Floor Statements

Mr. Speaker, I ask unanimous consent that all Members

may have 5 legislative days within which to revise and extend their remarks and include extraneous material on H.R. 5365, the bill just passed.

Mr. Speaker, I submit the following exchange of letters between myself and Chairman Thomas for submission into the Record related to debate on H.R. 4520, The American Jobs Creation Act of 2004, which took place October 7, 2004.

House of Representatives,

Washington, DC, October 7, 2004.

Hon. William M. Thomas,

Chairman, Committee on Ways and Means, Longworth House Office

Building, Washington, DC.

Dear Mr. Chairman: I am writing to raise a concern

regarding regulations issued several years ago by the

Internal Revenue Service (IRS) in which they apply an

expansive new interpretation of the law retroactively.

Congress enacted section 263(g) of the Internal Revenue

Code as part of the Economic Recovery Tax Act of 1981

(``ERTA'') to discourage the use of certain ``straddle'' type

tax shelters known as ``cash and carry'' transactions. In the

Report accompanying ERTA, the Senate Finance Committee noted

that ``[t]he committee intends to discourage these

transactions, sometime called `cash and carry' shelters, in

its legislation.'' The Committee also described the nature of

the ``cash and carry'' transactions Congress was trying to

discourage, in detail.

Twenty years later, on January 17, 2001 the Treasury

Department issued a set of proposed regulations under section

263(g), that would expand the scope of 263(g) beyond so-

called cash and carry transactions, and states in its

effective date section that the new rules apply to ``. . .

interest and carrying charges properly allocable to personal

property that are paid, incurred, or accrued after the date

these regulations are adopted as final . . . for a straddle

established on or after January 17, 2001.''

Despite the clear legislative intent, the IRS has attempted

to apply the proposed regulations expanding the coverage of

263(g) to transactions undertaken prior to January 17, 2001,

and a number of field agents have indicated to taxpayers that

absent clear guidance to the contrary, they will continue to

apply this expansive interpretation of section 263(g) on a

retroactive basis.

When the tax writing committees decide to change the law in

a way that might affect ongoing transactions our normal

practice is to put the public on notice through an

announcement. Once we have so acted, it is considered fair to

make the change effective on the date of the announcement

because taxpayers have been given fair warning.

I would like to know if you agree with my conclusion that

the IRS should follow rules that are equally fair. If a

change in the law which was not made as a result of a

legislative mandate is announced in regulations, do you agree

that the change should be prospective?

Thank you for considering this matter and I look forward to

your response.

Sincerely,

Phil English.

Mr. Speaker, I wonder if the gentleman from California (Mr. Thomas) might respond to a colloquy. I specifically have a question about how to interpret one of the rules contained in section 422 of the conference agreement.

Would the chairman please clarify what the rule that disallows deductions for expenses ``properly allocated and apportioned to the deductible portion'' of the dividend is intended to cover?

I yield to the gentleman from California.

Mr. Speaker, I thank the gentleman from California.

Mr. Speaker, we have before us a conference report today that repeals the FSC/ETI regime and, while doing so, boldly strengthens our manufacturing sector. Passing this conference report will fulfill our duty to end the punitive job-killing tariffs that are being levied against American products.

Manufacturers in my home State of Pennsylvania are being hard-hit by the tariffs, and that is why ending the tariffs has been a top priority for many of us. The repeal of the export regime also provides us with an opportunity to enact pro-growth, pro-manufacturing policies, resulting in new and higher-paying jobs across the United States. This bill acts on that opportunity and significantly reduces the tax burden on manufacturers in the United States and begins to address the uncompetitive tax system U.S. employers are faced with.

Mr. Speaker, I particularly want to draw attention to one particular job-creating provision in this bill, which mirrors legislation I introduced and will lead to in-sourcing. This provision, known as the Homeland Investment Act, is one of the strongest stimulus proposals brought before Congress in recent years, and I think it is going to have a huge impact. It temporarily reduces the tax rate on foreign earnings of U.S. companies, when that money is brought back to the United States for investment here at home.

The billions of dollars that will be brought back will be used by American employers to hire new workers, invest in top-of-the-line equipment, and build new plants right here at home, instead of in the countries where their earnings are currently stranded. This is critical legislation to rebuild our manufacturing base.

Mr. Speaker, I yield 7 minutes to the gentleman from Arizona (Mr. Hayworth), my distinguished colleague from the Committee on Ways and Means.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, you know, this is a very interesting debate tonight, although it seems a little circular, because we have seen similar motions to instruct in the past.

Mr. Speaker, I have chosen to rise tonight in opposition to this motion to instruct. First I want to commend the chairman of the Committee on Ways and Means and the Republican leadership for having already taken substantial action on the issues before us.

Contrary to what the argument is we are hearing from the minority, the House took action on this issue and moved legislation forward in order to ensure that families are not hit with a tax increase next year. Earlier this year, the House voted to permanently extend the current $1,000 child tax credit, relief from the marriage penalty and the expansion of the 10 percent bracket. That is the bracket that applies to working families. The House passed this permanent relief without raising taxes on hard-working Americans.

The motion to instruct before us takes several steps back from the policy we had previously passed. The motion calls for the extension of middle-class tax cuts, but insists that they be fully paid for. I do not think that the minority intends to pay for them through cuts in spending. If they did, we might have a very different outcome this evening, but I do not believe they do.

Republicans have provided tax relief in the past 3 years, and the minority has fought us every single time.

Mr. Speaker, the gentleman has already had a few minutes. I would like to complete my statement, because I think it is important that a realistic perspective be offered on this.

This is, in my view, simply another attempt to turn the clock back on tax relief. While it is costly to extend tax relief permanently, the workers of this country deserve to know that their taxes will not be increased on a year-by-year basis. The tax relief passed by this House under this administration has clearly helped grow the economy.

Chairman Greenspan has been invoked here, and it is fairly clear from his testimony before congressional committees that he believes that the tax plan that has passed the House and that has been signed into law has clearly stimulated the economy.

This is the wrong time to block the extension of this tax relief. The House acted when it passed a direct and permanent solution to the needs of families struggling with the burden of day-to-day expenses.

This motion, in my view, is unnecessary and sets us down a path of tax increases. The author, whom I have great respect for, argued that this could be paid for simply by closing a few tax shelters. If it is so painless, I would be very interested as a member of the

Committee on Ways and Means to solicit his suggestions, and perhaps he may offer some this evening.

I thank him, Mr. Speaker. However, under the circumstances, I feel obliged to call upon the House to oppose this motion.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, will the gentleman yield?

Mr. Speaker, I am deeply flattered by the gentleman's kind words and his apparent elevation of me to the chairmanship of the Committee on Ways and Means. I am not in a position to make any promises about what the Committee on Ways and Means will do.

