Floor Statements

Mr. President, this afternoon we resume consideration of the JOBS bill. The chairman of the committee, Senator Grassley, is on his way over. I thought I would proceed to make sure we do not have any dead time.

While the Senate went off this bill and considered the budget just a week ago, the Bureau of Labor Statistics released new job figures for February. Those data show 8.2 million people are still unemployed. That is more than 2 million more than at the beginning of the recession in March 2001. Job growth remains too slow.

As this chart shows, we have lost more than 3 million private sector jobs since December 2000, and job creation has not turned around.

This next chart shows jobs lost--2.2 million jobs lost; overall total employment, 3 million jobs lost from January 2001 to February 2004; 3 million lost in the private sector during that same period. It was almost 3 million, 2.8 million lost in the manufacturing sector.

The economy created just 20,000 new jobs in February. The private sector created no new jobs last month. All the net new jobs came from the Government. Let me repeat that. There were no new private sector jobs created last month. Yet there were 20,000 new jobs overall, and all those jobs were Government jobs. That is not something I think we want to do.

This next chart shows manufacturing jobs. It is very interesting to see that in the years 1950, 1960, 1970, all the way up to the year 2000, this dotted line shows that today, 2004, we have the fewest jobs in America in half a century. That is the fewest jobs in half a century. Stated another way, the number of jobs we have now is as low as it was a half century ago.

Manufacturing jobs declined for the 43rd straight month. Mr. President, 3,000 manufacturing jobs disappeared in February. Manufacturing employment is at its lowest point in more than a half century, since March of 1950. Again, that is what this chart shows. The job level now is as low as it was a half century ago.

Part of the story is that the American manufacturing worker has become more productive. The average manufacturing worker has turned out more product than before. But it goes deeper than that. Manufacturing production--that is the output of manufacturing jobs--remains below the levels of the beginning of 2001.

There is reason for continued concern about the future. A week ago, Goldman Sachs reviewed the latest manufacturing data and concluded:

[W]e interpret Monday's decline in the New York Fed's

Empire Survey for March as one more piece of evidence that

the manufacturing sector is transitioning to somewhat slower

growth. . . .

This next chart shows the share of population with jobs. That is, we reached our peak in about the year 2000 of the percentage of American population that had jobs, and we can tell by the chart that whereas it has been steadily rising in percentage of Americans who have jobs from 1994, steadily rising up to the beginning of the recession in March 2001, we have declined precipitously since that date.

In sum, the jobs picture remains sluggish. Even the normally taciturn Federal Reserve noted the weak job market in saying in a recent statement last Tuesday that ``hiring has lagged.''

The latest Labor Department numbers show total unemployment fell in February to 138.3 million. The share of the population age 16 and older with jobs declined to 62.2 percent. This employment population ratio is lower than it was at any time between March 1994 and June 2003. Again, that is in the chart as I just indicated.

The slow job market spans the Nation. As of January 2004, nearly 3 years after the recession began, almost every region of the country continues to have higher unemployment than in March 2001. Forty-five States have higher unemployment rates than when the recession began.

In terms of unemployment, my State of Montana has fared better than some, but unemployment remains markedly higher than pre-recession levels throughout much of the country. Colorado unemployment is up 2.8 percent. Again, if we look at the chart, every State has higher unemployment, as indicated by red, but for three States. One is the State of Montana, where it is level. In two States, Nevada and South Dakota, unemployment has actually declined. In every other State, unemployment has increased at a very marked rate.

Again, as I said, Colorado is up 2.8 percent; Ohio is up 2.6 percent; Massachusetts up 2.6 percent; Oregon up 2.4 percent; New York up 2.3 percent; Texas is up 2.1 percent; and New Jersey is also up 2 percent. The list goes on.

In terms of the absolute number of jobs, 36 States have failed to get back to the pre-recession employment levels. In 49 States, job creation has not kept up with natural growth in the number of potential workers. Only in Alaska has job growth exceeded the growth of working age population.

The news of the Nation's slow job growth has cycled back to lessened consumer demand, and thus economic growth. This chart shows consumer confidence. As we can see beginning in 1994, consumer confidence in America remained at about the 95 percent level. This is the consumer confidence index, based in the hundreds, so it was a little lower in 1994 to 1996. It steadily rose from 1997 to 1998. Those are the boom years. It reached its peak roughly at the beginning of the recession in March of 2001, and then just plummeted to its low levels.

Why is that important? It is important because, as I have mentioned, the Nation's slow job growth has cycled back. It has cycled back to lessened consumer demand. When consumer demand is down, economic growth also falls off as well.

In the latest consumer confidence survey, confidence fell for the second straight month in part because of consumer concern over the weak job market. Nearly 3 years after the start of the recession, consumer confidence remains below its January 2001 levels.

These numbers of people without jobs are not just statistics; they are real lives. These are real lives we are talking about. This weak job picture causes real pain. It causes disruption in many families.

For example, there is a fellow named John in East Helena, MT, who has worked 22 years at the ASARCO smelter plant that has recently closed. John suffers permanent health problems from working with chemicals at the plant. He has been unable to get full-time employment so he works part time. John cannot get health insurance because he has preexisting health conditions.

Then there is Bruce. Bruce is 50 years old. He worked 28 years at that same East Helena smelter. He did what they say to do; that is, use retraining benefits and train as a computer technician. Unable to get work in that field, he works now full time in a grocery store.

Often when a person loses a job, a family loses a job. Evelyn from western Montana wrote:

I am concerned about the economy of Western Montana. . . .

I see that industry . . . is [waning]. What do we have to

offer our children and grandchildren in the way of stability

within Montana? . . . What do you propose . . . [to give us]

a hope of being able to support our families?

Kim wrote about her husband's job:

The second paper mill my spouse has worked at in three

years is threatened with closure in the next six to twelve

months. In a letter to the employees . . . in Missoula,

Montana[,] the company president blamed the endless drain of

manufacturing America to overseas as the cause for possible

shut-down. [The company] makes liner-board, the cardboard

boxes products are shipped in. [I]f products are not made in

the United States, boxes are not needed. . . . [T]he liner-

board market is a direct reflection of the state of the

economy[,] because the more liner-board boxes sold[,] the

more products being manufactured within the United States . .

.

Real people like John, Bruce, Evelyn, and Kim are the reason we need to move this bill. We need to fight to create and keep good manufacturing jobs in America.

The bill before us provides a 9-percent deduction for manufacturing, effectively reducing the tax rate for domestic manufacturers by 3 percentage points. The JOBS Act will thus help all manufacturers produce goods in the United States. Cutting taxes for domestic manufacturers will help prevent layoffs and will help preserve jobs. It is the right thing to do.

We got a good start in this bill the week before the budget resolution. The Senate agreed to the managers' amendment that among other things ended some outrageous leasing tax shelters,

and the Senate unanimously extended the R&D tax credit. We expanded that credit for universities and labs.

We also conducted a good and spirited debate on an amendment by Senator Dodd. That amendment addressed the performance of Government contracts by American workers. After working collaboratively on modifications proposed by Senator McConnell and Senator McCain, the Senate agreed to that amendment by a vote of 70 to 26.

The Senate then began debate on an amendment proposed by Senators Bunning and Stabenow to accelerate the phase-in of the manufacturing tax cuts. The Senate also began considering an amendment by Senator Bayh providing for an extension of expiring tax provisions. These last two important amendments are now pending.

Under a previous order, the next first-degree amendment in order will be that offered by the minority leader or his designee. We understand the amendment will be proposed by Senator Harkin regarding the Department of Labor's overtime regulations. I know there are strong feelings on this amendment, but Senators are all now aware that we must address that issue in order to move this bill along. I hope we can come up to a vote on that amendment in a reasonably short period of time and move to other amendments.

In the end--and I will keep returning to this theme--this bill is about jobs, good jobs, about jobs in America. We are trying to help preserve American manufacturing. The task ahead of us is large, the challenge great, but Americans do not shrink from that challenge.

Renee, the bookkeeping manager for a small manufacturer in Bozeman, MT, said it well when she wrote:

The United States is a nation built on steely determination

in the face of overwhelming odds. We must act now to reverse

the loss of our high-skill, high wage manufacturing jobs.

That is our job, and we need to do that. We need to get this bill done for John, Bruce, Kim, and Evelyn and all the hardworking Americans who depend on a strong manufacturing sector in America. We cannot let them down. Let us move on to the bill, let us move on to amendments and let's address them. Let's move this bill and let us do what we can to strengthen American manufacturing.

I yield the floor.

Mr. President, I take a couple of moments to discuss the pending second-degree amendment, the amendment offered by the Senator from Indiana, Senator Bayh. It is an excellent amendment. It is somewhat broad in scope. I commend Senator Bayh for suggesting this. My guess is it will be adopted without too much difficulty.

I have been pushing for a long time, and I know the chairman of the committee has, as well, the package of extenders. We have crafted the underlying JOBS bill to create jobs and to stimulate competitiveness in American business. In addition to the new provisions in the bill, it is critical we renew our past commitments in the Tax Code and not leave anyone behind. I am talking about the so-called package of tax extenders.

We failed last year to extend many expired or expiring tax provisions that are essential. We now have another chance. That is the amendment offered by the Senator from Indiana, not only to extend these provisions, but also to improve upon them.

When we were last on the bill, the Senate acted to improve one of the provisions, the research and development

tax credit. This was the first of many positive steps we need to take to fix an ailing economy. Encouraging research and development clearly is one of the most important forward looking actions we could take. Why is that so important? It is the underlying basis for improving innovation and for addressing the offshoring of American jobs.

In addition, there are many other provisions commonly referred to as extenders. They all address the needs of our Nation. These are not contentious. They are not partisan. Rather, they are provisions that just make good sense.

The chairman and I pushed to have these same provisions extended last year. We urged our colleagues not to wait until the last minute before these provisions were expired. We wanted to move right away.

These provisions are like a yo-yo. We enact them. We extend them for several months, sometimes a year or a year and a half, we let them expire. After they have expired, sometimes we go back and reenact them retroactively and there is no break. Sometimes we do not reenact them retroactively. It is very poor policy.

I personally believe all these provisions should be enacted permanently into the Tax Code. We should not have the on-again, off- again, up-and-down, yo-yo effect Congress has undertaken in addressing these provisions. For the life of me, I cannot understand why we are not making these permanent. Nevertheless, they are not, and taxpayers have suffered often from lapsed provisions. We have let them down. I hope we do not do that again. The time has now come to extend these provisions. If we do not act now, there is no telling when our next opportunity will be.

In this package there are many good provisions that have already expired. They are widely supported. The expiring provisions include a diverse array of topics and all are important. One of the most important expiring provisions we must address is the one allowing for the carryback of net operating losses, otherwise known as NOLs. In the wake of prolonged economic downturn and the recent ruling by the WTO, it is very important we give American businesses a chance to recover their losses. Like the underlying JOBS bill, this provision also promotes economic growth.

Two other important provisions are the work opportunity tax credit, sometimes known as WOTC, and the welfare-to-work tax credit. I have worked long and hard with many of my colleagues--especially Senator Santorum, Senator Bayh; both Senators worked very hard--for the provisions to make the credits permanent. Unfortunately, we cannot achieve permanence at this point, but neither can we afford to let this opportunity pass.

The work opportunity tax credit and the welfare-to-work tax credit are proven initiatives that help economically disadvantaged workers get jobs. They help those receiving the welfare check to earn a paycheck. That is very important. These provisions very much help get people off welfare and to get jobs. Both of the credits expired in 2003 in December.

As we consider ways to create jobs for Americans, it is only appropriate to consider what these tax credits have done for both employees and employers across our country. In a recent study, it is shown in New York State the work opportunity tax credit generates economic benefits that exceed the cost of the program. These programs are too valuable to fall by the wayside.

This amendment, including the extenders, will simplify and strengthen the credits to expand unemployment opportunities for disadvantaged individuals and attract more employers to participate in the program.

Along with these are other provisions that help raise the standard of living in America now and in the future. Individual credits against the alternative minimum tax provide for such things as lifetime learning credit, the HOPE scholarship, and care for the elderly and disabled. These provisions not only create incentives for education but also help families build a stronger financial base.

Other benefits to be gained from this important extenders package include encouraging computer contributions to schools, economic recovery provisions in the wake of September 11, deductions for school teachers, and energy incentives for the environment. And the list goes on.

These tax incentives make America a better place, a better place for jobs, education, health care, environment, and more. Now is the time to act. We must not let these essential parts of our Tax Code fall by the wayside.

I encourage my colleagues to join me in support of this amendment offered by the Senator from Indiana, Senator Bayh, and others. Like the JOBS bill itself, these provisions will help make important contributions to American business and to American people.

I yield the floor.

Mr. President, a fundamental feature of any income tax system is the ability to use losses to reduce taxable gains. If a company has gross income of $100,000 and losses of $50,000, we don't force the company to pay tax on $100,000--they only pay tax on net income.

But just as a company can have gross income and losses within the same year, a company can also have income in one year and losses in the next.

Letting companies ``carry-back'' their losses to prior years smooths things out and helps companies deal with the hardships of the business cycle.

And it is important to be able to carry losses back. Carrying losses forward doesn't give taxpayers a boost when they need it.

Carrying losses forward only gives them a boost after things have already turned around.

Many businesses have been in hard times for the last 3 or 4 years. Giving them a 1- or a 2-year NOL carryback doesn't help them--because they don't have any profits in the last few years.

For many of these companies, the last year they were profitable was 1999 or even earlier. These companies will be able to use a 5-year NOL carryback to help them turn things around.

I urge you to support this amendment, to help get our economy going again.

For example, the timber industry in Montana and many parts of the Northwest was profitable in the late 1990s. But many of these timber companies--both large and small--have fallen on hard times in the last few years. The terrorist attacks of 9/11, the economic downturn, and the wildfires of last summer have taken their toll on these timber companies.

These companies paid large tax bills when things were going well. But how that they are struggling they can't get any of those taxes back.

If they had a smoother, more consistent pattern of earnings, they would have paid less tax over the course of the last 5 years. Instead, the boom-bust cycle that has actually played out is giving them higher tax bills overall.

