[Pages S6440-S6473]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

REVENUE RECONCILIATION ACT OF 1997

The Senate continued with the consideration of the bill.

Amendment No. 537

Mr. DOMENICI. How much time do I have on the amendment?
The PRESIDING OFFICER. Forty-four minutes.
Mr. DOMENICI. And the opposition has 44 minutes?
The PRESIDING OFFICER. Sixty minutes.
Mr. DOMENICI. So we have used 16. Actually, unless Senator Lautenberg
has anything further to say, I believe I have stated the case for the
Domenici-Lautenberg amendment No. 537. Does Senator Gramm want to offer
an amendment to the amendment?
Mr. GRAMM. I think Senator Biden is going to offer an amendment
first, and after his amendment is disposed of, then I will have an
amendment, as will several other people.
Mr. BIDEN addressed the Chair.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. BIDEN. Madam President, I wonder if the Democratic manager would
yield me time off the bill.
Mr. DOMENICI. The Senator has time on his amendment.
Mr. BIDEN. Parliamentary inquiry. Can I get time in my own right?
Mr. DOMENICI. I yield back my time.
The PRESIDING OFFICER. The time is controlled by Senator Domenici and
Senator Roth.
Mr. LAUTENBERG. I yield back my time.
The PRESIDING OFFICER. Is all time yielded back?
Mr. DOMENICI. We yielded back our time.
Mr. BIDEN addressed the Chair.
The PRESIDING OFFICER. The Senator from Delaware.

Amendment No. 539 to Amendment No. 537

Mr. BIDEN. Madam President, I send an amendment to the desk.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Delaware [Mr. Biden], for himself and Mr.
Gramm, proposes an amendment numbered 539 to amendment No.
537.

Mr. BIDEN. Madam President, I ask that further reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

On page 43 of the amendment, strike lines 14 through 21 and
insert the following:
``(5) with respect to fiscal year 2001--
``(A) for the discretionary category: $537,677,000,000 in
new budget authority and $558,460,000,000 in outlays; and
``(B) for the violent crime reduction category:
$4,355,000,000 in new budget authority and $5,936,000,000 in
outlays;
``(6) with respect to fiscal year 2002--
``(A) for the discretionary category: $546,619,000,000 in
new budget authority and $556,314,000,000 in outlays; and
``(B) for the violent crime reduction category:
$4,455,000,000 in new budget authority and $4,485,000,000 in
outlays;

as adjusted in strict conformance with subsection (b).''.
(2) Transfers into the fund.--On the first day of the
following fiscal years, the following amounts shall be
transferred from the general fund to the Violent Crime
Reduction Trust Fund--
(A) for fiscal year 2001, $4,355,000,000; and
(B) for fiscal year 2002, $4,455,000,000.

Mr. BUMPERS. Will the Senator from Delaware yield for an inquiry for
a moment?
Mr. BIDEN. I would be happy to.
Mr. BUMPERS. Could the managers of this bill tell us how many second-
degree amendments there are to this process?
I assume we are on the second-degree amendment process; is that
correct?
The PRESIDING OFFICER. That is correct.
Mr. BUMPERS. Could the managers tell us how many second-degree
amendments they anticipate on this?
Mr. DOMENICI. I do not know.
Mr. GRAMM. I believe there will be four. Senator Biden will offer one
for himself. Once that is adopted, I will offer a second-degree
amendment. And

[[Page S6441]]

