Floor Statements

Mr. President, I rise today to call attention to an issue whose time for reform and resolution has come. I am speaking of the so-called ``reachback'' and ``super-reachback'' issues enacted in the Coal Act in the 1992 Energy bill. This insidious tax has caused numerous businesses to fail over the past 10 years as a result of its inequitable taking from those that should not have been included in this effort in the first place.

The Coal Act obligated companies to pay an annual tax to cover premiums of coal miner retirees' health care benefits. Not only did the Coal Act require companies then active in the coal mining business to pay but it also retroactively required companies--referred to as the reachback companies--that were no longer in the coal mining business to participate and assessed them liability to pay in to the Coal Act's combined benefit fund, CBF. This retroactive tax has been so crippling for a number of companies that many have been driven into bankruptcy. The very existence of many other companies that are subject to this tax is in danger due to the heavy obligation this tax imposes on them.

Needless to say, the provisions of the Coal Act that created the CBF were hastily crafted and rushed into law without the benefit of hearings in the Senate Finance Committee or serious examination by the Senate.

The combined benefit fund is not only financed by the taxes on these reachback and superreachback companies. At its inception, the coal miners' pension funds were used for part of the startup money for the fund. It is additionally funded through current transfers of the surplus interest income of the abandoned mine lands reclamation fund, or the AML. As of 2003, those transfers have been in the hundreds of millions of dollars.

Since the beginning, the solvency of the CBF has been in question. Even now, the possibility exists that, without reform in the near future, this fund could fail putting in jeopardy the coal miner retirees' health care benefits. To temporarily stabilize the CBF, Congress appropriated $68 million for fiscal year 2000 and another $96 million for fiscal year 2001 and $35 million for fiscal year 2003. These ad hoc appropriations are not a permanent solution and do nothing to guarantee that retirees will continue to receive health benefits in future years. For some younger retirees, the benefits from the CBF is their only source of health care until they are eligible for Medicare. For older retirees, it serves as a kind of Medigap policy.

In addition to reachback companies, the current law imposed crippling taxes on companies such as Plumb Supply in my home State of Iowa. Plumb Supply has been designated as a superreachback company. The superreachback companies were relieved of their prospective liability by the U.S. Supreme Court since 1998. They were not, however, afforded refunds of those improperly assessed taxes they had been required to pay into the CBF. This hurts Plumb Supply and all other similarly situated companies. The superreachback companies have been waiting patiently for the return of their money for nearly 7 years.

Many of us in the Senate, along with our colleagues in the House of Representatives, pursued legislation aimed at solving the reachback issue in a comprehensive manner during the 106th and 107th Congresses. We took on these efforts in order to create stability and fairness in the combined benefit fund, and to thereby provide a solution that would address the needs of all interested parties.

I sincerely hope that the Ways and Means Committee will take up legislation during this session of Congress to continue this program for coal mine retirees and their beneficiaries in a responsible fashion, while ending the unfair taxation imposed on businesses no longer active in the coal mining business.

Such legislation should do four things. First, it should provide for permanent solvency for the combined benefit fund. Second, it should relieve all reachback companies of prospective liability. Third, the long-overdue refunds to the superreachback companies should be satisfied immediately. Finally companies with an ongoing reachback liability should be given an opportunity to prefund their obligations on an actuarially sound basis.

If the Ways and Means Committee can send us this legislation, the Finance Committee will be most happy to receive and examine it so this issue can finally be resolved.

Mr. President, I rise today to pay tribute to a young man from Iowa who lost his life in service to his country. On Monday, May 26, 2003, Private Kenneth Nalley was killed in a tragic accident on a road in Iraq. Kenny was only 19 years old. As the town of Hamburg, Iowa mourns the loss of one of its sons, I know I join many of my fellow Iowans in extending my prayers and sympathy to Kenny's family. Private Nalley is the third soldier from Iowa to be killed since the start of Operation Iraqi Freedom. His death reminds us that a great many American men and women are still putting

themselves in harm's way every day in answer to their country's call. Kenny joined the Army right out of high school in order to gain experience and further his prospects for a career in law enforcement. Like all who serve in our armed forces, he knew that meant he might be asked to risk his life to defend American interests. I salute Kenny Nalley's sense of public service, and I honor his sacrifice today. The announcement I received from the Army regarding his death said it best. It reads ``Pvt. Nalley epitomizes the best of our country--a brave soldier-- who exhibited courage, selfless service, and honor in abundance. His ultimate sacrifice has contributed immeasurably to the freedom and security of both Iraq and the world.'' I ask that all my colleagues in the Senate remember Kenny Nalley today, and all those who have given their lives in the service of our great Nation.

I send an amendment to the desk and ask for its immediate consideration.

Mr. President, I ask unanimous consent that the reading of the amendment be dispensed with.

I am pleased to join my distinguished ranking member, Senator Baucus, in the agreement we have reached on the child tax credit. I wish to take a minute to fill in my colleagues on how we are at this place at this time on another tax bill.

In the Finance Committee in the year 2001, Senator Snowe and Senator Lincoln added a refundable formula to enhance the child tax credit. This provision lasted through conference. The formula was increased to 15 percent in 2005. President Bush proposed to accelerate the $1,000 tax credit amount but did not accelerate the refundability formula.

In the Finance Committee, we accelerated the refundability formula. Unfortunately, that provision was dropped in conference. At that disappointing moment and at times since, I have indicated that I would like to revive that formula. I was joined by several Finance Committee members and both leaders in attempting to resolve this problem.

I am pleased to say this agreement moves the ball on the marriage penalty and the child tax credit. The relief is small but a start in addressing yet another marriage penalty.

I applaud Senator Kay Bailey Hutchison for her steadfast interest in resolving this other marriage penalty provision.

Finally, our agreement is offset with an extension of customs fees, user fees. I urge the House to respond on our action today.

I would like to get the bill to the President. This will ensure that low-income families get the checks we expect to get out in the next few months that are related to the tax bill that the President signed last week. Without this additional provision we are working on now, we would have families who get an increase in the child credit of $400 per child get a check this summer, but we would not get checks to people who are entitled to the usual refundability because it was not extended.