This NOL provision will ensure that these timber companies--and many other companies in cyclical industries--pay an appropriate amount of tax over time. It will give them a boost in those unprofitable years when they need it most.

Mr. President, I rise today to introduce the Medicaid and CHIP Safety Net Preservation Act, a bill to clarify existing law and to preserve the core elements of Medicaid, the State Children's Health Insurance Program, (CHIP), and our health care safety net, which provide needed health services to more than sixty million Americans. These programs, which are so critical to the health of our children, our parents and grandparents, and to our communities, have been threatened in recent years by waivers that undermine the very foundations of these programs. I am introducing this bill with my colleague, good friend, and the Ranking Member of the Finance Committee's Subcommittee on Health, Senator Rockefeller.

I have long been concerned about the inappropriate use of the so- called ``Section 1115'' waiver authority with respect to Medicaid and CHIP. Section 1115 of the Social Security Act permits the Secretary of HHS to waive provisions of the Medicaid and CHIP statutes at the request of a state if the waiver is determined to ``promote the Objectives'' of the program, and if it meets certain other criteria established in statute. The waiver authority has existed since before Medicaid's inception, and it is designed to allow states before Medicaid's inception, and it is designed to allow states to experiment and engage in pilot and demonstration programs in a variety of Social Security Act programs. It has long been used to allow States to try innovative approaches to deliver or finance healthcare for some of our most vulnerable citizens--poor children, pregnant women and parents, individuals with disabilities, and the elderly, including many in nursing homes.

But in recent years, the waiver authority has been used increasingly aggressively and, in my view, irresponsibly. I first became concerned about these waivers when I learned that waiver programs, which now affect millions of people and tens of billions of dollars annually, were being negotiated and approved in the dark. In some cases, Medicaid enrollees literally could not find what the operative Medicaid rules were in their state, because laws and rules had been waived and the new program requirements were not published in a place accessible to the public. In 2001, I and my colleague, Chairman Chuck Grassley, wrote to Secretary Thompson with our concerns that the waiver process was not adequately transparent, and that there could be no accountability without transparency.

After many months and much correspondence with Secretary Thompson, I noticed some improvement in the posting of approved waiver applications. By that time, the General Accounting Office had reported that there were serious problems with 1115 waivers. Waivers were being approved without adequate public input; waivers were being approved that used funds set aside by Congress for children's health care on childless adults; and waiver applications were being negotiated and approved with different standards applied, depending on the identity of the state applicant. Finally, and most disturbing, the GAO noted that HHS was applying a condition to one type of waiver that imposed a hard cap on Federal spending for a state's elderly Medicaid enrollees over a five-year period.

Most recently, I was deeply disturbed to read press reports indicating that HHS was inviting states to prepare new more comprehensive waiver applications that would impose enforceable, global caps on state Medicaid programs. One of the crucial elements of the Medicaid program is its unique state-federal financing structure, which requires every state dollar expended on Medicaid to be matched by at least one Federal dollar. This guaranteed matching structure provides financial stability and an incentive for states to maintain levels of health care spending in good and bad economic times. The matching structure has, over time, allowed a swift response to economic recessions, high rates of uninsurance, epidemics, disasters like 9/11, and innovative treatment advances, like the advent of expensive protease inhibitors to threat AIDS. The law does not, and it should not, allow a Secretarial waiver of such a core element of Medicaid.

Another press report indicated that one governor intended to seek a waiver to the Medicaid entitlement in exchange for accepting a hard cap on Federal Medicaid spending. In the absence of the individual entitlement, a state could turn away eligible applicants; impose waiting lists; or terminate a health care benefit in the middle of treatment for a serious illness or a stay in a nursing home. For the poor, for children, for individuals with disabilities, such as ``innovation'' in Medicaid could be devastating.

I also heard reported an instance where HHS announced in court, for the very first time, that the Secretary has waived the essential ``EPSDT'' benefit for children in one state. Beneficiaries did not even know that they were no longer entitled to the comprehensive benefit for children until they were in litigation with the State over inadequacies in the state's Medicaid program.

And finally, I am concerned about efforts to undermine Medicaid financing for Community Health Clinics and Rural Health Clinics through the use of the 1115 waiver authority. These clinics provide desperately needed care for Medicaid and CHIP enrollees as well as millions of uninsured Americans. Without fair payment from Medicaid, CHCs and RHCs have reduced capacity to see the patients who rely on them for care.

There are some features of the Medicaid program that are so fundamental to the program that they should never be waived with the stroke of the pen of one person. And I am pleased to quote the new Administrator of the Centers on Medicare and Medicaid Services, Mark McClellan, who agreed at his nomination hearing that, and I quote from a news article citing his testimony, ``federally imposed caps on spending are not envisioned as part of Medicaid's structure.'' He also said that core Medicaid principles, such as the program's state and federal funding partnership and citizens' entitlement to benefits, should not be waived.

I am hopeful that, one day in the not too distant future, the Congress can have a meaningful debate on how to improve the Medicaid program that is now a healthcare lifeline for more than 50 million people, and how to improve CHIP and expand coverage to the uninsured. But in the meantime, we must ensure that efforts to innovate through waivers are made publicly and openly, with an opportunity for stakeholder

input at every level of decision making, and with a promise that innovation will ``do no harm'' to the foundational principles of these safety net programs. I urge my colleagues to cosponsor this bill, which will improve the integrity of Medicaid and CHIP and ensure that they remain available and responsive to the needs of so many Americans.

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

Mr. President, securing this nation's borders and keeping Americans safe from terrorist threats is of the utmost importance to this body. That is why I support the men and women who serve this country. Thousands of men and women are currently deployed in Iraq, Afghanistan and other parts of the world. We count on so many of these brave men and women to protect our communities at a moment's notice and for that, too, we thank them. We want them to come home safe to their families, and to find good jobs and good healthcare waiting for them.

The State of Montana, known affectionately for its ``big sky'' and small population, plays a key role in protecting this nation. At the core of this country's national defense is the ICBM program maintained by Malmstrom Air Force Base. This program must be fully modernized and I support Malmstrom's mission 100 percent.

Montana also shoulders a unique responsibility to protect this nation due to the 600-mile land border--the equivalent distance of Washington, DC, to Chicago--we share with Canada. This border is porous and topographically diverse and it constitutes the front line in the war on terrorism. We have to make sure we not only have enough agents at the border, but that we get them the equipment and technology they need to secure Montana's borders, and to head off any threats directed toward populations and infrastructure anywhere else in the country.

Though not every state has an international land border it must secure, every state has the sacred duty to protect the people who call it home. In the past 2\1/2\ years, the states, with federal assistance, have made strides in emergency planning and terrorism preparedness. We need to give our first responders the training, equipment, personnel and resources that they need. But we're not there yet and we've got to stay the course. That's why I joined 22 of my colleagues in the Senate in urging the Budget Committee to find a way to restore $1 billion dollars to the State Homeland Security Grant program that was cut from the fiscal year 2005 budget. Montana's first responders rely almost entirely on this assistance for their terrorism preparedness efforts.

But that's not enough. We need to make sure that our state and local law enforcement get the funding they need if we expect them to protect our communities and prevent the threat of terrorism. How can we expect our communities to fight the war on terrorism if we aren't willing to fund it well enough to win?

The same people who prepare for the unthinkable terrorist plot must also plan for nature's devastation, which our state knows all too well. These brave people serve their communities and their nation without regard for the risks they take. We ought to be thanking them. We ought to get them the personnel and resources they need and I am committed to finding the way to do that. The money needs to be there for coordinated communications for state, local and federal agencies, for fire fighters and emergency managers, so that they can save time and save lives in the event of any disaster we'd rather not imagine.

Security in Montana is more than knowing our borders and communities are protected. It is also knowing that our children are receiving the top notch education we have come to expect. Montana schools have made do with too little for too long. It is access to affordable health care. Unfortunately, access to health care remains a

challenge for many, particularly Native Americans and Veterans. It is critical that the necessary resources are provided in Indian Health Services and Veterans Administration.

Unfortunatley, it is commonplace for Native Americans seeking care from Indian Health Service to be denied essential services that most of us simply take for granted. This is a problem.

I believe we also owe it to our veterans to better attend to their medical needs. Surely the greatest nation in the world should be able to keep their promise to the veterans who have fought for and protected our nation.

There are many challenges that face us now. By working together, we will make America stronger.

This week throughout the Senate's debate on the budget several very good amendments, including several on issues I just mentioned, were offered that I, unfortunately, could not support. I do not believe that we need to roll back tax relief that Congress enacted in 2001 to fund this amendment. I supported those 2001 tax cuts. Congress enacted them in a time of massive surpluses. Returning some of those surpluses to the taxpayer was the right thing to do.

We can find other offsets to pay for the spending in this amendment. Offsets like the closing of corporate tax shelters currently pending in the JOBS bill come readily to mind. Before we start rolling back the tax relief that we enacted in 2001, we should ensure that we have taken all reasonable steps to obtain revenues through closing down abusive tax shelters.

I shall look forward to working with my colleagues to find other offsets for their amendments--offsets that as much as possible avoid rolling back the tax relief that we enacted in 2001.

Madam President, I am going to have to oppose this amendment offered by the Senator from California, Mrs. Boxer, and I would like to take a moment to explain why.

The spending proposed by the amendment is for a good purpose. We can and should find ways to fund this important goal.

But I do not believe that we need to roll back tax relief that Congress enacted in 2001 to fund this amendment. I supported those 2001 tax cuts. Congress enacted them in a time of massive surpluses. Returning some of those surpluses to the taxpayer was the right thing to do.

We can find other offsets to pay for the spending in this amendment. Offsets such as the closing of corporate tax shelters currently pending in the JOBS bill come readily to mind. Before we start rolling back the tax relief that we enacted in 2001, we should ensure that we have taken all reasonable steps to obtain revenues through closing down abusive tax shelters.

And so, I shall reluctantly oppose this amendment, as I did the amendment offered by the Democratic leader,

Mr. Daschle, the day before yesterday increasing veterans' funding--and for the same reason.

I shall look forward to working with my colleagues to find other offsets for their amendments--offsets that as much as possible avoid rolling back the tax relief that we enacted in 2001.

There should be some discussion on this amendment. It is a very important amendment. This is an amendment that raises a point of order against any revenue measure which has the effect of an increase in the tax rate at the top bracket. I don't think that is something----

Mr. President, this is not a small business amendment. It is purportedly a small business amendment. It is not. Why? As the able Senator from Arkansas stated, only 2 percent--only 2 percent--of small businesses are in the upper bracket. The remaining are not. They are not small businesses.

More importantly, this is an amendment that makes it much more difficult to raise taxes on the wealthiest top bracket than it is in the effort to raise taxes on the middle-income taxpayers. It provides for a point of order on any revenue measure that would have the effect of raising taxes on the top bracket. It only applies to the top bracket. It wouldn't apply to any other bracket. We don't want that.

I can't for the life of me understand why the Senator from Kentucky is on the floor even daring to offer that amendment. At the appropriate time, I am going to suggest that the amendment is not germane because it is not germane. I can only do so when all time is yielded.

Mr. President, the pending amendment is not germane, and therefore I raise a point of order that the amendment violates section 305(b)(2) of the Congressional Budget Act of 1974.

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

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

I thank my good friend from Washington.

Mr. President, I don't know what the debate is all about. This is a no-brainer. It is an absolute no-brainer. All of us, when we are home talking to our teachers and to our communities, to school boards, know this is the right thing to do. It is clear. There is no contest. There is no debate.

Congress passed No Child Left Behind trying to set levels of accountability. But then Congress did not provide the money to implement No Child Left Behind. It is contributing to all the cutbacks in our elementary and secondary schools about which we are hearing. I hear this constantly at home. I daresay that every Member of the Senate, when he or she returns home, finds the same comments.

Again, I don't know why we are debating this amendment. It is pretty clear. I highly compliment the Senator from Washington. I don't know anybody who believes more and has spent more personal time helping to educate our Nation's children than the Senator from Washington, who is a schoolteacher. She is right. We should take our cues from what she is telling us.

There is another reason to vote for this amendment. How are we paying for it? Closing tax loopholes. That in and of itself should be enough to pass the amendment. Also, we are closing tax loopholes to do something that is good; that is, supporting education.

Education truly is a means of developing our greatest assets. We have built the strongest, the most diverse economy on the planet, basically through education. There is more mobility, more opportunity in America, and one reason is our educational system.

We have pushed the technology horizon. We have developed a quality of life that is the envy of much of the world. There is no doubt that we can further improve our economy and our quality of life. But it is important to note that it is the investment in education that has essentially brought us to where we are, and it is an ongoing investment. You cannot stop investing in education. You have to keep going for obvious reasons.

Fully funding No Child Left Behind is a no-brainer. It is obvious we should do this. Our people back home want us to do it. If you took a poll at home, should No Child Left Behind be paid for, the results would be overwhelming because people at home know what a tight spot elementary and secondary education is in.

We are not giving our children our best shot. We have a moral responsibility to leave this place in as good a shape or better than we found it. That applies to the environment, education, the general conditions in which the America public finds itself. It is unfortunate in a certain sense--we are kind of lucky in another--that we have to accelerate our support for education. Why? Because the world is changing so quickly. New technologies are developing worldwide so quickly. We, therefore, have an obligation to accelerate our emphasis on education generally, and that is at all levels. It is Head Start, elementary and secondary, continuing, 4-year colleges, graduate education. It is at all levels.

Clearly, a key part of that is No Child Left Behind. So far this administration is giving words to the concept. It says vote for No Child Left Behind, but it has not backed it up with dollars.

A Presidential candidate years ago once asked: Where is the beef? I will ask the same question: Where is the beef? Where is the support? Where is the funding?

We have an opportunity to assist our children by providing them with the necessary resources to help them meet the challenge. Under No Child Left Behind, Montana was promised $71 million in 2005 to comply with the new educational standards. What does this budget include? Half of that, $46 million, and that is a shortfall. Add to that all the other pressures schools are facing.

Again, this is a no-brainer. I compliment the Senators from Washington and Massachusetts. Both of them work very hard for education.