I am not in a position to make a commitment on behalf of the Committee on Ways and Means. I do not know the chairman's policy. I do know that the chairman is prepared to move forward with whatever legislation is necessary, recognizing that the national debt today is significantly smaller relative to the economy than when Republicans inherited that 10 years ago when I came in.

I cannot, obviously, commit the Committee on Ways and Means.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I think what is coming through here is kind of an interesting contrast, and while I am here by myself tonight speaking on this point, I do not feel that I am particularly outnumbered, one man and the truth and all of that.

I think what we have before us, Republicans clearly want to prevent tax increases on middle-class families. I think from the debate tonight we have a legitimate question as to whether our friends on the other side are as firmly committed to doing that, unless they also get to raise taxes somewhere else.

I found reassuring some of the comments of my friend from Texas who suggested that he might be willing to consider cuts as well in spending. I think everyone here intuitively understands that there is adequate spending, low-priority spending, in the Federal Government, and that certainly that would be one way we can bring down the deficit. In fact, the Republican budget this year contemplates just that kind of fiscal restraint through the process.

H.R. 1308 maintains the successful tax policy that has clearly contributed to the economic recovery. The motion to instruct here creates a zero sum game. It extends tax relief with one hand, while potentially raising taxes with the other. If I understand our recent fiscal experience in America, I do not believe that this is a good time for us to be raising taxes on certain sectors. This is bad for the economy, and it is bad for families.

Republicans have provided significant tax relief for families since this administration took office resulting in higher after-tax incomes for Americans. Yet because of arcane Senate rules, Congress could not provide permanent tax relief for families.

The gentleman correctly pointed out that when we voted, what we voted for turned out to be a temporary expedient, but was a function, as he well knows, of the Senate and its rules.

House Republicans have voted to provide predictability in the Tax Code, and the Senate has not taken those steps. If Congress does not act, I think we all could agree, middle-class families will face a tax increase next year. For example, next year, the $1,000 tax credit, as my friend from Arizona noted, drops to $700 per child. The 10 percent tax bracket will apply to less of an individual's income, and the marriage penalty provision will provide significantly less relief for couples.

The House has voted overwhelmingly to make these tax cuts permanent and has done so without offsets. These votes show that the House does not want to increase taxes on middle-class American families.

Now, if we are serious about looking for a way of balancing this, if we are serious about addressing the deficit, first we need to stimulate the economy to bring down the deficit. We have done that, and it has succeeded. But second of all, if there is an argument here that we should be tying tax cuts to other reductions in spending, or closing some unsubstantial loopholes, then I think that the burden is on the other side as they lay out the instructions to tell us specifically how they think this could be done without pain or without a drag on the economy.

Mr. Speaker, I retain the balance of my time.

Mr. Speaker, I retain the balance of my time.

Mr. Speaker, I retain the balance of my time.

Mr. Speaker, I have only one more speaker, myself, to close; and I would like an understanding from the gentleman how many more speakers he might have.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, it has been with great interest that I have listened to the debate tonight. I guess my reaction, in listening to some of the rhetoric from the other side, is that I do not mind much if they steal our clothes when we go in bathing, if they want to look and sound like fiscal conservatives, look and sound like Republicans; that is an understandable thing in today's political climate.

Although I must say, if I were actually to go in swimming and they were to steal my clothes, they might need a little clever tailoring, and, in fact, I think the rhetoric suggests they may need a little clever tailoring if they are to pass themselves off.

I feel very strongly myself that under most circumstances the United States should have a balanced budget, but history tells us, whether Republicans were in charge or whether Democrats were in charge, there is no real example of the United States having maintained a balanced budget during a significant recession.

Second of all, there is no real example of the United States having run a balanced budget during wartime, and over the last few years, as the gentlemen undoubtedly are aware, we have not only been fighting a slowdown, which began during the Clinton administration, which cut into our revenues and began to create the deficit over a couple of years' time, but also, we engaged in the war on terror.

Now, I realize it is controversial on the other side. They are sometimes for the war in Iraq, sometimes against it, even sometimes having misgivings about Afghanistan, but the fact remains, we have made a major investment in our efforts not only to improve homeland security, but also to challenge our adversaries elsewhere in the world. In my view, that has been an investment worth making.

The fact that we have run a deficit does not alarm me as much as some of the rhetoric on the other side seems to suggest alarm. For example, when I came to Congress in 1994, we were approaching a point where our national debt, which was smaller in those days in absolute numbers, but larger relative to the economy, was approaching 44 percent of GDP. Even in that context, realizing that what we needed to do was stimulate the economy, we cut taxes, and we were able to trim spending, and over time the Republican Congress, grappling with a Democratic administration, winning some, losing some, we were able to get to a balanced budget, and we brought down the deficit in relative terms to the economy.

Today, in real terms, our national debt is lower than 40 percent of GDP. It has grown over the last year. Well, we might expect that under the circumstances, but also, the Republican budget has made a commitment to lower the deficit to one-half of what it is currently relative to the economy. That is a powerful commitment that gives us confidence to go forward and cut taxes, which is what we need to do to stimulate the economy and generate more revenues.

There will always be some who would prefer to raise taxes during a slowdown, and we remember the intellectual genesis of their philosophy. This was the argument being made by the Hoover administration. It is odd that we hear some conservative Democrats, or who are wanting to be conservative Democrats, tonight adopting some of the same rhetoric that the Hoover administration embraced during the Depression. Hoover Democrats I do not think is the solution tonight.

I do think what we need to do is continue to stimulate the economy and make permanent the President's tax program. It has been criticized tonight for allegedly giving most of the benefits to the wealthy. Yet the folks on the other side will have difficulty explaining that in the context of the studies which have shown that now the wealthy, since the tax cut, pay a higher proportion of the tax share.

We have increased the progressivity of the American Tax Code in the wake of the tax programs that have passed this House. That is something that is not grasped well on the other side, but it is one of those stubborn facts that takes the sting out of their rhetoric.

The fact is a little more of the share has gone to working families, and this is important. Some families, I realize, may be only $2 a day, but that means something to them, and I believe it is important that we continue to have that relief in place.

This is, I think, a very important debate. I think it is worth noting that there is fresh evidence that the way to get the deficit down is to grow the economy, because with new estimates, we have found that the deficit has actually shrunk by $75 billion, $75 billion over the past few months as we have begun to take into account the recovery of the economy and the growth in revenues.

These, I think, are facts which rebut the argument being made on the other side, but if they were serious about these arguments, I think we would hear some more specifics. We would hear some specifics about the tax shelters that the gentleman from Indiana alluded to, and I am hoping in his close he will perhaps give us some specifics of tax shelters that can be closed, real ones that can generate real revenue or reduce spending. Surely we can have some suggestions from the other side. If they do, contrary to my impression, want to cut spending, perhaps they will prove me wrong and identify some areas where we can save money.