I would like to do a lot more on the child tax credit. Families should be able to rely on permanent tax relief. That is what the bill I introduced did--not this compromise before the Senate. That is close to what the Senate growth bill did. That is what we should do in the upcoming process on this legislation.

I hope we resolve the refundability formula. We address the marriage penalty and the child tax credit and we make progress on the longer term child tax credit. We simplify the definition of a child. This last measure is the principal recommended simplification of the Tax Code for individuals. This recommendation comes from the Joint Committee on Taxation and the Treasury Department and is something that should have been done a long time ago.

Today we make some major progress on simplifying the Tax Code. Of course, we need to do a lot more. This is what we do as we try to move forward on various pieces of legislation from the Finance Committee.

In this bill we are also going to help those serving in the Armed Forces overseas. Because some of their remuneration is not considered income, they would not benefit from the child tax refund the same way as other people who are not in a war zone. We ought to change that and do change it so everybody is treated fairly.

Mr. President, I yield the Senator from Oklahoma 5 minutes.

Mr. President, I was a party to the conversation with the majority leader and the Senator from Texas. She has accurately stated what was discussed at that meeting. I will try my darnedest to fulfill it.

Mr. President, I yield the Senator from Maine 2 minutes.

Mr. President, I yield back the remaining amount of my time.

Mr. President, I am pleased today to be once again introducing with Senator DeWine the Mentally Ill Offender Treatment and Crime Reduction Act of 2003. This bipartisan bill authorizes the Attorney General to administer a grant program to assist communities in planning and implementing services for mentally ill offenders. These grants will increase public safety by fostering collaborative efforts by criminal justice, mental health, and substance abuse agencies. I have seen these types of collaborative programs work in Iowa and I know that they can work elsewhere.

We have an obligation to ensure that the public is protected from these offenders who suffer from mental illness. The Bureau of Justice Statistics has reported that over 16 percent of adults incarcerated in U.S. jails and prison have a mental illness. In addition, the Office of Juvenile Justice and Delinquency Prevention has reported that over 20 percent of youth in the juvenile justice system have serious mental health problems. This grant program will help increase public safety, as well as reduce the number of mentally ill adults and juveniles incarcerated in correctional facilities.

These grant dollars may be used by States and localities to establish mental health courts or other diversion programs, create or expand community-based treatment programs, provide in-jail treatment and transitional services, and for training of criminal justice and mental health system employees. The state of Iowa and a number of its counties are already leading the way in finding creative and collaborative programs to address the problems presented by these mentally ill criminals. Working together, the criminal justice, mental health, and substance abuse professionals can make a difference in the lives of this special class of offenders and also increase the safety of the public.

I want to thank Senator DeWine for his leadership on this important issue. He has drafted a bill that reflects a common sense approach to a serious public safety issue. I also want to encourage my colleagues to support this important piece of legislation.

Mr. President, I am pleased today to be once again introducing with Senator DeWine the Mentally Ill Offender Treatment and Crime Reduction Act of 2003. This bipartisan bill authorizes the Attorney General to administer a grant program to assist communities in planning and implementing services for mentally ill offenders. These grants will increase public safety by fostering collaborative efforts by criminal justice, mental health, and substance abuse agencies. I have seen these types of collaborative programs work in Iowa and I know that they can work elsewhere.

We have an obligation to ensure that the public is protected from these offenders who suffer from mental illness. The Bureau of Justice Statistics has reported that over 16 percent of adults incarcerated in U.S. jails and prison have a mental illness. In addition, the Office of Juvenile Justice and Delinquency Prevention has reported that over 20 percent of youth in the juvenile justice system have serious mental health problems. This grant program will help increase public safety, as well as reduce the number of mentally ill adults and juveniles incarcerated in correctional facilities.

These grant dollars may be used by States and localities to establish mental health courts or other diversion programs, create or expand community-based treatment programs, provide in-jail treatment and transitional services, and for training of criminal justice and mental health system employees. The state of Iowa and a number of its counties are already leading the way in finding creative and collaborative programs to address the problems presented by these mentally ill criminals. Working together, the criminal justice, mental health, and substance abuse professionals can make a difference in the lives of this special class of offenders and also increase the safety of the public.

I want to thank Senator DeWine for his leadership on this important issue. He has drafted a bill that reflects a common sense approach to a serious public safety issue. I also want to encourage my colleagues to support this important piece of legislation.

Mr. President, I move to reconsider the vote.

I appreciate the Senator's work in this important area. It is true that permitting States and localities to advance refund governmental bonds one additional time would provide important financial flexibility at a critical time. State and local governments across the country are facing unprecedented fiscal crisis. Being able to refinance debt at a lower rate will clearly translate into important savings for our Nation's cities, counties and states.

I assure the Senator this proposal will receive serious and thorough consideration by the Finance Committee, which I chair, as we address tax legislation in the future.

Mr. President, I will take a moment to congratulate the individuals from Central Academy in Des Moines, IA who participated in the We the People: The Citizen and the Constitution national finals in Washington, DC. This event is the culmination of extensive study by students throughout the country of the American system of constitutional democracy. The students from Central Academy won the State competition in West Des Moines and thus were given the distinction of representing Iowa in the national finals. I had the opportunity to meet with these students when they were in Washington and I am certainly proud to have had them representing the great State of Iowa. I am also pleased that my staff member, Aaron McKay, was able to be involved in this program as a judge for both the Iowa competition and the national finals as well as acting as a mentor for the team going into the finals. The We the People: The Citizen and the Constitution program, run by the Center for Civic Education with the help of Federal funding, provides an outstanding curriculum that promotes civic competence and responsibility among elementary and secondary students. Students take away a solid understanding of the origin of American constitutional democracy as well as the contemporary relevance of our founding documents and ideals. In short, it produces better citizens. In fact, I would like to personally recognize the Central Academy students who participated in this program, Alexander Body, Alec Davis, Ainslee Ericson, Joanna Grillas, Brian Haroldson, Daren Ho, Meryl Houser, Jonathon Kent, Michael Larking, Conrad Lee, Kyle McCord, Jasmine McDowell, Eleanore Neumann, Timothy Smith, Akili Thomas, Sarah Wang, Kyle Wilkinson, Jay Williams and their teacher, Harvey Kimble. They can all be very proud of their knowledge and accomplishments. I look forward to next year's competition.