then we have two other Senators who want to offer second-degree
amendments, so they will be seriatim.
Mr. BUMPERS. Then there are five, because I have one also. I am just
wondering if we could get some kind of sequence so we know how they are
going to be offered so we do not spend the rest of our lives waiting.
Mr. DOMENICI. I say to the Senator, you can be assured there will be
four ahead of you, if you would like to be fifth.
Mr. BUMPERS. I thank the Senator for his courtesy.
Mr. GRAMM. Why don't you do yours last?
Mr. DOMENICI. That is what I said.
Mr. BIDEN. Madam President, the second-degree amendment I have at the
desk is very simple and straightforward. The Senator from New Mexico is
introducing a budget process amendment, and what the amendment of
Senator Gramm and myself does is, quite frankly, it merely extends the
crime law trust fund for the extension of this agreement.
I am told by the staffs of the majority and minority that in the
budget process agreement that was agreed to with the administration,
there is a line on page 90 of the concurrent resolution of the budget
fiscal year 1998. On page 90, it says, ``Retain current law on separate
crime caps at levels shown in the agreement tables.''
All we are doing here is extending the crime law trust fund. We are
not making judgments on how that will be disbursed within the trust
fund. We are just extending the trust fund to the extent of this
agreement. And, Madam President, as I offer this amendment, we are
maintaining a commitment to one of the few specific ways the
reconciliation package can, by virtue of the type of legislation it is,
maintain a commitment.
The commitment we made was to fight violent crime. And, ironically,
it is working. It is working. And so for us now to extend the violent
crime trust fund, let it expire 2 years before this budget agreement
expires, means we are going to be back at it again in the year 2000 or
before, fighting over something we now know works.
So I realize we can take a long time debating this. But the bottom
line is this: We are not suggesting, as the Senator from New Mexico
knows, how this trust fund money within the caps will be disbursed;
merely that we have the continuation of the trust fund as long as the
budget agreement to the year 2002.
Of all the priorities addressed in this budget package, I believe
that none is more important than continuing our fight against violent
crime and violence against women.
The amendment I am offering, along with Senator Gramm seeks to
maintain this commitment in one of the few specific ways this
reconciliation package can--by virtue of the type of legislation this
is--maintain this commitment. That is by extending the violent crime
control trust fund will continue through the end of this budget
resolution, fiscal year 2002.
Senator Byrd, more than anyone, deserves credit for the crime law
trust fund. Senator Byrd worked to develop an idea that was simple as
it was profound--as he called on us to use the savings from the
reductions in the Federal work force of 272,000 employees to fund one
of the Nation's most urgent priorities: fighting the scourge of violent
crime.
Senator Gramm was also one of the very first to call on the Senate to
``put our money where our mouth was.'' Too often, this Senate has voted
to send significant aid to State and local law enforcement--but, when
it came time to write the check, we did not find nearly the dollars we
promised.
Working together in 1993, Senator Byrd, myself, Senator Gramm, and
other Senators passed the violent crime control trust fund in the
Senate. And, in 1994, it became law in the Biden crime law.
Since then, the dollars from the crime law trust fund have: Helped
add more than 60,000 community police officers to our streets; helped
shelter more than 80,000 battered women and their children; focussed
law enforcement, prosecutors, and victims service providers on
providing immediate help to women victimized by someone who pretends to
love them; forced tens of thousands of drug offenders into drug testing
and treatment programs, instead of continuing to allow them to remain
free on probation with no supervision and no accountability;
constructed thousands of prison cells for violent criminals; and
brought unprecedented resources to defending our Southwest border--
putting us on the path to literally double the number of Federal border
agents over just a 5-year period.
The results of this effort are already taking hold: According to the
FBI's national crime statistics, violent crime is down and down
significantly--leaving our nation with its lowest murder rate since
1971; the lowest violent crime total since 1990; and the lowest murder
rate for wives, ex-wives, and girlfriends at the hands of their
intimates to an 18-year low.
In short, we have proven able to do what few thought possible--by
being smart, keeping our focus, and putting our ``money where our
mouths'' are--we have actually cut violent crime.
Today, our challenge is to keep our focus and to stay vigilant
against violent crime. Today, the Biden-Byrd-Gramm amendment before the
Senate offers one modest step toward meeting that challenge:
By assuring that the commitment to fighting crime and violence
against women will continue for the full duration of this budget
resolution.
By assuring that the violent crime control trust fund will continue--
in its current form which provides additional Federal assistance
without adding 1 cent to the deficit--through 2002.
The Biden-Gramm amendment offers a few very simple choices: Stand up
for cops--or don't; stand up for the fight against violence against
women--or don't; and stand up for increased border enforcement--or
don't.
Every Member of this Senate is against violence crime--we way that in
speech after speech. Now, I urge all my colleagues to back up with
words with the only thing that we can actually do for the cop walking
the beat, the battered woman, the victim of crime--provide the dollars
that help give them the tools to fight violent criminals, standup to
their abuser, and restore at least some small piece of the dignity
taken from them at the hands of a violent criminal.
Let us be very clear of the stakes here--frankly, if we do not
continue the trust fund, we will not be able to continue such proven,
valuable efforts as the violence against women law. Nothing we can do
today can guarantee that we, in fact, will continue the Violence
Against Women Act when the law expires in the year 2000.
But, mark my words, if the trust fund ends, the efforts to provide
shelter, help victims, and get tough on the abusers and barterers will
wither on the vine. Passing the amendment I offer today will send a
clear, unambiguous message that the trust fund should continue and with
it, the historic effort undertaken by the Violence Against Women Act
that says by word, deed, and dollar that the Federal Government stands
with women and against the misguided notion that ``domestic'' violence
is a man's ``right'' and ``not really a crime.''
I urge my colleagues to support the Biden-Gramm amendment.
At the appropriate time--and I am not quite sure yet when is
appropriate--I will ask for the yeas and nays on this.
But make no mistake about it, what we are voting on here is whether
or not we are going to commit now to the extension of the trust fund,
the violent crime trust fund, for the extent of this agreement. That is
all this does. That is everything it does, but that is all it does.
Mr. DOMENICI addressed the Chair.
The PRESIDING OFFICER (Mr. Bennett). The Senator from New Mexico.