Jack Kennedy once said:

Our progress as a Nation can be no swifter than our

progress in education.

I think we all agree. Funding education is key to maintaining an American workforce that can compete in the world economy. Education is critical to keeping jobs and creating new jobs in the United States. A big problem we know is the offshoring of American jobs. It is very serious. We deserve to give it an answer.

I don't believe the answer has been given to us thus far by this administration. We have heard nothing. It is laissez-faire: Let things happen. So what if people lose their jobs. It is good in the long term. That is essentially what the administration is saying.

I believe in order to keep our country strong we have to do something positive. We have to take some action. We must advance policies to help create new jobs in the United States, undertake measures designed to keep good-paying jobs in the United States.

Finally, when jobs are lost in trade, we need to retrain workers and help them get back in the workforce as quickly as possible. That is why I believe it is right that one of the priority amendments on this side of the aisle addresses jobs. It is why at the appropriate time I will offer an amendment that will set us as a country on the path to accomplishing those goals.

We must begin where the jobs begin. We must adopt policies to create jobs in America. One of the best ways to do that is by supporting research. Most of the innovative research done in the United States is at universities and research institutes which attract students from across the globe. Over the last 20 years, Federal research funding in the physical sciences and engineering as a percentage of GDP has actually declined. It has declined by nearly one-third. I believe we should reverse that trend, increase Federal spending on basic research. The money we spend will come back to us many times over in the creation of new jobs and new industries making products yet to be invented.

If we want to support Federal spending on research, we should support the National Science Foundation. The NSF funds research and education in science and engineering through a variety of successful programs. It accounts for roughly 20 percent of all Federal support to academic institutions for basic research, a crucial engine of innovation for our economy.

NSF funds have helped discover new technologies that have led to multibillion-dollar industries and created countless new jobs. The list is astounding: fiber optics, radar, wireless communication, nanotechnology, plant genomics, magnetic resonance imaging, ultrasound, and, yes, the Internet. All were made possible by work in the basic sciences and engineering funded by the NSF.

Each year, the NSF helps fund over 200,000 students, teachers, and researchers. Many of these people take their NSF-supported work into industry, where they found company startups selling new products and new technologies. That means one thing: jobs. Fully funding NSF will lead to more jobs.

When the President signed the National Science Foundation Authorization Act of 2002, the intent was to double in 5 years the funding devoted to the NSF. Not fully funding NSF shortchanges America's future.

The amendment I am offering will fulfill the promise of the NSF Act and restore funding to its fully authorized levels. That means providing $7.4 billion in fiscal year 2005, $8.5 billion in 2006, and $9.8 billion in 2007. All told, that is $7.4 billion above current levels--certainly money well spent.

Our future depends upon our ability to continue to innovate, and that depends upon the support we give to America's innovators--our scientists and engineers. We should fully fund the NSF.

At the same time, we must ensure America's families can afford higher education, which is an important part of the solution. This is the key to America's continued prosperity. Education provides the skills necessary to unleash the creativity of our citizens.

We should improve, consolidate, and expand the educational tax incentives that already exist and make them more effective. There are many ways.

We can expand and extend the deduction for tuition expenses, expand the Hope and lifetime learning credits, craft targeted incentives for student pursuing science and engineering careers, and focus on programs to make it possible for nontraditional students to obtain an education. These are all good options.

We need to ensure that young Americans are not discouraged from obtaining postsecondary education because of costs. That is the American dream, to get an education. We should not discourage it. Tuition costs have risen considerably in recent years, and our Federal assistance programs have not kept up.

Increasing tax incentives can help to lessen the burden on students, and allow students to attend the schools that best fit their needs, whether 4-year colleges or 2-year colleges, which can also provide vocational and technical training.

I ask for an additional 2 minutes.

Different students will opt for different types of training. That is good. We need workers with different skills to fill all the new jobs that are constantly being created.

One thing is sure: We need to train more engineers. Listen to this, Mr. President. We train only half as many engineers as does Japan. We train only half as many engineers as does Europe. We train only a third as many as does China. Think how many engineers China is going to train next year and the year after that and the year after that. Where will we be? Engineers play a critical role in the development of new jobs and new industries. We should encourage students to pursue training in this vital field.

We need to help displaced workers to receive the retraining needed to succeed in a changing economy. There is one thing they can be sure of: Things will always change. Jobs will change. Workers should be equipped with the tools to change with these jobs. Education is certainly the key.

The amendment I am going to offer will put a downpayment of $10 billion into our workforce. The U.S. economy is the most flexible, vibrant, dynamic in the world. We have to keep it that way. We owe that to the ingenuity of the American people and their relentless thirst to create and innovate.

I urge my colleagues to join me in a positive response to offshoring. It should not be negative; it should not be protectionism. It has to be positive. I am offering a sound, positive approach. Create jobs in America by fully funding the National Science Foundation and support education. That is one of the keys to our long-term prosperity.

I yield the floor.

Will the Senator yield on that point?

Will the Senator read the first line of the description of this amendment?

Above that, further up.

Yes.

Does the Senator disagree that we should close tax loopholes?

By closing tax loopholes.

The purpose is to close tax loopholes.

If the Senator will yield, the only way to close tax loopholes is by raising additional revenue. That is the only way you can do it. There is no way to close loopholes otherwise. Does the Senator agree that he will work with me in closing loopholes and if not by raising revenue in some other way? The purpose of the amendment is to raise revenue by closing tax loopholes. I assume the Senator agrees with me that is the best way we should raise the revenue, although technically we have to have the numbers in here; otherwise, the amendment serves no purpose.

Mr. President, all Members ought to think and reflect upon this amendment and how important this amendment is. First of all, let me explain what this amendment does and what it does not do.

What does it not do? It does not prevent any of the middle-income tax cuts we all want to extend. It does not do that. It does not prevent those tax cuts. It does not prevent Congress from enacting an extension of those tax cuts that we all want to extend. This amendment has no effect on that.

What does it do? It says we should not use the regular Senate rules in deciding whether to extend and how to extend the middle-income tax cuts; that is, the child tax credit, the marriage penalty, and the 10- percent bracket. It says no, create a special rule. Do not use the regular order, the regular standing rules of the Senate in determining how and in what way we extend those middle-income tax credits. This amendment does say do not do that. And Congress will extend those middle-income tax cuts. That is not the issue. We are going to do that.

The issue is twofold. One is, should we pay for them or not? That is the issue. And there are lots of ways we could pay for it, lots of ways that are virtually painless. What are those virtually painless ways? Closing a lot of tax loopholes. There are countless tax loopholes that we can pass very quickly, shelters that are ripping off American taxpayers, post-Enron provisions. There are a host of them. We talk about SILOs, for example. We know we are about to find in the Finance Committee other shelters being used that are not widely known.

That is why we are saying this is a two-for. We are saying to extend the middle-income tax credits, tax provisions, child tax cut, and the 10-percent bracket, and at the same time we are going to clamp down on some tax loopholes. I am not being facetious or joking about this. This is real. There are immense loopholes we can and should close down. I know the Presiding Officer agrees, as most Members would agree. This is a two-for.

We are saying, let's get that two-for, get both of those passed. And we have to pass the amendment of the Senator from West Virginia to do that; otherwise, we are saying change the Senate rules, extend these tax cuts but do not pay for them, do not enact those shelters.

I also add, we have a moral obligation.

We have a moral obligation, I believe, as Senators, as representatives of our people, to leave this place in as good a shape or better shape than we found it. That pertains to the environment. That pertains to the budgets. That pertains to all we do. We are entrusted with such responsibility as U.S. Senators.

And, my Lord, it seems to me, right off the top, at the very least, we could cut back on the irresponsible, large deficits and debts we are going to be leaving our children and our grandchildren. That is a moral obligation you have, I have, and each Member of this body has.

By adopting the amendment of the Senator from West Virginia, we can make good on that moral responsibility, that moral obligation, by saying, sure, we are going to extend the tax cuts, as well we should, but we are going to do it in a responsible way; we are not going to add to the budget deficit; we are not going to add to the debt. It is the only right thing to do. I urge my colleagues, therefore, to pay very close attention to the Senator's amendment and to adopt it.

I might add, there are other issues. I do not think these have been thought through very much. Let me just explain.

The budget resolution instructs the Finance Committee to decrease revenues by $80.6 billion. This is intended to cover the extension, as I mentioned, of expiring middle-class tax cuts--the 10-percent bracket, the marriage penalty, and the child tax credit. The instruction for this tax bill does not, however, include any instructions to increase outlays.

Why is that important? It is very important. It is an instruction for tax cuts. Why am I saying we need to also increase outlays? It is not called for in the budget reconciliation provision. I say so because these specific tax cuts also require outlays. That is because there is a refundable part of these tax cuts. Let me explain it.

The child tax credit provides a $1,000 per child tax credit for low- and middle-income families. There are some working, low-income families that do not have income tax liability that this credit can be used to offset. Even so, they are out there working every day paying a good chunk of their paycheck in payroll taxes. For these families whose income does not qualify, we provide, in the law today, as you know, a refundable child tax credit. They do not have the income liability to offset, so they get a refund from the Treasury, and this scores for budget purposes as an outlay.

These reconciliation instructions tell us to extend the child tax credit. But we know that if we extended the child tax credit for all the families that currently receive it, it would take about $20 billion in outlays. But the reconciliation instruction fails to include this. It does not even mention it. In fact, by definition, therefore, we cannot increase outlays.

So what does this mean? The best I can figure it, it means we should extend the tax cuts for all families--except for the working poor. If middle-income families deserve to get the $1,000 child tax credit next year, then why not low-income families?

We have heard many times this week: Families should not see their taxes increase next year. We should extend the current tax relief. So why does this budget leave the working poor families behind?

There are about 26 million families that receive the child tax credit. About 8 million of these families receive some refundable credit. That is almost one-quarter of all child tax credit recipients, families making between $10,500

and $26,000. Three-quarters of families deserve an extension of the full child credit but not the remaining one-quarter? This does not make sense. Give me a break.

Who are the families that will be left behind? Let's think about that a second. A single mother of one, making $17,000 a year is left behind. A couple, both working full time at minimum wage is left behind. What other type of family is going to be left behind? Military families. There are a couple reasons for this.

Mr. President, I ask unanimous consent for 2 additional minutes.

Why are military families left behind under this reconciliation instruction?

First, there are many military families that have incomes between $10,000 and $26,000 a year. Roughly, 200,000 military personnel fall within this income range. They all get the refundable child tax credit. But under the reconciliation provisions, which the Senator from West Virginia wishes to delete, they would be left behind. They do not get any help.

Second, there are many military personnel with higher incomes who receive the refundable child tax credit. But why do the higher income people receive the refundable child tax credit? That is because they have been called to serve in combat zones. Why is that relevant? Well, the income military personnel receive when they are in a combat zone does not count for income tax purposes. That means it also does not count for purposes of determining the child tax credit. How many are those? At least 40,000. So even though these families make more than the $26,000, they are receiving the refundable child tax credit because they are in a combat zone.

So roughly a quarter of a million military families are being cut out by the Budget Committee's reconciliation instructions. Families that receive the refundable credit simply because they are serving in a combat zone or simply because they are serving in the military--all these families will be left behind.

We all agree, extending the child tax credit is critical. So why are so many families being excluded?

This reconciliation instruction will not work the way it should. It is not right to cut so many low-income people off and out of the child tax credit. That is wrong. So let's work together. Let's use the regular order and the Senate rules so we can fix some of these discrepancies that exist in the current budget resolution.

I urge my colleagues to support the amendment of the Senator from West Virginia. It is the right thing to do.

I have an amendment at the desk and I ask for its immediate consideration.

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

Mr. President, this amendment would eliminate the reconciliation instruction in the budget resolution directing the Finance Committee to produce savings in mandatory programs within the committee's jurisdiction. The amendment is based on an assumption in the resolution that our committee would cut Medicaid by $11 billion over 5 years, and reduce earned-income tax credit outlays by $3 billion.

Let me begin by clearing up one common misconception. Some may think the budget calls for the Finance Committee to produce legislation that saves $3.4 billion over 5 years, since that is the figure in the reconciliation instruction. In fact, the Finance Committee would have to produce $21.6 billion in savings. Why? Because the budget resolution calls for extending the child tax credit and marriage penalty relief. Since a portion of the child tax credit and marriage penalty relief

is refundable, these count as outlays in the budget process. So extending the child tax credit and marriage penalty relief, as the President has proposed and as the budget resolution provides, and which I support and I think the vast majority of Members of this body support, it will have the effect of increasing outlays also by $18.2 billion over 5 years.

To produce legislation that generates net outlay reductions of $3.4 billion, and the additional $8.2 billion cost, the Finance Committee would have to draft legislation to reduce spending by $21.6 billion-- again, not the $3.4 billion over 5 years, which is the figure in the budget resolution. It would actually have to be $21.6 billion.

The budget resolution assumes the Finance Committee will pass legislation that cuts Medicaid by $11 billion and cuts the earned- income tax credit by $3 billion and comes up with the remaining $7.6 billion by extending customs user fees.

Absolutely.

Mr. President, I reserve the right to object, too.

Mr. President, actually it is not agreeable. I would like an hour. I may not use it all, but I would like an hour, equally divided.

Mr. President, let me just recap briefly so Senators understand my amendment. I explained where we were before the break in the action.

I am offering an amendment which would eliminate the reconciliation instruction to the budget resolution directing the Finance Committee to produce savings in mandatory programs within the Finance Committee's jurisdiction. The amendment, as I mentioned earlier, is based on the assumption in the resolution that the committee would cut Medicaid by $11 billion over 5 years and reduce the earned-income tax credit outlays by $3 billion.

Some may think the budget calls for the Finance Committee to produce legislation that saves $3.4 billion over 5 years, since that is the figure in the reconciliation. Actually, the committee would have to produce savings of $21.6 billion, and that is basically because the resolution calls for extending the child tax credit and the marriage penalty relief, as the President has proposed, and as provided for in the budget resolution and which I support. I think the vast majority of the Members here support it.

As a consequence of all that, the outlays have to be increased $18.2 billion over 5 years, and that is, again, because the earned-income tax credit is refundable. So you add it all together and it actually comes up to $21.6 billion that has to be cut, not the figure of $3.4 billion contained in the budget resolution.