Mr. President, I want to speak briefly about low-income families and the recently passed tax bill. There has been much heat and very little light about what we have done in this bill. Most of the heat has been focused on the conference decision not to retain the Senate position regarding acceleration from 10 percent to 15 percent as part of the refundable child credit--a change already scheduled to take place in 2005.

Before I discuss this matter in detail, let me start by saying that I agree with my colleagues that we should seek to reconsider this provision. I am introducing legislation today that will do that, and will also, of equal, and perhaps greater importance, provide a uniform definition of a child and make the $1,000 child credit permanent. Finally, my bill will eliminate the marriage penalty that is contained in the child credit. This bill is an encompassing effort to help low- income and middle-income families.

The uniform definition of a child will help hundreds of thousands of families receive tax benefits for which they are not currently eligible. As important, it will bring simplification and clarity for millions of families, ensuring that they are not subject to IRS audit and collection efforts.

The bill also makes permanent the $1,000 child credit. Otherwise, in 2005 working families with two eligible children will receive a $600 tax increase as the tax credit drops to $700. In addition, the bill accelerates the refundable calculation from 10 percent to 15 percent.

Finally, the bill addresses the marriage penalty contained in the child credit. Currently, the child credit phases out at $75,000 for a single mother and a $110,000 for a married couple. My bill would eliminate the marriage penalty by having the credit phase out at $150,000. In addition, it adjusts the phase-out level for inflation.

I do not need to wait for comments from my colleagues or from the media to take this action. Many from the media who attended my press conference the day of final passage of the conference report will recall that I stated then that I would quickly seek to revisit the child tax credit issues and seek Senate action on permanency of the child credit.

Let me turn now to the acceleration issue. The media and some members of Congress seem to have a willful blindness as they discuss this matter. What are they blind to? The Earned Income Credit, EIC, program provides great assistance to the very population that is of concern.

Let me give you an example: A family of four making $11,000 will be eligible for $50 under the refundable child credit. By accelerating it, as proposed by my bill and by others, they will now be eligible for $75. What does this family get under EIC? In 2002 they will get a check for $4,140. That means that family is paying no income tax and payroll tax of $842 and is getting a payment from the federal government of almost $3,300 in excess of the payroll tax they pay.

You would never know this from the media accounts and the press releases. And even if there is a mention of the EIC, I have seen no mention of the dollar amount--the $4,00-plus check for families with two children and $2,500 for families with one child. Why is that? Because the chicken littles are too busy running around. I would hope that the concept of ``context'' would not be something of which the media has to be reminded. You would think from reading speeches and media accounts that the whole tax relief provided in the tax code to a family making $11,000 is the refundable child credit. The child credit for these families at this income level is a thimble compared to the enormous benefits of EIC.

Let me remind my colleagues of the purpose of the child credit: It was designed to address the perceived penalty for working families as the EIC began to phase out. In fact, the original proposal of the refundable child credit that I drafted with Senator Baucus in 2001 would not have begun to take effect until the point where the EIC begins to phase-out--at approximately $13,500 for a head of household and $14,500 for married couples.

The Finance Committee heard testimony, and it was the repeated view of academics, that Congress needed to address the phase-out of the EIC. There was no testimony to the Senate Finance Committee and I can find very little in respectable academic discussions that advocated an increase in the check for EIC recipients--that the EIC top amount of $4,000 plus for two children or $2,500 for one child was insufficiently generous.

So that is what was the genesis of the Finance Committee's support for a child credit--addressing somewhat the EIC phase-out as families begin to make more money. However, the beginning point of the phase-in was shifted at the request of some Senators to $10,000. That does not negate that the underlying purpose was and is to deal with the EIC phase-out.

This concern about the phase-out is reflected in the actions we took in conference. By raising the child credit to $1,000 we helped put more money in the pocket of a single mom with one child making $17,000 to $20,000.

That single mom making $20,000 will now get a $1,000 check instead of a $600 check under previous law.

What if we were to only do as some propose and do acceleration to 15 percent but not increase the child credit in 2005 to $1,000?

Yes, it will mean a bit more for those families already receiving a $4,000-plus check under EIC--and I recognize that every penny counts to these families. But this proposal will also mean a tax increase on that single mom making $18,000, that single dad making $19,000 and that married couple with one child making $20,000. Why? Because they benefit more from the increase in the child credit to $1,000. The acceleration will not benefit them; they will quickly meet the maximum child credit. It is the increase to $1,000 that is the real

benefit for these families that do not receive the maximum benefits under EIC.

That is why I urge my colleagues to support my legislation that helps millions of working families, and doesn't impose a tax on families that are working hard and getting themselves a little bit better paying job.

And let me close with one other note. My colleagues should remember that it still takes 3 million taxpayers off the rolls completely. They will no longer have to pay tax under this legislation. Much of that is due to the increase in the child credit to $1,000.

Finally, for those who want to talk about income tax relief for low- income individuals, I would encourage them to remember this is many ways a bill that is in concert with the 2001 tax relief that created the 10 percent bracket and provided great income tax relief to singles. Again, a bigger picture that provides greater context of our work will show that we are providing broad-based relief to millions of taxpayers.

I urge my colleagues to work with me in passing this full relief for families. I also think it is important that we pass legislation that can be passed into law by working with the House and the White House. We have already passed legislation that deals with just the 10 percent to 15 percent--the Finance Committee passed it and the Senate passed it. The Senate is on record on this matter already. Now is the time to bring real relief and permanent relief to all working families.

Mr. President, I want to speak briefly about low-income families and the recently passed tax bill. There has been much heat and very little light about what we have done in this bill. Most of the heat has been focused on the conference decision not to retain the Senate position regarding acceleration from 10 percent to 15 percent as part of the refundable child credit--a change already scheduled to take place in 2005.

