Floor Statements

Mr. President, I ask unanimous consent that the Senate now return to legislative session and proceed to the consideration of S. 476, the CARE Act, as provided under the previous order.

Mr. President, I have a few remarks on the legislation. I am sure my good colleague, Senator Baucus, has remarks as the manager for the Democratic Members. We would also like to take quick action on a managers' amendment that is in order under a unanimous consent agreement. There are a few issues that have to be cleared on the amendment.

I rise to speak on the CARE Act of 2003. I will first talk generally about the charitable provisions in the bill and then talk about those provisions designed to combat corporate tax shelters.

The CARE Act seeks to support that great American tradition--helping a neighbor in need. Our Nation's tradition of caring and charitable support goes back to the founding. When faced with tragedy or hardship in our communities, we have always been a people who have rolled up our sleeves to pitch in, rather than leaning on a shovel waiting for the government to show up.

The charitable tradition in America has certainly been for the common good. Unfortunately, there are not many K Street lobbyists for charities and for the common good.

That is why this legislation is a direct testimony to the leadership of President Bush. There is no question that but for his efforts, this legislation for the common good would not have seen the light of the Senate floor.

Let me note that commentators have rushed to state that the President's efforts to strengthen America's charitable tradition has been watered down. Nothing could be further from the truth. This legislation goes far in meeting the President's ambitious goals for a greater role for charities in assisting those most in need.

And legislation is only part of the story. The President's speeches and visits have done even more to energize the charitable sector of this country. Hardly a week goes by when I am not stopped by someone who runs a charity, or is active in a charity, and they ask me how they can get involved in the President's proposal, how they can help. Clearly, President Bush's words have been heard by America's charities and they are eager to turn his words into deeds of compassion and aid.

In addition to this legislation being a tribute to President Bush's leadership, let me also note the tremendous efforts of Senators Santorum and Lieberman to bring this bill to the Senate floor. I commend them for their energy in making the CARE Act a reality. Finally, I'm pleased to have worked with Senator Baucus, the ranking member of the Finance Committee. This legislation continues our bipartisan efforts as to tax legislation.

Mr. President, for the benefit of my colleagues let me now highlight some of the major tax provisions of the CARE Act that encourage charitable giving.

First, is the creation of a charitable deduction for nonitemizers. Given that over half of Americans do not itemize their tax return, this provision will encourage taxpayers to give to charities, regardless of income. The legislation allows for charitable deduction of up to $500 for a married couple giving over $500 per year. For an individual filing single, it is a deduction of up to $250 for a person who gives over $250 per year. For example, an individual who doesn't itemize and gives $400 to charity, could deduct $150 from their taxes. This provision was designed to encourage new giving and also limit possible abuses.

Next is a major provision that will provide for tax-free distribution from Individual Retirement Arrangements, IRAs, to charities. This is a provision that is important to many major charities, particularly universities. The Finance Committee heard testimony from the President of the University of Iowa about the importance of this provision in encouraging new giving. The legislation provides that direct distributions are excluded from income at the age of 70\1/2\ and distributions to a charitable trust can be excluded after the age of 59\1/2\.

We then have language that encourages donations of food inventory, book inventory and computer technology. I would note that my colleagues, Senator Lugar, and Senator Lincoln, a member of the Finance Committee, were strong advocates for the legislation involving food donation. I'm particularly pleased that this legislation will give farmers and ranchers a fairer deal when it comes to donation of food.

Conservation is also a part of this bill. Efforts to conserve our land and limit development benefit our Nation as well as farmers and ranchers who work on the land. The CARE Act contains language I have long supported that will encourage conservation of land through a 25- percent reduction in the capital gains tax of the sale of undeveloped land, or conservation easements. The sale must be to a charitable organization and the land must be dedicated for conservation purposes. I am pleased that President Bush also included this proposal in his budget.

The bill also encourages gifts of land for conservation purposes. This is an issue long advocated by Senator Baucus, which I am pleased to support.

These are the major tax provisions that encourage charitable giving contained in this bill. I would note that I am pleased that the legislation does contain provisions requiring greater sunshine and transparency in the work of charities. It is my belief that just as we are encouraging people to write more checks, we need to ensure that those checks are being cashed for a charitable purpose. In addition, the bill authorizes a serious increase in funding for the Exempt Organizations Office at the IRS to better police the few bad apples among the nonprofits.

My colleagues should also be aware that this legislation addresses the abuse of charities by terrorist organizations, making it easier to shutdown or suspend such organizations.

Let me note also that this bill contains $1.4 billion in new funding for Social Services block grants, SSBG. This is a very important provision that will greatly benefit the States and, more

importantly, those in need. I would note that this was a matter of great priority for me, and I am glad to see we have been able to include this funding. The provision also gives States greater flexibility in how to use the SSBG funds.

My colleagues will be pleased to know that this bill is fully paid for. I turn now to discuss those provisions regarding abusive corporate tax shelters that are of great importance.

We have known for many years that abusive tax shelters, which are structured to exploit unintended consequences of our complicated Federal income tax system, erode the Federal tax base and the public's confidence in the tax system. Such transactions are patently unfair to the vast majority of taxpayers who do their best to comply with the letter and spirit of the tax law.

