that by dividing 203 million by 500,000. In 1969 Congress was motivated by the situations of the 155 taxpayers to enact a tax calculated to impact about 406 people.

Clearly, the situation has changed dramatically in the last 30 years because this year the AMT is going to hit several million taxpayers. Although not its only flaw, the most significant defect of the alternative minimum tax is that it was not indexed for inflation. If it had been indexed for inflation, we would not be dealing with this tax problem and millions of people this year would not have to figure out if they owed the alternative minimum tax.

The failure to index the exemptions and the rate brackets, the parameters of the AMT, is a bipartisan problem. Perhaps a most notable opportunity to index the AMT for inflation was the passage of the Tax Reform Act in 1986. That law was passed by a Democratic House, a Republican Senate, and signed by a Republican President. It is worth pointing out at that time, because of the bipartisan cooperation, indexing was a relatively new concept, and even though they had a bipartisan opportunity, they did not take advantage of it. One can argue that indexing of the AMT should have received more attention, but the fact is it did not then or any time since then, so we have the problems I am discussing today.

Today it is impossible for anyone to use the excuse that indexing is a new concept. Maybe it could be used in 1986. In a regular tax system, the personal exemptions, the standard deduction, the rate brackets are indexed for inflation. Government payments such as Social Security benefits are indexed for inflation and people would be hard pressed to go into most schools and find a student who does not at least know that inflation was something to be avoided or at least to be compensated for through indexing.

Despite what must be a nearly universal awareness of inflation, though, the alternative minimum tax, the Internal Revenue Code equivalent of a time capsule, remains the same year after year as the world changes around it. It must be obvious to everyone that the value of a buck has changed a lot in the last 38 years, and all here are experienced enough to have witnessed that change.

More than anything else, the problem posed by the alternative minimum tax exists because of a failure to index that portion of the Tax Code for inflation. Although $200,000 was an incredible amount of money in 1969, the situation is different today. I am not saying that $200,000 is not a lot of money--because it is, obviously, to most middle-income people a lot of money--but $200,000 is certainly going to buy less today than it did in 1969.

I also emphasize that I am not the only one saying the failure to index the alternative minimum tax for inflation is what is causing it to consume more and more of the middle-income taxpayers. On May 23, 2005, the Subcommittee on Taxation and IRS Oversight, the Committee on Finance, held a hearing entitled ``Blowing the Cover on the Stealth Tax: Exposing the Individual AMT.'' At that hearing, the national taxpayers advocate Nina Olson said:

[t]he absence of an AMT indexing provision is largely

responsible for increasing the numbers of middle-class

taxpayers who are subject to the AMT regime.

Robert Carroll, who is now Deputy Assistant Treasury Secretary for tax analysis and then was in the acting position, same title, testified:

[t]he major reason the AMT has become such a growing problem

is that, unlike the regular tax, the parallel tax system is

not indexed for inflation.

We also had at that hearing Douglas Holtz-Eakin, who at that time was director of the nonpartisan Congressional Budget Office:

If the 2005 [increased AMT] exemptions were made permanent

and, along with other AMT parameters, indexed for inflation

after 2006, most of the increase over the coming decade in

the number of taxpayers with AMT liability would disappear.

Clearly, there is a consensus among knowledgeable people that the failure to index the AMT for inflation has been and continues to be a serious problem and, in fact, for the most part, would be a solution to the problem if you want to maintain the AMT. If you want to argue for doing away with the AMT, that is another ball game.

What makes the failure to index the AMT in 1986 and other years more disastrous is repeated failure to deal with the problem in additional legislation that has actually compounded the problem posed by the alternative minimum tax.

Before I continue, I will catalog the evolution of the alternative minimum tax rate for a moment. The 1969 bill gave birth to the alternative minimum tax which established a minimum income tax rate of 10 percent in excess of the exemption of $30,000. In 1976, the rate was increased to 15 percent. In 1978, graduated rates of 10, 20, and 25 were introduced. In 1982, the alternative minimum tax rate was set at a flat rate of 20 percent and was increased to 21 percent in 1986. This is not a complete list of legislative changes and fixes, and I am sure no one wants me to recite a full list but, very importantly, I want to make sure that everyone realizes Congress has a long history of trying to fiddle with the AMT in various ways but without doing anything permanent to it. Hence, we are here again this year considering what to do.

Now, a great detail on recent bills impacting the AMT. In 1990, the Omnibus Budget Reconciliation Act is a result of the famous Andrews Air Force summit between President Bush and Democratic leaders on Capitol Hill. Probably Republicans were involved, as well. That legislation raised the alternative minimum tax rate from 21 percent to 24 percent and did not adjust

the exemption levels. That means every person who had been hit by the AMT would continue to be hit by the AMT but be hit harder.

Then we had the same title, but in 1993 we had the Omnibus Budget Reconciliation Act. The exemption level was increased to $33,750 for individuals and $45,000 for joint returns, but that was accompanied by yet an additional rate increase. In 1993, the tax increase passed this Senate with just Democratic votes for it. No Republican voted for it.

Once again, graduated rates were introduced, except this time they were 26 percent and 28 percent. By tinkering with the rate and exemption levels of the alternative minimum tax, these bills were only doing what Congress has been doing on a bipartisan basis for almost 40 years, which is to undertake a wholly inadequate approach to a problem that keeps getting bigger and bigger and bigger.

Aside from this futile tinkering that has been done every few years, Congress has, in other circumstances, completely ignored the impact of the tax legislation on taxpayers caught by the alternative minimum tax. In the 1990s, a series of tax credits, such as the child tax credit and lifetime learning credit, were adopted without any regard to the alternative minimum tax. The alternative minimum tax limited the use of nonrefundable credits, and that did not change. In other words, because of the AMT, we did not accomplish the good we wanted to with those credits for lower middle-income and lower income people. Congress quickly realized the ridiculousness of this situation and waived the alternative minimum tax disallowance of nonrefundable personal credits, but it only did it through the year 1998.

In 1999, the issue again had to be dealt with. The Congress passed the Taxpayer Refund and Relief Act of 1999. In the Senate, only Republicans voted for that bill. That bill included a provision to do what I would advocate we ought to do right now: repeal the alternative minimum tax. If President Clinton had not vetoed that bill, we would not be here today. But we are here today with a worse problem.

Later, in 1999, an extenders bill, including the fix, to fix it good through 2001, was enacted to hold the AMT back for a little longer; in other words, not hitting more middle-income people.

In 2001, we departed from these temporary piecemeal solutions a little bit--at least a little bit--for 4 years with the Economic Growth and Tax Relief Reconciliation Act of 2001. That 2001 bill permanently allows the child tax credit, the adoption tax credit, and the individual retirement account contribution credit to be claimed against a taxpayer's alternative minimum tax. While this certainly was not a complete solution, it was a step in the right direction.

More importantly, the 2001 bill was a bipartisan effort to stop the further intrusion of the alternative minimum tax into the middle class. The package Senator Baucus and I put together that year effectively prevented inflation from pulling anybody else into the alternative minimum tax through the end of 2005.

Mr. President, I ask unanimous consent for 3 more minutes.

Our friends in the House originally wanted to enact a hold harmless only through the end of 2001, while Senator Baucus and I were trying to do it through 2005. We got the final bill the way Senator Baucus and I wanted it. So it was not a problem then until the year 2005.

Since the 2001 tax relief bill, the Finance Committee has produced bipartisan packages to continue to increase exemption amounts to keep taxpayers ahead of inflation, with the most recent being the Tax Increase Prevention and Reconciliation Act of 2005, which increased the AMT exemption to $62,550 for joint returns and $42,500 for individuals through the end of 2006.

These packages put together since 2001 are unique in that they are the first sustained attempt undertaken by Congress to stem the spread of the AMT through inflation and hitting more middle-income taxpayers. Admittedly, these are all short-term fixes, but they illustrate a comprehension of the AMT inflation problem and what needs to be done to solve it.

So this leads us to the present day and the situation we currently face. In 2004, the most recent year for which the IRS has complete tax data, more than 3 million families and individuals were hit by the AMT. And those figures for each State are shown on this chart behind me. You can see a breakdown by State of families and individuals who paid the alternative minimum tax, even with our hold-harmless provisions in place.

This does not even begin to hint at what will happen if we do not continue to protect taxpayers from the alternative minimum tax. Barring an extension in the hold harmless contained in the 2006 tax bill, AMT exemptions will return to their pre-2001 levels. At the end of 2006, provisions allowing nonrefundable personal tax credits to offset AMT tax liability expired. If further action is not taken, it is estimated that the AMT could claim 35 million families and individuals by the end of this decade. That is just 3 years away. Think of it: a tax originally conceived to counter the actions of 155 taxpayers in 1969 could hit 35 million filers by the year 2010--a well-intentioned idea 40 years later with unintended consequences. Some analyses show that in the next decade, it may be less costly to repeal the regular income tax than the alternative minimum tax.

Aside from considering the increased financial burden the AMT puts on families, we also should consider the opportunity cost. Because the average taxpayer spends about 63 hours annually complying with the requirements of the alternative minimum tax, that is an awful lot of time that could be more productively used elsewhere.

As I have illustrated, the AMT is a problem that has been developing for a while. Thirty-eight years down the road are we now. On numerous occasions, Congress has made adjustments to the exemptions and rates, though not as part of a sustained effort to keep the alternative minimum tax from further absorbing our Nation's middle class.

Despite these temporary measures, the AMT is still a very real threat to millions of middle-income taxpayers who were never supposed to be subjected to a minimum tax. That the alternative minimum tax has grown grossly beyond its original purpose--which was to ensure the wealthy were not exempt from an income tax--is indisputable and that the AMT is inherently flawed would seem to be common sense.