Before I discuss this matter in detail, let me start by saying that I agree with my colleagues that we should seek to reconsider this provision. I am introducing legislation today that will do that, and will also, of equal, and perhaps greater importance, provide a uniform definition of a child and make the $1,000 child credit permanent. Finally, my bill will eliminate the marriage penalty that is contained in the child credit. This bill is an encompassing effort to help low- income and middle-income families.

The uniform definition of a child will help hundreds of thousands of families receive tax benefits for which they are not currently eligible. As important, it will bring simplification and clarity for millions of families, ensuring that they are not subject to IRS audit and collection efforts.

The bill also makes permanent the $1,000 child credit. Otherwise, in 2005 working families with two eligible children will receive a $600 tax increase as the tax credit drops to $700. In addition, the bill accelerates the refundable calculation from 10 percent to 15 percent.

Finally, the bill addresses the marriage penalty contained in the child credit. Currently, the child credit phases out at $75,000 for a single mother and a $110,000 for a married couple. My bill would eliminate the marriage penalty by having the credit phase out at $150,000. In addition, it adjusts the phase-out level for inflation.

I do not need to wait for comments from my colleagues or from the media to take this action. Many from the media who attended my press conference the day of final passage of the conference report will recall that I stated then that I would quickly seek to revisit the child tax credit issues and seek Senate action on permanency of the child credit.

Let me turn now to the acceleration issue. The media and some members of Congress seem to have a willful blindness as they discuss this matter. What are they blind to? The Earned Income Credit, EIC, program provides great assistance to the very population that is of concern.

Let me give you an example: A family of four making $11,000 will be eligible for $50 under the refundable child credit. By accelerating it, as proposed by my bill and by others, they will now be eligible for $75. What does this family get under EIC? In 2002 they will get a check for $4,140. That means that family is paying no income tax and payroll tax of $842 and is getting a payment from the federal government of almost $3,300 in excess of the payroll tax they pay.

You would never know this from the media accounts and the press releases. And even if there is a mention of the EIC, I have seen no mention of the dollar amount--the $4,00-plus check for families with two children and $2,500 for families with one child. Why is that? Because the chicken littles are too busy running around. I would hope that the concept of ``context'' would not be something of which the media has to be reminded. You would think from reading speeches and media accounts that the whole tax relief provided in the tax code to a family making $11,000 is the refundable child credit. The child credit for these families at this income level is a thimble compared to the enormous benefits of EIC.

Let me remind my colleagues of the purpose of the child credit: It was designed to address the perceived penalty for working families as the EIC began to phase out. In fact, the original proposal of the refundable child credit that I drafted with Senator Baucus in 2001 would not have begun to take effect until the point where the EIC begins to phase-out--at approximately $13,500 for a head of household and $14,500 for married couples.

The Finance Committee heard testimony, and it was the repeated view of academics, that Congress needed to address the phase-out of the EIC. There was no testimony to the Senate Finance Committee and I can find very little in respectable academic discussions that advocated an increase in the check for EIC recipients--that the EIC top amount of $4,000 plus for two children or $2,500 for one child was insufficiently generous.

So that is what was the genesis of the Finance Committee's support for a child credit--addressing somewhat the EIC phase-out as families begin to make more money. However, the beginning point of the phase-in was shifted at the request of some Senators to $10,000. That does not negate that the underlying purpose was and is to deal with the EIC phase-out.

This concern about the phase-out is reflected in the actions we took in conference. By raising the child credit to $1,000 we helped put more money in the pocket of a single mom with one child making $17,000 to $20,000.

That single mom making $20,000 will now get a $1,000 check instead of a $600 check under previous law.

What if we were to only do as some propose and do acceleration to 15 percent but not increase the child credit in 2005 to $1,000?

Yes, it will mean a bit more for those families already receiving a $4,000-plus check under EIC--and I recognize that every penny counts to these families. But this proposal will also mean a tax increase on that single mom making $18,000, that single dad making $19,000 and that married couple with one child making $20,000. Why? Because they benefit more from the increase in the child credit to $1,000. The acceleration will not benefit them; they will quickly meet the maximum child credit. It is the increase to $1,000 that is the real

benefit for these families that do not receive the maximum benefits under EIC.

That is why I urge my colleagues to support my legislation that helps millions of working families, and doesn't impose a tax on families that are working hard and getting themselves a little bit better paying job.

And let me close with one other note. My colleagues should remember that it still takes 3 million taxpayers off the rolls completely. They will no longer have to pay tax under this legislation. Much of that is due to the increase in the child credit to $1,000.

Finally, for those who want to talk about income tax relief for low- income individuals, I would encourage them to remember this is many ways a bill that is in concert with the 2001 tax relief that created the 10 percent bracket and provided great income tax relief to singles. Again, a bigger picture that provides greater context of our work will show that we are providing broad-based relief to millions of taxpayers.

I urge my colleagues to work with me in passing this full relief for families. I also think it is important that we pass legislation that can be passed into law by working with the House and the White House. We have already passed legislation that deals with just the 10 percent to 15 percent--the Finance Committee passed it and the Senate passed it. The Senate is on record on this matter already. Now is the time to bring real relief and permanent relief to all working families.

Mr. President, I have the opening script that the majority leader would usually give. I will do it in his stead.

The Senate will begin debate in relation to the conference report to accompany H.R. 2, the jobs and economic growth bill. Under the previous order, the Senate will vote on the adoption of the conference report at 9:30 a.m.

Following the disposition of the conference report, the Senate will consider H.J. 51, the debt limit extension legislation. Amendments to the measure are expected throughout the day. Therefore, rollcall votes will occur into the afternoon. If Members show restraint in the number of amendments offered, the Senate could complete action on this necessary measure early in the afternoon.

Following completion of the debt limit extension, the Senate will take up the unemployment insurance extension.

Mr. President, I yield myself such time as I might consume.