As a result, the Finance Committee has worked exceedingly hard over the past several years to develop several legislative discussion drafts for public review and comment. Thoughtful and well-considered comments on these drafts have been greatly appreciated by the staff and members of the Finance Committee. The collaborative efforts of those involved in the discussion drafts combined with the recent request for legislative assistance from the Treasury Department and IRS formed the basis for our most recent approach to dealing with abusive tax avoidance transactions.

The antitax shelter provisions contained in the CARE Act encourages taxpayer disclosure of potentially abusive tax avoidance transactions. It is surprising and unfortunate that taxpayers, though required to disclose tax shelter transactions under present law, have refused to comply. The Treasury Department and IRS report that the 2001 tax filing season produced a mere 272 tax shelter return disclosures from only 99 corporate taxpayers, a fraction of transactions requiring such disclosure.

Today's bill will curb non-compliance by providing clearer and more objective rules for the reporting of potential tax shelters and by providing strong penalties for anyone who refuses to comply with the revised disclosure requirements.

The legislation has been carefully structured to reward those who are forthcoming with disclosure. I wholeheartedly agree with the remarks offered by a recent Treasury Assistant Secretary for Tax Policy, that ``if a taxpayer is comfortable entering into a transaction, a promoter is comfortable selling it, and an advisor is comfortable blessing it, they all should be comfortable disclosing it to the IRS.''

Transparency is essential to an evaluation by the IRS and ultimately by the Congress of the United States as to whether the tax benefits generated by complex business transactions are appropriate interpretations of existing tax law.

To the extent such interpretations were unintended, the bill allows Congress to amend or clarify existing tax law. To the extent such interpretations are appropriate, all taxpayers--from the largest U.S. multinational conglomerate to the smallest local feedstore owner in Iowa--will benefit when transactions are publicly sanctioned in the form of an ``angel list'' of good transactions. This legislation accomplishes both of these objectives.

This year's legislation contains a new provision that would clarify the economic substance doctrine. The economic substance doctrine was created by the courts as a flexible text to determine whether a transaction is a tax scam or valid business deal.

Last year, there were several court rulings that, in my view, misapplied this doctrine. These rulings now stand as legal precedent that can be used to justify abusive schemes in the future. Today's clarification is intended to overturn those rulings. If a court finds that a shelter violates our clarification, the shelter participant would be subject to a strict 40 percent penalty on any tax due. This is a very tough anti-shelter provision.

Mr. President, I appreciate my colleagues' patience as I have reviewed the key provisions of the CARE Act. I think it is legislation that provides needed encouragement for charities and charitable giving in this country. In addition, it takes real steps toward addressing corporate tax shelters. I strongly encourage my colleagues to support this legislation.

I yield the floor and suggest the absence of a quorum.

Mr. President, first of all, I thank Senator Baucus for the compliments he gave me. More importantly, it emphasizes, as I have tried to indicate, the great cooperation I have had from him. Legislation such as this has some controversial provisions in it, and you don't get a piece of legislation such as this to the floor without the bipartisan cooperation that has been exhibited. I thank him for that.

Amendment No. 526

(Purpose: To provide a Managers' amendment)

Mr. President, I send an amendment to the desk and ask for its immediate consideration. This is what is referred to as the managers' amendment.

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

Mr. President, I ask unanimous consent that all time be yielded back on the amendment.

Mr. President, I further ask unanimous consent that the amendment be agreed to and the motion to reconsider be laid upon the table.

Mr. President, I have already complimented Senator Santorum and Senator Lieberman for their joint work on most of the provisions of this legislation. I am happy to have Senator Santorum, who is also a member of the Senate Finance Committee, manage a bill that he has been central to getting those provisions into law.

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 that the order for the quorum call be rescinded.

Mr. President, I wish to speak against the McCain amendment. I assume that is in order.

Mr. President, I urge my colleagues to support funding for the construction of the Ames, IA, animal health facilities laboratory. That is the National Animal Disease Laboratory--a national facility, not an Iowa facility--in Ames, IA. I heard my colleagues question the relevance of this provision. I am here now to explain to all my colleagues the importance of this facility to America's national security.

In the event of an animal disease outbreak, this facility in Iowa will play a very crucial role. Whether the issue is bioterrorism or a new or emerging disease, this facility will be centrally involved. Modernization of this facility that was built three or four decades ago is a paramount priority to ensure America's agricultural biosecurity and the safeguard of our food supply. Both the Department of Agriculture in Washington, as well as this Congress, have recognized the importance of moving forward with this modernization project as quickly as possible.

I quote from a May 2001 report which was issued by the Secretary of Agriculture:

The Agricultural Research Service and Animal Plant and

Health Inspection Service partnership in Ames represents an

unmatched team of scientific and response personnel providing

expertise and skill to address known and emerging domestic

animal disease threats.

Our current national threat level demonstrates that we need to be aware of our environment and prepared for realistic threats. Animal disease is a realistic threat to all Americans because it affects our food safety and supply.

Even without bioterrorism, we know what mad cow disease, for instance, has done to agriculture and to the people of England, as one example; and that carried over to Europe a year later and it has recently scared the consumers of Japan. That is not even bioterrorism; that is just a natural course of animal disease and, in fact, how that in turn impacts upon whether humans live.