Despite a widespread sense that something needs to be done, there is still disagreement on what needs to be done. Over the course of a few more remarks on this floor, in days to come, I will address some of those things we ought to do. But this is a case where well-intended legislation not being paid attention to has turned out to be a major tax problem in this country.

Mr. President, I yield the floor.

Mr. President, I am introducing the Pigford Claims Remedy Act of 2007. This bill establishes a new cause of action for those African-American farmers who filed late claim petitions as required by the Pigford v. Glickman Consent Decree, but whose petitions were rejected.

These rejections have effectively barred African-American farmers from the one process that was established to bring closure to the claims of discrimination by African-American farmers, many of which have been pending for decades.

My bill attempts to remedy what appears to be a lack of sufficient notice,

indicated by the late applicants. It helps bring justice for farmers who have historically been discriminated against while being mindful of the constitutional constraints on Congress's authority. This bill will provide a new cause of action that will assist those putative claimants whose claims have never been evaluated on the merits.

Studies conducted by the USDA revealed the depth and impact of this disparate treatment. In 1994, the Department of Agriculture commissioned a study to analyze the treatment of minorities and women in farm programs and payments.

In 1997, Secretary Glickman commissioned the Civil Rights Action Task Force to look into allegations of racial discrimination in the agency's loan program. In conjunction with this the Inspector General conducted its own investigation into the allegations of disparate treatment.

Each report confirmed what African-American farmers already experienced first hand. USDA failed to act to adequately address these past wrongs. It took a class action lawsuit filed by African-American farmers in 1997 to get USDA to respond.

The resulting Pigford v. Glickman Consent Decree was believed to be a turning point in this unfortunate history. Hopes were high that African-American farmers would finally be compensated for the history of injustice. The consent decree was intended to provide a swift resolution for the claims of discrimination that had gone unaddressed for decades.

Yet, in a sad twist, the process that was created to provide a forum for those whose claims had been shut out, has itself shut out more than 75,000 African American farmers who wish to have their claims of discrimination heard.

Hearings before the House Subcommittee on the Constitution revealed that almost 76,000 farmers who submitted late claim petitions were denied entry because they could not show that extraordinary circumstances prevented them from filing a timely complaint.

Despite the lack of knowledge about the consent decree, which was cited by more than half of these petitioners, lack of notice was not deemed an extraordinary circumstance under the consent decree. So these petitioners are left without any recourse to have their claims of discrimination heard on the merits. These people should be allowed to have their case heard.

I urge my colleagues to support this important legislation.

Mr. President, I am introducing the Pigford Claims Remedy Act of 2007. This bill establishes a new cause of action for those African-American farmers who filed late claim petitions as required by the Pigford v. Glickman Consent Decree, but whose petitions were rejected.

These rejections have effectively barred African-American farmers from the one process that was established to bring closure to the claims of discrimination by African-American farmers, many of which have been pending for decades.

My bill attempts to remedy what appears to be a lack of sufficient notice,

indicated by the late applicants. It helps bring justice for farmers who have historically been discriminated against while being mindful of the constitutional constraints on Congress's authority. This bill will provide a new cause of action that will assist those putative claimants whose claims have never been evaluated on the merits.

Studies conducted by the USDA revealed the depth and impact of this disparate treatment. In 1994, the Department of Agriculture commissioned a study to analyze the treatment of minorities and women in farm programs and payments.

In 1997, Secretary Glickman commissioned the Civil Rights Action Task Force to look into allegations of racial discrimination in the agency's loan program. In conjunction with this the Inspector General conducted its own investigation into the allegations of disparate treatment.

Each report confirmed what African-American farmers already experienced first hand. USDA failed to act to adequately address these past wrongs. It took a class action lawsuit filed by African-American farmers in 1997 to get USDA to respond.

The resulting Pigford v. Glickman Consent Decree was believed to be a turning point in this unfortunate history. Hopes were high that African-American farmers would finally be compensated for the history of injustice. The consent decree was intended to provide a swift resolution for the claims of discrimination that had gone unaddressed for decades.

Yet, in a sad twist, the process that was created to provide a forum for those whose claims had been shut out, has itself shut out more than 75,000 African American farmers who wish to have their claims of discrimination heard.

Hearings before the House Subcommittee on the Constitution revealed that almost 76,000 farmers who submitted late claim petitions were denied entry because they could not show that extraordinary circumstances prevented them from filing a timely complaint.

Despite the lack of knowledge about the consent decree, which was cited by more than half of these petitioners, lack of notice was not deemed an extraordinary circumstance under the consent decree. So these petitioners are left without any recourse to have their claims of discrimination heard on the merits. These people should be allowed to have their case heard.

I urge my colleagues to support this important legislation.

Mr. President, every time a President gives a State of the Union message, there are a lot of people who praise it, there are a lot of people who disagree with it. One of the areas where there was some agreement--but also a lot of disagreement--was on the energy package the President suggested in his State of the Union message. Since I come from a State that is No. 1 in almost all of the alternative energies such as biodiesel, such as wind--we are third in wind energy, we are first in biodiesel, we are first in ethanol production--I would like to set the record straight and encourage people to see that a lot of good has been accomplished over the last several years and that we ought to forget a lot of disagreeing rhetoric and move on and even enhance what we have already done. So I am here to address an issue President Bush mentioned in his State of the Union message and an issue that those particularly on the other side of the aisle have been quick to criticize.

In the President's speech to the Nation, he once again highlighted the need for the United States to reduce our dependence upon foreign oil. This has been something that Presidents have been stating on a very regular basis, both Republican and Democratic, going back to 1973, when President Nixon gave a speech, during the first energy crisis, speaking about energy independence. Of course, President Nixon was saying we can do it by 1980. I don't know why he picked that date, but actually we are much more dependent upon foreign sources now than we were even in 1980 because of the consumption of the United States and the standard of living we have. People want to be free to drive their car wherever they want to drive it as long as they want to. Whether it is a big car or little car, it is freedom in America to do it, so we become more dependent. But also along the lines of alternative energy, we have made tremendous progress.

So President Bush did not do anything that Presidents probably haven't been doing for the last 34 years, in saying we need to move toward energy independence, but what they mean is less dependence upon foreign sources and less dependence upon petroleum. Because I would be misleading my colleagues, I would be misleading my constituents if I said we have the capability--at least I don't know that we have the capability--of being totally independent of foreign sources of energy, but we surely have the capability

of being less dependent upon foreign sources of energy, and we have the capability of being less dependent upon petroleum as a basis of our energy.

So the critics, though, it seems, have been quick to point out that the President has mentioned our dangerous dependence on foreign oil in seven straight addresses to the Congress. That is why I pointed out that every President since President Nixon has been talking about this issue. So it is not just President Bush who has been mentioning it and, presumably and impliedly, not doing anything about it. I wish to remind my colleagues he has also talked about the value of domestic, homegrown, renewable sources. But at the same time, there has been criticism that he has done little to actually support the growth of alternative energy. I say my colleagues are wrong.

I am going to quote Senators, but I am not going to mention their names because I am not here to embarrass anybody; I am here to try to get people to be responsible. I do wish to refer to these as all Members of the Democratic Party, but I am not going to mention their names. One Democratic Senator stated after the President's speech last week:

The President acknowledged the need to develop alternative

energy, but he did not offer a real plan to put us on the

path to energy independence.

Now, I am going to show my colleagues how the President has been very much involved in this.

Another Democratic Senator stated:

So many of us believe that though the President continues

to refer to the problem--

Meaning the problem of not being energy independent enough--

he has never quite moved us--

Never quite moved us--

as we would like in the direction of a solution. We did

little or nothing in Washington to address the addiction.

Maybe he hasn't addressed the addiction, but because there is an addiction, he has tried to make us less dependent upon a petroleum addiction, as opposed to an energy addiction.

Finally--and I could go on and quote many more, but I will stop at the third one--one more Democratic Senator commented:

We have waited 6 long years for the aggressive new

incentives needed to really get our biofuels industries off

the ground and break America's oil addiction.

Of all the statements I have quoted, it seems to me that is the one that is flatout intellectually dishonest, as I am going to give some facts here. The facts would suggest otherwise. The fact is the ethanol industry is growing at the fastest pace in its history. There are over 110 ethanol facilities operated across the country. These plants have the capacity to produce 5.3 billion gallons of ethanol annually. I said 110--110 ethanol facilities. We only have 170 petroleum refineries to make gasoline and fuel oil in this country. So I think we are developing an industry.

Here my colleagues can see the States that are darker, where the ethanol industry is being located. Iowa is No. 1, my State is No. 1 in the production of ethanol, but it is rapidly expanding. I still remember 3 or 4 years ago, or maybe it has only been 2 years ago now, when we had Members from this State and Members from this State who would stand up here and offer amendments against ethanol, and it wasn't long that once we got into the point where everybody realized they had to use ethanol, we had Members from this State and we had Members from this State saying to Senator Harkin and me: Why don't you get us more ethanol, as an example. So people are becoming more ethanol friendly, but it seems you have to take them dragging and screaming into the new world of alternative energy.

So we have a developing industry. Twenty-three States currently have ethanol plants in operation or under construction. Today, there is some level of ethanol blended in more than 46 percent of our Nation's fuel. In my State, that would be about 80 percent. In Minnesota, I will bet it is more because Minnesota has a State mandate. I have been embarrassed because when the Republicans controlled the State legislature and I went to them and said we ought to be doing what Minnesota is smart enough to do, I had Republican legislators tell me: Grassley, go back to Washington and stick to your own business. But I told them how I fought for the ethanol industry and alternative fuel and for the agricultural industry because that is where the source of the energy comes from, from the family farmers of America, and I told them it was embarrassing to me to fight big oil here while they were kowtowing to big oil back in Des Moines.