I would like to refer to the capital gains provisions of the compromise bill. I discussed last night the benefits of seeing capital gains reduced to 15 percent, and 5 percent for low-income families and individuals. But I also want to emphasize the simplification that we are bringing to the capital gains rates. While we still have the 1-year division between short-term and long-term capital gains, we have eliminated the 5-year holding period and the 18-percent rate.

It is a small but very important step in actually eliminating lots of lines and lots of calculations that taxpayers face in their annual returns. The Joint Tax Committee has stated that there is much need for simplification of capital gains. The Joint Tax Committee notes that Congress has received continual testimony that capital gains is a source of enormous complexity. So in this compromise, we make a very good start on an important source of complexity in the Tax Code.

Let me make clear for my colleagues that for many middle-and low- income families, we make capital gains as simple as possible. At the end of the time period of this bill, middle- and low-income families will pay zero capital gains. Of course, it doesn't get much simpler than that because zero brings it down to nothing.

I now would like to deal with the issue of corporate governance that was a significant part of the Senate bill.

The Senate bill contained several major provisions that seek to put an end to the Enron abuses and corporate shell games that we have all learned so much about recently. These con artists who had keys to the executive washrooms have devastated the lives of millions of workers and shareholders.

I am proud to have worked closely with my colleague, Senator Baucus, on so many of these provisions with the goal of addressing and reforming corporate governance. While I very much wish we could have seen these reforms incorporated in the House-Senate conference committee, let me be very clear that the snake oil salesmen should not be celebrating. I intend to continue to work very hard to press to have these provisions incorporated into other tax legislation and ultimately placed into the statute books.

For example, some of the critical corporate tax shelter provisions that were in the Senate bill are already included in the Charitable Giving Act--what we call the CARE Act--because these are used for ``pay-fors'' in this legislation. The CARE Act will soon go to conference with the House.

In addition, I expect us to soon revisit provisions regarding corporate inversions where corporations set up overseas offices, basically simply a file drawer. They do this simply to escape taxation.

Other legislation that I expect we will have a chance to consider again would include the Baucus-Grassley provisions dealing with fines and penalties--ending the loopholes that allow Wall Street firms to escape the real costs of their own wrongdoing.

I am very proud of the bipartisan efforts of the Senate Finance Committee to shut down corporate tax shelters and promote proper corporate governance.

I apologize to my colleagues if it is immodest. But I suggest the legislation contained in the Senate finance bill probably represents the most sweeping tax reforms in a generation to seek to clean up corporations and shut down the pin-striped con artists.

I will continue to push for these needed reforms, and I expect that we will have step-by-step success in stopping corporate shelters and providing greater protection to the shareholders and workers.

I yield the floor and reserve my time.

Mr. President, I yield 5 minutes to the Senator from Texas.

Mr. President, I yield myself such time as I might consume. I want to respond to the statements just made because it brings up the issue of the Federal debt.

We have heard from the other side that we are unconcerned about the Federal debt, as if they are concerned about it. I want to remind my colleagues--particularly those on the other side of the aisle--of how many amendments we had during the budget debate and during the omnibus appropriations bill debate back in January where there was amendment after amendment after amendment after amendment on the other side of the aisle to spend more money--spend more money.

When it came to the budget, there was amendment after amendment after amendment to take money away from the part of the budget of giving authority for tax relief and reducing that amount of money. Did it go against the bottom line? No. They took the money they wanted to take away from tax relief and spent it someplace else.

So don't give me this sort of lesson that they are concerned about the deficit and we are unconcerned about the deficit. If they were concerned about the deficit and they wanted to cut the amount of money we are going to give for tax relief and put it against the bottom line, then I would believe them. But it is just the opposite. When they want to spend it someplace else, the bottom line stays the same, the bottom line of the budget is not reduced.

The problem here is they don't want any tax relief because they want to spend it. They think they know better

how to spend it than the taxpayers. It isn't going to do as much economic good if the 535 members of Congress decide how to spend it. If the people back home spend it, it is going to turn over more times in the economy and create more jobs.

They think the American taxpayers are undertaxed and that is why we have a budget deficit. The American people are not undertaxed, and it is not undertaxation that is the cause of the deficit. The cause of the deficit is the overspending, and that overspending is best exemplified by amendment after amendment. Two times this year we have had those vote-aramas, with amendment after amendment to spend more money.

This is about giving money back to the American taxpayers. If we are worried about the deficit, we will express that worry by spending less.

I yield the floor.

Mr. President, he just admitted I was right. He said every time they took money away from our tax cut allotment in the budget, they took it to offset spending someplace else. That is exactly my point. They never did take any money away from it to put against the bottom line. They took it away because they wanted to spend it someplace else. They want to continue that money coming into Washington. They want more money to spend. I will take them seriously when they want to reduce the amount of money in the budget for tax cuts and put it against the bottom line.

Mr. President, I yield 5 minutes to the Senator from Oklahoma.

Mr. President, I am very much aware of Senator Miller's interest in this provision. As you know, the Finance Committee has supported his provision by including it in two separate pieces of legislation that our committee considered this year. We had hoped to include it in this bill, even if the corporate shelter language was not included. Unfortunately, this measure has a negligible revenue effect and could possibly violate the Byrd rule. Accordingly, we were obliged to remove it from the bill. I give Senator Miller my commitment, however, that we will continue to work with him on opportunities to get this amendment enacted into law this year. I would also add that I discussed this provision with Mr. Thomas, the chairman of the House Ways and Means Committee, and his staff, and they indicated a willingness to examine and explore the measure in conferences on future bills.

I would say that as my good friend, the Senator from Utah, knows, the Jobs and Growth Tax Relief Reconciliation Act of 2003 is first and foremost an economic stimulus bill. The most effective aid the Federal Government can give to States or individuals is a healthy economy with a robust job market. Without jobs, families with children won't need child care services and won't have any way to pay the family bills.

I thank the good chairman of the Judiciary Committee and understand his concern over the State aid portion of the legislation. We have tried to provide as much leeway as possible to the

States. However, it would be impossible to list all of the acceptable activities for which a state could use his money. Therefore, the Congress has broadly defined the allowable activities for which States could spend their temporary fiscal relief dollars.