The Ames lab is very important as we talk about the safety of our food. This lab is the best large research and diagnostic facility in the United States. Unfortunately, after all these decades, it is obsolete. It does not even meet international standards. Nearly every other livestock trading nation has superior facilities. They understand the importance of effective and expedient diagnostic competency. The Ames lab is a surveillance hub for animal disease in the United States. It is the closest thing we have for agriculture and livestock health to human health with the Centers for Disease Control in Atlanta, GA. Doesn't it seem unbelievable that the Ames facility does not have the electrical capacity to handle new computers necessary to update the facility, let alone a complex array of essential electronic diagnostic equipment? This is more than an embarrassment for our Government. It is a national security risk.

We have worked through many different scenarios to improve this facility. We have evaluated leaving the current facility in place and renovating the existing facility to bring it in to the 21st century. We found in the interest of the taxpayers that the most cost-effective method to bring this facility up to speed is to start over from the ground up.

Let me be clear. This $98 million is not full funding for the U.S. Department of Agriculture master plan. This amendment only affords us the opportunity to build the laboratory. The laboratory is clearly critical for research, diagnosis, and prevention of all animal disease threats. We cannot afford to delay construction. We need to be prepared, and this is the only way to reach an optimum level of security.

Remember, we have already appropriated some money for other aspects of this renovation, and this still will not complete the renovation of the animal disease laboratory to what is planned by the Department of Agriculture.

The fact is, the Ames laboratory is the cornerstone of the planned National Animal Health Laboratory Network. The Ames facility is a fundamental element required to protect American agriculture and to improve food safety.

For these reasons, I urge my colleagues not to support this amendment to delete but instead vote for continuing the process that is already in place, that has expended tens of millions of dollars of the taxpayers' money in partial renovation. To move one step closer toward that renovation for the safety of our food supply means to vote against the McCain amendment. I yield the floor.

Mr. President, I have a great deal of respect for Senator McCain. He is very consistent. I want to only argue with one point. This is a national facility. It was located decades ago in my State for reasons that I believe are closely related to Iowa State University being a very good land grant and research institution.

Second, the issue of whether this is legitimate at this point is best justified by the fact that this renovation has already been reauthorized, and this is just one more step by the Congress in carrying out a decision that Congress previously made that this facility that is now decades old should be renovated for the good of the safety of food in the United States.

Mr. President, I want to take a moment to express some concern to the Appropriations Committee about the report language that was included regarding the supplemental request for the Andean Counterdrug Initiative. The Senate report indicates that the committee considers their funding of the President's request as a downpayment on funding for the next fiscal year.

I would like to ask the committee to reconsider taking this position without

a greater examination of both the 2004 request and how the supplemental funding will be used. I believe penalizing the 2004 request because of needed funds today will hamper the effectiveness of this program, particularly when it seems we may be turning the corner.

This request is designed to support our current efforts in Colombia, which are occurring at a significantly higher operational pace than was anticipated when the current fiscal year budget was developed. Since the fiscal year 2004 budget was created, we have seen a wave in urban bombings, the launch of a rescue mission for kidnapped American citizens, a significant increase in the violent attacks against our spray aircraft, and an increase in the violent attacks against President Uribe and other top Colombian officials. These increased threats need to be countered now, and require a revision in the original budget estimates on what will be spent both this fiscal year and next.

The supplemental funding is necessary to continue current operations at their current pace. By including the President's request in this bill, the committee is recognizing this need. But we should not penalize next year's efforts by counting this supplemental appropriations against the 2004 request. I strongly urge the committee to reconsider holding this needed supplemental funding for the Andean Counterdrug Initiative against the fiscal year 2004 request.

Mr. President, the Dividend Allocation Rule, DAR, is the result of several old court cases and subsequent IRS interpretation that applies only to cooperatives which are corporations. When a non cooperative corporation pays a dividend to its shareholder the corporation pays tax on the dividend issued and the shareholder pays a tax on the dividend received, so they pay two levels of taxation. In fact, under the President's dividend exclusion proposal as presented to the U.S. Congress, the President of the United States makes a compelling argument that being taxed twice is inherently unfair and it would be good for the Nation's economy that only one level of tax should be paid by the corporation and that the shareholder would receive the dividend tax free.

Well--if two levels of taxation on corporations and their shareholders is unfair and adverse to the creation of capital and the economy--how would you like to try to operate as a fiscally sound business entity if you had to figure out every day how you were going to generate enough cash flow to pay THREE levels of taxation.

Current law requires corporate cooperatives to treat income from their member-owners, patrons, separate from income of their non-members money. Contributions and earnings used by the cooperative to operate is typically called retained patronage. The member, unlike a shareholder, has to pay income tax on that amount even if the Cooperative retains the money for operation expenses. Then, because of the IRS' rules, when the Cooperative returns money to its non-members it loses its corporate deduction which in turn reduces the return of earnings that the patron has already paid taxes on--the result is a triple layer of tax. This rule is inherently unfair to our corporate cooperatives.

Now is the time to finally correct this injustice. The Congress passed this bill in 106th Congress, but it was subsequently vetoed by the President. It was a part of a bill I sponsored the ``Tax Empowerment and Relief for Farmers and Fishermen, TERFF, Act'' in the 107th, and now it is time for the Senate to pass it again in the 108th. As Chairman of the Finance Committee, I am proud to join with my Ranking Member Max Baucus to introduce the bill to repeal the Dividend Allocation Rule. We have been joined by many of our farm States' Senators in a truly bipartisan effort to correct this financial injustice.