Well, anyway, I think things are going to be moving along. We have a Democratic Governor who wants to do more with the biofuel industry in my State, and I think we are going to make some progress. We may not have a mandate, but we may not need a mandate now.

I wish to talk about where we are located. Now, according to the Renewable Fuels Association, the ethanol produced in 2006 resulted in the reduction of oil imports by 170 million barrels of oil, with a value of $11.2 billion. Remember, $11.2 billion being spent on ethanol that is not going to the Middle East to produce a profit for the oil barons over there who shoot bullets at our soldiers as we are trying to take on the war on terrorism.

Now, I say to the critics on the other side--the other side chooses, as evidenced by the earlier statements I quoted of Democratic Senators--to ignore this data when they discuss the energy track record of President Bush and the Republican-controlled Congress in past years.

I was cynical when there was a Governor Bush running for President and coming to Iowa to campaign saying he would be for anything but big oil. So I had the opportunity in January of 2000, when we have our caucuses in the coldest time of the year, to be in a minivan with President Bush, as a candidate for the Republican caucuses at that time, to ride with him for 2 or 3 days. I thought, what a wonderful opportunity to be in a small car with a Governor who might be President of the United States, to teach him about the facts of ethanol. It didn't take me very long because he came back--and you never remember the exact quotes because I didn't write this stuff down. But I remember him saying something along the effect of: Well, it is just common sense. We only have so much petroleum. We have to start relying on ethanol to a greater extent. I guess I believed him then, but maybe I had some question marks. So we went on for 2 or 3 days, and there wasn't anything in those 2 or 3 days to change my mind. But you wonder: you say one thing as a candidate; you might perform another thing as an officeholder. But I found back in 2000 that the President was a friend of ethanol when he told me about it, and he has performed that way in office. So I am satisfied that this President is coming from where he started and albeit from a State where oil is big business and where you wouldn't expect him to be for it, but he has been a friend, as he indicated to me privately he was going to be. I think this President has done well for alternative fuel. So I don't think the criticism of him is legitimate.

The fact is that when President Clinton left office in 2000, our farmers were only producing 1.6 billions of gallons of ethanol. Now, I am not saying President Clinton was not friendly to ethanol. He was friendly to ethanol. But I think there are degrees of friendliness. But for the people on the other side of the aisle who tend to be criticizing this President, I want them to see where we have come since this President took office. During the 8 years of the Clinton presidency, domestic ethanol production grew 33 percent, as my colleagues can see here. Now, when we compare that to what it is since President Bush came to office in January 2001, the domestic ethanol industry is producing 1.7 billion gallons annually. That grew to 4.9 gallons last year. When President Bush leaves office--this chart is somewhat of an estimate, but we think it is on target because the plants are coming online and ethanol is catching on and the need for ethanol is very real--we think this will grow to 10 billion gallons. That is a 488-percent increase during this period of time compared to a 33-percent increase.

I am not belittling President Clinton's efforts, but I think people on the other side of the aisle ought to take into consideration when they are raising a question about whether we have done enough in recent years about alternative energy these facts and this growth and not belittle this growth that seems to me is going on. This growth is no accident.

In fact, a key turning point took place in March of 2001 when President Bush took a courageous step that President Clinton should have taken but did not take during the last year of his Presidency. In 1999, the big State of California, with a tremendous consumption of fuel for automobiles and energy--generally, the State of California, at that time, was deciding to ban the competitor to ethanol as an octane enhancer that is known by the acronym MTBE. It stands for methyl tertiary-butyl ether. It was found to contaminate ground water.

Obviously, California had to quit using it, but they did not want to substitute ethanol. According to the 1990 Clean Air Act, they had to substitute ethanol without a waiver by the President or Congress. They were asking for that waiver. It did not happen, so we did not know where the ethanol industry sat versus the MTBE, so ethanol did not benefit the way it could have if President Clinton had made a decision.

California Governor Gray Davis did not want his citizens to have to use ethanol--which the 1990 law required--and he petitioned Clinton for that waiver. While many of my colleagues and I lobbied President Clinton to deny the waiver, he took no action. When President Clinton had the opportunity to demonstrate his confidence in our Nation's farmers and ranchers to produce this clean renewable alternative energy, President Clinton was nowhere to be found.

That changed when Governor George Bush was elected President. Less than 90 days into his term as President, George Bush denied the waiver which put the ethanol industry firmly on a path to growth because California uses so much energy.

Along the way, Congress considered and enacted a number of incentives and supportive policies to foster the development of this important industry. In August 2005, President Bush signed into law the Energy Policy Act which included the renewable fuels standard, or RFS, for short. This provision was a culmination of the work of dozens of Senators during a period that spanned three Congresses. It has also been key to the growth of the domestic ethanol industry.

The effort to enact a strong renewable fuels standard was bipartisan, but it was approved by the majority Republican Congress with the help of President Bush.

During the consideration of the Energy Policy Act, President Bush asked Congress for a bill that would help diversify the U.S. away from crude oil. He put his public support behind the renewable fuels standard to require the use of ethanol and/or biodiesel. The President supported our efforts toward a renewable fuels standard because he recognized that increasing our use of ethanol and biodiesel would create new markets for farm products and increase our energy security.

During the consideration by the Senate during this period of time-- and I referred to this a little bit before--no fewer than 11 amendments were offered by Members of the other side of the aisle to delay, reduce, or render useless the renewable fuels standard which had broad bipartisan support, particularly from those from the Midwest. It was not the Republicans offering these amendments to kill the growth of the domestic renewable fuels market. It was members of the other side, some of whom are the same ones who may be criticizing the President today for not doing enough to decrease dependence upon foreign oil.

Perhaps more ironic is that a strong renewable fuels standard could have been enacted earlier than 2005. In November 2003, an Energy bill conference report came to the Senate with a renewable fuels standard but ran into a filibuster in the Senate. Had there not been a Democratic-led filibuster, what the President signed in August of 2005 would have been signed in November 2003. We would have been 2 years ahead of the game.

In addition to the renewable fuels standard, other provisions enacted in the past 6 years have perhaps done even more to spur the growth of the renewable fuels, particularly ethanol and particularly biodiesel. In 2004, Congress enacted the American Jobs Creation Act. This legislation included modification and extension of the ethanol tax incentive. While improving the incentive, it also extended it through 2010.

In the Energy Policy Act, which the President signed in August of 2005, Congress expanded the incentive for small ethanol producers and created a new credit for small producers of biodiesel. Most recently, Congress extended the tariff on imported ethanol through the year 2008. The tariff ensures that U.S. taxpayers are not subsidizing foreign ethanol and that we continue to grow our domestic production of ethanol.

As a result of the tax incentives, the ethanol import tariff and the renewable fuels standard, the domestic renewable fuels industry, is growing faster than anyone could have ever imagined. The policies put in place by the Congress when Republicans controlled it, with the support and assistance of President Bush, have put this industry on a path of extraordinary growth. We have recognized that renewable fuels, such as ethanol and biodiesel, improve air quality, strengthen national security, reduce the trade deficit, decrease dependence upon the volatile Middle East for oil, expand markets for agricultural products, increase income for farmers, and create good-paying jobs in rural America.

In other words, it is as the Campbell's soup advertisement of 25 years ago: everything about ethanol is good, good, good.

The fact is, President Bush has been the most prorenewable fuels President our country has ever had. I stated earlier when he was a candidate for President coming from big oil Texas and being Governor of that State, would I expect him to be a renewable fuels person in the future? No, because I have been dealing with big oil and fighting them versus ethanol for a long period of time. It is only within the last 3 or 4 years that we had the freedom of not having to fight big oil. Who knows, maybe today we will have to fight big oil again when it comes to some ethanol products for the future, but there has been a lull. I thank President Bush for keeping his word to the people when he promised to be prorenewable fuels.

Getting back to those who claim the renewable fuels industry has lacked attention from President Bush and previous Republican Congresses, I leave with one final point. In the year 2000, the final year of the Clinton administration, we produced 1.6 billion gallons of ethanol. That is nothing negative about President Clinton. He seemed to be, for the most part, very ethanol friendly. But you cannot criticize this President when we have this figure: By the time he leaves office in 2008, we will be producing 10 billion gallons. The policy supported by the Republican Congress led to this growth.

I have proven that I don't want to sit by quietly while the other side tries to say otherwise.

I yield the floor.

Mr. President, I rise to reintroduce the Congressional Whistleblower Protection Act of 2007, which will extend whistleblower protections currently available to certain executive branch employees to legislative branch employees.

Presently, executive branch employees are shielded from retaliation for exposing waste, fraud, or abuse by the Whistleblower Protection Act. The bill I'm introducing today simply extends those same protections to legislative branch employees.

A theme that has dominated this new Congress, as well as the elections this past November, is accountability and responsibility in Washington. I have fought hard for whistleblowers over the years because they are key in our efforts to ensure government accountability to the people we are sent here to serve. In most instances, the only reason we discover waste or fraud is because employees are brave enough to stand up to the wrongdoers and expose their offenses. Without these whistleblowers, the American taxpayer would continue to foot the bill.

The Office of Compliance has called for these changes on numerous occasions in recent years, and they are very supportive of this bill. We have already taken the steps to protect whistleblowers in the executive branch. It doesn't make sense not to extend these same protections to whistleblowers in our own backyard. My bill will, very simply, give congressional employees the same protections that workers in the other branches of government already possess.

I hope my colleagues will join me in supporting this bill to ensure that those who help us in the fight to hold government accountable are not punished for their efforts.