I might add that I think neither the earned-income tax credit cuts nor the Medicaid cuts make a lot of sense. Let me start with the earned-income tax credit. That is a feature in the Tax Code that President Reagan once hailed as--and let me give his quote:

. . . the best anti-poverty, the best pro-family, the best

yet creative measure to come out of Congress.

I think he is right. The earned-income tax credit has done a lot to lift people out of poverty.

President Bush has not proposed any reductions in the earned-income tax credit, and with good reason. The earned-income tax credit was created in 1975 as a bipartisan effort to reduce the tax burden on low- income Americans. It provides a powerful incentive for people to work. It has played a very large role in moving poor families from welfare to work. It has reduced poverty.

Nearly 4.8 million people, including 2.6 million children, are lifted out of poverty each year because of the EITC. By all accounts, the earned-income tax credit has been successful, and it has been effective.

While the earned-income tax credit has achieved its policy aims, and I might add with incredible success, a 1999 Treasury audit of EITC returns shows that noncompliance is a problem. And it is a problem. Noncompliance in the EITC has been a problem. I believe, however, that noncompliance on the earned-income tax credit is largely due to errors, not because of fraud. Both the complexity of the tax credit and the complex living situations are responsible for the high error rate.

Let me give an example. There is an IRS publication called publication 596. That is the IRS instructions and forms for the earned- income tax credit. Guess what. It is 52 pages long. Can you imagine somebody sitting down at his or her kitchen table trying to figure out the earned-income tax credit? The IRS takes more pages to explain the earned-income tax credit than it does to explain the complicated alternative minimum tax. Guess how many pages are in that. Eight. They are eight terrible pages, but there are only eight of them. The EITC booklet has 52 pages. Obviously, it is unnecessary complexity.

Senator Grassley and I fashioned a series of reforms that were enacted as part of the 2001 tax cut legislation. The Treasury expects those changes alone will reduce earned-income tax credit overpayments by about $2 billion a year. So we are doing something about it. We all recognize more needs to be done, and we will all work together to see that this work gets done.

But the remaining work is administrative; it is not legislative. As this administration has indicated, finding ways to identify earned- income tax filers who were not compliant, and to save money by preventing losses to the Treasury, is primarily an administrative issue, not one that can be achieved through legislation. One can't simply wave a wand and pass a law mandating a lower error rate. That takes a lot of administrative work. The IRS and Treasury are working on it now. They are conducting a major pilot project to test new procedures which the agency hopes will reduce overpayments. I hope the Treasury reduces overpayments, and the IRS is also likely to conduct a second pilot this summer. I and other Senators want to see whether these procedures work, while making sure

they don't cause honest, eligible working families to lose earned- income tax payments for which they qualify.

But I believe administrative action is the proper course. Let me reiterate that no legislative remedies are at hand that the Joint Committee on Taxation has found will generate significant savings--no legislation. Reducing errors is primarily administrative, and the budget resolution's reconciliation instructions to the Finance Committee would unfortunately force the committee to cut the EITC itself. It doesn't really address the error rate.

For hard-working, low-income families, the EITC offsets income, payroll, or Federal excise taxes. It would thus raise taxes for these working families; that is, if the EITC were cut.

It is bad enough we continue to let the minimum wage erode. We should not be raising the taxes on the working poor on top of that by cutting the EITC. The Senate should take a firm stand against raising taxes on working Americans.

The chairman's mark in the Budget Committee last week lays out two ways to achieve these so-called EITC savings. One way is a tax increase, pure and simple. The other way is administratively infeasible and would generate strong opposition from small business owners. The only way the second method could be designed so it would save money would be to make it, too, into a tax increase. Let me explain.

The first of two options in the chairman's mark is to repeal the EITC for very poor workers, particularly workers without children. According to the IRS, some 3.7 million low-income workers received this credit in the year 2003 and secured an average tax credit of a little over $200 each. These workers are among the poorest, lowest paid workers in the country. Only single workers with incomes below $11,490, and married couples with incomes below $12,490, would even qualify.

This credit equals a maximum of 7.65 percent of the first $5,000 in wages these workers earn. As a result, this credit simply offsets some or all of the employee share of the payroll taxes these workers pay. Repeal it and the net Federal tax burden on these workers rises.

Furthermore, if this tax credit is repealed, poor, single workers will begin owing Federal income tax in addition to their payroll taxes when their earnings only reach $7,950. That is nearly $2,000 below the poverty line. We can't do that. Such a change would literally tax these low-paid workers deeper into poverty.

The other option the chairman's mark lists for achieving these EITC savings is to require workers to get their EITC payments in their paychecks rather than in the refund when they file their tax returns at the end of the year. This is unworkable.

First, some small employers will find it very difficult to do. They would have to have additional complexity to do it. Second, many workers will not want to do this because they believe their earnings or their spouse's earnings may rise during the year which would make them eligible for a smaller EITC or no EITC at all, and if they received EITC payments during the part of the year their family's income was lower, they would have to write the IRS a check paying back the EITC when they file their tax returns. Not everyone in this situation is likely to file a separate amended tax return or have the cash to pay the EITC back. As a result, this could actually increase errors. It could increase overpayments as well as causing many families considerable difficulty.

It would not save money. Suppose you instituted this system starting in the tax year 2005. It means next year low-income workers would receive both their EITC tax refund for the tax year 2004 and their EITC payments for tax year 2005 which would be provided in their paychecks throughout the year. The result would be the earned-income tax credit costs would nearly double in 2005. That would increase costs, not reduce them.

This is not the time to cut Medicaid. Medicaid provides a crucial health care lifeline to more than 50 million Americans. It is a critical player in our health care safety net. Medicaid pays for about 40 percent of all births in this country. It pays for almost half of all nursing home days. Its reach stretches throughout the health care system, and substantial costs will be felt in every corner of this Nation if this cut were to proceed.

Even without these proposed cuts, Medicaid beneficiaries and providers are facing a very difficult year. Many States have not yet emerged from their worst financial crisis in several decades, and Medicaid programs have been cut in virtually every State in the past 2 years. In fact, over the past 2 years, States have instituted Medicaid changes that have resulted in between 1.2 million to 1.6 million low- income children, parents, elderly, and disabled people losing coverage and becoming uninsured.

Benefits and provider payments have also been cut, resulting in beneficiaries' reduced access to needed services and greater cost shifting to individuals who are insured. The liability of our health care safety net is threatened. These cuts would have been significantly steeper had Congress not provided States with $20 billion in fiscal relief last year.

Even after these Medicaid cuts and other budget cuts--and in many States tax increases--States still face a new round of deficits estimated at $40 billion in the coming year. Despite this news, the Federal fiscal relief is ending with the result that deeper Medicaid cuts are likely. The last thing we need to do now is to reduce Federal funding for Medicaid further and force deeper cuts in Medicaid.

We should instead heed the bipartisan warnings of the National Governors Association. In a letter last week, the National Governors Association chair and vice chair, Governor Kempthorne of Idaho and Governor Warner of Virginia, had this to say:

States are currently emerging from the most severe budget

crisis since World War II. And nearly every State has enacted

difficult cuts to its Medicaid program, including both

eligibility levels and provider payments. Federal funding

reductions would force States to implement even deeper cuts

by restricting eligibility, eliminating or reducing critical

health benefits, and cutting or freezing provider

reimbursement rates. As a result, the Medicaid funding cuts

could add millions more to the ranks of the uninsured and

would harm our Nation's health care safety net.

We should listen to the Governors. They are bipartisan. This is not a bipartisan issue.

Opposition to the cuts extends beyond the Governors to hundreds of organizations of hospitals, doctors, nurses, veterans, disability advocates, patients' advocates, and nursing homes.

Some have argued the savings could come--harmlessly, they seem to suggest--by merely cutting ``fraud and abuse,'' particularly in State financing arrangements. But this is a false premise. Not one, not the administration and not the chairman of the Budget Committee--not one-- has proposed a policy to limit State financing arrangements they decry. The administration's exhortations on this matter are so vague the Congressional Budget Office has not scored the administration's proposal as producing any savings in Medicaid. No one has even claimed any specific proposals could raise $11 billion as essentially called for in this reconciliation instruction.

To be clear, Congress has addressed the fraud we hear about.

The Finance Committee takes very seriously its oversight of the programs within its jurisdiction. The committee is dedicated to maintaining program integrity and ensuring taxpayer dollars are used wisely and efficiently. I am as strongly opposed to fraud as any Senator. But mandatory budget cuts are a blunt instrument unsuited to address this difficult, complex problem, particularly in the absence of specific administration proposals the Congressional Budget Office scores as producing savings.

Some have argued this budget reconciliation instruction doesn't matter. They argue if the Finance Committee does not want to make these cuts, then it can simply not act.

But I ask, What if the House committees of jurisdiction do act? If the House passes a reconciliation bill, any single Senator could then use rule XIV to put that bill on the calendar, bypassing the Finance Committee. The Senate could then be facing a fast-track vehicle to make unfair spending cuts that fall in the Finance Committee's jurisdiction without the committee ever having participated in the effort.

I have high confidence in the chairman of the committee, Senator Grassley of Iowa. He will find a good way to

deal with Medicaid and with Medicare. He is very fair. He works with all Senators. I think that is by far the preferable procedure rather than the fast-track procedure as I mentioned under rule XIV which bypasses the committee. It could well happen, if the House acts.

Finally, I note the House budget is likely to reconcile much deeper cuts in these programs while acting as though all such savings can somehow be achieved by wishing away ``fraud, waste, and abuse.'' I am deeply concerned about conference deliberations on this matter.

This reconciliation instruction is a very dangerous provision. It is one that could do real damage. My amendment to strike this reconciliation instruction enjoys widespread support from many Governors, many health care providers, and organizations dedicated to helping the Nation's children, among countless others.

I urge my colleagues to join me in supporting the amendment.

I yield 10 minutes to the Senator from Hawaii to also speak on this amendment.

Mr. President, I want to address a couple of points that I think need to be addressed. They are a bit misleading. First, there is no language in the budget that specifically requires the Medicaid cuts. So why pass this? The fact is, with all due respect to the chairman of the Budget Committee, during markup the chairman said basically that we assumed the $11 billion in mandatory cuts was going to come from Medicaid. That is the chairman's assumption. He made that very clear. He wants it to come out of Medicaid.

As we know around here, that is the general thrust of measures we pass that are in the budget resolution, and that is what is going to happen. As long as I have been here, and I have been here a long time, that is the way this place operates.

There are clearly going to be cuts there. So the point that cuts in Medicaid are specifically required, that is not true. Are they effectively required? Clearly, yes. Also, it has been suggested there is a lot of fraud, waste, and abuse. That is a bit of a disingenuous statement. First, we never condone fraud and abuse. We don't need a statute to allow that. There are anti-fraud and anti-abuse laws. There are no specific fraud and abuse proposals. It just says cut.

If there is no proposal, as I said earlier, Joint Tax has not scored anything that amounts to raising revenue. By logical conclusion, we are going to cut Medicaid; it is that simple. It sounds good, this fraud, waste, and abuse, but it is just going to be a straight cut. There is no specific proposal that addresses that.

Also, we are already so-called cutting waste. There is a $2 billion savings, a cut in error rates, because the administration is looking at this more closely, which is good. There are a lot of error rates elsewhere in the code, not just for low-income people. It is in sole proprietorships and other categories of taxpayers as well. We are not cracking down on them; we are cracking down on poor people. That is the wrong thing to do.

The main point is this is a cut in Medicaid. That is clearly what is intended. Second, this is not a fraud, waste, and abuse cleanup; it is a cut in Medicaid. Be honest. That is the effective result.

Technically--it is a small point--some of the concern about error rates in Medicaid is because States controlling the Medicaid Programs are undertaking actions that are now being corrected by Uncle Sam. So it is not the fault of the low-income folks. It is not the earned- income tax credit or the refundability portion. That is a small part of the problem. Rather, it just changes the administration of it between Uncle Sam and the States.

This is a good amendment. We should not cut Medicaid. We should not cut folks who get the advantage of the marriage penalty by $21.6 billion. That is the effect of the cut that is going to be required in the budget resolution.

My amendment says, let's eliminate that requirement and deal with Medicaid and other programs as we normally do in the normal course of business.

I yield back the remainder of my time.

Mr. President, we are at a stage where we are hoping to get some action on some amendments. This is an extremely important bill. This bill will provide a very significant break to all companies manufacturing products in America. It is about a 9-percent deduction on the costs of manufacturing products in States. That translates to about a 3-percentage point reduction in their income tax returns. To a corporation paying the top rate of 35 percent, that means they are going to have a tax rate on that production of 32 percent. It is a very important bill.

There are lots of different ideas about how this bill can be improved. We have already adopted an amendment by the Senator from Utah, Mr. Hatch, cosponsored by myself. In fact, this is a bill that Senator Hatch and I have introduced for many years. It will increase the research and development tax credit for at least 18 months and also modify it in a way to make it more attractive to more companies.

We all know the real pursuit is how do we get more jobs in America, how do we create more jobs in America, how do we keep those jobs in America, and

how do we train people who lose jobs in America.

We are a wonderful and wealthy country. We are very lucky to be Americans. People from all over the world want to live in America. I will not say they all do but there are certainly an awful lot of people who want to live in the United States. That is why we have so many immigrants coming to our country.

We do not see very many people heading for the door. Not very many people living in America want to go live in other countries. There is a real reason for that. I think the basic reason is because we are a country of great opportunity. We are a country of great mobility. We are a country where a person can pretty much do what he or she wants to do.

Sure, there are some limitations that some people face, depending upon where they are born or where they grew up in America, but still, compared with any other country in the world, there are opportunities in the United States of America that are just wonderful. We are incredibly lucky to be Americans.

We are now faced with a question, though, of jobs and job loss in America, particularly manufacturing job loss, and even some service industry job loss. We have lost close to 3 million jobs in the last several years. Those are manufacturing jobs. Those are good-paying jobs.