The time to act is now and this bi-partisan legislation will eliminate the adverse tax problem and will help rejuvenate over 100 of our farmer cooperative networks in Iowa and nearly 3000 of our cooperatives across the America.

Mr. President, the Dividend Allocation Rule, DAR, is the result of several old court cases and subsequent IRS interpretation that applies only to cooperatives which are corporations. When a non cooperative corporation pays a dividend to its shareholder the corporation pays tax on the dividend issued and the shareholder pays a tax on the dividend received, so they pay two levels of taxation. In fact, under the President's dividend exclusion proposal as presented to the U.S. Congress, the President of the United States makes a compelling argument that being taxed twice is inherently unfair and it would be good for the Nation's economy that only one level of tax should be paid by the corporation and that the shareholder would receive the dividend tax free.

Well--if two levels of taxation on corporations and their shareholders is unfair and adverse to the creation of capital and the economy--how would you like to try to operate as a fiscally sound business entity if you had to figure out every day how you were going to generate enough cash flow to pay THREE levels of taxation.

Current law requires corporate cooperatives to treat income from their member-owners, patrons, separate from income of their non-members money. Contributions and earnings used by the cooperative to operate is typically called retained patronage. The member, unlike a shareholder, has to pay income tax on that amount even if the Cooperative retains the money for operation expenses. Then, because of the IRS' rules, when the Cooperative returns money to its non-members it loses its corporate deduction which in turn reduces the return of earnings that the patron has already paid taxes on--the result is a triple layer of tax. This rule is inherently unfair to our corporate cooperatives.

Now is the time to finally correct this injustice. The Congress passed this bill in 106th Congress, but it was subsequently vetoed by the President. It was a part of a bill I sponsored the ``Tax Empowerment and Relief for Farmers and Fishermen, TERFF, Act'' in the 107th, and now it is time for the Senate to pass it again in the 108th. As Chairman of the Finance Committee, I am proud to join with my Ranking Member Max Baucus to introduce the bill to repeal the Dividend Allocation Rule. We have been joined by many of our farm States' Senators in a truly bipartisan effort to correct this financial injustice.

The time to act is now and this bi-partisan legislation will eliminate the adverse tax problem and will help rejuvenate over 100 of our farmer cooperative networks in Iowa and nearly 3000 of our cooperatives across the America.

Mr. President, I rise today to introduce the Clean Diamond Trade Act. Technically, this act will implement a certification process for imports of rough diamonds. But, as many of you know, this bill goes far beyond technicalities. This bill will help put an end to trade in conflict diamonds. As many of you know, conflict diamonds are diamonds mined and used by rebel movements in many African nations as a source of revenue to fuel armed conflict and the activities of rebel movements aimed at undermining or overthrowing legitimate governments in African countries. Millions of people have been driven from their homes by wars that have been fought for control of these diamonds. Families and entire countries have been torn apart.

That is why it is vitally important that we pass this legislation. Passage of this legislation would be a true bipartisan success and a significant step forward in stopping trade in conflict diamonds. And I would like to thank my colleagues for helping to develop the compromise legislation in this Act. I would especially like to recognize the hard work of Senators Gregg, DeWine, Durbin, Bingaman, and Feingold, whose devotion and dedication to stopping trade in conflict diamonds is unsurpassed.

Prior attempts to move similar bills have stalled in both the House and the Senate. As Chairman of the Finance Committee, I took great care to try and achieve the right balance so that we might implement a certification process that meets our international responsibilities, that can pass the House and the Senate, and most importantly, that works.

The Clean Diamond Trade Act will implement the Kimberley Process Certification Scheme. This is an international agreement establishing minimal acceptable international standards

for national certification schemes relating to cross-border trade in rough diamonds. It represents over two years of negotiations among more than 50 countries, human rights advocacy groups, the diamond industry and non-government organizations.

The next plenary session of the Kimberley Process is scheduled to convene in Johannesburg, South Africa, from April 28 to the 30, 2003. The U.S. played a leadership role in crafting the Kimberley Process Certification Scheme, and it is critical that we implement the certification process before April 28 if we are to retain this leadership. We also need to do this to ensure that the flow of legitimate diamonds into and out of the United States will continue without interruption. Most important, we need to do everything we can to stop trade in conflict diamonds as soon as possible.

Mr. President, we plan to mark-up this legislation in the Finance Committee tomorrow morning. I am confident the bill will receive strong bipartisan support in committee and am hopeful we can pass this bill by unanimous consent in the full Senate before we adjourn for the April recess. The people and countries in Africa affected by the damage of conflict diamonds deserve our support. Passing this bill is the right thing to do.

Mr. President, I rise today to introduce the Clean Diamond Trade Act. Technically, this act will implement a certification process for imports of rough diamonds. But, as many of you know, this bill goes far beyond technicalities. This bill will help put an end to trade in conflict diamonds. As many of you know, conflict diamonds are diamonds mined and used by rebel movements in many African nations as a source of revenue to fuel armed conflict and the activities of rebel movements aimed at undermining or overthrowing legitimate governments in African countries. Millions of people have been driven from their homes by wars that have been fought for control of these diamonds. Families and entire countries have been torn apart.