Therefore, my answer to the question posed to me from the Senator from Utah is yes. We did intend for child care expenses to be included as an element of ``essential government services'' provided that a state is currently operating a child care program and expenditures for child care were permitted under the most recently approved budget for the State.

Mr. President, I yield 1 minute to the Senator from Wyoming.

I yield myself such time as I might consume.

As we wind down debate on this bill, it is very important that I give appropriate thank-yous to people who have worked so hard on putting this bill together. I am talking about the staff of the Finance Committee and the Joint staff, both Republican and Democrat: Chief tax counsel, Mark Prater; chief of staff, Kolan Davis; Ed McClellan, Dean Zerbe, Christy Mistr, Diann Howland, Elizabeth Paris, and Brad Cannon; members of the health staff of the Finance Committee: Colin Rosky, Jennifer Bell; members from the Budget Committee staff: Chief of staff, Hazen Marshall; Cheri Reidy, Beth Felder, and Rachel Jones; Staff of Majority Leader Frist and Assistant Majority Leader McConnell, including Lee Rawls, Eric Ueland, Rohit Kumar, Bill Hoagland, and Mike Solon.

All of the staff of the Joint Committee on Taxation worked through the night on many occasions. As one who was caught in the crossfire on this bill, I can appreciate when they take the heat from both sides on revenue estimates.

I would especially like to thank George Yin, Mary Schmitt, and Bernie Schmitt of the Joint Tax Committee. I wish more of the participants in the tax legislative process realized how tough the Joint Tax's job is; conferee staff, including Evan Liddiard and Garett Jones with Senator Hatch's office; Laura O'Neill with Senator Lott's office; Lisa Wolski and Lawrence Willcox of Senator Kyl's staff.

Senate legislative counsel, these folks, of course, are true legal wizards who do excellent work under amazing pressure. This group includes Jim Fransen, Mark Mathiesen, and Ruth Ernst. Then a team of people who worked on the State aid issue so much: Ted Totman, Steve Robinson, Becky Shipp, Leah Kegler, Michaela Sims, and Amy Tejra with Ben Nelson's staff, and Michael Bopp with Senator Collins; Treasury Department staff, including Pam Olson, Greg Jenner, J.T. Young, and Drew Lyon; the administration staff, including Ziad Odjakli, O. Jack Lee, Christine Burgeson, Candi Wolff, and David Hobbs.

Finally, I would like to thank Senator Baucus's Finance Committee staff who assisted in the creation of a better product during times when we were able to work collaboratively: Jeff Forbes, Bill Dauster, Russ Sullivan, Matt Jones, Pat Heck, Anita Horn-Rizek, Liz Liebschutz, and Jonathan Selib. I really appreciate all of that.

I am very pleased with the bill that is before us today. We have given the country some very good tax relief and investment incentives. But there is one provision in the bill that I intend to change, and that is to let the inverters of the world know they better be on notice, as far as I am concerned.

The new 15 percent tax rate applies to dividends paid by foreign corporations to their U.S. shareholders. That is good policy.

What is not good policy is when those dividends are paid by a phony foreign shell corporation created by a U.S. corporate inversion. In an inversion, a U.S. corporation pretends to move its headquarters to a phony shell corporation that is nothing more than a folder in a filing cabinet or a post box in a tax haven. With this phony tax haven parent corporation in place, the U.S. company is positioned to rip its taxable income out of the United States through artificial interest payments to the tax haven shell, which are legally deductible on its U.S. return. This structure also allows the corporate inverter to move U.S. assets offshore and outside the reach of the IRS on a tax-free basis.

I question whether it is proper to allow a tax cut for dividends from a corporate inversion. The House blocked my efforts to insert this ban in today's legislation. Because the President wanted the Jobs & Growth bill on his desk by Memorial Day, I chose not to block the legislation over this issue.

I acknowledge that it is the shareholders who would be denied the rate reduction, and not the corporate management that engineered the inversion. But an inversion requires shareholder consent. Usually around 60 percent must approve of the inversion. So do not let it be said that all shareholders are innocent bystanders in an inversion. Those who disapprove of the transaction are always free to sell their shares.

We should not give a tax cut that benefits an inversion, and I will continue to examine this issue and hopefully put a stop to it.

Mr. President, how much time remains on my side?

I move to reconsider the vote.

I will yield back my time.

I move to table the amendment and I ask for the yeas and nays.

The Hollings amendment would prevent the ``disinvestment'' of the Social Security Trust Fund. What that means is if we did not increase the debt limit, the Social Security Trust Fund could not be used to pay Social Security benefits. We need to defeat this amendment and pass a clean debt limit bill so Social Security checks can go out on time.

Mr. President, I want to speak in opposition to the amendment. I think the information the Senator from North Dakota wants, and wants in one document or one report, is a very legitimate bit of information, not just a small bit but a legitimate amount of information that he wants, and it is a reasonable request. I think a lot of it exists in the Department of Commerce and maybe it is just a case of bringing it all together. But that can't be the issue today. The issue today is, if we amend this bill, it goes back to the House, and then we are in a situation where we are not able to operate Government. We can't wait until the month of June to get a conference with the House on this issue. The Secretary of Treasury has made it very clear that he has taken all prudent and legal steps available to him to avoid reaching the statutory debt limit.

I urge everybody to vote against the amendment regardless of the merits.

Mr. President, as well intentioned as the amendment is to bring information to the Congress from the Joint Committee on Taxation, to bring a greater degree of transparency to where we are on certain tax legislation, I have to ask my colleagues to vote against this amendment because if it were adopted, it would force the bill back to the House

and we would not be able to fund Government. We would also have a situation of having to have a conference. I urge my colleagues to vote against it.