But, at any rate, I want to congratulate the gentleman from Indiana tonight for raising this debate. It has been, from my standpoint, edifying. I have enjoyed it, and I believe also that the House has had an opportunity to see a clear difference here, and I believe as they examine it, they will have an opportunity to vote down this perhaps well-intentioned motion to instruct, but one that I think would be counterproductive at a time when we are trying to get our economy back on the growth path.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I thank the gentleman for yielding me this time.

Mr. Speaker, today we are considering landmark legislation to implement the U.S.-Morocco Free Trade Agreement, and delve deeper into the bonds of friendship with the Kingdom of Morocco. Just 4 days ago, we marked exactly 217 years of official relations with Morocco, the longest unbroken diplomatic relationship in the existence of the United States. While the furthering of our positive ties with Morocco is certainly an important goal, this FTA really stands on its own as a benefit to our economy.

The U.S.-Morocco Free Trade Agreement was negotiated over a period of a year and a half and, once implemented, will be truly a win-win for both of our countries. This is, in my view, an FTA which contains the best market access package of any FTA that has been negotiated with a developing country.

I believe it has the potential to serve as a model for future free trade agreements with developing countries, particularly because of tough provisions to enforce intellectual property rights. The Morocco Free Trade Agreement contains the most advanced intellectual property chapter in any FTA negotiated thus far. It contains language that not only commits Morocco to fight piracy, but to fight piracy on products that are potentially coming through as transshipment.

Morocco is a natural market for many American companies, and a Free Trade Agreement will bring both countries closer together for mutual benefit.

The International Trade Commission has also determined that U.S. exports to Morocco are likely to increase dramatically, by $740 million, while imports from Morocco are likely to increase by nearly $200 million after full implementation of the Free Trade Agreement.

The major reason for the anticipated increase in U.S. exports is due to the fact that on day one of this agreement, 95 percent of tariffs on industrial and consumer goods will be eliminated. Morocco has demonstrated consistently its commitment to being a fair and responsible trading partner. They have taken steps to guarantee the security of foreign investment in Morocco, and have enacted sweeping labor laws to protect their workers and to improve women's rights. These negotiations were a catalyst for Morocco moving forward with a modernizing labor code.

Moreover, workers in Morocco have the right to associate, collectively bargain, and to strike. The new labor law also improved worker safety, raised the minimum wage, and created additional safeguards on child labor, all core obligations of the U.S.-Morocco Free Trade Agreement, including labor and environmental provisions, which are subject to the dispute settlement provisions of the agreement, and the agreement includes strong enforcement mechanisms, including the ability to suspend trade concessions or establish monetary assessments.

This agreement deepens America's dialogue with the Middle East and North Africa, and builds upon the free trade agreements already reached with Israel and Jordan.

The U.S.-Morocco Free Trade Agreement, in my view, is an essential part of the puzzle in moving forward to strengthen our trade relationships with our trading partners, establish stronger, more enforceable trade agreements, and establish over time a level playing field in which American companies and American workers can thrive.

Mr. Speaker, I believe the passage of this FTA will be a significant achievement in moving toward a stronger trade policy for the United States, and on the strength of that, I urge all of my colleagues to join me in supporting this FTA.

Mr. Speaker, I move to suspend the rules and agree to the resolution (H. Res. 705) urging the President to resolve the disparate treatment of direct and indirect taxes presently provided by the World Trade Organization.

Mr. Speaker, I yield myself such time as I may consume.

I am pleased to bring House Resolution 705 before the House today. It was introduced last week and it is being brought forward with considerable urgency because, Mr. Speaker, while this may not be the first time that we have discussed the issue of competitive trade disadvantage on the floor of the House that U.S. companies are facing, this may be the time that we are most clearly focusing on the contribution to that problem created by the American tax system.

The fact that our trade deficit is more than $500 billion demonstrates that the economic engine of American exports has experienced a slowdown. In order for us to revive our economy and to have long-term growth, the substantial trade imbalance that we now are experiencing, 5 percent of our economy, representing our trade deficit, has to be corrected.

Mr. Speaker, Congress and the administration need to push our trading partners to adjust the rules to level the playing field for American workers and American companies; and today's resolution helps do that by focusing on the disadvantage actually built into the

World Trade Organization rules, a disadvantage imposed upon our Tax Code, allowing our competitors what amounts to a $120 billion advantage over American companies.

For the past 30 years, the WTO has said that, while the EU members and other trading partners can and do exempt from tax their exports to the U.S., we must fully tax our exports to them. As our manufacturers and other critical industries begin to recover from the recession, it is imperative that we address this inequity. Otherwise, we risk undermining one of the key drivers of economic growth, our export sector, and we also put at risk those companies that are competing within our domestic market by fostering upon them a significant competitive disadvantage.

Right now, WTO rules recognize the U.S. corporate income tax to be a so-called direct tax. Under the WTO rules, so-called ``indirect taxes,'' value-added tax or retail sales tax or any other consumption- type tax, can be rebated on exports going out from the home country and imposed on imports coming in from foreign countries, but such adjustments cannot be made for direct taxes when goods and services cross international borders.

This is a distinction that has no grounding in economic reality and simply puts us at a competitive disadvantage. It is a crucial inequity for U.S. taxpayers and producers. Confronting it head on will go a long way to boost American competitiveness in the global market. That is why the resolution before us declares that this distinction is arbitrary and it results in a competitive disadvantage for businesses and works with a border-adjustable system, such as all value-added tax systems.

Looking to the future, this resolution should serve as a roadmap for reforming our international tax rules to allow U.S. products to compete in the global marketplace. This should be done in a way that exports American goods and services, not American jobs.

The resolution asks the President to report to Congress on two matters within 120 days of the convening of the 109th Congress. As required by the Trade Act of 2002, the United States Trade Representative is charged with considering how to eliminate trade barriers put up by the U.S.'s direct tax system in pursuing trade negotiations. Thus, first, the resolution asks for the President to provide a progress report on these barriers and how they can be eliminated. Second, it resolves that the President should report on proposed alternatives to the disparate treatment of the direct/indirect distinction as well as domestic proposals redressing the taxes disadvantage to the U.S.

Under the resolution, the President is asked to consider the impact of reducing the corporate rate, of implementing a territorial tax system, as well as the impact of a border-adjustable system as already allowed under the WTO rules. A comprehensive report on the issues would be an enormous help to the Congress and to any administration in putting into bold relief the improvements needed to international tax rules as well as our tax system as it stacks up against the systems of the rest of the world.