That is why it is vitally important that we pass this legislation. Passage of this legislation would be a true bipartisan success and a significant step forward in stopping trade in conflict diamonds. And I would like to thank my colleagues for helping to develop the compromise legislation in this Act. I would especially like to recognize the hard work of Senators Gregg, DeWine, Durbin, Bingaman, and Feingold, whose devotion and dedication to stopping trade in conflict diamonds is unsurpassed.

Prior attempts to move similar bills have stalled in both the House and the Senate. As Chairman of the Finance Committee, I took great care to try and achieve the right balance so that we might implement a certification process that meets our international responsibilities, that can pass the House and the Senate, and most importantly, that works.

The Clean Diamond Trade Act will implement the Kimberley Process Certification Scheme. This is an international agreement establishing minimal acceptable international standards

for national certification schemes relating to cross-border trade in rough diamonds. It represents over two years of negotiations among more than 50 countries, human rights advocacy groups, the diamond industry and non-government organizations.

The next plenary session of the Kimberley Process is scheduled to convene in Johannesburg, South Africa, from April 28 to the 30, 2003. The U.S. played a leadership role in crafting the Kimberley Process Certification Scheme, and it is critical that we implement the certification process before April 28 if we are to retain this leadership. We also need to do this to ensure that the flow of legitimate diamonds into and out of the United States will continue without interruption. Most important, we need to do everything we can to stop trade in conflict diamonds as soon as possible.

Mr. President, we plan to mark-up this legislation in the Finance Committee tomorrow morning. I am confident the bill will receive strong bipartisan support in committee and am hopeful we can pass this bill by unanimous consent in the full Senate before we adjourn for the April recess. The people and countries in Africa affected by the damage of conflict diamonds deserve our support. Passing this bill is the right thing to do.

Mr. President, I rise today after hearing several reports of the continued problem of methamphetamine production in rural America. Law enforcement must dedicate more and more resources to the small, ``ma and pa'' meth labs. These small labs pose a threat not only because of the drugs they produce, but also the serious health and environmental risk caused by the production process.

In years past, methamphetamine production was controlled by skilled chemists or well-educated individuals who were paid significant amounts of money to manufacture the narcotic. Methamphetamine production at times took an entire day to produce. Today, with modern technology and the help of information readily available over the Internet, methamphetamine production can be accomplished within a very few hours. Production no longer takes a highly skilled individual or chemist. Recipes for producing meth can be downloaded off the Internet, complete with step-by-step instructions anyone can follow. These recipes use products available at any number of local retail outlets as ingredients, first reducing them to the needed chemical components and then recombining them to produce meth.

Small cooks, often producing only enough meth for themselves and a few friends, dominate the concerns of rural law enforcement organizations. Several of the narcotics task forces in Iowa report that while they believe over 80 percent of the meth within their jurisdiction comes from outside the State, they spend 80 percent of their time and resources on these small cooks. If we are going to get ahead of this problem, we must change this ratio.

Several years ago we took some important steps in limiting access to many of the precursors needed for meth production. These were good steps, and have proven somewhat effective. But more needs to be done.

Officers from the Southeast Iowa Task Force will tell you stories of suspects they have followed all over the county, stopping at each convenience store, supermarket, and drug store they passed to pick up as much cold medicine as they could. Not because they were sick, but because they needed the ephedrine in these drugs to cook meth. Sometimes it is purchased, but just as often it is stolen. These suspects were followed back to apartments, farm houses, motel rooms, or even deserted areas of gravel roads where the cold medicines were combined with other chemicals like starter flud, anhydrous ammonia, and drain cleaner solvents for a ``cook'' of methamphetamine. This is all too common anyplace we find meth being cooked by amateurs using recipes off the Internet.

There are several different recipes for cooking meth. In rural areas, many of the small cooks use a receipt calling for anhydrous ammonia, which is a fertilizer readily available wherever farming occurs. Other recipes call for the use of red phosphorous, the common ingredient in emergency road flares. But all of these recipes need some form of ephedrine or pseudoephedrine, a common ingredient in cold medicine.

If we make it more difficult for meth cooks to acquire ephedrine, then it will be more difficult for them to manufacture this poison. Several proposals have been put forth by the DEA and others which would help control access to ephedrine products. Many of these have merit, and I hope we will continue to pursue these proposals.

One method that could be very effective would be to put products containing ephedrine or pseudoephedrine behind the counter, such as is currently do with cigarettes. Other proposals would increase the penalties for possession of excessive amounts of precursor chemicals for meth. Some quarters have suggested collecting names or even social security numbers for everyone who purchases products containing ephedrine or pseudoephedrine. Clearly, each of these proposed solutions brings its own set of challenges.

But new steps need to be taken. Spending 80 percent of the time on 20 percent of the problem is not a way to get ahead. Increasing the difficulty of getting the products needed to do a small ``cook'' of meth decreases the likelihood these ``cooks'' will take place at all. While none of these proposals will stop all of the ma and pa meth operations, the status quo is not acceptable. Our cops are being overwhelmed, and our kids are dying--we cannot remain silent.

Mr. President, I rise today for the very sad purpose of honoring a fallen American.

I learned this morning that Sgt Bradley Korthaus of Davenport, Iowa, has died while in service to his country as part of Operation Iraqi Freedom. I would like to take this opportunity to salute his patriotism and his sacrifice.

Sgt Korthaus disappeared Monday during an operation in which he and three other Marines were swimming across a canal in southeastern Iraq, and his body has now been recovered.

This is the first Iowan who has died in the current conflict in Iraq and the news has hit home with me and my staff.

We all know that sacrifice is part of war, and the President has tried to prepare us for the inevitable losses; but it is impossible to fully prepare for the loss of a young life.

My prayers go out to Steve and Marilyn Korthaus who grieve for their son and to all of the family, friends, and neighbors who are touched by his passing.

There is nothing I can say that can take away the pain they must feel, but they should know that they are not alone in their grief.

Iowans have a strong sense of community and I know that Bradley's loss will be felt deeply by many who never even knew him.

Bradley Korthaus deserves the highest gratitude of this body and the entire Nation. His sacrifice reminds us that freedom is so precious because of its incredibly high cost.

Bradley's father served in Vietnam and Bradley followed that tradition of service to his country.

This is an example of the patriotic contribution made by thousands of American service members and their families.

The love of country and dedication to service shared by so many of its citizens is the great strength of our Nation and we can all be very proud of patriots like Bradley Korthaus.

Mr. President, it is a privilege for me to be before the Senate again in a working relationship with Senator Baucus, the ranking Democrat of the Senate Finance Committee. It is another example of legislation that comes out of our committee in the bipartisan tradition of our committee, and this one came out, I believe, with unanimous support.

I very much appreciate not only the cooperation of Senator Baucus, but other members on the Democratic side of the committee, for helping us move along a very important piece of legislation, one that was very important last fall when we did not get it passed but more important now because it deals with our people in the military and because of what is going on in Iraq at this moment.

We are here today to consider the Armed Forces Tax Fairness Act which the Finance Committee developed during this and the last Congress. This is a particularly somber time in our country as we continue our dangerous operations in the country of Iraq.

The contributions of the men and women of our uniformed services, our reservists and our National Guard, are foremost in our minds, and our thoughts and prayers remain with their loved ones and with families. I particularly wish to extend my condolences to the family of SGT Bradley Korthaus of Davenport, IA, whose death was reported yesterday. SGT Korthaus died while serving his Marine Corps engineering unit in southeast Iraq. So we have before us legislation affecting all of these men and women, legislation to ensure that our service men and women and their families are treated fairly under tax law. It seems to me this legislation is particularly timely.

The military bill we consider today rectifies a number of inequities faced by the uniformed services, our National Guard, and even Foreign Service personnel. For example, this legislation before the Senate now ensures that the families of military personnel called into active duty are not disadvantaged under the home sale exclusion provisions that affect many homeowners in the United States because most Americans are permitted to exclude built-in gain on the sale of their personal residence if they meet certain residency requirements.

The situation for military personnel owning a home is entirely different because we know that military personnel, called to active duty or asked to relocate, do not have the flexibility to meet these residency requirements and are consequently then adversely impacted by these rules. The Tax Code is unfair to them because they have no control over where they are going to live because they are called to meet the command of a military commanding officer to move out to someplace else.

The legislation, then, would suspend the residency test for periods of active duty aggregating no more than 10 years. We should obviously not punish members of our military and their families who are asked to relocate in the name of serving their country and protecting our national security, protecting our freedoms. To that extent, the Tax Code is unfair so that they get punished in ways that people who are nonmilitary and can control more of their lives would not be punished.

Another important issue weighing on the minds of many military personnel called into active duty is the well-being and the care of their children. The Federal Government works to ensure that military families have adequate and affordable access to child

care, as we should. This is an important function of the military during peacetime, but it is essential, even more so, during periods of conflict such as the one we are experiencing in Iraq.

The need is that much more pressing obviously for single parents and dual military career families. This legislation clarifies that dependent care benefits provided to families of the uniformed services will not be treated as taxable compensation.

In recent days, the press has focused significantly on the impending service contributions of our Reserve, military people, and National Guard members. To date, we have more than 200,000 reservists and National Guard being called to active duty, most of them called for the sole purpose of assisting Operation Iraqi Freedom. This includes, in my own State of Iowa, 3,500 men and women who have been called to active duty. We have begun to rely increasingly on these service personnel to defend our borders and serve and protect in other areas of the world, meeting their commitment to our total force concept of the military.

Many of Iowa's reservists have contacted me to emphasize that reservists who travel for training exercises that they do on weekends, or any other time, are required to spend their own money for these travel expenses. If our military is not able to reimburse reservists for travel expenses related to training assignments, we should, at a very minimum, allow these men and women to fully deduct those expenses on their Federal tax returns and not be hit by some threshold that precludes most of these deductions from being taken. Reservists should not be in a position of subsidizing their own military training.

Among other things, this legislation also ensures that military personnel serving in Secretary of Defense-designated contingency operations--and this would include Operation Desert Storm and presumably now Operation Iraqi Freedom--receive appropriate relief from the administrative burdens that our tax laws foist upon them during participation in those operations.

In closing, we all thank the men and women of the U.S. military and Reserve components. The onset of the conflict in Iraq, no doubt, renews our deep appreciation for the tremendous sacrifices and risks that they undertake to protect the freedom of American people and others around the world. It is a perfect time then to ensure that our military is more fairly treated under our country's tax laws. That is what this legislation is all about.

So I thank my colleagues for their consideration of this legislation. I urge each of my colleagues to vote for this very important tax fairness measure, particularly considering the importance of it at this time of sacrifice on the battlefield of Iraq.

I yield the floor.

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

I thank the junior Senator from Louisiana for her bringing this important issue to the committee's attention. The Congress has an obligation to see to the well being of the men and women who are defending this Nation even now. For these reasons, the committee has adopted S. 351, and we would like to pass that legislation immediately. I know it contains provisions of deep interest to the Senator from Louisiana, and she would agree that the sooner they are enacted the better. However, I share her concern about the need to take whatever steps we can to support our troops and their families. For a variety of reasons, I do not believe that the S. 351 is the correct vehicle to address this problem. I do recognize that the issue appears to have drawn broad support as similar proposals have been introduced by Senators DeWine and Allen. I say to my friend from Louisiana, I will work with her and Senators DeWine and Allen on including the Reservists and Guardsmen Pay Protection Act in the reconciliation package that we will bring to the floor soon.

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

I associate myself with the remarks of the Senator from Montana. I share Senator Pryor's interest in a GAO study and will be glad to work with him on a letter. And, obviously, a person such as I, who relies upon the GAO for so much study on matters in which I am involved, would not discourage my colleague from likewise seeking the General Accounting Office's expertise and look forward to what such a study would show in regard to the treatment of our military personnel.

I yield the floor.

Mr. President, we all have an opportunity today to show support for our men and women in uniform in faraway places such as Iraq.

The bill before us is the Armed Services Tax Fairness Act. It is a bipartisan product. The bill represents the Senate's position pretty much as it was last year when this bill was brought up in the Senate. The revenue loss of the military tax relief package is offset with a crackdown on tax-motivated expatriates. I ask my colleagues to please show their support for our troops and support the Armed Forces Tax Fairness Act.

I yield the floor.

Mr. President, I ask for the yeas and nays.

Mr. President, I move to reconsider the vote.

Mr. President, next week we are going to have a supplemental appropriations bill of at least $75 billion before the Congress of the United States for the funding necessary for the military action in Iraq, at least for the early part of that action, which number could not have been decided when we passed the appropriations bills in January because at that point there would not have been any military action. I raise this issue now in conjunction with what there is in international law in regard to a victorious power in a nation, after the war is done, of what can be used of the natural resources of a country for the victorious country to administer the nation as well as to rebuild that nation.

The reason I raise these points about international law is because there is very clear international law about what a victorious nation can do and cannot do in regard to the resources of the defeated nation. I raise this issue at this point because I want to make sure the American taxpayers are not saddled with any of the costs of rebuilding Iraq that can be legitimately paid for, under international law, out of the resources of Iraq.

After the first full week of the conflict, the allied forces have pushed well into the country, liberating Iraqi populations across western and southern Iraq. These developments, then, raise an issue that must be explored and discussed before we obligate taxpayers' money to rebuilding Iraq; that is, with regard to the United States and allied occupation of Iraq, what does international law tell us? What does international law dictate with regard to our rights as the occupying power to administer Iraq's oil resources and our obligations to the citizens of Iraq?

The Hague Convention of 1907 and the Geneva Convention provide the basis for international law with regard to the obligations and rights of an occupying power. They provide specific guidelines for administering the resources of the occupied territory and the obligations of the occupying power to provide for the welfare and the safety of the occupied people.

With regard to the rights of an occupying power to use public property and resources, article 53 of Hague regulations of 1907 provides that an occupying power can only take possession of state- owned property, and any seizure of private property must be restored and compensation provided when peace is made.

Further, article 55 provides:

The occupying State shall only be regarded as administrator

and usufructuary of the public buildings, real property,

forests and agricultural works belonging to the hostile

State.

The rules of usufruct provide a tenant--in this case it would be the United States or the coalition forces--the right to use and enjoy the profits of property owned by Iraq, as long as the property is not damaged or altered in any way. In addition, the allied forces may use the public assets only for the benefit of Iraq and the Iraqi people, and to defray the costs of administration.

Secretary Powell recently reaffirmed this right. When discussing the issue of oilfields, he stated:

You can be sure that they [meaning the oilfields] would be

protected and the revenue generated from any such oil fields

would be used in accordance with international law and to the

benefit of the Iraqi people.

The occupying power may also take possession of public movable property only if such property can be directly or indirectly used for military operations. Clearly, Iraq's oil reserves are susceptible to military use and thereby subject to seizure by U.S. military forces under the laws of war to restore Iraq.

In addition, the oil produced from Iraqi wells may be considered similar to the produce of public land which, under article 55, may be appropriated by the occupying power.

With regard to the obligations of the occupying power, article 43 of Hague regulations of 1907 state:

The authority of the legitimate power, having actually

passed into the hands of the occupant, the latter shall take

steps in his power to restore and ensure, as far as possible,

public order and safety.

The Geneva Convention, relevant to the protection of civilian persons in time of war, states that the occupying power is also responsible for establishing a direct system of administration and maintaining the public order.

The key restriction to the use of Iraq's oil is that the proceeds are limited to occupation purposes, which includes measures taken in the furtherance of fulfilling that obligation that I just read under article 43, to reestablish peace and order to Iraq. Clearly, international law provides that the United States is entitled to use the money from oil sales to pay for such obligations as long as food and water, health care, roads and bridges, schools and airports, as examples.

Once a viable Iraqi government is established, the oilfields must be returned to Iraq in a reasonable condition.

One final issue for debate will be the role of the U.N. in the reconstruction and administration of Iraq. For example, what will remain of the United Nations Oil For Food Program in post-Saddam Iraq? Given the U.N.'s inability to fulfill its obligations with regard to enforcing Security Council Resolution 1441, it is unclear whether the U.N. will be relevant at all in the reconstruction efforts of Iraq.

It is my hope that the U.N. will follow the lead of the United States, Britain, and the other 40 or more allies currently in Iraq enforcing the U.N. resolutions. After all, it must be made very clear that the resources of Iraq will finally be available for the use of the Iraqi people, for the betterment of those same people.

For far too long, we know the prisoners of Saddam's regime have been deprived of their country's riches and forced to survive as peasants. While the responsibility for providing for the welfare of the Iraqi people belonged to Saddam Hussein, he was, as we know, more interested in spending it on himself in the form of elaborate palaces and in the pursuit of weapons of mass destruction.

The Iraqi people will finally share in the wealth of their country that has always belonged to them rather than Saddam sharing it with his family and the cronies of his brutal regime.

I hope the Congress will take into consideration the rights the taxpayers of the United States have under this Geneva Convention, to make sure the resources for the rebuilding of Iraq come from Iraqi natural resources and not from the American taxpayers. That should be fully taken into consideration, as some of the money we appropriate next week will probably be used for that purpose of at first establishing administration in Iraq.

I yield the floor.

I will work with both Senators and other interested Members to provide for consideration of legislation to provide reimbursement to health providers who provide federally required, but uncompensated, emergency health treatment to undocumented aliens.

Mr. President, the American people recognize the importance of the family farmer to our Nation and the need to provide an adequate safety net for family farmers. In recent years, however, assistance to farmers has come under increasing scrutiny.

Critics of farm payments have argued that the largest corporate farms reap most of the benefits of these payments. What's more, farm payments that were originally designed to benefit small- and medium-sized family farmers have contributed to their own demise. Unlimited farm payments have placed upward pressure on land prices and have contributed to overproduction and lower commodity prices, driving many family farmers off the farm.

Last year, the Senate agreed, by an overwhelming vote of 66 to 31, to a bipartisan amendment sponsored by Senators Dorgan and myself to target Federal assistance to small-and medium-sized family farmers. The amendment would have limited direct and counter-cyclical payments to $75,000. It would have limited gains from marketing loans and LDPs to $150,000, and generic certificates would have been included in this limit. That would have limited farm payments to a combined total of $275,000.

That amendment was critical to family farmers in Iowa and indeed farmers across the Nation. I feel strongly the farm bill failed Iowa and failed all of our farmers when it failed to effectively address the issue of payment limitations.

A solid majority in the Budget Committee voted last week in favor of a payment limitation provision to limit total payments of all kinds to a combined limit of $300,000. This is more than I think is necessary. It is $25,000 more than the limit that won over two-thirds of the Senate. But in the interests of compromise it seems like a fair approach. The most important thing is that loopholes in the payment limitation law be closed so that the limitation at whatever level is actually the real, effective level.

The Budget Committee voted to apply the savings from this reasonable payment limit proposal against the reductions suffered by the Conservation Security Program, CSP, during consideration of the agricultural disaster package in the fiscal year 2003 omnibus appropriations bill.

This new conservation initiative from the 2002 farm bill will reward farmers and ranchers who voluntarily implement effective conservation on their working lands. Farmers and ranchers will receive public support as they provide public benefits to the Nation's natural resources and environment. This program allows family farmers to solve critical resource problems, with graduated rewards for increasing efforts. The CSP is an innovative new program in the Federal agricultural conservation toolbox and its full funding should be restored as soon as possible.

The Budget Committee endorsed payment limitation reform including a combined maximum cap of $300,000 and endorsed restoring funds to the Conservation Security Program. Payment limitation reform is long overdue, a fact reflected in the vote of the Budget Committee. If cuts should be ordered in the final budget resolution emerging from conference, payment limitations would be the most logical place to look for savings. I look forward to working with my colleagues on this important issue.

Mr. President, obviously, like on so many issues, I happen to agree with my friends on the other side of the aisle. But where do you make this decision? You don't make it on the Budget Committee. You make it on the Finance Committee.

I am committed to having a drug benefit for all seniors. We developed such a bill last year, so we have the capability of doing it. We are going to do it this year. I do not want this decision made here. I do not want to curb the freedom of the Finance Committee.

I argued the same point on an issue that friends on the other side of the aisle would have agreed with me, on a Medicaid issue, that would have been in this budget that is not in the budget.

Leave these issues to a committee of competence, the Senate Finance Committee.

I move to reconsider the vote.

Which amendment is this?