Mr. President, I want to speak the common sense of Iowa to the Senator from the political machine of Chicago and to express a simple statement of fact: If, in fact, we had adopted the minority's budget, the Democrat budget, earlier this year, we would be facing the exact same increase in the debt ceiling now and by almost the same exact amount of money throughout the rest of the year. So it doesn't matter whether you are in the majority or we are, we would be doing about the same thing right now. So don't try to fool the people of America. You cannot do it even if you are from Chicago.

Mr. President, today I am introducing a bill to bring the United States into compliance with its obligations under the World Trade Organization.

The basic thrust of the bill is simple--it repeals section 801 of the Revenue Act of 1916 which the WTO Appellate Body found to be inconsistent with our responsibilities under Article VI of the GATT 1994 and the WTO Antidumping Agreement. Repealing section 801 will therefore bring the United States into conformity with its WTO obligations.

Section 801, which has been referred to as the Antidumping Act of 1916, allows private parties to sue importers of dumped imports in U.S. district courts, and also establishes criminal liability for importing dumped goods. While the provision is seldom used, there are several recent court cases pending in the United States where litigants have sued under the Antidumping Act of 1916.

I am introducing this legislation because I believe it is important that the United States comply with its WTO obligations. While we may not agree with each and every decision that comes out of the WTO, we should not pick and choose which decisions we will comply with. The bottom line is that the United States benefits greatly from a rules- based world trading system. We have had considerable success in bringing down foreign import barriers, and this has resulted in increased trade, economic growth, and more jobs right here in the United States. When we comply with adverse decisions we only strengthen our position in other cases where we challenge the impermissible import restraints of our trading partners, such as the de facto biotechnology moratorium adopted by the European Union, which continues to hurt farmers in Iowa and is now under challenge before the WTO. I want other countries to comply when we win, so I think it is important to comply when we lose.

I would also like to point out an important aspect of the bill I am introducing. The bill brings us into compliance with our WTO obligations, but it does not apply retroactively. I think retroactive application of repeal would be wrong in this case for a number of reasons.

First, the U.S. Supreme Court has held that under the constitutional due process standard, retroactive application of economic legislation is acceptable only where it is justified by a rational legislative purpose. To my knowledge, no one has yet articulated any reason, let alone a rational legislative purpose, for depriving litigants in U.S. courts of the opportunity for final adjudication of their disputes in this case. In fact, the Appellate Body Ruling itself does not call for a retroactive repeal of section 801 in order for the United States to conform to its WTO obligations. It seems to me that no rational legislative purpose is served by retroactive repeal of section 801 when the Appellate Body Report does not ask for retroactive repeal and the Administration has not explained why retroactive repeal is necessary.

The Supreme Court has also held that the justification for prospective application of legislation may not suffice for retroactive application of the same legislation. The justification for repeal of section 801 is to conform to our WTO obligations; again, if WTO compliance does not call for retroactive repeal, then the justification for repealing section 801 should not extend to a retroactive repeal of this provision.

Second, the administration and Congress have consistently taken the position that retroactive repeal is not necessary to ensure compliance with our WTO obligations in all cases, particularly in cases dealing with U.S. trade remedy laws. The Joint Report of the Committee of Finance, Committee on Agriculture, Nutrition, and Forestry, Committee on Government Affairs of the U.S. Senate which accompanied the legislation implementing the Uruguay Round Agreements Act explicitly noted that compliance with WTO panels in trade remedy cases applied prospectively only. The Joint Report continued that prospective application ``is consistent with the general principle in the GATT, and in the future WTO, that panel decisions do not have retroactive effect.''

This principle is fully consistent with the text of the WTO agreement itself. Article 19.1 of the Dispute Settlement Understanding states only that ``{w here a panel or the Appellate Body concludes that a measure is inconsistent with a covered agreement, it shall recommend that the Member concerned bring the measure into conformity with that Agreement. In addition to its recommendations, the panel or Appellate Body may suggest ways in which the Member concerned could implement the recommendations.'' Thus, the text of the WTO calls only for ``bringing the measure into conformity'' and not retroactive application of an Appellate Body decision.

To my knowledge, this is the position which has consistently been taken by the U.S. Government and the WTO Appellate Body. In fact, with the exception of one aberrant decision by a panel in the case of Australian Automotive Leather, WTO panels and the Appellate Body have continued to adhere to the general principle that retroactive compliance measures are inappropriate.

The panel ruling in Australian Automotive Leather is instructive. The WTO Dispute Settlement Body adopted a panel report that recommended the Australian recipient of a subsidy pay back the entire amount of the $30 million Australian dollar subsidy it had received. This recommendation went far beyond what the United States asked for. The United States sought only the return of the prospective value of the subsidy that the Australian automotive leather company had received. The United States argued that repayment of the entire subsidy was inappropriate and ultimately settled the dispute with Australia in a deal that required the automotive leather company to pay back $7.2 million Australian dollars to the Government of Australia, which reflected the prospective value of the subsidy. Thus, both U.S. law and U.S. trade policy conform to the general principle that compliance measures should be prospective in nature.

Finally, I believe that as a general matter, attempts at retroactive compliance with WTO rulings can make for bad trade policy. The intent of the rules-based trading system established under the WTO is to bring Members into compliance so that going forward international trade can be conducted on a level playing field. There is just no telling where efforts at retroactive compliance may lead. While in this instance the retroactive repeal of section 801 may seem clear-cut to some, it could set a dangerous precedent for future cases. Imagine if the WTO Appellate Body required or the U.S. Government advocated for retroactive application of a measure repealing the Extraterritorial Income Act/Foreign Sales Corporation tax regime. The result would be ludicrous.

Rather than foster the establishment of a level playing field, efforts at retroactive compliance may well distort markets to an extent even greater than the underlying measure that was found to be WTO inconsistent. We need to carefully consider whether retroactive repeal of a statutory provision is appropriate. I believe that considerations of judicial precedent, legislative intent, established practice under the GATT and the WTO, as well as good trade policy, all mitigate against the retroactive repeal of section 801.

I call upon my colleagues to support this bill repealing section 801. Passing the bill will bring us into compliance with our WTO obligations, demonstrate our continued commitment to the rules-based trading system, and strengthen our position in future cases where we prove successful in challenging impermissible import restraints erected by our trading partners.