Amendment No. 537, Withdrawn

Mr. DOMENICI. Mr. President, I withdraw my amendment.
The PRESIDING OFFICER. The amendment is withdrawn.
The amendment (No. 537) was withdrawn.
Mr. BYRD addressed the Chair.
The PRESIDING OFFICER. Under the previous order, the Senator from
West Virginia is recognized.

[[Page S6442]]

Amendment No. 540

(Purpose: To eliminate tax deductions for advertising and promotion
expenditures relating to alcoholic beverages and to increase funding
for programs that educate and prevent the abuse of alcohol among our
Nation's youth)

Mr. BYRD. Mr. President, I send an amendment to the desk.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:

The Senator from West Virginia [Mr. Byrd] proposes an
amendment numbered 540.

Mr. BYRD. Mr. President, I ask unanimous consent that further reading
of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

At the end of the bill, add the following:

TITLE --ALCOHOL ADVERTISING RESPONSIBILITY ACT

SEC. 01. SHORT TITLE.

This title may be cited as the ``Alcohol Advertising
Responsibility Act''.

SEC. 02. FINDINGS AND PURPOSES.

(a) Findings.--Congress finds that--
(1) alcohol is used by more Americans than any other drug;
(2) it is estimated that the costs to society from
alcoholism and alcohol abuse were approximately
$100,000,000,000 in 1990 alone.
(3) in 1995, the alcoholic beverage industry spent
$1,040,300,000 on advertising, while the National Institute
for Alcohol Abuse and Alcoholism was funded at only
$181,445,000;
(4) more than 100,000 deaths each year in the United States
result from alcohol-related causes;
(5) 41.3 percent of all traffic facilities in 1995, or
17,274 deaths, were alcohol related;
(6) in addition to severe health consequences, alcohol
misuse is involved in approximately 30 percent of all
suicides, 50 percent of homicides, 68 percent of manslaughter
cases, 52 percent of rapes and other sexual assaults, 48
percent of robberies, 62 percent of assaults, and 49 percent
of all other violent crimes;
(7) approximately 30 percent of all accidental deaths are
attributable to alcohol abuse;
(8) alcohol advertising may influence children's
perceptions toward an inclinations to consume alcoholic
beverages;
(9) 26 percent of eighth graders, 40 percent of tenth
graders, and 51 percent of twelfth graders report having used
alcohol in the past month; and
(10) college presidents nationwide view alcohol abuse as
their paramount campus-life problem.
(b) Purposes.--The purposes of this title are--
(1) to repeal the existing tax subsidization for expenses
incurred to promote the consumption of alcoholic beverages;
(2) to reduce the amount of alcohol advertising to which
our Nation's youth are exposed; and
(3) to increase funding for those programs that educate and
prevent the abuse of alcohol among our Nation's youth.

SEC. 03. DISALLOWANCE OF DEDUCTION FOR ADVERTISING AND
PROMOTION EXPENSES RELATING TO ALCOHOLIC
BEVERAGES.

(a) In General.--Part IX of subchapter B of chapter 1
(relating to items not deductible) is amended by adding at
the end of the following:

SEC. 280I. ADVERTISING AND PROMOTION EXPENDITURES RELATING TO
ALCOHOLIC BEVERAGES.

``(a) In General.--No deduction otherwise allowable under
this chapter shall be allowed for any amount paid or incurred
to advertise or promote by any means any alcoholic beverage.
``(b) Alcoholic Beverage.--For purposes of this section,
the term `alcoholic beverage' means any item which is subject
to tax under subpart A, C, or D of part I of subchapter A of
chapter 51 (relating to taxes on distilled spirits, wines,
and beer).''.
(b) Conforming Amendment.--The table of sections for part
IX of subchapter B of chapter 1 is amended by adding at the
end the following:

``Sec. 280I. Advertising and promotion expenditures relating to
alcoholic beverages.''.