The reason we must look at this issue more deeply is because it impacts on our economy in such a fundamental way. While we are certainly in a period of robust economic recovery, there is more we can do to sustain long-term growth. As evidenced by the $550 billion trade deficit I referenced earlier, we have become a Nation of importers. We need once again become a Nation of exporters; and as a Nation of exporters, we would see a thriving job market and a thriving manufacturing sector.

In the absence of some kind of border tax adjustments for exports of American-made goods to correspond to the export rebates under VAT systems, there will continue to be a disincentive to produce goods in the United States. In effect, our tax system is creating all of the incentives to send our good-paying jobs offshore. This must be corrected, and this resolution is a step in the right direction.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

First of all, I want to thank the gentleman for his statement because I can associate myself honestly with a good bit of the analysis that he has provided, and I also want to congratulate the gentleman because I know that he understands to an extent that many people who have not debated trade policy do understand that one of the reasons why we are in a competitive disadvantage is the design of our tax system, and I quite agree with him.

What we are putting forward in this resolution is not an endorsement of a particular tax system. What we are doing is putting the WTO on record that we want to change the standard, that we are going to insist on changing the standard. We are also putting the WTO on record that we are determined to make our tax system internationally competitive once more.

Through all of the debates on our trade deficit and the problems that we have had in the current international trading system, too little of the focus has been put on the disadvantages that we impose on ourselves, on our workers and our producers, because of the design and the level of American taxes. I will in my closing remarks give some specific examples.

But I again want to congratulate the gentleman for getting the gist of what

we are doing and supporting it and giving it a strong bipartisan push, because I think it is important for our trading partners in the WTO to see that this resolution is coming out of the House with strong support.

This is, in my view, an extremely strong resolution. This is a strong statement of policy. And I think that, although the gentleman makes I think a credible point, that there has been a need for stronger leadership on this point. It has not been specifically this administration but actually a series of administrations that have not been willing to take on this very difficult challenge directly. We need fundamental international tax reform if we are going to remain competitive.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, it is now a great privilege to yield 2 minutes to the distinguished gentlewoman from Connecticut (Mrs. Johnson), a strong advocate of fair trade for American workers.

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, let me say that I agree with the gentleman that there is a great need for bipartisanship right now in our trade policy if, in fact, we are going to reverse the tide and put American companies and American workers on a competitive level playing field that will allow us to build the 21st-century economy we need to create good-paying jobs for young people.

That is something that should not be a partisan issue. That is something that should unite us, because many of its components cut across philosophical lines.

As we will see today in some of the later trade votes, there is a great deal of bipartisanship still in the approach to trade policy. The gentleman is raising an important point that perhaps there should be more bipartisanship. But the fact is, the fact that we have had genuine philosophical disagreements on the FSC bill should not mask the fact that this resolution is enormously significant for American workers and for American companies.

I would like to demonstrate to the American public how dramatic an impact this is. I come from Erie County, Pennsylvania; and we make things for a living. We have the biggest concentration of manufacturing jobs still in the State. Much of what we make is actually for export. As a result of that, any small competitive disadvantage puts our workers and our companies at a significant disadvantage in the global marketplace. We cannot be dealing ourselves these sorts of large, substantial disadvantages.

Let us understand exactly what kind of disadvantage is being dealt to our producers as a result of a trading system which is not adjustable. This is a study that was done by the U.S. Council For International Business. It demonstrates on balance the comparative disadvantage of American products, both in our market and in foreign markets, as a result of not having a border-adjustable tax system.

In the United States, because in the U.S. we have the price of our tax system built into products, a product that has that price in it may, for argument's sake, cost $100. The same product, if it is produced to cost $100 in China, because there is a rebatable VAT tax, comes into our market costing only $88.89, plus the cost of transportation. All things being equal, if it is the same price there and the same price here, we are at a significant competitive disadvantage just because of the taxes.

At the same time, a product coming in from Germany that would cost $100

in Germany comes into the United States without the VAT included, without the price of their tax system included, lands in the United States, and it amounts to $86.21, competing with the product in the United States that costs $100. That is a significant wedge when it comes to manufactured products, where small price differences and small profit margins are what govern.

But what happens if we try to export from the United States to Germany? A product that costs $100 in the United States and $100 in Germany goes out of the United States with the price of our tax system built in, and then has imposed on it that additional VAT in Germany. So it costs $116 in Germany, competing with the same product that costs $100 in Germany. In that respect, Germany has a big advantage in competing with American products that they import. Their domestic producers have, in effect, a tax subsidy.

Look at what happens if we try to sell the same product in Germany and compete with the same product coming in from China. We send it in, it costs $116, but the Chinese export it to Germany, and it only costs $100.87. Why is it? It is because in their market, our pricing of our product has to include not only the price of our tax system, but theirs. It is double taxation.

When their product comes into our market, our product still carries the price of our tax system, but theirs has been rebated away. So, in effect, it is a tax subsidy, a standing tax subsidy that double taxes our products in foreign markets and frees imports from carrying their fair share of the tax burden. That is not fair. That is a tax differential that we can no longer afford to look the other way at.

This has been a disadvantage that we dealt ourselves back in the 1940s, and it has taken us this long. It is not this administration; it has taken us this long to come head to head with this problem.

The time has come for us to put the World Trade Organization on notice that we are going to insist on tax fairness, that we are going to insist on a level playing field. And that is not the only thing we need to do. There is no single silver bullet in leveling the playing field for fair trade, but this is one thing that has to happen. This needs to be the beginning of a much broader trade agenda that allows us to level the playing field, to insist on fairness, and to insist on apples-to-apples competition if we are going to have a strong international trading system.

I urge my colleagues, in the bipartisan spirit that my colleague raised, to support the resolution, to support this legislation, to put America on record as moving forward in this area and insisting on a change in terms of trade.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on H. Res. 705.

Mr. Speaker, today, the House is considering, I think, landmark trade legislation by considering a free trade agreement with our close ally and trading partner, Australia.

As a member of the Subcommittee on Trade, I have had the opportunity to review many trade agreements and specific concerns with our trading partners, and I am happy to conclude that the U.S.-Australia FTA is among the most pro-American, pro-worker agreements that we have seen before this House.

For 50 years, we have cooperated closely on security issues and developed a trading relationship to the tune of $29 billion. What is more, the United States enjoys a $9 billion trade surplus with Australia. Indeed, Australia purchases more goods from the United States than it does from any other country, and that is extraordinary.

While our positive relationship is an important factor in approving this FTA, to me, Mr. Speaker, this agreement really stands on its own merits on what it will do for manufacturers in my congressional district.

Australian companies currently employ 1,600 people in Pennsylvania of whom 600 are in the manufacturing sector. This agreement would increase investment opportunities in Pennsylvania and create jobs.