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

There being no objection the bill was ordered to be printed in the Record, as follows:

Mr. President, today I am introducing a bill to bring the United States into compliance with its obligations under the World Trade Organization.

The basic thrust of the bill is simple--it repeals section 801 of the Revenue Act of 1916 which the WTO Appellate Body found to be inconsistent with our responsibilities under Article VI of the GATT 1994 and the WTO Antidumping Agreement. Repealing section 801 will therefore bring the United States into conformity with its WTO obligations.

Section 801, which has been referred to as the Antidumping Act of 1916, allows private parties to sue importers of dumped imports in U.S. district courts, and also establishes criminal liability for importing dumped goods. While the provision is seldom used, there are several recent court cases pending in the United States where litigants have sued under the Antidumping Act of 1916.

I am introducing this legislation because I believe it is important that the United States comply with its WTO obligations. While we may not agree with each and every decision that comes out of the WTO, we should not pick and choose which decisions we will comply with. The bottom line is that the United States benefits greatly from a rules- based world trading system. We have had considerable success in bringing down foreign import barriers, and this has resulted in increased trade, economic growth, and more jobs right here in the United States. When we comply with adverse decisions we only strengthen our position in other cases where we challenge the impermissible import restraints of our trading partners, such as the de facto biotechnology moratorium adopted by the European Union, which continues to hurt farmers in Iowa and is now under challenge before the WTO. I want other countries to comply when we win, so I think it is important to comply when we lose.

I would also like to point out an important aspect of the bill I am introducing. The bill brings us into compliance with our WTO obligations, but it does not apply retroactively. I think retroactive application of repeal would be wrong in this case for a number of reasons.

First, the U.S. Supreme Court has held that under the constitutional due process standard, retroactive application of economic legislation is acceptable only where it is justified by a rational legislative purpose. To my knowledge, no one has yet articulated any reason, let alone a rational legislative purpose, for depriving litigants in U.S. courts of the opportunity for final adjudication of their disputes in this case. In fact, the Appellate Body Ruling itself does not call for a retroactive repeal of section 801 in order for the United States to conform to its WTO obligations. It seems to me that no rational legislative purpose is served by retroactive repeal of section 801 when the Appellate Body Report does not ask for retroactive repeal and the Administration has not explained why retroactive repeal is necessary.

The Supreme Court has also held that the justification for prospective application of legislation may not suffice for retroactive application of the same legislation. The justification for repeal of section 801 is to conform to our WTO obligations; again, if WTO compliance does not call for retroactive repeal, then the justification for repealing section 801 should not extend to a retroactive repeal of this provision.

Second, the administration and Congress have consistently taken the position that retroactive repeal is not necessary to ensure compliance with our WTO obligations in all cases, particularly in cases dealing with U.S. trade remedy laws. The Joint Report of the Committee of Finance, Committee on Agriculture, Nutrition, and Forestry, Committee on Government Affairs of the U.S. Senate which accompanied the legislation implementing the Uruguay Round Agreements Act explicitly noted that compliance with WTO panels in trade remedy cases applied prospectively only. The Joint Report continued that prospective application ``is consistent with the general principle in the GATT, and in the future WTO, that panel decisions do not have retroactive effect.''

This principle is fully consistent with the text of the WTO agreement itself. Article 19.1 of the Dispute Settlement Understanding states only that ``{w here a panel or the Appellate Body concludes that a measure is inconsistent with a covered agreement, it shall recommend that the Member concerned bring the measure into conformity with that Agreement. In addition to its recommendations, the panel or Appellate Body may suggest ways in which the Member concerned could implement the recommendations.'' Thus, the text of the WTO calls only for ``bringing the measure into conformity'' and not retroactive application of an Appellate Body decision.

To my knowledge, this is the position which has consistently been taken by the U.S. Government and the WTO Appellate Body. In fact, with the exception of one aberrant decision by a panel in the case of Australian Automotive Leather, WTO panels and the Appellate Body have continued to adhere to the general principle that retroactive compliance measures are inappropriate.

The panel ruling in Australian Automotive Leather is instructive. The WTO Dispute Settlement Body adopted a panel report that recommended the Australian recipient of a subsidy pay back the entire amount of the $30 million Australian dollar subsidy it had received. This recommendation went far beyond what the United States asked for. The United States sought only the return of the prospective value of the subsidy that the Australian automotive leather company had received. The United States argued that repayment of the entire subsidy was inappropriate and ultimately settled the dispute with Australia in a deal that required the automotive leather company to pay back $7.2 million Australian dollars to the Government of Australia, which reflected the prospective value of the subsidy. Thus, both U.S. law and U.S. trade policy conform to the general principle that compliance measures should be prospective in nature.

Finally, I believe that as a general matter, attempts at retroactive compliance with WTO rulings can make for bad trade policy. The intent of the rules-based trading system established under the WTO is to bring Members into compliance so that going forward international trade can be conducted on a level playing field. There is just no telling where efforts at retroactive compliance may lead. While in this instance the retroactive repeal of section 801 may seem clear-cut to some, it could set a dangerous precedent for future cases. Imagine if the WTO Appellate Body required or the U.S. Government advocated for retroactive application of a measure repealing the Extraterritorial Income Act/Foreign Sales Corporation tax regime. The result would be ludicrous.

Rather than foster the establishment of a level playing field, efforts at retroactive compliance may well distort markets to an extent even greater than the underlying measure that was found to be WTO inconsistent. We need to carefully consider whether retroactive repeal of a statutory provision is appropriate. I believe that considerations of judicial precedent, legislative intent, established practice under the GATT and the WTO, as well as good trade policy, all mitigate against the retroactive repeal of section 801.

I call upon my colleagues to support this bill repealing section 801. Passing the bill will bring us into compliance with our WTO obligations, demonstrate our continued commitment to the rules-based trading system, and strengthen our position in future cases where we prove successful in challenging impermissible import restraints erected by our trading partners.

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

There being no objection the bill was ordered to be printed in the Record, as follows: