Mr. President, today I am joining my good friend the Senator from Texas, (Mrs. Hutchison), and the Senator from Tennessee, the Majority Leader, Mr. Frist, in legislation to permanently extend the State sales tax deduction. This bill aims…
Mr. President, today I am joining my good friend the Senator from Texas, (Mrs. Hutchison), and the Senator from Tennessee, the Majority Leader, Mr. Frist, in legislation to permanently extend the State sales tax deduction. This bill aims to make permanent legislation that the Congress passed and the President signed into law last year on October 22, 2004 as a provision of the JOBS Act. It is a change to the tax code that I have worked to see enacted since coming to the U.S. Senate, and one I want to maintain.
The JOBS Act reinstituted, for a period of 2 years, the ability of taxpayers to deduct State and local sales taxes just as they would State and local income taxes. Residents of States such as Washington that do not have income
taxes, but have State sales taxes, had not been able to do this since the 1986.
Make no mistake about it: permanently extending the sales tax deduction is a tax cut for Washington State taxpayers. Such a cut will strengthen our economy and fundamentally restore basic tax fairness.
When the Federal income tax was first imposed in 1913, Congress allowed taxpayers to deduct State and local sales so they would not be taxed on once at the State level and then, again, at the Federal level in the same calendar year.
In 1986, after 74 years of precedent, this tax equity abruptly ended. Taxpayers from States without income taxes were given a raw deal when Congress made a budgetary squeeze play and ended the tax deduction for State sales taxes.
For States like Washington, where sales tax revenues are nearly 60 percent of the State budget, the impact is immense. The loss to Washington State taxpayers in 2004 alone, is estimated to be $500 million.
Washington taxpayers waited 18 years to for the Federal government to correct the unique burden on them that amounts to requiring them to pay taxes twice on the same money. Now that the burden has been lifted for 2 years, with thanks to this body and the President, Washington taxpayers are now looking for--and must have--permanence in the tax code with regard to their ability to deduct State and local sales taxes from their Federal income tax.
As I mentioned, this issue has been a primary one for me on behalf of the people I serve. In fact, when I became a member of this body in the 107th Congress, one of my first legislative acts was to cosponsor sales tax deduction legislation that at the time was introduced by the former Senator from Tennessee, Mr. Thompson. In the 108th Congress, Senator Hutchison and I carried the banner as the lead sponsors of similar legislation, the core of which we saw enacted into law for a 2-year period.
I am here once again in the 109th Congress with the Senator from Texas, Mrs. Hutchison, on the heels of a victory for a two-year reprieve for our constituents, looking, now, for permanent equity in the tax code. I look forward to continuing to work with Senator Hutchison, as well as Senator Frist and others, in moving this sales tax deduction legislation forward in the coming months.
Only by making the two-year law permanent will we be able to see to it that taxpayers from Washington State, or any other State, are not unfairly singled out to pay higher taxes.
I urge prompt action on this measure.
Mr. President, today I am introducing the Electricity Needs Rules and Oversight Now, or ENRON, Act.
This legislation does two simple--yet critical--things. The ENRON Act would amend the Federal Power Act to put in place a broad prohibition on all manipulative practices in electricity markets--rather than just round-trip trading, as included in last year's comprehensive energy bill; and it would specify that electricity rates resulting from manipulative practices are not just and reasonable under the Federal Power Act.
Many of my colleagues are, by now, familiar with the provisions of this legislation, as I have often described the circumstances that led me to propose it. While the Senate has been considering comprehensive energy legislation over the past few years, various investigations have unearthed Enron's ``smoking gun'' memos--detailing the company's schemes to drive up electricity prices--and other evidence leading the Federal Energy Regulatory Commission (FERC) to conclude that market manipulation was ``epidemic'' in western markets during 2000-2001. Recently, even more information--including audio files detailing Enron traders' conversations--has come to light. Meanwhile, the energy crisis continues to take a serious toll on American consumers and businesses: it's been estimated that, as a result, the West has lost $35 billion in domestic economic product--in other words, a 1.5 percent decline in productivity and a total loss of 589,000 jobs. Adding insult to injury, Enron has now sued a number of utilities throughout the country--for almost a $1 billion--attempting to collect penalty charges on inflated contracts, cancelled when the company went bankrupt. In essence, Enron is asking the same consumers it gouged to pay yet again.
As I have discussed on the Senate floor many times, the Western market meltdown of 2000-2001 has had a profound impact on my state's economy, the pocketbooks and economic well-being of my constituents-- too many of whom have had to make the choice between keeping their heat and lights on and buying food, paying rent, and purchasing prescription drugs. In some parts of Washington state, utility disconnection rates have risen more than 40 percent. People just can't pay their utility bills.
As my colleagues can imagine, what we have seen and heard since the height of the crisis--as we have learned about the market manipulation and fraud that took place in the Western market, while Enron energy traders laughed about the plight of ``Grandma Millie''--has added tremendous insult to substantial economic injury. Moreover, the Western crisis has brought to the forefront a number of very important policy questions about the kind of behavior that will be tolerated in our Nation's electricity markets, as the Federal Energy Regulatory Commission has continued to pursue its ``restructuring'' agenda.
I believe we need strong leadership that will condemn the types of schemes
used by Enron traders--manipulation tactics with infamous nicknames like Get Shorty, Death Star and Ricochet. We need to send a strong and unanimous message that these practices will not be tolerated in our nation's electricity markets. Next, we need to agree--as a matter of policy--that the victims of these schemes should not have to pay the inflated power prices resulting from market manipulation. The ENRON Act will make these commonsense principles the law of the land.
I would like to thank the original cosponsors of this legislation, the Senator from New Mexico, Mr. Bingaman, the Senator from California, Mrs. Feinstein, the senior Senator from Washington, Mrs. Murray, and the junior Senator from Wisconsin, Mr. Feingold, for joining me today. It is our hope that the Senate will move toward swift passage of the ENRON Act.
Mr. President, I ask unanimous consent that a copy of the legislation be printed in the Record.
Mr. President, today I am introducing the Animal Feed Protection Act of 2005. It is similar to legislation that I introduced in the 108th Congress.
Last week, during the Senate's consideration of the nomination of Governor Mike Johanns to be the Secretary of Agriculture, I spoke in favor of exercising caution with respect to re-opening the U.S.- Canadian border to imports of live animals and processed beef products until the Animal Protective Health Inspection Service fully investigates the most recent case of Mad Cow in that country. This legislation is important to our ongoing efforts to eradicate the possibility that Mad Cow disease will infect U.S. cattle herds.
My legislation provides necessary enhancements to current Federal feed regulations. It reduces the chance that the riskiest materials, those most likely to transmit Mad Cow disease, cross-contaminate cattle feed or are accidentally fed to cattle.
Specifically, my legislation would ban the inclusion of specified risk materials, or SRM, in all animal feed. Currently these materials are only banned from ruminant feed.
As we continue to negotiate the reopening of export markets to U.S. beef, a comprehensive SRM ban is a prudent step. It is necessary to assure our trading partners that we have secured our domestic feed, and eliminated the risk of spreading Mad Cow disease through feed.
As our domestic beef producers continue to suffer from the closure of our largest export markets, I encourage my colleagues to join me by cosponsoring this legislation--a measure that will strengthen our Mad Cow firewalls and our assurances to foreign beef consumers. I also hope that as the Senate Agriculture Committee conducts hearings next month into the appropriate Federal response to the most recent Canadian Mad Cow case, the committee will consider examining this legislation as well. The Senate should move toward its swift passage. Mr. President, I ask unanimous consent that a copy of the legislation be printed in the Record.
Mr. President, today I am introducing the White Salmon Wild and Scenic Rivers Act. I am pleased to be joined by the Senior Senator from Washington (Mrs. Murray), who has been a strong supporter of this legislation.
This bill would designate some 20 miles of the main stem of the upper White Salmon River Salmon and one of its tributaries, Cascade Creek, all within the Gifford Pinchot National Forest, as components of the National Wild and Scenic Rivers System. By designating this upper third of the White Salmon, we can permanently protect this special river as a premiere recreational destination, a Southwest Washington economic resource, and an important wildlife habitat.
I am happy to note that my delegation colleague, Congressman Baird, recently offered identical legislation in the House.
The White Salmon River's remarkable beauty and pristine condition are not in question. In fact, the lower eight miles of the river received protection when Congress granted that stretch of the river Wild and Scenic status in 1986. As we saw then, its protected status hasn't prevented residents and visitors from taking advantage of the unique recreational opportunities the White Salmon River offers. Extending Wild and Scenic protection to the river's upper reaches today is an important step forward in protecting even more of its wild character for fishing, boating, and other recreational activities.
As one of the best whitewater rivers in the Pacific Northwest, the White Salmon already supports a number of whitewater rafting companies. About 12,000 whitewater boaters visit the river each year. So I see this designation as not just protecting a pristine river, but also its beneficial impact on the local economy downstream.
Protecting the White Salmon River will help increase opportunities for other outdoor sports, as well. This is an important sector of our state's economy. According to the Washington Department of Fish and Wildlife, fish and wildlife related recreation pumps nearly $2.2 billion per year into our economy. And we rank first in the Northwest and eighth in the nation in spending by sport fishers.
Safeguarding the White Salmon through this designation will also be an important step toward restoring wildlife habitat. Once the Condit Dam is removed from the lower reach of the river, the White Salmon will again become valuable spawning habitat for salmon and steelhead.
I am proud that identical legislation to the measure I introduce today passed the Senate unanimously on October 10, 2004. While the bill narrowly missed clearing the House of Representatives, I am confident that because this bill has a broad range of support, and is a true win- win proposal for local interests, that it will become law during the 109th Congress.
Mr. President, I look forward to working with my colleagues in the Senate, as well as other members of the Washington state congressional delegation, to ensure swift passage of this important legislation. I ask unanimous consent that a copy of the legislation be printed in the Record at the conclusion of my remarks.
Mr. President, today I am introducing two pieces of legislation to help families save for their children's education.
In today's global marketplace, ensuring access to high-quality education--starting in early childhood and grade school, moving on to college and beyond--is central in maintaining America's competitive edge. To make paying for school easier, I am introducing two pieces of legislation that would expand Coverdell Education Savings Accounts or ESAs: The Education Savings for Students Act and College Savings Act.
Coverdell ESAs are trusts created solely for the educational benefit of any child under the age of 18. Contributions to a Coverdell Education Savings account can be used toward a child's education from kindergarten through 12th grade, college, and even graduate school. All earnings in the account grow tax-free and can be withdrawn on a tax- deferred basis, if used for educational expenses. Currently, annual contributions to each Coverdell ESA cannot exceed $2,000. But this particular provision will sunset on 12/31/2010 unless Congress takes action to extend it, otherwise the maximum contribution will drop back to a previously set stipulation of $500.
My bill, the Education for Students Act would expand the existing Coverdell ESA by permanently increasing the maximum annual contribution from $2,000 to $5,000. This bill keeps the current Coverdell ESA provision that investment earnings accumulate tax-free and withdrawals from the account are tax-exempt when the child uses the funds for school.
My other bill, the College Savings Act would also permanently increase the maximum annual contribution to a Coverdell ESA to $5,000. Instead of anticipating future earnings, families would be able to deduct the amount they contribute to their education savings account from income.
Rather than putting away money ad-hoc, both bills provide a financial incentive to save for college or other educational expenses. And since there is no limit on the number of Coverdell ESAs that may be opened for a child under age 18, parents have the flexibility to set aside money now through deductible contributions or bank on projected savings through tax-deferred earnings and withdrawals, or even take on both options. The College Savings and Education Savings for Students Acts will help families plan for future educational expenses, paving a path to financial self-sufficiency.
I understand that all families are different. Saving for college may be the last thing on a parent's mind, especially when their child is young and their family has significant financial needs. But just as fast as our children
grow, so does the cost of tuition. Mounting prices for books and materials, plus room and board have made colleges and universities less affordable for most families.
College is expensive. There are many parents whose children aim to go to college, but soon discover they can't afford it because the price of pursuing a higher education costs too much. If the College Savings and Education for Students Acts became law, families would have another powerful tool to help their children realize their educational dreams.
By saving money early and often, families won't feel as hard hit by skyrocketing college prices because you'll know what's coming in and what's going out of these accounts.
In 2002, the National Center for Public Policy and Higher Education reported on the national trends of rising college prices. The Center determined that if educational costs are unaddressed there will be adverse consequences for expanding students' opportunities to pursue a higher education and future career.
This report found that over the last two decades, the cost of attending two- and four-year public and private colleges have not only grown more rapidly than inflation, but faster than family incomes, increasing the share of family income that is needed to pay for tuition and other college expenses. From 1991 through 2001, tuition at four- year public colleges and universities rose faster than family income in 41 states, including my home state of Washington.
The Washington State Higher Education Coordinating Board reports that, over the last ten years, tuition and fees have far outpaced family income, increasing 89 percent compared to 51 percent in per capita personal income in my state. In comparison, the cost of most consumer goods increased an average of 20 percent during the same time. Per capita personal income in Washington increased 51 percent during this same period.
As a result, more students and families at all income levels are borrowing more money than ever before to pay for college. According to a recent study by the College Board, nonfederal borrowing reached $11.3 billion in 2003-04, up 39 percent over the previous year, and jumping nearly 150 percent in three years. Over $10 billion of these loans are private. Over the past five years, borrowing through banks and other private lenders has increased from 7 percent to 16 percent of education loan volume.
Although borrowing is an acceptable way to pay for college, the financial consequences of high debt can still ensue, and students spend years paying back loans, undermining their ability to purchase a home or save for retirement. Additionally, college students on average graduate with about $3,300 in credit card debit alone. Concern about the increase in educational loan debt may cause students to spend more time working than attending class or to opt out of enrolling in college altogether.
Moreover, the steepest increases in college and university tuition have been imposed during times of greatest economic hardship. Just in the past three years, our economy has experienced a loss of 1.8 million private sector jobs and 2.7 million manufacturing jobs. Preparing America's workforce and keeping up with the demand for skilled workers across all sectors of the 21st century economy is my priority. If we want to maintain our economic competitiveness, it is imperative that there are opportunities for individuals to fully take advantage of educational opportunities.
The Bureau of Labor Statistics reports that six of the ten fastest- growing occupations in the U.S. economy require an associate's degree or bachelor's degree, and that all ten of these careers will require some type of skills training. By 2010, 40 percent of all job growth will require some form of post-secondary education.
On average, a college graduate earns nearly 73 percent more than a typical high school graduate. In 2003, the average worker in the U.S. with a four-year college degree earned just under $50,000, over 60 percent more than the $30,800 earned by the average worker with a high school diploma, reports the College Board. Those with advanced degrees earn two to three times as much as high school graduates. In addition, society reaps the benefits of an educated workforce by improving quality of life and overall, the well-being of our communities.
Affordability is key to expanding opportunities to go to college. Saving for college early and often will help lift the pressures off of parents who are feeling the financial squeeze of increased tuition and fees.
Because my family qualified for financial aid, I was able to work my way through college using Pell grant funding. But there are many families who do not qualify for Pell or other sources of financial aid.
For these families, Coverdell Education Savings plans provide necessary relief for the middle class. The purpose of education savings plans are to increase saving by increasing net returns. Today, parents can put up to $2,000 a year into a Coverdell Education Savings account. The actual contribution is not tax deductible, but all earnings in this account are free from taxes when they are withdrawn to pay for school.
However, the current $2,000 annual limit on Coverdell contributions will be repealed in 2010 unless Congress acts to extend it. If we don't extend the contribution level, the maximum contribution will drop to $500.
While the current tax benefit makes it easier to save for college, the Education Savings for Students Act would increase the annual contributions from $2,000 to $5,000; making this change permanent ensures greater savings for families. By increasing the amount parents can put aside for their children's college savings, middle-income parents will be able to save more easily for their child's college education.
Say, for example, parents start saving when their child turns eight years old. If they put away just $100.00 a month--at an interest rate of savings of four percent--by the time their kid turns 18, their account would have earned more than $12,400 in interest. Parents will save over $3,100 in taxes when that child is old enough to go to school.
In addition to projected savings, parents also have the option to save now. The College Savings Act would allow families to deduct Coverdell ESA contributions from their taxes each year.
Mr. President, both of these bills, the College Savings Act and the Education Savings for Students Act are financial incentives for people to save by allowing families to deduct the amount they contribute and take tax-free earnings when their child is ready to go to school. These bills would further lessen the financial burden that parents bear by saving money early and often.
Permanently expanding the Coverdell maximum contribution from its current threshold of $2,000 to $5,000 a year and allowing this contribution to be tax deductible is a common-sense savings vehicle that keeps future college costs from spinning out of control. Increasing contribution caps will make school more affordable at a time when a college education and advanced job training is becoming more and more important for economic success.
I urge my colleagues to support these measures and I ask unanimous consent that the full text of these bills be printed in the Record.