(c) Effective Date.--The amendments made by this section
shall apply to amounts paid or incurred in taxable years
beginning after December 31 of the year in which this Act is
enacted.

SEC. 04. ALCOHOL ABUSE EDUCATION AND PREVENTION AMONG YOUTH.

(a) In General.--Subject to subsection (c), there shall be
transferred, from funds in the Treasury not otherwise
appropriated, to the entities described in subsection (b)
amounts to the extent specified under subsection (b).
(b) Education and Prevention Programs.--
(1) Substance abuse and mental health services
administration.--The amounts specified in this subsection
shall be:
(A) In general.--With respect to the Substance Abuse and
Mental Health Services Administration, $120,000.000 for
fiscal year 1998, $180,000,000 for fiscal year 1999,
$180,000,000 for fiscal year 2000, $210,000,000 for fiscal
year 2001, and $210,000,000 for fiscal year 2002, to
supplement substance abuse prevention activities authorized
under section 501 of the Public Health Service Act (42 U.S.C.
290aa).
(B) Use of funds.--Amounts provided to the Substance Abuse
and Mental Health Services Administration under subparagraph
(A) shall be used directly or through grants and cooperative
agreements to carry out activities to prevent the use of
alcohol among youth, including the development and
distribution of public service announcements.
(2) Centers for disease control and prevention.--
(A) In general.--With respect to the Centers for Disease
Control and Prevention, $120,000.000 for fiscal year 1998,
$180,000,000 for fiscal year 1999, $180,000,000 for fiscal
year 2000, $210,000,000 for fiscal year 2001, and
$210,000,000 for fiscal year 2002, to carry out a
comprehensive strategy to prevent alcohol-related disease and
disability.
(A) Required uses.--In carrying out the comprehensive
strategy under subparagraph (A), the Centers for Disease
Control and Prevention shall--
(i) enhance and expand State-based and national
surveillance activities to monitor the scope of alcohol use
among the youth of the United States;
(ii) enhance comprehensive school-based health programs
that focus on alcohol use prevention strategies;
(iii) develop and distribute commercial advertising to
prevent alcohol abuse among youth; and
(iv) enhance and expand Fetal Alcohol Syndrome prevention
activities throughout the United States.
(3) National highway traffic safety administration.--With
respect to the National Highway Traffic Safety
Administration, and in addition to any funds authorized from
the Highway Trust Fund, $120,000.000 for fiscal year 1998,
$180,000,000 for fiscal year 1999, $180,000,000 for fiscal
year 2000, $210,000,000 for fiscal year 2001, and
$210,000,000 for fiscal year 2002, to carry out programs
under sections 402, 403, and 410 of title 23, United States
Code, and to develop and implement a paid media campaign
targeting high-risk youth populations to improve the balance
of media messages related to alcohol impaired driving.
(4) Indian health service.--With respect to the Indian
Health Service, $40,000,000 for fiscal year 1998, $60,000,000
for fiscal year 1999, $60,000,000 for fiscal year 2000,
$70,000,000 for fiscal year 2001, and $70,000,000 for fiscal
year 2002, to supplement the programs that such Service is
authorized to carry out pursuant to titles II and III of the
Public Health Service Act (42 U.S.C. 202 et seq., 241 et
seq.).
(c) Authority to Transfer Funds.--The Committee on
Appropriations of the House of Representatives and the
Committee on appropriations of the Senate, acting through
appropriations Acts, may transfer the amount specified under
subsection (b) in each fiscal year among the entities
referred to in such subsection.