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

Mr. President, I rise to reintroduce the Congressional Whistleblower Protection Act of 2007, which will extend whistleblower protections currently available to certain executive branch employees to legislative branch employees.

Presently, executive branch employees are shielded from retaliation for exposing waste, fraud, or abuse by the Whistleblower Protection Act. The bill I'm introducing today simply extends those same protections to legislative branch employees.

A theme that has dominated this new Congress, as well as the elections this past November, is accountability and responsibility in Washington. I have fought hard for whistleblowers over the years because they are key in our efforts to ensure government accountability to the people we are sent here to serve. In most instances, the only reason we discover waste or fraud is because employees are brave enough to stand up to the wrongdoers and expose their offenses. Without these whistleblowers, the American taxpayer would continue to foot the bill.

The Office of Compliance has called for these changes on numerous occasions in recent years, and they are very supportive of this bill. We have already taken the steps to protect whistleblowers in the executive branch. It doesn't make sense not to extend these same protections to whistleblowers in our own backyard. My bill will, very simply, give congressional employees the same protections that workers in the other branches of government already possess.

I hope my colleagues will join me in supporting this bill to ensure that those who help us in the fight to hold government accountable are not punished for their efforts.

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

Speaking as in morning business?

Mr. President, I would like to speak about two issues that have been much in the news lately: the tax gap and the minimum wage bill. We had on the front page of the Times today the discussion about the tax gap. In addition, with the release of the President's budget today, the administration has provided Congress substantive proposals to deal with the tax gap. It is now Congress's responsibility to consider these proposals, review them, and hear from the public and also see what more is possible in terms of addressing the tax gap. But the good news is we have already taken steps in this Congress to deal with the tax gap. We have very important tax reforms and tax gap measures included in the minimum wage bill. So Congress is effectively killing two birds with one stone.

First, we are providing needed tax relief for small businesses that could be harmed by the increase in the minimum wage--and I voted for an increase in the minimum wage. Second, in the minimum wage bill we are going after the tax gap and those who engage in the tax scams.

Two things: No. 1, we are dealing with efforts to help small business and, No. 2, we are at the very same time bringing more money into the Federal Treasury by closing tax scams and reducing the tax gap.

I would say, as a sidenote to my colleagues, particularly the new leaders on the Budget Committee, that these tax provisions are only the latest example of the Finance Committee producing additional revenues by changes in the Tax Code. Unfortunately, I feel as though I need to put on a Sherlock Holmes hat and hire a bloodhound to go out and try to find any savings that the Budget Committee makes and had enacted into law when it comes to the spending side of the ledger. We have more than done our job on the tax side. I say it is time for the Budget Committee to deliver savings on the spending side.

But let me turn back to the tax gap and turn back to the minimum wage bill. I am very pleased that in working with Senator Baucus we have, as part of the tax provisions contained in the minimum wage package, a new provision--a number of provisions, in fact--that will go after those engaged in tax shelters and tax scams and take steps, then, in the process, to address the tax gap--in other words, money that is owed but not paid. I would like to highlight just a few of these provisions that are in the minimum wage bill that are closing the tax gap and shutting down tax scams.

We shut down the SILO scheme. That is an acronym. U.S. corporations cut their tax bills by purchasing and leasing back overseas government facilities such as sewer plants and subways in the country of Germany. We take additional steps to go after corporations that move to the Bahamas and have just a mailbox, not any people, and use the gimmick to cut their taxes. I can't tell you how many times I have heard speeches about that issue from Senators on the other side of the aisle. We can end the talking and we can start doing something about it with these very provisions contained in the minimum wage bill if we do not let suceed people who are talking about separating the tax provisions of the wage bill just to get a minimum wage bill passed.

We also tightened the rules on individuals who expatriate to avoid taxes legally owed in the United States--and we have that happen.

We end the fast and loose ways that corporations account for fines and penalties, so if a corporation gets a penalty for, let's say, polluting the environment, they do not get to deduct that from their income tax. We also increase penalties for those who underpay taxes due to fraud. I think everybody would agree with that. We double the fines and the penalties for those who use offshore financial arrangements to avoid taxes. The Finance Committee views that as a growing problem and a major reason that there is such a tax gap. We expand and improve the whistleblower program which will provide the Internal Revenue Service a roadmap for corporate tax fraud.

We modify the collection due process rules to protect the tax protesters from abusing the system. This is something that the administration proposed in its budget today to help deal with the tax gap.

This collection due process provision contained in the minimum wage bill only emphasizes my point that we can start dealing with a tax gap today, right now.

And then a final provision I will make reference to is one provision that closes a loophole in section 162(m), the $1 million limitation for corporate executives. The provisions provide that a CEO can't avoid the effects of 162(m) by not being on the job at the end of the year.

Mr. President, forests have been sacrificed to print the speeches that politicians make decrying excessive CEO pay. Yes, we have a provision in the minimum wage bill that tightens the deduction that can be taken for higher CEO pay.

So I get down to the basics, and I get down to the basics because I have been hearing some rumors from Senators--but more importantly from the leadership of the other body--that in order to get a minimum wage bill passed, we ought to drop the tax provisions and pass the minimum wage bill. But I have always been hearing over the years from those people who are saying: We need to do something about the tax gap; we need to do something about the tax scams; we need to do something about people going offshore to avoid the payment of taxes, and on and on. So I have to ask the Democratic leadership if they are going to put the provisions I am talking about--closing the tax gap, closing down the tax scams--if they want to put those provisions in the trash can. If they do, I would also like to put into the trash all the speeches made on the other side then about CEO pay.

I say this because the time for speeches is over. We can take steps right now with the tax provisions in the minimum wage bill to deal with the tax gap and CEO pay. I have listed these provisions, and as my colleagues know, while many of them are good common sense, these provisions are also not at all popular downtown on K Street or up the eastern coast on Wall Street.

While the debate has focused on the tax breaks for small business in the minimum wage bill--and those are important because they are helping small business overcome some negative impact of the minimum wage increase--it is also critical we pass a much-needed tax gap and anti- abuse provisions contained in the minimum wage bill and pass them now. Delaying these reforms as some would argue--putting them on another tax bill--rewards tax cheats. These reforms are often date and time sensitive. Delay only benefits those who are playing fast and loose with our tax laws.

I can't believe the House Democratic leadership wants the first action they take in the area of taxes to drop these reform provisions-- these provisions that would close the tax gap--and signal to the tax cheats that the door is wide open.

Senator Baucus and I, working together over the years, have passed into law a good many reforms, and we have shut down a number of tax scams. However, we have been, at times, stymied in the other body--not by Democrats but by Republicans.

We heard a lot of commentary during the elections and afterwards how it was no longer going to be business as usual. My hope is that given the rhetoric of the new House leadership, we could finally pass these anti-abuse tax reforms in the minimum wage bill. I worry, though, that with folks talking about stripping the tax provisions from the minimum wage bill, the House leadership may be singing a new song. But

the results are the same. The House Democratic leadership needs to understand that kowtowing to K Street is not a new direction that was promised by a new majority in the last election. They can show it is not business as usual, as they were condemning Republicans of doing. They can show that by passing all the tax provisions contained in the Senate minimum wage bill.

I yield the floor.

Mr. President, I would like to take a moment today to honor the distinguished civil service career of a particularly remarkable Iowan. Mr. Robert ``Bob'' Crawford will be retiring shortly from his civilian service to the Department of the Army and in doing so will leave behind a legacy of exceptional support and dedication to his work and to his country.

Over the years, Bob Crawford has amassed a series of professional accomplishments that are truly outstanding. His commitment to his work has earned him a Commander's Award for Civilian Service and he has twice been awarded the Superior Civilian Service Award. Bob's hard work, honesty, and leadership have become defining characteristics of his career and he has earned the respect of his colleagues and peers for his many years of expertise.

Bob Crawford currently works as the Deputy to the commander for the U.S. Army Joint Munitions Command, JMC, where he is entrusted to maintain the development and production of the ammunition supply for our brave service men and women overseas. Before serving in this capacity, Bob worked in a number of different roles within the ammunition production industry, ranging from a production engineer, to a production director, to a deputy for operations, and finally to his current position. While his responsibilities have shifted and grown over the years, Bob Crawford's commitment to the values of the Department of the Army has remained as steadfast and unwavering as ever.

As early as his time at the University of Illinois and then at St. Ambrose University, Bob has been distinguishing himself within his field and I am glad to be able to congratulate him and honor his magnificent career as it now comes to a close. I wish Bob and his wife Sharon and their children in Bettendorf, IA, the very best of luck for the future and I thank him for his 25 years of public service.

Madam President, I wish to speak briefly on a revenue provision contained in the minimum wage bill. Senator Baucus and I worked closely on the tax bill, both on the provisions providing relief to small businesses affected by the minimum wage but also the offsets that made sure the package was in balance.

One of the offsets, that dealing with limiting the amounts of annual deferrals under nonqualified deferred compensation plans, has attracted some concern and raised some questions.

I thought it would be useful to my colleagues for me to provide a brief sketch of where we have been on this issue. The issue of nonqualified deferred compensation came to the attention of the Finance Committee in response to the Joint Committee on Taxation's investigation into Enron--done at the request of the Finance Committee. The Enron report highlighted a number of abuses by top executives involving nonqualified deferred compensation.

In the American Jobs Creation Act that Congress passed in 2004, there were included provisions that limited deferred nonqualified compensation plans. In brief, the legislation limited when and under what circumstances distributions could be made.

More recently, in the Pension bill passed last year, Congress restricted funding of nonqualified deferred compensation plans if the employer had underfunded certain other retirement plans.

In addition, the Finance Committee last September had a hearing that looked closely at executive compensation that covered a wide range of pay issues involving top employees.

As my colleagues can see, the issue of executive compensation and particularly nonqualified deferred compensation has been of long- standing interest for the Finance Committee. I expect that these matters will continue to command the attention of the committee this Congress.

The majority of concerns that have been raised about this most recent provision contained in the minimum wage bill is its possible impact on middle management. I appreciate those calling for caution. The Finance Committee's Republican staff is reviewing the legislation and seeking to get more and better numbers about who is affected by this legislation. In addition, there have been bipartisan discussions at the staff level.

In discussions with Joint Committee on Taxation I have asked them what would be the impact of eliminating the 5-year average compensation limitation so that the aggregate amounts deferred under a nonqualified deferred compensation plan would be limited to $1 million annually.

JCT informs me that this would reduce the current $806 million score by less than $100 million--so it would only be a small shave off the score. This suggests to me, that the vast majority of individuals--90 percent--who would be affected by this reform are among the wealthiest--i.e., those individuals receiving more than $1 million annually in nonqualified deferrals. I hope this information will help inform members as we discuss this matter in the near future.

Finally, I think it is important for members to bear in mind that ERISA does not apply to so-called ``top hat'' plans, these top hat plans being those for top management. There is a concern that if a nonqualified plan is widely applicable, as widely applicable as some of the opponents of this provision contend, it raises other red flags.

The issue raised is the fact that a widely applicable plan should be treated as an ERISA plan. If these widely applicable nonqualified deferred compensation plans are actually ERISA plans, they then should come under the protections that Congress has put in place under ERISA to provide workers retirement security.

I will continue to look at this provision and bear in mind the issues raised by my colleagues.

Madam President, we are finishing up debate on the Senate minimum wage/small business tax relief bill.

The Senate invoked cloture on the Baucus substitute amendment. It contained two basic components. The first one is the proposed increase in the Federal minimum wage. The second component is tax incentives to assist workers and businesses burdened by the increased Federal minimum wage. That part of the package was approved, on a bipartisan basis, by the Finance Committee late last month.

Now, by approving the Baucus substitute on an overwhelmingly bipartisan vote, the Senate has made its will clear: a minimum wage increase must be linked to small business tax relief package.

In the normal course of events, after Senate passage, the amended House bill would either go into conference or go back to the House as amended. We call the latter procedure ``pingpong.''

Since tax matters were linked and the House bill doesn't have tax provisions, the House Democratic leadership and tax writers have threatened to send the Senate bill back to the Senate. They will claim that they are protecting prerogatives of the House.

We find ourselves stuck on minimum wage because the House Democrats have threatened to use the ``blue slip'' procedure.

So, no one should be mistaken. It is House Democrats, not Senate Republicans, who are delaying passage of the minimum wage.

If House Democrats send us a suitable revenue bill, Senate Republicans will be ready to move expeditiously to the next step. Right now, we can not move.

Now, if the House Democrats send us a minimum wage-related revenue bill, what happens next?

That is up to our Democratic and Republican leaders.

There are two basic avenues to take. One is a conference. The other is to amend the House revenue bill back with the Senate-passed bill and send it to the House.

On tax bills, we have used both approaches over the last few years. For instance, the Hurricane Katrina tax relief measures never went to conference. On the other hand, we had conferences on the tax relief reconciliation bill and the pension bill.

Still another approach would be for the House to combine its minimum wage bill with the Senate tax relief package and send it over here. That route, though unusual, has also worked.

In this case, I have indicated to my Republican leadership that I am wary about the conference option.

The Senate Democratic leadership only came to linking minimum wage with small business tax relief after Chairman Baucus relayed the Republican position to them. It took a cloture vote to prove Chairman Baucus right.

So, if we go to conference, the Senate Democratic leadership and House Democratic leadership might be perfectly willing to scrap the Senate's position.

Apparently, at a pen and pad session with reporters today, the majority leader indicated as much. He told reporters he wanted a ``clean'' minimum wage bill to come out of conference. Now, I am told the majority leader's press operation has attempted to change the impression those remarks left.

Let's just say I am reasonably suspicious of those kinds of ``clarifications.'' Apparently, the majority leader also said he would be prepared to dare Republicans to filibuster a clean minimum wage conference report. By ``clean,'' he appears to be referring to the term used by House and Senate Democratic leadership to mean no linked small business tax relief.

Make no mistake--the easiest and quickest way to send a minimum wage bill to the President would be for the House to send the Senate a bill identical to the Senate-passed bill.

An alternative quick option would be for the House to send us a revenue bill and the Senate would amend the bill and send it to the House. The House could then send the bill to the President's desk.

The conference option could be troublesome. It could be drawn out. Or, it could be a way for the House and Senate Democratic leadership to subvert the Senate position. That would not be a good way to start out the new session. In a conference setting, it would mean the Senate Democratic leadership acting in a manner that is at odds with how it said it was going to conduct business.

I counsel my leadership and the Democratic leadership to consider my concerns about the next step.

Madam President, after great effort by many people, the Senate has adopted the Fair Minimum Wage Act as amended by the Baucus substitute amendment containing the Small Business and Work Opportunity Act of 2007. This bipartisan small business package will help ensure that small businesses are able to cope with an increase in the minimum wage.

Credit must go to the dedicated members of my staff, who spent many hours helping to put this package together. Kolan Davis, Mark Prater, Dean Zerbe, Elizabeth Paris, Chris Javens, Cathy Barre, Anne Freeman, Grant Menke, Stanford Swinton, and Nick Wyatt showed great dedication to the tasks before them.

Of course this package could not have been put together without the efforts of Chairman Baucus and his staff. I particularly want to thank Russ Sullivan, Bill Dauster, Pat Heck, Judy Miller, Rebecca Baxter, Melissa Mueller, Pat Bousliman, and Ryan Abraham.

Mr. President, I rise to speak in support of a bill that I am introducing today, the Combating Money Laundering and Terrorist Financing Act of 2007.

The life-blood of any criminal organization or enterprise is money. Whether engaged in drug dealing or terrorism, criminals cannot operate without money. The targeting of efforts by criminals to hide illegitimate funds in legitimate financial institutions has long been a focus of law enforcement.

Yet like all other aspects of criminal activity, money laundering continues to evolve into newer and more complex forms. This is particularly true in the funding of terrorist organizations and operations. Therefore, money laundering remains not only a criminal racket but also poses a grave threat to our national security.

Tracking how terrorists obtain, store, and move illicit funds is among the most critical aspects of stopping their efforts. Among its recommendations, the 9/11 Commission report stated that, ``Vigorous efforts to track terrorist financing must remain front and center in the U.S. counterterrorism efforts.'' We have made some significant strides in identifying how terrorists accumulate and move money, but more remains to be done. Terrorists and criminal networks continually evolve new ways of using legitimate means to launder illegally obtained funds. We must not underestimate the intelligence or resolve of these groups. Many have already utilized loopholes in current law to hide funds or circumvent required reporting to U.S. Customs officials.

Work must continue so that terrorists and other criminals are left without the ability to hide illegally obtained funds inside or in concert with legitimate means. We should commit to increasing pressure on these organizations to make money laundering as difficult and unprofitable as possible. And ultimately, we must give law enforcement and prosecutors the ability to effectively deal with criminals' ever- changing tactics.

The legislation that I am introducing today will strengthen our current money laundering statutes by streamlining those laws, closing those loopholes in the laws exploited by criminal organizations, and creating more efficient means for dealing with violators of money laundering laws. My bill goes about doing this in several ways.

First, my bill deals with the problem of ``specified unlawful activities'' or ``SUAs.'' SUAs are predicate offenses required for current money laundering statutes to apply, and there are currently over 200 of them. As criminals continue to change methods of laundering money, the list of SUAs will continue to grow. This legislation will prevent criminals from turning to other means not designated as an SUA, and will consolidate the ever growing list of SUAs by including all federal and state offenses punishable by imprisonment for more than one year. Also, criminals will no longer be able to hide behind borders, as this legislation would subject violations in foreign countries that have an effect on the U.S. to the same penalties as if they had occurred in the United States.

Currently, most circuit courts must charge each violation of money laundering statutes separately. My bill will allow, at the election of the government, prosecutors to charge multiple acts under one count in an indictment. This will significantly reduce the time and expense incurred by the courts in these cases, versus the current method of charging each and every violation separately.

Criminals have realized that the movement of large sums of money through traditional financial institutions will result in increased scrutiny and investigation. Therefore, many have turned to smuggling large quantities of money via a courier or bulk cash smuggling. They have developed techniques to avoid having to declare property with a value greater than $10,000 and to protect those couriers who are caught. My legislation will remove the criminal's ability to get around current laws, and remove protections for the smuggler.

For example, current law requires that couriers know specifics about the illegal activities that produced the monies they carry before they may be prosecuted under money laundering statutes. As a result, many claim ignorance about the illegal origins of the money and are released. With my bill, couriers will now be held responsible for their actions, even if they try to claim ignorance. Therefore, law enforcement can get both the courier and the money off the street. This bill also would stiffen the penalty for bulk cash smuggling to 10 years.

Another tactic now being used by criminals is to have couriers carry blank checks in bearer form. The couriers argue that the check has no amount, so it is not subject to declaration. Once the courier arrives at his destination, he merely has to fill in the amount, whatever it may be. My legislation would remove this loophole by setting the value of any blank check in bearer form equal to the highest amount in that account during the time period it was being transported, or when it is cashed.