It is also true that virtually every other country in the world is losing jobs, too. We are not the only country that is losing manufacturing jobs. I will not be callous about it, but those are problems that those countries face, and we wish them very well. We wish more people in the world had better incomes; that people who are not the most wealthy would be doing pretty well by themselves. But our goal is here in the United States. How are we going to get more job creation in the United States? How are we going to get more job retention in the United States? How are we going to retrain people? There is no silver bullet, no panacea, no magic answers that are going to solve this problem.

There are lots of reasons why we are facing this, if we are totally honest with ourselves, and clearly we must be if we are going to solve it. One reason, frankly, is just the dramatic increase, to use a fancy word the economists use, in productivity in the last several years. That is, with ingenuity and with research and development and technology improvements, companies are able now to produce more widgets, more products, more cars, whatever it is, with fewer people. It is easier, then, for that company to sell products and make money, but unfortunately a byproduct of that is it is with fewer people, fewer jobs, so people are laid off. It is a huge problem. It is not only the shock of a person who loses his job, it is lost benefits, lost wages.

But some of this is due to productivity increases. It is a fact. We just have to recognize it. But having recognized it doesn't mean we should look the other way. It means we should find some other way to deal with it.

The job displacement that has occurred in America over the last several years has happened all over the world, in all developed countries, not just the United States. It is because of the general nature of economies moving a little more to services compared with manufacturing. Service industry jobs just don't pay as much.

This movement to services--it is like health care services. It is professional services. It is doctors, lawyers, accountants. They are all great professions, and they are services. But by and large, service jobs don't pay quite as much as manufacturing jobs. Again, that is a worldwide phenomenon.

I might say, too, one of the reasons for job loss is foreign competition. It is true in many countries that because of the lower wages it is cheaper to make a product than it is in the United States. There is no doubt about that. Benefits are a lot lower in other countries. There is no doubt about that either. It is true, American companies, as the case with companies in other countries, have to be competitive. They have to be competitive; otherwise, they go out of business.

Having said that, there are other reasons, too, for the phenomenon we are facing. We have to find answers and, as I said, honest answers, not just glib answers.

Frankly, I believe we have to focus on three major areas and be very positive. One is, How do we create new jobs. I would put a lot more effort into research and development than we now do. We should have more basic research in universities and companies than we now have. We have to figure out ways to develop new products. This is a bit corny and a bit dramatic, but it wasn't too many years ago--in the year 1900 nobody even dreamed of automobiles or airplanes. Yet somebody developed an automobile, somebody developed an airplane, and lately it is the Internet, it is broadband, it is fiber optics, it is a lot of new technologies nobody knew about.

A lot of that is because of the dollars devoted to research and development. It is ingenuity and opportunity. Persons knew if they spent time developing those products they could sell them in the United States and overseas and they could make a go of it. They could make something happen. Just think of the joy of maybe inventing something and making it work and selling it. That is one way. We have to figure out ways to create new jobs.

Another way is we have to keep the jobs we have. That is complex. Part of it is the much more vigorous enforcement of our trade laws. I have said it before and I will say it again: we hear of all these call centers going to India, Bangalore, other places in India. You pick up a telephone and try to order something, a credit card company or something, and find the call center is in India or someplace else. But we don't hear of American companies selling products to India. You don't hear of sales to India. Why is that? It is because India is a closed country. It is a very closed country. It is very hard for United States business people to sell their goods and their services and their products to India because India is a closed country.

They also pirate intellectual property. Billions of dollars of intellectual property created by Americans is pirated by people overseas. Various countries either do not have intellectual property legislation or they don't enforce it. It is very difficult. So a way to keep jobs in America is to be much more vigorous as we enforce our trade laws, and this country is not enforcing our trade laws. We are not opening up markets overseas the way we should. It is more laissez faire, let things happen. If some country wants to close its market, fine. That is basically the attitude of this administration as I see it. I have spent a lot of years in trade policy and I cannot remember a time when an administration was so laissez faire, so ``who cares'' when it comes to whether a country opens up its market to American products.

India is a good example. China is another example. There are so many examples. Rather, what does this administration do? I am not being critical here; I am just calling it as I see it. I am being objective in how I see this administration's trade policy to be operating.

Still, we reach trade agreements with minuscule economies: Bahrain, Morocco. Those are wonderful countries. But why are we spending the limited resources we have in the United States Trade Representative Office reaching free trade agreements with countries that would have virtually no or very little commercial value to the United States? Why? Because it is easy.

We should be taking the extra effort and going to countries, as I mentioned earlier, that are closed and have huge potential markets. We sell to India, a country of 1 billion people, half of what we Americans sell to Switzerland, a country of 7 million people.

Wait a minute. I know the per-capita income in India is lower than it is in Switzerland, but not that much lower, not by such huge orders of magnitude. One way to keep jobs, again, is to enforce our trade laws.

We have to tackle health care costs in the United States, which are much higher than they are in other countries. There are lots of efforts we could undertake.

I will now focus on one aspect of this bill I think is very important. I think most Members of the Senate agree with me. It is further reason why we should move expeditiously and bring up amendments so we can pass this legislation. We will be doing a great disservice to the people of our country if we don't quickly pass this legislation.

Already the World Trade Organization penalties levied on the United States amount to 5 percent of the $4 billion the WTO has said can be levied against the United States now because the United States has not repealed certain legislation which is the underlying part of this bill. WTO said that is illegal so we have to repeal a lot of it. That is $4 billion in penalties levied against the United States products we are trying to export to Europe. That is $200 million in this month alone, March, and there is going to be a 1-percent increase in each of the succeeding months. Why in the world aren't we passing legislation so we don't have to pay those penalties, so we don't have to penalize American companies, and therefore penalize American workers?

One way to send jobs overseas is to not pass this bill. Every day we don't pass this bill means additional costs of doing business in America on products manufactured in America and exported to Europe. If we repeal this penalty, then that cost to American businesspeople will be much less, and that would help them keep producing and keep their employees.

In drafting this bill which provides for a 9-percent deduction on domestic manufacturing, we believed it made good sense for that 9- percent deduction to apply not just to C corporations--that is the standard garden variety corporation--but also to virtually every other company in the United States, small partnerships, proprietorships, passthrough entities, and smaller companies that do not pay a corporate income tax.

I would like to show a couple of charts to give us a little sense of how U.S. companies organize themselves and why that is important to this legislation.

As this chart to my left demonstrates, about a quarter of American companies are C corporations. The other three-quarters of American companies are partnerships, sole proprietorships, somebody in business for themselves. Another entity called S corporations essentially means that the owners of the corporation are liable themselves and pay taxes themselves on the income of the organization.

About one-quarter are corporations. They are the big guys.

Going to the next chart, I point out that 99 percent of U.S. firms are actually small businesses. If you look at all the companies in America and you organize them according to whether they are a big or a small business, 99 percent are small businesses. By small business, we mean 500 or fewer employees. Virtually every company in the U.S. is not a big corporation but, rather, a small business.

That is important because the legislation we were repealing gives a tax break only to big C corporations. We believed that if we repealed that--and we have to repeal it because WTO says we must--we must be sure we replace it with something much more broad-based. So not only the larger C corporations but the other, smaller, American companies also get the benefit of the provisions of this bill.

I mentioned earlier that about a quarter of American companies are large companies, so-called C corporations. They have at lot of people working for them. About half of the employees in America work for small business; about half work for big business. It is an interesting statistic. Ninety-nine percent of all companies are small businesses. Still a full half of all employees in America work for small businesses.

Why do I say that? Because basically most new jobs are created by small business.

This chart shows that. Small businesses create jobs much more than big businesses. Even though half of all employees are in the category of small business, still three-quarters of the new jobs--this is a historical fact over the years with small business. Small business is more flexible; they can move more quickly; they see more opportunity right away; they can hire more, whereas big business takes time with all the decisions that have to be made going through all the various levels of hierarchy. But small business is where the job creation is.

That is relevant because if you look at private sector jobs in America, you will see the United States since 1994 has had a huge creation of jobs, until the year roughly 2000. Since the year 2000, about 3 million jobs have been lost in America. That is a net figure. That is not gross.

I mentioned earlier that half of those are small businesses. I mentioned earlier that job creation is generally through small business, not big business.

I also mentioned before, to repeat myself, this bill says: OK. We don't care whether you are a big or small business; you can still get that 9-percent deduction.

That is why I think this is a very good bill. I say that in part because there are other versions of this legislation in Washington that do not extend the same treatment to small business but essentially only to larger businesses.

I hope when we move on this bill and pass it and take it to the next stages that we keep in mind the importance of small business and keep in mind that we must retain the small business provisions in this bill.

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

Madam President, I give my compliments to the yeoman efforts of the Senator from Michigan. She has done a wonderful job. She has many times come to me and asked: Max, can't we do more? I have an amendment to accelerate the deduction and many times it will be explained how important it is, particularly for her people in the State of Michigan.

I compliment the Senator very much for her terrific work. Those in Michigan ought to know, she is persistent and steady in coming to this Senator and saying we have to do more; let's do this. And the same with the Senator from Kentucky, Senator Bunning. I have heard from him. But I must be honest and seek a full disclosure and say the Senator from Michigan has been very consistent and done a superb job. I also compliment her on the charts. They are good charts, explaining the situation very well.

I thank the Senator for her statement. She is on target. Most Members in the Senate will vote for this amendment offered by the Senator from Kentucky and the Senator from Michigan. It is very important to do what we can to create and to retain jobs in America.

The underlying bill goes a long way to accomplish that objective, but this amendment goes further; and that is, I think it costs about $6- point-some billion and accelerates the deduction, meaning that companies can get that deduction earlier. They can plan earlier. And it is for all size companies, not just big business, but all size business.

We all know, as the Senator from Michigan pointed out, half of all employees in America work for small businesses, and three-quarters of all new jobs in America are created by small businesses.

We often say small business is the backbone of America. Why do we say that? Because it is true. Small business is the backbone of America. A lot of these big companies can go offshore--and it is one of the problems we are trying to address--but the small business cannot go offshore in the main. If a big business goes offshore and takes contracts away, often small business bears the brunt of it. So it is very important we do what we can to keep jobs in America.

This clearly is a complex problem; that is, offshoring, outsourcing. It requires a very dedicated, concentrated effort to solve it. It is quite complex. There are various ramifications, various parts of this. The Senator from Michigan mentioned a good number of them, including the high cost of health care in this country.

One of the problems we are facing, too, is currency manipulation by various countries, including China and Japan, countries with huge reserves in currencies and having a great effect on the American economy; and it is not always good.

In addition to that, it is trade policy. We are reaching trade agreements with minuscule economies--Morocco, Bahrain. Well, that is fine. Morocco is a great country, as is Bahrain, but the point being, those are small economies. Rather, there are huge economies where we are not enforcing trade agreements already reached. One is China, this WTO, another is India.

We hear all the time about call centers moving to India. We do not hear about American companies selling to India, for a very good reason. India is a very closed country. It is very difficult to sell in India.

If we, as a country, were to use much more of our efforts to enforce trade agreements and open up huge markets--that is India and China-- rather than using our efforts to reach trade agreements with smaller countries, we would be doing a much better job to help keep jobs in America. That is just one of the various things we can and should be doing.

I am happy to yield. I yield the floor, Madam President, so my good colleague can have the floor.

Madam President, I am just saying, we have a huge challenge here to help create jobs and to keep jobs in America and to retrain people who lose jobs.

This phenomenon of job loss is huge. As the chart by the Senator from Michigan shows, we have lost about 3 million jobs since 2001; that is net loss. Those are manufacturing jobs; a net loss of 3 million manufacturing jobs in America. We have also lost a good number of service jobs, but on a net basis, not near as many service jobs lost as manufacturing jobs. Manufacturing just pays significantly more than service.

I might also say, this is not just an American phenomenon. It is happening in countries worldwide. It is happening in virtually every country. The one country where it is not happening as much is Japan, interestingly. But it is happening in every other country. Why? I daresay part of the reason is due to just natural phenomena--not natural, but phenomena that are occurring worldwide, due largely to globalization, advances in technologies, communications technologies, which are forcing countries worldwide to compete even more aggressively, to cut their costs as much as they can, and producing wherever they can to get the best rate of return they possibly can.

That is why it is happening worldwide, not just in America. It is happening worldwide. Part of that is because of increases in productivity. Obviously, as productivity increases, more products are produced with fewer employees per product.

Just to state the problem does not mean we stop right there. We have to start finding answers to the problem; that is, how to get more employees, more workers, more Americans working in more good-paying jobs. One way is with this bill. This bill will help reduce the cost of production; that is, by deduction. This bill actually creates a 9- percent deduction for the cost of domestic manufacturing. That is important.

For example, take a small business whose income tax would be $200,000 on domestic manufacturing, the 9-percent deduction calculates to roughly about a 3-percent reduction in the rate, so that is a $6,000 reduction in that company's income taxes. That helps. That is not a small matter to reduce one's income taxes by that amount. So that is one partial solution to job loss in America this bill addresses.

Second, we adopted an amendment to this bill already. It is the Hatch-Murray amendment. Senator Murray very much knows, as does Senator Hatch from Utah, that Washington State is a State that a few years ago was called the ``Silicone Forest'' with all the sort of higher-tech companies developing in Washington State. The Washington Seattle Port trades a lot. Salt Lake City is not a huge seaport, by any stretch of the imagination, although they have the great salt lake--it is not small--but the point is, Senator Hatch from Utah also knows the importance of extending the research and development tax credit. It is a measure, frankly, he and I have introduced jointly many times over the years. But that provision now is also adopted as an amendment in this bill.

The more we can encourage research and development, the more we are going to create jobs and keep jobs. We know, too, that where the research is, is where the jobs tend to be; that is, where the products develop is where the jobs tend to be. This is a research tax credit for American research and

development. It is not overseas, but it is in America. So that, too, is going to help.

Now we come with this amendment, the amendment offered by the Senators from Kentucky and Michigan. It is an additional stimulus because it accelerates the deduction very significantly. That is going to help. It is going to go a long way.

There are lots of other things we need to do. I am not going to spend all night talking about them, but one is to adopt the second-degree amendment offered by the chairman of the committee; that is, the extenders provision. That is very important.