The PRESIDING OFFICER. The Senator from West Virginia.
Mr. BYRD. Mr. President, would the Chair indulge me momentarily?
I protect my right to the floor.
The PRESIDING OFFICER. The Senator from West Virginia will be
protected in his right to the floor.
Mr. DURBIN addressed the Chair.
The PRESIDING OFFICER. The Senator from West Virginia has the floor.
Mr. BYRD. I thank the Chair.
Mr. President, last Friday negotiators from the tobacco industry and
State attorneys general announced the landmark agreement addressing the
impact of tobacco use on our Nation, particularly our young people.
Although this important deal will likely face many obstacles and has a
long way to go toward implementation, it is an unprecedented first step
toward curbing tobacco use and paying for the harm caused by that use.
This process has caused our Nation to focus on an important public
health danger and is an important step in working toward a meaningful
solution.
While I applaud the action being taken to address the pernicious
health effects of tobacco, I am concerned that its evil twin, which
also has a staggering impact on our Nation, is to a large measure being
ignored.
Mr. President, the cost of alcohol abuse to our country is
staggering. According to the National Institute on Alcohol Abuse and
Alcoholism of the National Institutes of Health, alcohol is used by
more Americans than any other drug. And the results are devastating.
The flood tide of alcohol causes more than 100,000 deaths each year
in the United States. Alcohol abuse and alcoholism imposes
approximately $100 billion in cost each year on society. Links have
been found between alcohol abuse and cirrhosis of the liver, as well as
other harmful health conditions. Alcohol is a contributing factor in
assaults, murders and other violent crimes, including fatal drinking
and driving accidents.
At the bottom of every empty bottle is another family in crisis,
another career being destroyed, or another dream washed away.

[[Page S6443]]