My bill also seeks to mitigate the tactics of ``commingling funds'' and ``structured transactions.'' The ``commingling funds'' tactic involves depositing illegal money in an account with legitimate funds. Under current law, criminals can argue that money withdrawn from the account was from the legitimate sources. The language in this bill would clarify that transactions on accounts containing more than $10,000 in illegally obtained funds will be considered a transaction involving more than $10,000 in criminally derived property, regardless of how the other money in the account was obtained. Nor will criminals be allowed to avoid the law by structuring smaller transactions below the $10,000 reporting requirement. Under my bill, individual but related transactions will be considered at their aggregate value.

Finally, this bill will provide the United States Secret Service with the legislative and financial resources it needs to combat counterfeiters and other criminals seeking to harm our financial systems. The U.S. Federal Reserve Note is the most identifiable currency in the world and the backbone of many other nations' economies. To help ensure continued stability of the Greenback worldwide, my bill will make illegal the possession of any materials used to make counterfeit currency. This is necessary because technology has evolved far beyond the old days of printing plates, stones, and digital images. Like the evolving tactics used by those in money laundering operations, the counterfeiter constantly changes his tactics and technologies. Furthermore, the crime of counterfeiting is becoming more and more international in scope every day. The Secret Service has identified counterfeiting operations in Colombia, Nigeria, Italy, Iraq, and North Korea. This is apparent in the use of bleached notes. Bleached notes are simply bills with low denominations being bleached with chemicals. This produces a blank canvas of genuine currency paper for counterfeiters to work with, to which they can add higher denominations. My bill will make it illegal to possess these bleached or otherwise altered notes, and give the Secret Service the authorization it needs to pursue these criminals outside the United States.

Additionally, this bill gives the Secret Service the authorization to use funds seized from criminals to pay for ongoing undercover investigations. This seems like common sense, and indeed, every other federal investigative agency has this authority. Tasked with protecting our financial systems, the Secret Service should be provided with all the resources necessary to fund its undercover operations. This makes even more sense, considering it's the criminals themselves who would be paying those bills. My bill provides that authority to the Secret Service and will allow them to continue the important work of protecting our financial infrastructure.

As I said, money is essential for the operation of any criminal or terrorist organization. The ability to get, move, and hide these funds is critical to the operations of both. We have had some success in thwarting this ability, as is evident by the constantly changing techniques for laundering money. We must continue to apply pressure on these groups, and do everything we can to identify and stop their financing operations. This bill is designed to do just that, and put these organizations out of business for good. I urge my colleagues to join me and my cosponsors, Senators Kyl, Cornyn, and Graham, in supporting this legislation to combat the financing of criminal and terrorist activities.

Mr. President, I ask unanimous consent that the text of this bill be printed in the Record.

Mr. President, I rise to speak in support of a bill that I am introducing today, the Combating Money Laundering and Terrorist Financing Act of 2007.

The life-blood of any criminal organization or enterprise is money. Whether engaged in drug dealing or terrorism, criminals cannot operate without money. The targeting of efforts by criminals to hide illegitimate funds in legitimate financial institutions has long been a focus of law enforcement.

Yet like all other aspects of criminal activity, money laundering continues to evolve into newer and more complex forms. This is particularly true in the funding of terrorist organizations and operations. Therefore, money laundering remains not only a criminal racket but also poses a grave threat to our national security.

Tracking how terrorists obtain, store, and move illicit funds is among the most critical aspects of stopping their efforts. Among its recommendations, the 9/11 Commission report stated that, ``Vigorous efforts to track terrorist financing must remain front and center in the U.S. counterterrorism efforts.'' We have made some significant strides in identifying how terrorists accumulate and move money, but more remains to be done. Terrorists and criminal networks continually evolve new ways of using legitimate means to launder illegally obtained funds. We must not underestimate the intelligence or resolve of these groups. Many have already utilized loopholes in current law to hide funds or circumvent required reporting to U.S. Customs officials.

Work must continue so that terrorists and other criminals are left without the ability to hide illegally obtained funds inside or in concert with legitimate means. We should commit to increasing pressure on these organizations to make money laundering as difficult and unprofitable as possible. And ultimately, we must give law enforcement and prosecutors the ability to effectively deal with criminals' ever- changing tactics.

The legislation that I am introducing today will strengthen our current money laundering statutes by streamlining those laws, closing those loopholes in the laws exploited by criminal organizations, and creating more efficient means for dealing with violators of money laundering laws. My bill goes about doing this in several ways.

First, my bill deals with the problem of ``specified unlawful activities'' or ``SUAs.'' SUAs are predicate offenses required for current money laundering statutes to apply, and there are currently over 200 of them. As criminals continue to change methods of laundering money, the list of SUAs will continue to grow. This legislation will prevent criminals from turning to other means not designated as an SUA, and will consolidate the ever growing list of SUAs by including all federal and state offenses punishable by imprisonment for more than one year. Also, criminals will no longer be able to hide behind borders, as this legislation would subject violations in foreign countries that have an effect on the U.S. to the same penalties as if they had occurred in the United States.

Currently, most circuit courts must charge each violation of money laundering statutes separately. My bill will allow, at the election of the government, prosecutors to charge multiple acts under one count in an indictment. This will significantly reduce the time and expense incurred by the courts in these cases, versus the current method of charging each and every violation separately.

Criminals have realized that the movement of large sums of money through traditional financial institutions will result in increased scrutiny and investigation. Therefore, many have turned to smuggling large quantities of money via a courier or bulk cash smuggling. They have developed techniques to avoid having to declare property with a value greater than $10,000 and to protect those couriers who are caught. My legislation will remove the criminal's ability to get around current laws, and remove protections for the smuggler.

For example, current law requires that couriers know specifics about the illegal activities that produced the monies they carry before they may be prosecuted under money laundering statutes. As a result, many claim ignorance about the illegal origins of the money and are released. With my bill, couriers will now be held responsible for their actions, even if they try to claim ignorance. Therefore, law enforcement can get both the courier and the money off the street. This bill also would stiffen the penalty for bulk cash smuggling to 10 years.

Another tactic now being used by criminals is to have couriers carry blank checks in bearer form. The couriers argue that the check has no amount, so it is not subject to declaration. Once the courier arrives at his destination, he merely has to fill in the amount, whatever it may be. My legislation would remove this loophole by setting the value of any blank check in bearer form equal to the highest amount in that account during the time period it was being transported, or when it is cashed.

My bill also seeks to mitigate the tactics of ``commingling funds'' and ``structured transactions.'' The ``commingling funds'' tactic involves depositing illegal money in an account with legitimate funds. Under current law, criminals can argue that money withdrawn from the account was from the legitimate sources. The language in this bill would clarify that transactions on accounts containing more than $10,000 in illegally obtained funds will be considered a transaction involving more than $10,000 in criminally derived property, regardless of how the other money in the account was obtained. Nor will criminals be allowed to avoid the law by structuring smaller transactions below the $10,000 reporting requirement. Under my bill, individual but related transactions will be considered at their aggregate value.

Finally, this bill will provide the United States Secret Service with the legislative and financial resources it needs to combat counterfeiters and other criminals seeking to harm our financial systems. The U.S. Federal Reserve Note is the most identifiable currency in the world and the backbone of many other nations' economies. To help ensure continued stability of the Greenback worldwide, my bill will make illegal the possession of any materials used to make counterfeit currency. This is necessary because technology has evolved far beyond the old days of printing plates, stones, and digital images. Like the evolving tactics used by those in money laundering operations, the counterfeiter constantly changes his tactics and technologies. Furthermore, the crime of counterfeiting is becoming more and more international in scope every day. The Secret Service has identified counterfeiting operations in Colombia, Nigeria, Italy, Iraq, and North Korea. This is apparent in the use of bleached notes. Bleached notes are simply bills with low denominations being bleached with chemicals. This produces a blank canvas of genuine currency paper for counterfeiters to work with, to which they can add higher denominations. My bill will make it illegal to possess these bleached or otherwise altered notes, and give the Secret Service the authorization it needs to pursue these criminals outside the United States.

Additionally, this bill gives the Secret Service the authorization to use funds seized from criminals to pay for ongoing undercover investigations. This seems like common sense, and indeed, every other federal investigative agency has this authority. Tasked with protecting our financial systems, the Secret Service should be provided with all the resources necessary to fund its undercover operations. This makes even more sense, considering it's the criminals themselves who would be paying those bills. My bill provides that authority to the Secret Service and will allow them to continue the important work of protecting our financial infrastructure.

As I said, money is essential for the operation of any criminal or terrorist organization. The ability to get, move, and hide these funds is critical to the operations of both. We have had some success in thwarting this ability, as is evident by the constantly changing techniques for laundering money. We must continue to apply pressure on these groups, and do everything we can to identify and stop their financing operations. This bill is designed to do just that, and put these organizations out of business for good. I urge my colleagues to join me and my cosponsors, Senators Kyl, Cornyn, and Graham, in supporting this legislation to combat the financing of criminal and terrorist activities.

Mr. President, I ask unanimous consent that the text of this bill be printed in the Record.

Mr. President, previous to Senator Baucus speaking, we heard my friend from Massachusetts harangue about minimum wage not being considered for the last 10 years and that it is about time we get the job done. I am going to be one of those to vote yes to get the job done, to increase the minimum wage. But I think it is legitimate to ask a couple of questions. One, there was a period of time during that 10 years that Senator Kennedy's party was in the majority and controlled the Senate. I don't recall them bringing up the minimum wage issue at that particular time. If it was so important that it be done before this period of time has elapsed, I would have thought they would be voicing concern about raising the minimum wage as much and have a responsibility to do it when they were in the majority, as it is now; and we are accused because we want to amend some tax provisions to it, which are very directly related to some of the negative impacts of increasing the minimum wage on small business, and it is a very legitimate point to bring up.

The second point I will bring up to the Senator from Massachusetts is, when he talks about adding tax provisions to the minimum wage, has he forgotten that during the signing ceremony of the last increase in the minimum wage bill by President Clinton Senator Kennedy was praised for bringing a bill to the President that had tax provisions that were very beneficial to small business and also other provisions that were very beneficial to minimum wage workers by increasing the minimum wage?

I read from President Clinton's statement last week during the debate. I know Senator Kennedy heard me say that. And yet it seems like it went in one ear and out the other because here he is saying it is wrong now, that when we are increasing the minimum wage, we have a small business tax provision included with the minimum wage increase.

It makes me wonder if there is a double standard: It is okay to have tax bills connected with a minimum wage increase when there is a Democratic President, but when there is a Republican President, it is not okay. I don't think we ought to have those sort of double standards. I think if it is okay

in the case of a Democratic President, it ought to be okay in the case of a Republican President.

Plus, I could raise the issue that if it is legitimate to have tax changes to benefit small business at the same time we are having increases in the minimum wage, this tax package is very meager compared to the one that was in the bill that President Clinton signed. At that time, I believe, there was about $20 billion worth of small business tax changes to benefit depreciation and other things that can offset the detrimental impact on a minimum wage increase on small business.

We all know there is no detrimental impact on larger businesses that can pass along the cost. But for smaller businesses that can't, for struggling small businesses, in particular mom and pops, it has to be something we take into consideration not only for the benefit of the smaller business but also for the benefit of the workers who work for that small business that maybe will be more underemployed or unemployed because maybe the small business can't afford to keep the same number of workers as when the minimum wage was lower. So all of these things seem to me to be legitimately tied together.

But in the case of a $20 billion tax package 10 years ago, compared to an $8 billion tax package in this bill, and considering inflation over the last 10 years, there isn't a single person listening to this debate who doesn't know that when there are complaints about connecting together a tax bill with a minimum wage increase, compared to the last time this was done in the Clinton administration, this tax package is peanuts compared to what we did for small business then--peanuts. Yet we are having this harangue about it, that somehow this debate is not legitimate.

Well, if it was legitimate in the Clinton administration, why isn't this debate legitimate now, particularly considering the great lengths to which President Clinton went to compliment Senator Kennedy for delivering a bill to President Clinton that had provisions benefiting small business, as well as benefiting the minimum wage worker?

We are going to get a bill passed. I don't know who is complaining. What is coming up when we get done? Well, of course, the debate, I suppose, on Iraq is going to come up. And it ought to come up. We know what is coming up. We know there is not going to be any more votes on that issue this week. So if we get this bill done today or tomorrow-- and I bet it will be done today--then we know that is probably going to be the last vote of the Senate this week. I think the people on the other side of the aisle who are managing this bill know that. They know when we get a couple of votes on a couple of other tax provisions, that it is limited. We know there is finality coming. There hasn't been any effort by anybody on this side of the aisle to hold up this bill, except to make sure that the impact of the minimum wage increase on small business is going to be considered the same way it was in the previous administration.

I am very happy that yesterday cloture was invoked on the Baucus substitute amendment, and it contains these two very important components about which I have already talked. For summary, in case people are now beginning to pay attention to this debate after 1 week in the Senate, the first component proposed an increase in the minimum wage.

You can make all sorts of arguments why maybe the minimum wage should not be increased. Economists can make that argument about some increase in unemployment. Some people would say you should never have passed the minimum wage in the first place in 1938. But forget those economic arguments. It is a political decision that we have had a minimum wage for the last 70 years, and it has to be a political consideration that it ought to be increased from time to time or you shouldn't have it.

So let's get over that argument, as legitimate as the economic arguments might be. They are going to be put aside because we are not going to eliminate the minimum wage. It is a part of the safety net of American society. It is part of the fabric of our society, just as Medicare, Medicaid, and Social Security. You can all argue about whether seven decades ago some of these decisions should have been made by Congress. But after a period of time, you accept it as a fact of life; they are part of the social fabric of America, and move on. It is a question now of how much.

That decision has even been answered--$2.10. It is about the same decision that is being answered in several State legislatures around the Nation, including my own State of Iowa, which now has made a decision that it ought to be $2.10, albeit triggered a little quicker than is going to be done under this bill. So we move ahead and that is taken care of.

The second component is not seven decades old, as I indicated. The Baucus substitute connects these efforts to assist small business with some changes in the tax law to benefit them. It has only been in the recent two decades that that has been an issue. But at least it recognizes something that maybe wasn't recognized before; that small business is the engine of employment in America and it ought to be recognized that, in some instances--and economists can back this up-- there is some underemployment or unemployment, particularly among young people, and most particularly among minority young people.

I think it is legitimate to consider that because we make a great deal in this Congress about having programs for the unemployed, such as retraining. We make a big deal about education, vocational education, and preparing people for the workforce. But do we ever stop to think of something that doesn't cost the taxpayers one penny? And that is that vocational education goes along with a young person getting the first job that they have ever had so that they learn to get up in the morning, go to work, and be part of the workforce.

If you are not in the workforce, you are never going to work your way up the economic ladder. So getting in the workforce, learning the rules of the workforce, treating people right, taking orders, being a productive citizen is very important vocational education. So if we are creating some unemployment, particularly among minority young people, because of a decision we are making, a political decision we are making, we ought to at least take that into consideration. But for two decades now we have considered that there is some negative impact.

There is not going to be a one-for-one correlation between changes we make in depreciation schedules for small business that is going to guarantee Joe Blow or Mary Smith, teenagers working for a mom-and-pop grocery store, that they are going to be able to keep their jobs. But it is some relief across the board that is going to benefit small business, and there may be less unemployment of teenagers, less unemployment of minority teenagers so that they can get in the world of work and work themselves up the economic ladder. So the Baucus substitute is before us and will pass this body.

Despite serious policy concerns about the efforts to raise the minimum wage, we all know that public support for increasing the minimum wage remains strong. And who can argue with that? Ten years? So there is a rationale for raising it. It is pretty hard to convince anybody that as long as Congress is setting a minimum wage, it shouldn't be adjusted from time to time. So it is quite obvious. That is why we are here for that debate. So the political reality is that a majority of Senators support a minimum wage increase, not based upon being trustees of the American people but based on the proposition of being representatives of the American people. And that message is coming very clearly from the grassroots.

As predicted, the cloture vote last week showed there are not 60 votes for this minimum wage bill without the small business tax incentives. And for Senator Kennedy, who is haranguing about the fact this is not being passed fast enough, the members of his own party voted with us on that, and that seems to show it is bipartisan.

As I said before, tax incentives targeted to small business and other businesses impacted by a minimum wage increase have been linked to minimum wage legislation over the past couple of decades. Democrats have, at times, joined Republicans in supporting that linkage. Once again, Republicans have asked for small business tax relief, if a minimum wage hike is going to happen. Based on an overwhelming cloture

vote yesterday on this Baucus substitute, it looks as if we are going to get there. Democrats, in effect, agree--through that vote--with this linkage.

To different groups of Senators, these topics carry their own benefits or burdens. Many on my side don't like the idea of second- guessing the labor market with a federally mandated minimum wage. In past statements, I pointed out some of the related issues that should give us pause when considering such legislation. Some, mostly Democrats, will call this bill before us nothing but a minimum wage increase bill. Some, mostly on my side of the aisle, will call it a small business tax relief bill. But isn't that how we get things done in the Senate? Doesn't almost everybody have to have a win? And in this aren't we having a win-win situation in a bipartisan way?

I suppose some of our Members are going to have it both ways, it is going to be both a minimum wage increase and a small business tax relief bill. President Bush, similar to President Clinton, whom I have already quoted, will recognize both parts of this package. If my friends on the other side of the aisle would review that statement, as I led them to review it last week, they will note that President Clinton saw merit in the small business tax relief package.

If I were chairman, I might have tilted the package a bit more toward depreciation and less toward, let's say, that portion that we call the worker opportunity tax credit. It is important these incentives coincide with the timing when the minimum wage increase will be taking effect. It has been proven that a minimum wage hike without tax relief for small business will not fly in a body where we have to move ahead in a bipartisan way or nothing gets done. Let's recognize that reality. Let's improve this bill and complete it in a timely manner.

Mr. President, I suggest the absence of a quorum.

Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

Madam President, I ask unanimous consent to speak as in morning business for what time I might consume, and it will not be too long, on two bills I am going to introduce.

Madam President, since I do not think anybody else is seeking the floor, I suggest the absence of a quorum.

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I ask unanimous consent to continue as in morning business for, I would say, roughly 10 or 12 minutes on an issue unrelated to what is on the Senate floor.

Mr. President, next week the President's budget will come to Capitol Hill. In terms of tax issues, no issue is more pressing in the upcoming budget than resolving the alternative minimum tax issue for both the short term as well as the long term.

As many Members know, the so-called patch--the temporary fix we did last year for the alternative minimum tax so no more people would be hit by it than are presently hit by it--ran out at the end of last year. So right now 23 million people in the year 2007 could be hit by the alternative minimum tax, if we do not do something about it. Since we have to offset things such as this, if we patch this up again, it is going to take $50 billion to offset or, if it isn't offset, that means $50 billion that would come into the Federal Treasury under existing law would not come in.

Next week I will give a series of speeches in some detail. I am going to look at how we got where we are on the alternative minimum tax. I will examine the history of the alternative minimum tax and the origins of the current problem. In another speech, I am going to discuss the fiscal effects of maintaining, repealing, and replacing the alternative minimum tax. And in the third speech, I will talk about options to remedy the alternative minimum tax problem in the short term and over the long term.