Madam President, you know, as well as anyone in this body about the importance of predictability, the importance of certainty, as much as possible, that any businessperson may have or may not have--or, to state it differently, the uncertainty they may have. Every businessperson abhors uncertainty. You almost don't care what the problem is so long as the problem is pretty certain. If you know what the problem is, you can work around it. If the problem is always changing, it is pretty hard to work around it.

We have had something called tax extenders, and they have been for very good purposes, as the Senator from Maine well knows. I think the Senator from Maine, as I recall, has one on education for teachers. It is to help teachers get their deduction for the supplies they purchase to help their students. That has expired.

Well, if I am a teacher with very low pay--it would be a great job, actually, in many respects; that is, to be a teacher--I would want to know if that deduction is still available or not. So far, it is not available. It has expired. But in the extenders package we are adopting here, we are going to extend that deduction so teachers will know, at least until the end of 2005--18 months roughly; they are going to have that.

There are a lot of other extenders, too. Senator Bayh, for example, is interested in the work opportunity tax credit and other similar tax credits which enable employers to get people off of welfare and hire people so they are doing work, so they can earn a living for themselves and their families. That tax credit has expired. Senator Santorum is also interested in extending that tax credit. We have that here in the extenders.

There are a good number of others. For example, Senators Clinton and Schumer are very concerned about the liberty bonds for the development of New York City. That has expired. That is jobs. The more we can continue these extenders and get them back in the law, the more it enables those people in New York and others related to it to know whether or not they can depend upon those bonds and continue the reconstruction from the damage caused by 9/11.

In addition, there are some provisions that help the District of Columbia. We don't have any Senators here representing the District of Columbia. We all are, in a certain sense. But those, too, are going to be available.

I mentioned the one the Presiding Officer is interested in. What about computers in schools? We have a provision for companies to donate computers to schools. That has expired. I would think we would want to extend that. That is going to help kids, help companies. It is going to help America. It provides jobs.

After that, there are a few others. I won't go into great detail. There are incentives for jobs, for health care, to clean up pollution and more.

Essentially, we have a responsibility to pass these extenders. We have been derelict over the years. Everybody likes these provisions. Everybody wants them. They last maybe a year, a year and a half, then they expire. We let them lapse sometimes for 6 months, sometimes 7, sometimes 8. Sometimes we go back and reenact them retroactively. Sometimes we don't. It is just nuts. They are yo-yo extenders. How in the world are people going to be able to plan if we are yo-yos?

We as Senators should put them permanently in the law because we always reenact them. My hope is over the not too distant future we will be able to do that.

Another temporary extension is in the bill. That is going to help address some of the job loss this country is facing.

I yield the floor.

Mr. President, I would like to make a few remarks about the JOBS bill before the Senate. With this bill, we join in the work of improving the economic well-being of Americans.

This bill is about creating good jobs in America. This bill is about improving the standard of living of all Americans.

Let me begin with the economic context for this bill. In a series of statements over the coming week, I will address particular aspects of the legislation. We begin with the dignity and importance of work. Our jobs often define who we are. They are where we spend much of our waking hours. As the preacher teaches in the book Ecclesiastes, ``A man can do nothing better than to . . . find satisfaction in his work. This . . . I see, is from the hand of God. . . .''

Job creation is fundamental to our ability to live a good life. It is through the creation of good jobs that Americans have come to enjoy remarkable advancements in income and comforts. The American job creation machine makes our shores the shores to which immigrants swarm. We don't see people heading for the door. Rather, people from around the world want to live in America.

Ours is a dynamic economy. This economic growth is the key to our Nation's success.

I point out this chart. I will raise it up so people can see it. This chart shows the picture I have just basically described. In 1900, in the wake of the industrial revolution, America already stood at the pinnacle of the world economy. Already in 1900, believe it or not, we had the highest per capita income in the world, slightly more than Britain or Australia, and almost double that of France or Germany.

But even adjusted for inflation in today's dollars, not 1900 dollars, America's per capita GDP--a rough measure of our average income--was only about $5,000 a year in today's dollars. Measured by today's standards, we lived in poverty: Walking and horseback was how one got around; electricity lit only 3 percent of homes in 1900; only one-third of Americans had running water; only 15 percent had flush toilets; life expectancy was 47 years.

In 1900, America had one of the best educated populations in the world. But 1 in 10 were illiterate. The typical adult had left school after the eighth grade. There were only 382 Ph.Ds awarded in the entire country in 1900.

Even though in 1900 our economy was at the top of the world, Americans had an average income then that the average person in Mexico has today.

If our economy had not grown, our standard of living would be unacceptable by today's measures. Economic growth made a huge difference.

Because of economic growth, inflation-adjusted, our per capita income today is roughly seven times now what it was 104 years ago.

With economic growth, electricity became available across the country, and automobiles made us a mobile nation and made much more of the Nation within reach of work.

It is incredible to see how much we have grown in real per capita GDP since 1900. You can see a dip on the chart in 1929. But we have grown at a rapid rate.

The next chart is very interesting as well. This is private sector employment. American economic growth created 108 million new jobs, net, since 1900. In 1900, the American economy employed 27 million people in its civilian labor force. By January 2004, 104 years later, the American economy employed almost 140 million Americans.

Two-thirds of Americans participate in the labor force--substantially higher rates than in Europe. That is up from 55.5 percent in 1900. Americans are hard-working people. We work.

The American economy has, on average, created more than a million net new jobs every year since 1900. Since 1935, we have done better; America has created 1.5 million jobs every year. That is a net figure.

America's economic growth springs from our people, our freedom, our unity. The American people are smart and as hard working as any in the world. Our free market has given this great people the freedom to achieve their best potential. Our unity has protected its huge internal market from robbers, foreign and domestic.

We are lucky to be Americans, very lucky. Our Nation is still a magnet for immigrants. This country is still a beacon to countries around the world.

We can pride ourselves in our independent judiciary, which helped make this country strong. We can be proud of our system of government-- this long-lived democracy. We have a dynamic, mobile society.

In a number of ways, America has it right. More times than not, Americans have struck about the right balance between government protections and private freedoms, to contribute to economic growth.

Our society provides an environment for success. Bill Gates, for example, might be a pauper in Sri Lanka. But America provides the environment and infrastructure and, of course, the political system and markets where a Bill Gates can succeed. We should not take this lesson for granted. This is not true in all countries. Our society, economy and, yes, the Government contributed to the successes of people such as Bill Gates.

Government does have a role to play, for good or evil, either to foster or to impede this economic growth.

Government can impede growth. By running large continuing budget deficits, the Government can suck vital capital out of the economy, robbing individuals and businesses of funds that can be used for investment.

Thus, the record budget deficits that the Government is now running pose a threat to our Nation's economic growth. We have to recognize that. These deficits decrease national savings, decrease private sector investment, and raise interest rates. The resulting slower economic growth and increased cost of borrowing harm businesses, large and small.

Foreign governments can impede our growth when they deny Americans access to their markets, when they don't let us sell products in their country, when they artificially depress the value of their currency, flooding our lands with their imports and denying our exports a fair opportunity to compete.

Our Government can foster growth by investing in education, by opening markets at home and abroad, and by removing barriers to our economic greatness. We can foster growth in America.

That is what this bill is about--removing barriers to economic growth and creating jobs.

It is no secret that in the past few years the engine of American job creation has ground to low gear; manufacturing has been particularly hard hit.

This next chart shows the story of private sector job creation in the American economy over the last decade. Beginning in March of 1993, here at the lower left, the American economy steadily created new jobs throughout the rest of the decade. The economy grew. People had jobs and families had more money in their pockets. In fact, from January of 1993 to January 2001, about 20 million--net jobs--were created in America.

Private sector employment peaked at 111.6 million jobs in December of 2000. The Bureau of Labor Statistics reports that since the end of the year 2000, the private sector of the American economy lost 3 million jobs. You can see that on the chart. Our peak was here in 2000 and we have lost jobs--3 million. Three million jobs were lost in the American economy since that peak in December of 2000. In January of this year-- the month for which we have the latest statistics--the American economy employed 108 million private sector workers, which means 1 out of every 40 private sector jobs have disappeared since the end of 2000.

The manufacturing sector has disproportionately borne the brunt of these job losses.

This next chart shows the story. This is manufacturing jobs from 1993 to 2004. We can see the dramatic decline in roughly 2001, since July of 2000.

Since July of 2000, the American economy has lost 3 million manufacturing jobs. That is a net loss. The Bureau of Labor Statistics reports that in January, America employed 14.3 million workers in manufacturing, and that is down from the 42nd straight month from the high of 17.3 million in July of 2000. That is a drop of 17.5 percent in manufacturing employment. More than one in every six American manufacturing jobs has disappeared since July of 2000. Again, one in every six manufacturing jobs in America has disappeared since July of 2000.

Manufacturing jobs have disappeared in all 21 industries that constitute the manufacturing sector. It is in all sectors. We lost jobs in computer and electronics products. We lost jobs in transportation equipment. We lost jobs in machinery. We lost jobs in fabricated metals. We lost jobs across the board.

My home State of Montana has suffered more than most. It has had a 19-percent reduction in manufacturing jobs since January of 2000.

This next chart also shows job losses happening all across the country; not just across all manufacturing sectors but all across America. Every State in the Nation but one has lost manufacturing jobs since July 2000. The darker the shade, the greater the job loss; the lighter the shade--orange and yellow--there is less job loss. But every State in the Nation has lost jobs, except one.

The manufacturing jobs we are losing are good jobs. This next chart shows

manufacturing jobs pay more than service jobs on the average. We all know we are moving from a manufacturing society to a service job society. Regrettably, those new jobs, service jobs, pay quite a bit less than manufacturing jobs, and that has been true from 1994 all the way up through the current date.

This next chart shows manufacturing employment is now at its lowest absolute level since July of 1950. Fewer Americans are employed in manufacturing today than at any time in more than half a century. We can see from the line from 1950 to today there is essentially the same number of jobs. Clearly, we are not doing very well.

Why do I mention all this? First, it is fact. Second, we have to deal with it. We have to do something about it, and that brings us to the bill before us, the JOBS bill. We have targeted the provisions of this bill directly at manufacturing employment. Why? Because that has been the greatest problem.

This bill will not be a complete solution. By no stretch of the imagination will this bill be a complete solution to job loss in America. To help create and keep manufacturing jobs, we also need to do many other things in addition to passing this bill. We need to open foreign markets to American goods much more aggressively than we have done in the last couple of years. We need to improve education, to preserve the comparative advantage of American workers. Clearly, we have to be the smartest--hopefully at least try to be the smartest--in the world. To do that, we have to educate our kids and keep education at all levels, and to retrain workers.

We also need to make health care more affordable. Health care costs in the United States are too high. They place a big burden on employment, on businesses. The cost of health insurance and the cost of health care is way too high and should be lowered. We also need to provide assistance to displaced workers. They need to be retrained.

This bill will do two things that will make an important contribution to creating and keeping manufacturing jobs in America. This bill will contribute to economic growth and increased demand. This bill will help reduce manufacturers' tax burdens. It will reduce the tax rate for domestic manufacturers by 3 percentage points. Basically, it is a 9- percent reduction for domestic manufacturing income, which translates to about a 3-percentage point break for corporations. The JOBS Act will thus help all manufacturers who produce goods in the United States.

Cutting taxes for domestic manufacturers will help prevent layoffs. It will help. It will not solve the entire problem, but it is going to certainly help. It will help preserve jobs, and this bill is paid for. It will not contribute to the deficit. It thus will not raise interest rates. It thus will not levy that hidden tax of higher borrowing costs for business.

This is an important bill. It comes none too soon. American manufacturing is calling out for help. This bill is part of the answer.

To ensure continued prosperity and well-being, the American economy needs to start growing again, and this bill is part of that solution.

This bill is an important first step to address the economic circumstances in which we find our country. Over the days to come, I look forward to working with my colleagues on this bill. I particularly thank the chairman of the committee, Chairman Grassley, who has done a terrific job in putting this bill together in a way that focuses directly on the problem.

We know we are here in large respect because of the WTO ruling which says we must repeal the so-called FSC/ETI regime because it is WTO illegal and replace it with a system that helps our domestic manufacturers in a way that is legal under WTO. There are various ways to fashion a replacement bill, and the other body has a replacement bill which gives the break to American corporations, C corporations, big corporations. We have a different bill. Our bill says if you are a C corporation, if you are an S corporation, sole proprietorship, partnership--whatever--if you manufacture products domestically in the United States of America, whether you export is irrelevant. You get the same reduction in your tax rate. That is to help small business as well as big business. So business together across the board is helped, not just big business.

We all know that is important because most new jobs are created by small businesses. There are many more small business people in this country than there are big business. Small business tends to be more creative in creating new jobs and expanding rather than big corporations.

I will stop here. There is much more to say about this bill.

One final point. I mentioned it is paid for. It is paid for by measures which in themselves should be good public policy and we should pass, anyway. What are they? They are corporate tax loophole closures. They are shelters legislation. They are post-Enron provisions that have not yet been enacted into law. There is something else called silos, to shut down another abusive international transaction.

Not only is this bill paid for, it is paid for in ways that will help restore consumer and investment confidence in American business which, in and of itself, will help create and keep jobs in America.

I yield the floor.

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

Madam President, I have a few more comments I would like to make about this bill. I hope, though, we can get an agreement put together, a list of several amendments that would then be in order. I know various Senators and leadership are now discussing that. It would be my hope we could reach that agreement fairly soon so we can get on with this bill.

Let me just discuss for a few minutes what this JOBS bill is really all about. It is a bill which the Finance Committee reported last November. It is something we simply must pass due to the WTO decision. I hope we can get it enacted into law as soon as possible.

I think this bill is important for three reasons. First of all, it will cut taxes for domestic manufacturers. That is important. The bill will also simplify taxes for American companies operating overseas. That, too, is important. And it will bring us into compliance with an unfavorable ruling of the World Trade Organization--no small matter. The JOBS bill, the bill before us, reduces the tax rate for domestic manufacturers by 3 percentage points. So if you are in the top bracket, it is 3 percentage points. If you are a company or corporation in a lower bracket, it is still about the same. Actually, it is a 9-percent deduction for the cost of producing or manufacturing products in the United States, which translates to about a 3-point reduction. Cutting taxes for domestic manufacturers will help prevent layoffs. It will help preserve jobs. As we all know, this country has lost 3 million-- think of that, 3 million--manufacturing jobs since July of 2000. That is net loss. We have lost a lot more and gained some, but the net loss is 3 million manufacturing jobs lost since July of 2000.

When I talk to manufacturers in my home State, as I know the Presiding Officer does in her own State, they say the rising cost of doing business is one of the biggest impediments to business. It is a big problem business has. By cutting the cost of doing business, this bill will help alleviate the job loss.

This bill will help companies do their job. This bill helps small businesses as well as larger businesses. The Tax Code treats different kinds of businesses differently, as we all know. C corporations, as you well know, are companies that exist as a separate entity from their owners, thus limiting the owners' liability. The corporations can be liable for various actions, but the stockholders themselves, the owners, are not. That is the reason why companies organize themselves, very often, in that manner.

This chart shows about 26 percent of companies in the United States are organized as C corporations; that is, they limit their owners' liability, the shareholders themselves. The owners are not liable.

Sole proprietorships and partnerships are businesses where the owners of the

business are fully liable for its debts. S corporations are smaller businesses that are incorporated for liability purposes but taxed as a partnership. The S corporations, partnerships, and sole proprietorships are collectively known as passthrough entities. These are generally smaller businesses, while C corporations are larger concerns.

Why do I mention all of that? I mention all that because, as I earlier stated, about a quarter of companies are organized as C corporations, but about three-quarters of American companies are organized differently, either as sole proprietorships, as partnerships, or as S corporations. We want to make sure that not just standard, garden-variety C corporations get the benefit of this bill but that all companies that manufacture domestically get the benefit of this bill, so we have changed the underlying bill.

Currently, today, under the FSC/ETI regime, which has been declared illegal by the WTO, the C corporations are the ones that get the benefit of the tax break. It helps them export products overseas. But in the Finance Committee, we felt, not just big companies but all companies should get the benefit of reduced taxes.

Nearly three-fourths of the manufacturers in this country are S corporations, partnerships, and sole proprietorships. About three- quarters of all new jobs that are created are by these small businesses. This chart shows that. About one-half of all employees in this country are employed not by big C corporations, they are employed by the other passthrough entities I mentioned. About three-quarters of all the jobs created and held in the United States are not by the big companies but by all the other smaller companies.

That is why we have extended this bill to include so-called passthrough entities. Our smaller businesses are the backbone of my State's economy and certainly the backbone of the economy of the Presiding Officer's State. I think they deserve tax relief just as much as larger businesses do.

In addition, by including partnerships and sole proprietorships, more of our agricultural producers will become eligible for this tax relief.

The JOBS bill that is before us also includes long overdue international tax reform. We are not just talking about the domestic manufacturing reduction rate; we are also talking about international tax simplification. That is for bigger American companies that do operate overseas. We want to make sure our American companies are competing on equal ground with rivals from other countries. One way to do that is to limit double taxation. When our companies are taxed twice, that makes them less competitive. We have included international tax simplification and reform provisions that will help American companies compete with foreign companies overseas.

A number of provisions will help companies better utilize their foreign tax credits. Foreign tax credits prevent income from being taxed twice. There is a repatriation provision that encourages companies to bring back overseas profits for investments in the United States. There is also a provision that will ease the tax compliance burden for small businesses looking to gain access to overseas markets. These are worthwhile, and they are measures that will help restore fairness and integrity to our American tax system.

As I mentioned, the bill repeals the current FSC/ETI laws. Why? To bring us into compliance with WTO obligations. Our bill replaces a tax incentive that was dependent on exports with a tax incentive that is not dependent on exports. A company can utilize this tax benefit in this bill whether the product it manufacturers is exported. So long as it is manufactured in the United States, that company qualifies. We will partially offset the loss of tax benefits to U.S. exporting companies, therefore, by the repeal of the current law, which I said is inconsistent with WTO, and will also provide benefits to all American manufacturers, providing a needed boost to our economy.

Another point: This legislation is completely paid for. Repealing the old FSC/ETI regime will cover most of the cost for the new tax incentive. By repealing the current law, that almost pays for what we are doing here.

The international provisions are paid for; that is, the additional provisions of the bill are paid for with offsets that curb abusive tax shelters. We have offsets in this bill. They will not just create revenue, but they are also good provisions, good tax policy in and of themselves--clamping down on shelters, the inversions provisions, post- Enron reforms, something else called SILOs, which is a gimmick, frankly, that international American companies are using to shelter their income. All that is shut down, and that pays for the rest of the bill. Again, these shelter provisions are absolutely critical to be enacted.

Let me mention in a little bit more detail the three reasons for supporting this bill. I mentioned it is fully offset and the revenue goes to manufacturing. I think that is a principle we should maintain. We should not put incentives in this bill or change this bill in a way that deviates from that. We should also not change this bill in any way that reduces or diminishes stopping the abuses of tax shelters. That is a principle we should absolutely maintain.

I might say something about our budget deficit. Our current budget deficit is projected at about $521 billion this year. We all know that is basically an understatement. It is going to be much worse. Why? Because the administration's budget, as well as the budget resolution pending in the Senate Budget Committee, does not include several factors which more accurately reflect the true deficit our country is facing. What are those? First, both the budgets of the administration and the Budget Committee, which will be coming before the floor on Monday, will not include the cost of the war in Iraq. It will not include war costs. In fact, defense spending is going to be cut a little bit. One might wonder why, when costs are going up. My guess is the administration will come back with a supplemental next year with a big increase in Iraq costs and war costs. This budget does not include that and it should. That would be more honest.

Second, the budget does not include the cost of making expiring tax cuts permanent. That is the view of the administration, that they should be permanent. The budget does not include that.

It doesn't include providing alternative minimum tax relief. We all know this Congress is going to have to enact alternative minimum tax relief soon, and it is very expensive. That also is not included, to say nothing of the cost of paying for the baby boomers when they start to retire in the not too distant future.

Deficits are going to be a lot larger than contemplated in either the administration budget or the budget resolution that will come to the floor.

I say that because it is all the more reason why this bill must be budget neutral. I say that also because there are other Members of Congress who have a different view about that. They would not like this to be budget neutral. They would like there to be further tax cuts but not paid for. I think that is not wise. Frankly, psychologically, as well as actually, the American people will appreciate us having a budget-neutral bill and trying to work toward a balanced budget. That means people around the country are saying those guys and gals in Washington maybe have their heads screwed on straight. Maybe they are doing something right back there. Maybe they are not frittering away taxpayer money.

The more we do what is right, by keeping this budget neutral, not succumbing to the siren song of lowering taxes but not paying for them, the better off we will be in so many respects.

Another point: We have a heck of a job ahead of us, a huge challenge. What is it? It is how to create more jobs in America, how to keep jobs in America, and how to help those who have lost jobs--no easy task. It is extremely difficult. We all know the statistics. Three million manufacturing jobs lost in the last several years. We have to do something about that. The real question is, what do we do? What is the right thing to do? Some say it is OK. That is the way things are. That is international competition. That is globalization. It just happens. In the long run we are all better off. Some say that.

Essentially that was a statement of Mr. Mankiw the other day that has been bandied about so much. He said that is the way it is. There will be new

technologies. Companies will be able to compete better. They have to lower their costs, and they can lower their costs if they can compete any place in the world. If that means jobs overseas, lowering costs, that makes American companies more competitive.

I have a different view. I think we have to face up to the challenge of creating more jobs and retraining Americans so they can have jobs, and keeping those jobs in America. That is, we cannot be passive. We have two choices: try or do nothing.

I say we try to create more jobs in America; we try to keep more jobs in America; we try to retrain people and help people who have lost jobs. We have to do something about it.

The administration thus far has been passive. It has gone AWOL. It does not seem to really care. I do not see any affirmative programs to create jobs in America. We need them. It is a hugely complex problem in both the short term and long term. In the long term, it is education-- science, math, engineering. Did you know we don't graduate nearly as many engineers as does Japan, Europe? And China graduates about three times the number of engineers we do. Did you know that? How long can we continue that? In the long term, we cannot. It is unsustainable.

I must also say the amount of financial aid or the amount of support in basic research has dropped tremendously in America. The number of engineers who graduate in America is now about 30 percent less than it was not too many years ago. The figure is worse than that. We are not going to be able to compete in the long run if we continue that. It can't be done. There are lots of other long-term measures we have to undertake.

There are also in the midterm things we could be doing and we are not. What are they? No. 1, we are not opening foreign markets. Look at India, look at other countries in the world that are closed to America, particularly the country of India. We hear about all the call centers going to India. We don't hear about goods being exported to India for a very good reason: India is by and large closed. They are closed to intellectual property rights, closed to so many markets, so many products. India is closed. What are we doing about that? Not much.

The same can be said for other countries--China. Remember the WTO? They are a member of the WTO. We gave them PNTR. China has a lot more to do.

What are we doing in trade? Basically looking to countries--with no disrespect--such as Bahrain and Morocco. These smaller countries don't have huge commercial benefit to the United States. It is easier to reach trade agreements with those countries. It is much more difficult to go after where the real problem is. As I mentioned, this country is not doing that, and it should do that. It should start working more aggressively to open markets so we can sell products overseas. When we start selling products overseas, that means more jobs in America. It is pretty doggone simple, but it is not being done.

I might also add that there are other things we could be doing that we are not doing. I mentioned education. We are cutting education in this country. We are not fully financing No Child Left Behind. How are we going to compete in the world if we don't give full due to education? We have all gone overseas and visited high schools in countries worldwide. I have. The graduates in Pusan, Korea, are bright as the dickens, and they are hungry.

We have great schools and great teachers. But there is so much more we can do. In my State--and this may be true in other States--teachers are leaving because their salaries are so low. They cannot teach. A lot of schools in the country are cutting back on gifted children programs. They don't have any money. Why are we cutting back on gifted kids? That certainly helps all kids, including the underprivileged.

Madam President, I will yield the floor because I see our Democratic leader in the Chamber. He has a lot to tell us. Certainly, it will add immensely to this discussion. I urge us to think critically about the real problem. We cannot close our borders and put our heads in the sand. We have to meet this challenge head on. This is part of that effort.

I yield the floor.

Mr. President, I yield myself about 10 minutes.

Mr. President, I ask my friend from Wyoming how much time he has. It is my understanding that there was an agreement before I came to the floor.

Mr. President, I will be very brief.

I am very happy to be supporting the pending amendment. This is an amendment that the author of the amendment, Senator Hatch, and I have introduced many times over many years. I have been a cosponsor of this amendment for years. Senator Hatch has been a cosponsor of this amendment for years. It is critically important that we finally get a major research and development tax stimulus enacted into law. This provision has been in law for various years, but it has always been extended--on and off again. It has been a yo-yo tax provision--a yo-yo incentive. Sometimes companies get it, sometimes they don't. Sometimes we enact it--all the way back to the expiration previous times-- sometimes we don't. It is very irresponsible, in my judgment, for this Congress not to give permanent research and development tax credit to American companies. Other countries do. The Government of Canada, for example, has a R&D tax credit which is much more generous than the one we give to American companies.

There are other countries that also have stimulus incentives to research and development--more generous than we have in our country.

I urge adoption of this amendment.

I also agree with my good friend from Nevada. This provision should be permanently extended. It makes no sense not to be permanently extended. It should be a permanent fixture in the law.

I say that because the stakes are getting so high. We are losing jobs to overseas companies in lots of ways.

One way to create jobs in America is to have a very aggressive research and development tax credit for research and development in America. It is clear that jobs tend to be where the research is. The more research we have in America, the more likely it is we will have more jobs in America. It will also help to maintain jobs.

We do not want jobs to go overseas. This will help us maintain jobs in America. We should not erect barriers to our companies going overseas. We should not stick our heads in the sand. That does not work. We are facing an immense challenge, and one good way is to pass this amendment.

In addition to passing the underlying bill, this JOBS bill before the Senate is not going to be the silver bullet many would like but it will help significantly.

With respect to the R&D credit, 62 percent of total industry research and development is performed in manufacturing industries. That includes computer and electronic products, transportation, equipment, and chemicals. It is disproportionately helpful to manufacturing jobs. We clearly want more manufacturing jobs in this country. Manufacturing jobs are important to the entire economy.

The multiplier effect in manufacturing jobs is extremely high. For every 16 million manufacturing jobs in this country, another 9 million are created in retail, wholesale, finance, and other sectors. That is not as true in other sectors. Most of the R&D effect is manufacturing, and manufacturing has a very high multiplier effect, which is all the more reason to get this passed.

Workers employed in manufacturing plants with more technologies also earn 63 percent more than workers in plants using lower level technologies. It is a question not only of the number of jobs but the wages the jobs pay, the amount of income those workers will receive.

I can go on at great length as to why this is so important. I am not going to expand anymore on it because I think Senators realize how important it is. I expect this to pass by a very large margin, and well it should.

Once we pass this amendment, it is incumbent upon us to start looking for other ways we can help give stimulus and help American companies keep jobs in America. I am certainly going to be a part of this. It is something we desperately have to do.

What is the remaining time?

I yield the floor.

I ask for the yeas and nays.

I move to lay that motion on the table.

The motion to lay on the table was agreed to.

Mr. President, with this amendment, we are moving along on this bill. I very much appreciate the Senator's generosity in suggesting a time agreement. At this point, apparently, that is not advisable. But I thank the Senator for making his generous offer and for proceeding nevertheless.

My good friend from New Jersey has to leave the floor. I compliment the Senator for what he is trying to do. This clearly is the issue, the problem that faces our country as it will certainly for the rest of the year and probably for the indefinite future.

I am wondering, in addition to the approach suggested today--and there probably are additional proposals, too. This is a complex problem and requires a complex solution. It reminds me of a quote I am fond of making. H.L. Mencken once said: For every complicated problem there is a simple solution, and it is usually wrong.

In my judgment, this administration not only is sort of laissez-faire but kind of going AWOL on this issue. I don't see a plan. I don't see a way to deal with job loss that passes the smell test. In addition, wouldn't it help to be much more aggressive in enforcing our trade laws?

One thing that bothers me, frankly, is that we are going about getting trade agreements with minuscule economies. The big bang for the buck is enforcing our trade laws, say, with respect to India or China or maybe the European Union. There are lots of examples.

We hear about all the call centers in India. We don't hear much about many products by American companies being sold in India, and the Indians are very much violating the intellectual property agreements. Billions of dollars are being lost to American companies that could be spent in America because other countries are not living up to their international obligations.

I was wondering if the Senators agree that is one of the additional ways we can take to keep more jobs in America? Let's open up markets in other countries so we can export more.

The point I am trying to make is, we Americans pride ourselves on being fair and open, but I don't know that other countries are as fair and open when it comes to trade.

We are not pure. We do not wear a white hat. Other countries are not necessarily Darth Vaders and wear black hats. But I think it is also true the shade of gray of our hat is a lot lighter shade of gray than the shade of gray of their hats. They do not agree to fair trade in the main. I am talking about the bigger countries. India is the best example, the most blatant example.

Absolutely.

Let me ask the Senator a question on that same point. Would the Senator agree that in the main, most of the countries we are talking about--we are talking about environmental standards and labor standards in these countries--generally do not most of those countries want to sign free trade agreements with the United States because it adds to their prestige; it helps them market their products and helps them gain standing in the world? Would the Senator agree with that?

Would the Senator also agree that it is the case that most of these countries probably want to enjoy the status or the prestige of having a free trade agreement with the United States? Certainly we are not going to negotiate an agreement that gives away the store. This is a bargain for an exchange. Is it not also true that it therefore is a mistake for the United States to in effect be negotiating against itself; that is, for some in the administration to say, no, we do not want those labor standards, we do not want those environmental standards, whereas in truth those countries, frankly, are the ones we should be talking with because they themselves want these agreements and would be much more willing to agree to them?

The point being that the other countries themselves are much less concerned about this.

Exactly.

Absolutely.

I do not know how much time the Senator has, but I might ask, if the Senator does not mind, to address another subject with respect to jobs. Would the Senator agree, as we try to find a solution to this problem, that one of the issues we have to face and have to focus on is high health care costs that American companies pay and face? It is a very complex problem, clearly, but a lot of companies unfortunately are lowering their employee health benefits or their retiree health benefits because they say it is necessary in order to do business; the world is just so competitive.

The first casualty is those who lose their health benefits. They are scared to death, frankly, about lowered health benefits or no health benefits. On top of that, it is partly, it seems to me, because we do have high health care costs in America.

In fact, the last study I saw is that we pay twice as much per capita on health than does the next highest country. I do not know if we are twice as healthy as people in other countries, but we pay a lot, and that has to be the cost of doing business.

What I am getting at, is part of the solution of this some way to address efficiencies in health care and quality of health care, recognizing that employees of companies in other countries have their health covered by the government, where that is not true in our country; that that, too, is a part of the problem here? If we are honest with ourselves, we are going to have to figure out some way to get our hand on that one, too.

Usually that is true.

We are going to give you a Nobel Prize for that.

Mr. President, I ask unanimous consent that the following interns and fellows of the Finance Committee be granted the privileges of

the floor for the remainder of the debate on S. 1637, the JOBS Act: Shannon Augare, Jane Bergeson, Simon Chabel, Tyson Hill, Jeremy Seidlitz, Trace Thaxton, Steve Beasley, Justin Bonsey, Jodi George, Scott Landes, Pascal Niedermann, Matt Stokes, and Chris Knopes.

Mr. President, I rise today to introduce the Trade Adjustment Assistance Equity for Service Workers Act.

Since 1962, Trade Adjustment Assistance--what we call ``TAA''--has provided retraining, income support, and other benefits so that workers who lose their jobs due to trade can make a new start.

The rationale for TAA is simple. When our government pursues trade liberalization, we create benefits for the economy as a whole. But there is always some dislocation from trade.

As President Kennedy said, ``those injured by . . . trade competition should not be required to bear the full brunt of the impact.'' ``There is an obligation,'' he said, for the Federal Government ``to render assistance to those who suffer as a result of national trade policy.'' We meet that obligation through TAA.

The TAA program has not been static over time. Several times, Congress has revised the program to meet new economic realities. In 1993, for example, Congress created a new TAA program targeted specifically at workers who might suffer dislocation as a result of the North American Free Trade Agreement.

Most recently, in the Trade Act of 2002, Congress completed the most comprehensive overhaul and expansion of the TAA program since its inception.

We expanded the program to cover workers affected by shifts in production, secondary workers, and farmers, ranchers, and fishermen. We extended income support to permit workers to complete needed training.

We added wage insurance and other incentives to employers to promote on-the-job training. And we added a health insurance tax credit, so that workers don't need to choose between needed retraining and health care for their families.

I am very proud to have played a leading role in passing this landmark legislation. But I am also the first to admit that our work is not done. Economic realities continue to change, and TAA must continue to change with them.

One fundamental aspect of TAA that has remained unchanged since 1962 is its focus on manufacturing. We only give TAA benefits to workers who make things. That means that the 80 percent or more of American workers in the service sector cannot access this program.

Excluding service workers from TAA may have made sense in 1962, when most non-farm jobs were in manufacturing and most services were not traded across national borders.

But today, most U.S. jobs are in the service sector. And the market for many services is becoming just as global as the market for manufactured goods.

In 2001, the service sector accounted for 81 percent of U.S. private sector gross domestic product and a similar percentage of total U.S. employment. Although trade in goods continues to dominate, cross-border services trade rose to 21 percent of the total value of U.S. trade in 2001.

Trade in services is a net plus for the U.S. economy. In fact, the service sector generated a trade surplus of nearly $74 billion in 2001.

Just as we have seen with trade in manufactured goods, however, trade in services will inevitably cost some workers their jobs.

Indeed, there have been some well-publicized examples in the papers. Software design. Technical support. Accounting and tax preparation services. Just recently, a group of call center workers in Kalispell, Montana saw their jobs move to Canada.

Examples abound of service-sector jobs--even high tech service jobs-- relocating overseas. Over the past three years, somewhere between a quarter and a half million service jobs have moved to other--mainly low-wage--countries.

The legislation that I am introducing today is a simple matter of equity. When a factory relocates to another country, those workers are eligible for TAA. When a call center moves to another country, those workers are not eligible for TAA. But they should be. And under this legislation they will.

This bill provides TAA benefits to three categories of trade-impacted service workers:

First, it covers workers who lose their jobs due to competition from imported services. For example, if a U.S. truck driver loses his job because his employer loses routes to a Mexican-domiciled trucking company, the U.S. driver would be eligible for TAA.

Second, it covers workers who lose their jobs when a service facility relocates overseas as, for example, in the case of a call center or software design operation.

These workers would be eligible if their employer opens an overseas facility, or--as is often the case--if the employer contracts out the jobs to a foreign service provider. This ``offshoring'' eligibility would apply to both private and public sector service workers whose jobs relocate overseas.

Third, the bill covers secondary service workers. Secondary workers are those who provide inputs to a primary firm where the workers are eligible for TAA.

Right now, workers who make parts for manufactured products are covered if they lose their jobs when the primary firm closes. But workers who supply services to a TAA-eligible firm do not. This bill corrects that inequity.

The benefits service workers will receive under this legislation would be exactly the same as those that trade-impacted manufacturing workers now receive. They include retraining, income support, job search and relocation allowances, and the health insurance tax credit.

The bill also expands the TAA for Firms program to cover services. The TAA for Firms program provides technical assistance to mostly small and medium-sized businesses that face layoffs due to import competition.

The program helps firms become more competitive so they can retain and expand employment. As with TAA for workers, there is no reason to exclude businesses that provide services from this program.

Hard-working American service workers deserve this safety net. Despite what some opponents of TAA suggest, no worker would choose to lose his job so he can qualify for TAA. These benefits will always be second best to a job. But they can really make a difference in helping workers make a new start.

It is also critical to note that TAA can make an important difference in public attitudes. Surveys show that most Americans feel a lot more comfortable with globalization and with trade agreements when they know they will get help if their jobs are threatened.

That's why 66 percent of Americans responding to a recent poll agreed with the following statement: ``I favor free trade, and I believe that it is necessary for the government to have programs to help workers who lose their jobs.''

The world is changing and TAA must keep up with the times. This bill will

help our government to keep its promise to the American people to make trade work for everyone.

I want to thank my colleagues who have joined me in co-sponsoring this important legislation, particularly Senator Coleman. I've also been working closely with Members in the House, including Representatives Smith, Holden, Inslee, Rangel, and Levin.

I know they share my interest in seeing this bill move quickly through the legislative process and I thank them for their support. I plan to work hard this year to move this legislation.

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

Mr. President, I rise today to introduce the Trade Adjustment Assistance Equity for Service Workers Act.

Since 1962, Trade Adjustment Assistance--what we call ``TAA''--has provided retraining, income support, and other benefits so that workers who lose their jobs due to trade can make a new start.

The rationale for TAA is simple. When our government pursues trade liberalization, we create benefits for the economy as a whole. But there is always some dislocation from trade.

As President Kennedy said, ``those injured by . . . trade competition should not be required to bear the full brunt of the impact.'' ``There is an obligation,'' he said, for the Federal Government ``to render assistance to those who suffer as a result of national trade policy.'' We meet that obligation through TAA.

The TAA program has not been static over time. Several times, Congress has revised the program to meet new economic realities. In 1993, for example, Congress created a new TAA program targeted specifically at workers who might suffer dislocation as a result of the North American Free Trade Agreement.

Most recently, in the Trade Act of 2002, Congress completed the most comprehensive overhaul and expansion of the TAA program since its inception.

We expanded the program to cover workers affected by shifts in production, secondary workers, and farmers, ranchers, and fishermen. We extended income support to permit workers to complete needed training.

We added wage insurance and other incentives to employers to promote on-the-job training. And we added a health insurance tax credit, so that workers don't need to choose between needed retraining and health care for their families.

I am very proud to have played a leading role in passing this landmark legislation. But I am also the first to admit that our work is not done. Economic realities continue to change, and TAA must continue to change with them.

One fundamental aspect of TAA that has remained unchanged since 1962 is its focus on manufacturing. We only give TAA benefits to workers who make things. That means that the 80 percent or more of American workers in the service sector cannot access this program.

Excluding service workers from TAA may have made sense in 1962, when most non-farm jobs were in manufacturing and most services were not traded across national borders.

But today, most U.S. jobs are in the service sector. And the market for many services is becoming just as global as the market for manufactured goods.

In 2001, the service sector accounted for 81 percent of U.S. private sector gross domestic product and a similar percentage of total U.S. employment. Although trade in goods continues to dominate, cross-border services trade rose to 21 percent of the total value of U.S. trade in 2001.

Trade in services is a net plus for the U.S. economy. In fact, the service sector generated a trade surplus of nearly $74 billion in 2001.

Just as we have seen with trade in manufactured goods, however, trade in services will inevitably cost some workers their jobs.

Indeed, there have been some well-publicized examples in the papers. Software design. Technical support. Accounting and tax preparation services. Just recently, a group of call center workers in Kalispell, Montana saw their jobs move to Canada.

Examples abound of service-sector jobs--even high tech service jobs-- relocating overseas. Over the past three years, somewhere between a quarter and a half million service jobs have moved to other--mainly low-wage--countries.

The legislation that I am introducing today is a simple matter of equity. When a factory relocates to another country, those workers are eligible for TAA. When a call center moves to another country, those workers are not eligible for TAA. But they should be. And under this legislation they will.

This bill provides TAA benefits to three categories of trade-impacted service workers:

First, it covers workers who lose their jobs due to competition from imported services. For example, if a U.S. truck driver loses his job because his employer loses routes to a Mexican-domiciled trucking company, the U.S. driver would be eligible for TAA.

Second, it covers workers who lose their jobs when a service facility relocates overseas as, for example, in the case of a call center or software design operation.

These workers would be eligible if their employer opens an overseas facility, or--as is often the case--if the employer contracts out the jobs to a foreign service provider. This ``offshoring'' eligibility would apply to both private and public sector service workers whose jobs relocate overseas.

Third, the bill covers secondary service workers. Secondary workers are those who provide inputs to a primary firm where the workers are eligible for TAA.

Right now, workers who make parts for manufactured products are covered if they lose their jobs when the primary firm closes. But workers who supply services to a TAA-eligible firm do not. This bill corrects that inequity.

The benefits service workers will receive under this legislation would be exactly the same as those that trade-impacted manufacturing workers now receive. They include retraining, income support, job search and relocation allowances, and the health insurance tax credit.

The bill also expands the TAA for Firms program to cover services. The TAA for Firms program provides technical assistance to mostly small and medium-sized businesses that face layoffs due to import competition.

The program helps firms become more competitive so they can retain and expand employment. As with TAA for workers, there is no reason to exclude businesses that provide services from this program.

Hard-working American service workers deserve this safety net. Despite what some opponents of TAA suggest, no worker would choose to lose his job so he can qualify for TAA. These benefits will always be second best to a job. But they can really make a difference in helping workers make a new start.

It is also critical to note that TAA can make an important difference in public attitudes. Surveys show that most Americans feel a lot more comfortable with globalization and with trade agreements when they know they will get help if their jobs are threatened.

That's why 66 percent of Americans responding to a recent poll agreed with the following statement: ``I favor free trade, and I believe that it is necessary for the government to have programs to help workers who lose their jobs.''

The world is changing and TAA must keep up with the times. This bill will

help our government to keep its promise to the American people to make trade work for everyone.

I want to thank my colleagues who have joined me in co-sponsoring this important legislation, particularly Senator Coleman. I've also been working closely with Members in the House, including Representatives Smith, Holden, Inslee, Rangel, and Levin.

I know they share my interest in seeing this bill move quickly through the legislative process and I thank them for their support. I plan to work hard this year to move this legislation.

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

I concur with the statement of the chairman of the Finance Committee, and I, too, pledge to continue working to address the concerns of my colleagues from Oklahoma and North Dakota.