Australia is the eighth largest market for Pennsylvania goods exports, with total exports valued at $430 million last year.

Pennsylvania's economy is heavily dependent on manufacturing; and 21 percent, or $89 million, of our total exports to Australia was in manufactured machinery in 2003. Our exports to Australia support, we estimate, 2,000 jobs in Pennsylvania alone.

This agreement would lower the tariffs on American manufactured products and create even more opportunities for local manufacturers to tap into a robust Australian market.

By immediately making almost 99 percent of U.S. manufactured exports to Australia duty free, American exports would shoot up by an estimated $2 billion annually. Since 93 percent of our goods exported to Australia are in industrial products, the significant benefit this agreement offers U.S. manufacturers is obvious.

Mr. Speaker, it is clear that our relationship with Australia is one of our most important. By approving this FTA, we can deepen this relationship, and we can also enter into an FTA which will particularly benefit our manufacturing sector; and that is what sets this treaty particularly apart from others that have come before this House.

I urge my colleagues strongly, on a bipartisan basis, to embrace this

Mr. Speaker, I rise today to recognize and honor Mr. Billie L. Miller for his dedication to his country and exemplary service during World War II. I commend Mr. Miller for his commitment to liberty and justice and for his dutiful service in carrying freedom to the world.

World War II is filled with stories of heroism, selflessness, patriotism and a relentless desire to secure a peaceful and prosperous future for the United States of America and the international community. Brave men left their ordinary lives in order to serve a cause greater than themselves. Mr. Miller was among those great men to take up the call of service and sacrifice.

A man of courage, Mr. Miller served in the 92nd Bombardment Group as a stealth gunner on a B-17 bomber and participated in numerous flying military missions. As a prisoner of war, captured by the enemy, he was forced to trudge alongside his American comrades during an 86 day, 488 mile march from Gross Tychon, Poland to Halle, Germany. A true guardian of freedom, Mr. Miller kept his morale high and persevered, earning several honorary medals and helping America achieve greatness.

I am often reminded that our country has been blessed with great people and leaders; Americans who rose to the challenge when their country was in need. I take great pride in representing a district with so many heroes.

In June of this year, the Slippery Rock Area High School of Pennsylvania's 3rd Congressional District will honor Mr. Miller for his service and bravery during World War II.

Mr. Speaker, I hope my colleagues will join me in honoring Mr. Miller for his dedicated service to our country. The spirit of his sacrifice lives on in the strength of the United States of America.

Mr. Speaker, I want to thank the gentlewoman. I want to rise today not only to mark this historic day for Medicare beneficiaries because today, for the first time since the program's inception, Medicare, through a discount card, will be providing real relief to seniors who struggle to pay for their prescription medicines.

I want to acknowledge that, but I also want to especially acknowledge the efforts of the gentlewoman as chairman of the Subcommittee on Health for making this legislation possible. I am very proud to have been part of the team that helped put this legislation together and see it through to the end; and I am also glad to be on the floor tonight, having heard some of the extraordinary claims from a number of Members who consistently voted against prescription drug benefits for seniors. They are now trying to run down the program that we put together, we fit into a budget, and we got passed in the House. The record shows that they did not offer a credible alternative, they did not offer a budget that they could fit it into, and they were talking a lot about seniors, but not delivering.

The discount card program that was created under the Medicare reform bill that we passed will also ultimately create a prescription drug program that will be available by 2006 for every Medicare beneficiary. But what we have done, which is so important, is offer an interim program to provide immediate relief for seniors. Because I know, as the gentlewoman found in her district in Connecticut, in my district in Pennsylvania, what seniors wanted was some help that would be available quickly. And when I brought the head of CMS into my district for a town meeting and he said it would take a couple of years to ramp up a prescription drug program, they made it very clear, that group of seniors in Mercer County, Pennsylvania, they wanted to see something quicker, and that is what we have been able to do.

These discount cards are meant to provide a transitional program, especially for the approximately 10 million Medicare beneficiaries who have no drug coverage. Seniors have been enrolling in the numerous discount cards in their area since May 3; and today, many seniors will begin to enjoy savings on their medicines. CMS, the Center For Medicare and Medicaid Services which administers the Medicare program, estimates that seniors will save between $3.8 billion and $5.1 billion over the 2-year duration of the program. This is a substantial amount of money.

For an annual enrollment fee of no more than $30, seniors will enjoy savings on drugs of up to 30 to 60 percent on generic drugs, 16 to 30 percent or more on usual retail prices, and 11.5 to 17 percent off average retail prices with significantly larger discounts available on mail order drugs. This is in real contrast with the message we have heard from some of the critics. These are real savings.

Even better, beneficiaries can choose the card that gets them the lowest prices; and if they wish, they can also get help finding low or no-fee cards, cards that include specific neighborhood pharmacies and/ or cards from specific sponsors. But the important thing is, this drug card, I think appropriately, provides additional assistance to low- income seniors through a direct subsidy. This is a big benefit to seniors in my district.

Today, seniors with limited means are eligible for a $600 annual credit that goes a long way toward paying for their medication. In my home State of Pennsylvania, we have had a great program for low-income seniors called the PACE program, which provides a prescription drug benefit for low-income seniors who do not otherwise have such a benefit. This has been, I think, the hallmark of Pennsylvania State government for many years and an extraordinary success for those who are eligible.

With this new Medicare legislation, the $600 credit will go directly to PACE and allow them to automatically enroll about 150,000 low-income seniors, lower PACE's costs, and allow PACE to waive some $6 co-pays which low-income seniors would otherwise have had to pay to get their medicines.

PACE beneficiaries will continue to use the card PACE issues them to receive the benefits of the new program, and seniors enrolled in a Medicare Advantage plan like Security Blue in my district will receive a drug discount card from that plan.

Other eligible Pennsylvania seniors can choose between 43 drug cards to find the benefit that is best for them. And as I think the gentlewoman is about to point out, they have one number that they can call to get the information that they need.

Mr. Speaker, signing up for the drug discount card and getting information on the plans offered in their area could not be easier. Seniors who want help in selecting a card should call 1-800-MEDICARE or visit the Medicare Web site at www.medicare.gov; and there it is, right there. There are 3,000 customer service representatives available 24 hours a day, 7 days a week to answer these questions. To enroll in a particular card, beneficiaries should contact that card and receive an application. There is a standard enrollment form that will be accepted by all cards.

Mr. Speaker, what is interesting to me is some politicians and special interest groups with their own narrow agendas have run down the prescription drug benefit as ineffective. But I

would ask them how guaranteeing savings ranging from 11 to 60 percent is ineffective, especially considering the enormous credit for low- income seniors.