Today, on a preemptive basis, I want to counter a charge that I think is going to be repeated by Democratic-leaning think tanks, maybe by the leadership of the Congress, and, more importantly, by east coast media who tend to be sympathetic to the views of those political organizations. The charge will be that the alternative minimum tax problem we face is a result of the bipartisan tax relief legislation enacted in 2001 and 2003.

I ask unanimous consent to maintain the floor and yield to the majority to make a unanimous-consent request.

Let me ask the majority, would they like me to yield the floor for that debate?

Next week, when the President's budget comes out, there is going to be an awful lot of discussion about the alternative minimum tax. I am trying to preempt--in a sense counter--what I think are old arguments that are going to be repeated about that issue. They are going to be coming from leftwing think tanks, and maybe the Democratic leadership in the Congress will pick up on it. For sure, the east coast media, who tend to be sympathetic to the views of these political organizations, is going to be loudly speaking about it. I don't

find anything wrong with it being discussed, but I am going to make sure it is discussed in an intellectually honest manner.

The charge is going to be made that the alternative minimum tax problem we face now is a direct result of the bipartisan--I emphasize bipartisan--tax relief legislation that was enacted in 2001 and 2003, which, by the way, Chairman Greenspan has said, both before he left the Fed as well as a private citizen, that these tax relief packages we passed back then are the basis for the economy going very smoothly in the last 3 or 4 years, creating 7.2 million jobs. If that is the argument they are going to make--and I will bet you, although I am not a betting man, that that is what we are going to hear--it is a distortion, plain and simple. So I think I am going to try to correct the record in advance. Maybe next week, if I have done it adequately, there won't be any record to correct. I have been around here long enough to know what is going to be said.

To the extent the Democratic leadership and allies suggest, like others who have looked at this issue, that the bipartisan tax relief packages are responsible for the alternative minimum tax problem, I respond in this way: Most who have reached that conclusion have done so by misusing data, data that is provided by the truly nonpartisan Joint Committee on Taxation, an agency of Congress that you might say wears green eyeshades, looks at things as they are, without a Republican or Democratic bias. These figures of the Joint Committee on Taxation will be used to distort the record on the issue of the alternative minimum tax.

The Joint Committee on Taxation analysis suggests an alternative explanation for the alternative minimum tax problem, and that is the failure of Congress to index the alternative minimum tax for inflation when it was first established 35 years ago. The critics are going to charge that the bipartisan tax relief packages are responsible for this alternative minimum tax problem. This conclusion is reached in error because it is based upon faulty logic. Those who have done similar analyses have based their conclusions on the mistaken assumption that a reduction in Federal receipts should be interpreted as a percentage causation of the alternative minimum tax problem. The Joint Committee on Taxation was asked to project Federal alternative minimum tax revenue, if the bipartisan tax relief provisions were extended but current law hold-harmless provisions were not extended. And what do we get, a $1.1 trillion issue, and a Federal alternative tax revenue, if neither the Bush tax cuts nor the hold-harmless provisions is extended, a $400 billion issue compared to the $1.1 trillion issue.

From that data, some erroneously concluded and publicly represented that the tax cuts of 2001 and 2003 are responsible for 65 percent of the alternative minimum tax problem. In other words, this $1.1 trillion minus the $4 billion divided by $1.1 trillion. And conversely then, that the tax cuts of 2001 and 2003 tripled the size of the alternative minimum tax problem; again, $1.1 trillion divided by $400 billion. The logic used to reach that conclusion is flawed. That is what I am about to show.

This is because the many variables affecting the alternative minimum tax have overlapping results, and the order in which one analyzes those overlapping variables will directly impact the outcome of the analysis.

In that way, we can use the same Joint Committee on Taxation data in the analysis above to suggest that the failure to index is actually the dominant cause of the alternative minimum tax problem. If one were to first index--and that wasn't done 35 years ago--the current tax system for inflation by permanently extending an indexed version of the current hold-harmless provisions, Federal alternative minimum tax revenue would be reduced from $1.1 trillion to $472 billion over the 10-year period we use to guesstimate taxes coming into the Federal Treasury. Thus, extending and indexing the current hold-harmless provision for future inflation would reduce the alternative minimum tax revenues by 59 percent over the same period referred to in the Joint Committee on Taxation letter dated October 3, 2005, as ``percentage of AMT effect attributable to failure to extend and index hold harmless provision.''

I ask unanimous consent to print a copy of that entire letter in the Record.

Let's go back to the Joint Committee on Taxation analysis. If we then assume that the tax cuts of 2001 and 2003 are repealed, alternative minimum tax revenue falls by an additional $302 billion, from $472 billion to $169 billion. That second drop attributable to the repeal of the Bush tax cuts reduces Federal revenue by only 27 percent. Thus, one should argue that failure to index is a greater cause of the alternative minimum tax problem--in other words, 59 percent versus 27 percent. If we had indexed, we wouldn't have this problem.

Using logic similar to that undertaken above would also cause us to conclude that failure to index is responsible for 59 percent of the alternative minimum tax problem or, alternatively, that failure to index also nearly triples the size of the AMT problem. But simple logic suggests that the bipartisan tax relief cannot be responsible for 65 percent of the alternative minimum tax problem and failure to index responsible for 59 percent of the problem. The anomaly arises because there is overlap between variables being analyzed. Although the analysis fairly demonstrates the amount of alternative minimum tax revenue saved by making a particular change to the Federal tax system, it is inappropriate to represent that such analysis accurately isolates causation of the alternative minimum tax. Because there is overlap in the variables being analyzed in these examples, indexing and the bipartisan tax relief packages, the order of analysis of those variables is crucial to whatever outcome we have.

The Joint Committee on Taxation acknowledges this point to us in a letter dated October 3, from which I will quote:

There is, however, interaction between these two

contributing factors to the AMT effect. In order to avoid

double counting of interactions, a stacking order is imposed.

The apportionment of effects to each contributing factor will

vary depending on the stacking order, even though the total

effect remains constant.

To this point in time, I have not seen anything that accurately suggests that the 2001 and 2003 tax cuts have worsened the alternative minimum tax problem to date. It is my intention to ensure we continue to honor that commitment.

Proponents of this charge fail to recognize that we addressed the problem for 2001 through 2005 in legislation that most of these organizations opposed. By the way, those hold-harmless alternative minimum tax provisions were the first significant legislative efforts to stem the rise of the alternative minimum tax tide, meaning affecting millions more people who were never intended to be affected by it.

It was, in fact, the Finance Committee that put its money where its mouth was on the alternative minimum tax. Last year's bipartisan tax relief reconciliation did the same thing for the year 2006--in other words, to make sure that the alternative minute tax problem is not worsened. Once again, it was the bipartisan leadership of the Finance Committee that ensured millions of families would not face the alternative minimum tax problem in the tax-filing season this year.

I might say that Republicans, last year, when we were controlling, were willing to add millions of people to it because they didn't want to hold harmless completely, just to some extent. But we in the Senate stuck to our guns, and we got the hold harmless kept in place, as it had been since 2001.

I reiterate the importance of the last sentence in my remarks, where I said that the Finance Committee ensured that millions of families would not face the alternative minimum tax in this tax-filing season that we are in right now. Everyone who supported the tax relief reconciliation bill walked the walk on the alternative minimum tax. A lot of the critics I am referring to have talked that walk on the alternative minimum tax, but if you look at their voting records, they have not walked the walk on the alternative minimum tax. Thank goodness, then, 15 million families were put above politics, or you might say a bipartisan solution saw that they were not harmed because, otherwise, 15 million families would be dealing right now, as they file last year's income tax, with the AMT in their tax returns--in other words, paying the alternative minimum tax because we did not hold harmless.

If they had to deal with that, you know how complex they think the tax forms are already and the tax system is already. Well, if you have to go through that alternative minimum tax exercise, it almost doubles the complexity. Every Member who voted against the bipartisan tax relief reconciliation bill ought to think about that bottom-line reality. If that group, led by--because it tended to be very partisan-- the Democratic leadership had prevailed, 15 million families concentrated in the so-called blue States would have been dealing with the alternative minute tax now. It is a fact--because higher income people tend to live in the so-called blue States, according to the results of the last two Presidential elections--they are paying more of this alternative minimum tax. They happen to be represented by people of the other political party who thought that the hold harmless provisions should not have been there. So 15 million people--most of them in those States--would be hit again.

The clock is ticking on the alternative minimum tax problem for this year. In other words, we have to do something before the end of the year or we are going to have 23 million people hit by it. A year from now then, those 23 million people will be working with the complexities of the AMT and paying the alternative minimum tax. They are people who come from those high-income States, more so than the State I come from, although we have people who are hurt by it--or would be hurt by it--but not to the extent of some of the high-income States. On October 15, a taxpayer's first quarter estimated tax payments will be due, and they will have to take this into consideration. Twenty-three million families will have to start dealing with the AMT yet this year on these quarterly estimates.

Last year, Congress acted a few weeks after April 15. Hopefully, this Congress will act before April 15. Mr. President, next week, Congress will be facing the AMT problem as the budget process moves forward. That is what is going to start this demagoguery about the AMT. To get a grip on that problem, we need to examine its history, assess its fiscal impact, and carefully consider our short-term and long-term options. I look forward to these discussions on these three topics next week. Let's use correct data when we discuss the alternative minimum tax. Let's be intellectually honest. Let's discard the partisan fuzzy math and partisan revisionist history.

Mr. President, I suggest the absence of a quorum.

I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I ask unanimous consent that the time during the quorum call be equally divided.

I suggest the absence of a quorum.