After many years, and after the House of Representatives, having acted in two prior sessions, Congress has finally acted to give our seniors an affordable, flexible, and dependable Medicare program. Today, we ring in a new era of better prescription drug coverage. Tomorrow, we will broaden that benefit and work to make sure seniors continue to get the benefits they have earned.

As one of the earlier speakers noted, perhaps indeed people will remember this on Election Day. But I think as they look at this program, they are going to decide that this is a very substantial benefit. This is a remarkable accomplishment. This is a massive moving of the Medicare program in the right direction, and I think it is going to provide substantial benefits for a lot of seniors that need it.

Again, I want to thank the gentlewoman for her extraordinary efforts.

Mr. Speaker, it has been fascinating to appear several times on the floor during recent weeks to hear the debate on tax bills that seem to lurch in the direction of Iraq and wander all over the public policy landscape. I would like to bring the debate today back to the core issue of the bill that is before us and whether the substitute is actually an improvement on it, and I would argue that it is not.

Mr. Speaker, the underlying bill that we have before us today would provide increased medical security, not as my friend, the gentleman from Massachusetts, has suggested, for the wealthiest Americans, but for many American workers. When flexible spending accounts are offered by an employer, their tax-preferred nature offers a powerful incentive for workers to contribute to and grow these accounts. Unfortunately, current law perversely influences these incentives by pushing workers who have built up an FSA to spend the money in the account if they have not used it by the end of the year.

This use-it-or-lose-it policy defeats the positive benefits of an FSA, which is why many eligible workers have chosen not to open FSAs. When workers use the hard-earned dollars they have contributed themselves or earned from their employers, they will ask more questions, further inform themselves, and become better consumers, for example, of health care products. If they lose these dollars at the end of the year by simply not having the necessity for them instead of becoming better health care consumers, they become, in a sense, over- users of health care.

Through allocating $500 of unused FSA funds to be carried forward or rolled over into a health savings account, FSAs and HSAs can thrive and become the practical vehicles they were intended to be for working families who want to manage their own health care.

It is important to point out that the substitute, unlike the underlying bill, does not allow the unused funds to be transferred to the new HSAs. This is an essential component of the legislation because it encourages the HSAs, which embody similar pro-consumer and pro- worker principles as the FSAs.

Employers are just beginning to offer HSAs, so now is not the time to discourage a health savings account, but to promote it. Let us not take a step backwards by passing the substitute. It is bad policy, it is poorly thought through, and I think that we ought to be looking at how we can provide workers with more opportunities to have these kinds of accounts, not fewer.

These are not the wealthiest people in America. These are people who want the opportunity to manage their own health care, to manage their own resources; and we are giving them an opportunity to accumulate more of those resources in this bill.

Mr. Speaker, I was unable to be present for rollcall votes 139, 140, and 141 on May 4, 2004. Had I been present, I would have voted in the following manner: Rollcall 139, ``yea'' on H. Res. 600--Congratulating charter schools; rollcall 140, ``yea'' on H. Con. Res. 380--Recognizing school-based music education; and rollcall 141, ``yea'' on H. Res. 599--Congratulating the UConn men's and women's basketball teams.

Mr. Speaker, pursuant to House Resolution 619, I call up the bill (H.R. 4227) to amend the Internal Revenue Code of 1986 to extend to 2005 the alternative minimum tax relief available in 2003 and 2004 and to index such relief for inflation, and ask for its immediate consideration.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, today the House will consider one of the most important bills from the standpoint of tax equity that we will consider this year, the Middle-Class Alternative Minimum Tax Relief Act, a bill to make sure that the tax cuts which allowed middle-class families to keep more of their income over the past 3 years will not be undermined by the Alternative Minimum Tax.

There is little dispute, certainly none outside of this Chamber, that the Republican tax cuts helped families cope with economic uncertainties and played a significant role in stimulating the economic growth that we are seeing today. But if we do not act now to give the taxpayers another year of reprieve, the AMT will suddenly reappear and 11 million taxpayers will be hit with an average tax increase of $1,520.

Mr. Speaker, by preventing middle-class Americans from claiming their rightful exceptions from tax liability, the AMT punishes families with children or those who live in high tax localities. If we do not act, married couples will see their AMT exceptions snap back from a threshold of $58,000 to $45,000. Single individuals will see their AMT exception drop from $40,250 to $33,750.

Mr. Speaker, let us be clear about this. These are not wealthy people. These are middle-class Americans who would be slapped with a steep tax hike that they would not know about until tax day, when they learn that the tax exemptions that they thought they could take, the same tax exemptions we intended for them to take and told them we were giving them, would no longer apply.

For example, a family of four with a household income of $58,000 would, in 2005, be hit with the AMT. I am sure that no one here would seriously argue that that family is wealthy.

Today, the House has the opportunity, indeed, the duty, to extend AMT relief for 1 year and to ensure that middle-class Americans are not faced with an increase in their tax liability; and we must do this without raising taxes someplace else and stifling growth and killing jobs.

Mr. Speaker, this is an important measure to buy us time to truly reform the AMT and, as I hope, to repeal this regressive tax entirely. I have taken it upon myself to work with a number of colleagues, including the gentleman from Louisiana (Mr. McCrery), a fellow member of the Committee on Ways and Means, to form a Zero AMT Caucus. We will have our day; but in order to get there, we need to pass this bill today on behalf of working families.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself 15 seconds.

Mr. Speaker, I note that this issue has come up repeatedly before the Committee on Ways and Means. The Committee on Ways and Means has repeatedly worked its will on this issue and it has made very clear that it is committed to this kind of exemption. The Committee on Ways and Means is clearly in the loop in this.

Mr. Speaker, I yield 3 minutes to the gentleman from Illinois (Mr. Crane), a distinguished member of the Committee on Ways and Means.

Mr. Speaker, I yield 1 minute to the distinguished gentleman from Florida (Mr. Shaw), a member of the Committee on Ways and Means.

Mr. Speaker, it is a great privilege for me to yield 4 minutes to the gentleman from Connecticut (Mr. Simmons), the prime sponsor of this legislation and a real advocate for middle-class taxpayers.

(Mr. SIMMONS asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield myself 15 seconds just to say to the gentleman what is fairly clear and Chairman Greenspan recently indicated to us before the Joint Economic

Committee that the tax cuts are working as a tonic for the economy. Clearly they are helping us to expand our tax base and move back toward a balanced budget, and that is fairly clear.

Mr. Speaker, I yield 3 minutes to the gentleman from Texas (Mr. Sam Johnson), a member of the Committee on Ways and Means.

Mr. Speaker, I first yield myself 15 seconds to thank the gentleman from New York for his presentation. It was very thoughtful. I want to associate myself with his remarks. We appreciate his making this debate very bipartisan, and I welcome him to get involved in our Zero AMT Caucus and try to work on a bipartisan basis to deal with this problem.

Mr. Speaker, it is a great privilege for me to yield 5 minutes to another gentleman from New York (Mr. Houghton), who has put an extraordinary amount of time in on this issue, the chairman of the Subcommittee on Oversight of the Committee on Ways and Means, my colleague.

Mr. Speaker, I yield 2 minutes to the gentlewoman from Michigan (Mrs. Miller).

Mr. Speaker, I yield 3 minutes to the gentleman from California (Mr. Herger).

Mr. Speaker, I yield 2 minutes to the gentlewoman from Tennessee (Mrs. Blackburn).

Mr. Speaker, I yield 2 minutes to the distinguished gentleman from New Hampshire (Mr. Bradley).

Mr. Speaker, I reserve the balance of my time with the right to close.

I presume, Mr. Speaker, that also means that we cannot mischaracterize them.

Mr. Speaker, I yield myself the balance of my time.

This has been a useful debate because I think in an odd way it has highlighted a couple of things. First of all there is a consensus in this Chamber behind the bill that the gentleman from Connecticut (Mr. Simmons) has put forward. There will be a substitute offered. I will have ample opportunity and grounds to criticize that substitute when it is offered, but for now I think what needs to be emphasized here is that in the end both parties are committed to at least moving forward on this very limited bill. I wish we were doing more today, but the fact is, this is probably the best we could agree on in the gridlock that exists in the institution right now.

I would like to use some of my time to respond to some of the points that were made by the other side. First of all, let us be clear. This bill is not about the war. It is not really about the deficit in the sense that I think it is fairly clear and I would hope people on both sides could agree that we do not need revenue from this source. We can come up with spending cuts, and we can come up with alternative revenue sources to deal with this.

We do not need the revenue applied from applying an AMT that was intended to be applied originally only to a very narrow band of very wealthy taxpayers, applying it to the middle class.

Some strange things have been said here and I would like to respond to them. First of all, this problem was not created by the Republicans. This was created back in 1986 when a tax reform passed when the other body controlled the Chamber, and in all the time that they controlled the Chamber afterward, they did nothing to deal with this problem. In fact, in 1993, they voted to actually increase the burden of the AMT. And we have heard from a number of speakers today who purport to be against the AMT, but actually who voted for that increase.

It has been said by the distinguished gentleman from Washington, my friend, that Republicans do not know what they are doing. I would submit to the Members when this AMT was put in place without any provision for how inflation would move and more taxpayers into AMT status, they knew what they were doing. They wanted the revenue. They wanted to apply a progressively higher tax burden to the American people and use that future revenue in order to justify a higher level of spending and an expansion of the welfare state.

We in this Chamber today are committed to moving forward to making sure that a new heavier tax burden is not applied to taxpayers next year and that next year taxpayers do not face a bait and switch on some of the key provisions that we have passed. That I would submit is really what the Republican Party is all about.

And as for Republican management of the economy, I am proud to associate myself with Republican management of the economy at a time when clearly responsible economists agree the tax policies enacted in this Congress supported by this administration are having the effect of lifting the economy, not as much as I would like right now in my district, but clearly turning around the slowdown that we had experienced that we inherited from the last administration and providing a significant prospect of new jobs and new economic growth and new dynamics that are going to provide opportunities for working families in the coming months. We recognize that we need to do more, and this Congress is clearly committed to doing that. And yet we need to agree at very least today to pass this provision.

I am very proud to support this bill as introduced by the gentleman from Connecticut (Mr. Simmons) that provides some relief to middle class taxpayers, to make sure that they have access to the relief that we promised them so that we can continue to grow the economy, that we can continue to create opportunities, that we can continue to provide some relief to families that have children and that are eligible and should be eligible for the tax credit that we have passed in this Chamber.

This is to me a critical issue of tax equity. We need to be prepared to guarantee to middle class families that they do not face a higher burden because of a stab in the back called the AMT, that they are not hit on tax day

with an unexpected tax burden, that they are not required to recalculate their taxes accordingly. We have an opportunity today to strike a real blow for tax equity for the middle class.

With that, I hope we pass this bill.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I rise to claim the time in opposition to the amendment in the nature of a substitute.

Mr. Speaker, I yield myself such time as I may consume.

This has been a fascinating debate today, and I particularly want to congratulate the gentleman for his contribution. The gentleman from Massachusetts, as with his customary eloquence, has laid out his position, and in the process perhaps subconsciously has drawn a striking contrast between the two parties and perhaps one that he had not intended. He characterizes, first of all, Republican tax relief as maniacal. I think that is an interesting choice of words, but as I look at it, it perhaps I think accurately captures the view on the other side of tax relief and a tax program that is already lifting the economy, that is creating jobs, that is creating opportunities throughout America, including for a lot of people who were not directly the beneficiary of as much tax relief as we would have liked.

Let me say in addition to that, there has been the procedural argument made here that this proposal before us today has not been adequately vetted. Mr. Speaker, to be very clear, this language is similar to what has been included in the tax bill that passed. This kind of language has been many times before the body. We have thoroughly debated within the Committee on Ways and Means the issue of the alternative minimum tax, and it is not clear that additional hearings would have provided a substantive additional agenda.

I am delighted to hear the gentleman come out in favor of full repeal because, as I said to the gentleman from New York earlier in our discussion, I invite the gentleman to join with me and other members of the zero AMT caucus to come together and to work through a proposal to get rid of this AMT.

The substitute that we have now risen to debate, though, was not I think adequately discussed in the gentleman's remarks, and perhaps there is where the contrast is clearest. Because in an effort to, as they put it, pay for the AMT relief that is included in the bill, what they have proposed doing is permanently putting in place an increase of corporate taxes in order to pay for 1-year relief to the individual AMT. That sounds like good politics, but at a time when our economy is struggling, at a time when even people on the other side of the aisle have conceded that corporate tax rates in our country and on our companies and workers are higher than those globally and are a clear competitive disadvantage to our companies who are seeking to keep jobs here in the United States, that the idea of permanently raising corporate taxes is one that I think is striking and I think uniquely ill conceived.

What they have proposed doing is generating revenue through the permanent implementation of something called the economic substance doctrine. Economic substance is a doctrine that our courts apply on a discretionary basis to situations which erode our rules-based tax system.

The substitute attempts to codify this judicial doctrine and expand its definition so the IRS can pick apart any ordinary business transaction and subjectively look for reasonable business purposes. The result is a new requirement for taxpayers to have yet another layer of IRS intervention and be burdened with restrictions in ways that the courts have not even considered. I realize that there are some who have embraced this on the Senate side, but no one on our side of the aisle here in the House of Representatives so far has done so. The result would be a new requirement for taxpayers and another layer of IRS intervention.

The proposal would then propose strict liability penalties on understatements of tax, which would not be limited to abusive transactions. The proposal, in our view, is far too broad and significantly expands common-law doctrines.

There is also no indication that the doctrine would be limited to abusive transactions. While we are currently debating a 1-year extension of tax relief for working families, let me make this clear again: this substitute levies a permanent tax increase on employers and ultimately on the labor of the workers that they employ.

The gentleman from New York (Mr. Rangel) has himself indicated support for lower corporate tax rates for our manufacturers in his own bill to replace the FSC/ETI regime. Here his proxy is insisting on raising their taxes by $15 billion.

In addition to a $15 billion tax increase, companies would now have to spend valuable time and resources managing the implications of the law, when they could be using these resources to expand their operations, invest in production lines, and create jobs. Instead, what this proposal effectively does is create jobs only in the legal profession.

Mr. Speaker, the House has voted repeatedly against this tax increase because it is bad tax policy, bad economic policy, and it further hinders

American competitiveness and does so permanently. I think it is fairly clear that what is being attempted here in this substitute is to take something that we really need to do, addressing the problem of the AMT, and attach to it something off of a wish-list from the left, which, frankly, has no place here at a time when we are trying to buoy the economy.

I think it is worth noting that the last time someone really aggressively proposed to raise taxes during a slowdown was Mr. Hoover, so there may even be some Republican genealogy in the proposal we are seeing offered on the other side. But the Republicans of today do not recognize this as a positive thing.

Let me summarize the bill of particulars against the Rangel substitute and specifically the economic substance doctrine.

First of all, it is a permanent tax increase. Although the AMT relief in the Democratic substitute is temporary, the tax increases are permanent.

In addition, the administration strongly opposes codification of the economic substance doctrine. They have looked at it, and they have found it wanting. Acting Treasury Assistant Secretary for Tax Policy, Gregory Jenner, has stated that codifying the economic substance doctrine could be counterproductive, as it would drive tax shelters even further underground. Assistant Secretary Jenner has stated that the most effective way to stop tax shelter transactions is to require increased disclosure. The administration's tax shelter proposal increases disclosure by levying substantial penalties on those who fail to disclose their transactions.

As I have noted, this proposal has been repeatedly rejected in the House, and it would also hurt jobs and investment. Codifying the economic substance doctrine would result in businesses foregoing job- creating investments because of concerns that the IRS would improperly apply the economic substance doctrine to legitimate transactions.

Finally, this proposal goes beyond accepted case law. The Democratic proposal requires that some transactions have at least a risk-free rate of return. This type of provision goes beyond what is required by either the Tax Code or common-law court doctrines. Furthermore, their proposal does not define a risk-free rate of return.

All things being equal, this is a very poor substitute; and we urge its rejection.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself 10 seconds to thank the gentleman for his salute to the simplicity of the economic substance doctrine, and we look forward to the vote on the substitute.

Mr. Speaker, I yield 3 minutes to the gentlewoman from Connecticut (Mrs. Johnson), a member of the Committee on Ways and Means.

Mr. Speaker, I am delighted to yield 3 minutes to the gentleman from Florida (Mr. Foley), my distinguished colleague on the Committee on Ways and Means.

Mr. Speaker, I yield 3 minutes to the gentleman from Missouri (Mr. Akin).

Mr. Speaker, I yield 2 minutes to the distinguished gentleman from New Hampshire (Mr. Bradley).

Mr. Speaker, I yield 2 minutes to the gentleman from the State of Pennsylvania (Mr. Shuster).

Mr. Speaker, I yield 4 minutes to the gentleman from Arizona (Mr. Hayworth), a member of the Committee on Ways and Means (Mr. Hayworth).

Mr. Speaker, I reserve the balance of my time.

Yes.

Mr. Speaker, I yield myself the balance of my time, and first of all, thank the gentleman for his contribution and take him up on his offer because we in the Zero AMT Caucus would like to work for permanent resolution of this problem. We would like to see a permanent repeal of the AMT; but unfortunately, in the current political climate, in the current climate of gridlock and recrimination that we have in Washington, nothing more elaborate than the current fix appears to be possible.

Let me say there are a couple of things that I need to correct at the outset.

It was suggested by the gentlewoman from Texas that our bill is a tax increase. It is very hard to understand how she would make that point; but to be clear, this provides critical tax relief for a significant portion of the middle class.

The gentleman from Long Island intimated that there was nothing in this bill to help these people. Well, as a practical matter, a place like Long Island would be one of the biggest beneficiaries of the underlying Republican bill because of the high taxes.

Let me say that the gentleman from Michigan talked about a tax train wreck. I come from a part of the world where we make locomotives, and we recognize their dynamics; and let me say that we recognize that the locomotive that was started, that is threatening, the train wreck was started back when the other party controlled the Chamber and did not deal with an underlying problem by making the AMT responsive to increases in the cost of living.

We have heard procedural arguments from the other side, that the committee has not looked closely enough at this issue; and I reject those because the committee clearly has been tracking this issue from the get-go.

What we have instead is the core issue, which is the substitute being offered today and which, on the other side, they are proposing to dramatically increase the complexity of the Tax Code and also significantly raise corporate taxes on a permanent basis in order to provide temporary tax relief. They congratulate themselves for doing that, but I do not think that they are entitled to a new chapter in ``Profiles in Courage.''

My feeling is that the substitute is inherently a bait-and-switch and increasing taxes at a time when we are experiencing, we are trying to come out of a slow-down. We are, in a sense, embracing Herbert Hoover economics.

I think that the substitute is very ill conceived. It, among other things, imposes a burden on the corporate community at a time when we worry about competitiveness; but that burden is far greater than the one simply indicated by the expected revenue. This is a burden which will permanently change behavior and affect legitimate business transactions. So the rhetoric of the gentleman from North Dakota that this only affects tax cheats is unfortunately not accurate. This is going to be an enormous burden for the corporate sector coming at a most unfortunate time.

Ultimately, I sense that the reason why the folks on the other side have not been as aggressive and certainly in many cases not as aggressive as the gentleman from Massachusetts to deal with this problem is that they want to spend the money. May I suggest, in the end, we get to the solution on reforming the corporate AMT, not by undercutting the tax bill, not by undercutting the tax program which is revitalizing America's economy today, but ultimately by controlling our spending. That is how we will in the context of a growing economy get back to a balanced budget and I think in the long run also have room to deal with this AMT.

Again, I invite our friends on the other side of the aisle to work with us on this issue. We have an opportunity to do this on a bipartisan basis. This is a part of the Tax Code that we agree on, but I think the solution starts today with a rejection of the ill conceived substitute that is being offered

by the other side and passage of the underlying legislation.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and to include extraneous material on the subject of the bill, H.R. 4227, just passed.