The amendment I am offering today would eliminate the tax deduction
for alcoholic beverage advertising expenditures. In addition, it would
increase funding for a number of programs that educate and prevent the
abuse of alcohol among our Nation's youth.
What should be of the utmost of our concern in our Nation is the
impact of alcohol on our children and our grandchildren.
I am introducing this amendment on behalf of the children who died
because they were drinking and driving, and on behalf of the millions
of children who are drinking right now without the full appreciation of
what they are doing to themselves and what they could potentially do to
others.
Alcohol is the drug of choice among teenagers.
Mr. President, more specifically, and looking at this chart compiled
by the National Center on Addiction and Substance Abuse, the use of
alcohol by our Nation's youth is highlighted among different age
groups, including children between the ages of 12 and 17. Among
children between the ages of 16 and 17, 69.3 percent have at one point
in their lifetimes experimented with alcohol.
Clearly, as made evident by these alarming statistics, alcohol is the
leading problem among teenagers--not marijuana, not cocaine.
In the last month, approximately 8 percent of the Nation's eighth
graders have been drunk--have been drunk. We are talking about eighth
graders, 13 years old--13-year-olds. I never heard of such a thing when
I was in my teens, as a young man, or in my middle age. We are talking
about eighth graders, 13-year-olds.
Every State has a law prohibiting the sale of alcohol to individuals
under the age of 21. How is it then that two out of every three
teenagers who drink report that they can buy their own alcoholic
beverages?
The youth of this country, who at the delicate age of 15 should be
enriching their minds with schoolwork, improving their bodies with
exercise, and discovering the wonders of life through God and family
values, instead are experimenting and endangering themselves with
booze. Junior and senior high school students drink 35 percent of all
wine coolers and consume 1.1 billion cans of beer a year. I know,
because I pick some of them up off my lawn--I am talking about the beer
cans, not the young people.
I will repeat what is common knowledge to us all: Every State has a
law prohibiting the sale of alcohol to individuals under the age of 21.
Alcohol is a factor in the three leading causes of death for 15- to 24-
year-olds--the three leading causes--accidents, homicides, suicide. In
approximately 50 percent to 60 percent of youth suicides, alcohol is
involved.
Links have been shown between alcohol use and teen pregnancies and
sexually transmitted diseases. Eighty percent of the teenagers do not
know that a can of beer has the same amount of alcohol as a shot of
whiskey or a glass of wine. By the time they are in college, 40 percent
have binged on alcohol during the previous 2 weeks.
In 1994, 8.9 percent--almost 95,000--of the clients admitted to
alcohol treatment programs that received at least part of their funding
from the State were under the age of 21, including over 1,000 under the
age of 12. And 31.9 percent of youth under the age of 18 in long-term
State-operated juvenile institutions were under the influence of
alcohol at the time of their arrest.
While our Nation's education system needs repair, it seems that our
society has been successful in teaching these kids something. The
problem is that what we have taught them is deadly.
Drinking impairs one's judgment. We all know that. Nobody will
dispute that. Alcohol mixed with teenage driving is a lethal, a lethal
combination. We read about it all the time in the Washington Post, the
Washington Times, and every newspaper in the land. In 1995, there were
1,666 alcohol-related fatalities of children between the ages of 15 and
19. The total number of alcohol-related fatalities that year was
17,274. Mr. President, for many years I have taken the opportunity,
when addressing groups of young West Virginians, to warn them about the
dangers of alcohol. I supported legislative efforts to discourage
people, particularly young people, from drinking any alcohol. For
example, 2 years ago I authored an amendment that requires States to
pass the zero-tolerance laws that will make it illegal for persons
under the age of 21 to drive a motor vehicle if they have a blood
alcohol level greater than .02 percent. This legislation not only helps
to save lives but it also sends a message to our Nation's youth that
drinking and driving is wrong, that it is a violation of the law, and
that it will be appropriately punished. Unfortunately and tragically,
we all know someone, whether it is a family member or a friend or an
acquaintance, whose life has been cut short by a drunk driver. These
are senseless losses that are devastating to the families and the
friends who are left behind.
As if the aforementioned statistics about youth alcohol use and the
results of that use are not frightening enough, young people who
consume alcohol are more likely to use other drugs.
On the chart to my left, Senators will note these statistics,
compiled by the National Center on Addiction and Substance Abuse at
Columbia University, statistics which show that 37.5 percent of young
people who have consumed alcohol have used some other illicit drug,
versus only 5 percent of young people who have never consumed alcohol;
26.7 percent of those who have consumed alcohol have tried marijuana,
versus 1.2 percent of those who have never consumed alcohol; 5 percent
of youths who have partaken of alcohol have tried cocaine, while only
0.1 of 1 percent of those who do not drink have used cocaine. So it is
not a question that is even debatable that youths who drink alcohol are
more likely to use other drugs.
Mr. President, as the aforementioned facts and figures indicate,
alcohol exacts a tremendous cost on our society. These costs are not
always clear-cut. For example, consider the costs of the lost
productivity of a person showing up at work on a Monday morning with a
hangover and inadequately performing his or her job, perhaps making a
mistake that results in injury. How many of us would like to ride in
the automobile that was made on such a Monday morning? How many of us
would like to fly on the airplane whose maintenance man or woman, whose
mechanic was on a binge the previous day? While there is no way to
accurately gauge the enormous costs that alcohol exacts upon our
society, there can be no doubt that the pleasures of alcohol
consumption exacts a considerable price on our Nation.
The purpose of the amendment that I introduce today is simple. My
proposal would simply tell all producers of alcoholic beverages that
they can no longer deduct the costs of their advertising expenditures
on those products from their Federal income tax liability. While
advertising is generally deductible as a legitimate business expense, I
believe there exists a moral, legitimate reason to create an exception
for producers of alcoholic beverages whose products exact such
considerable costs on our society. My proposal would not make illegal
any advertising of alcoholic beverages. It does not say that any
advertising of alcoholic beverages is unconstitutional. It does not
attempt to ban such advertisements, nor would it create any additional
Federal bureaucracy to regulate alcohol products. Rather, it would
simply end the American taxpayers' subsidization of alcohol advertising
by amending the Internal Revenue Code of 1986 to include a disallowance
of any deduction for any amount paid or incurred to advertise or
promote by any means any alcoholic beverage. This is not a sin tax. It
is, rather, an end to the sin subsidy that has left American taxpayers
footing the bill for both alcohol advertising and the high health care
costs inflicted on society by alcohol consumption. Now there may be
those who argue that it is wrong to single out alcohol advertising
expenses. I counter that with the question: What other product, with
the possible exception of tobacco, costs society $100 billion each
year? What other product results in more than 100,000 deaths each year
in the United States? The statistics are indeed staggering.

Mr. President, in these complicated times, the innocence of youth,
the innocence of youth is dashed away at an early age by the irreverent
messages spewing from the television set. Profanity and violence on
television programming are interrupted only by the aggressive
commercials seeking to influence viewers in the name of profit.

[[Page S6444]]

Our impressionable youth, pressured by the self-indulgent motives of
revenue-hungry corporations are bombarded by countless images
glorifying an unrealistic view of reality, often insincerely portraying
alcoholic beverages as an ingredient for ideal lifestyles. Our children
are besieged with the message that if you drink you will attract
beautiful women, if you drink you will be popular, if you drink you
will excel at sports. Are these the images of reality or do they leave
out something important? Do they leave out some important facts about
alcohol consumption? What about the negative and all too prevalent
results of alcohol consumption--the hangovers that result in lost
productivity, the tragic deaths, the injuries caused by a drunk behind
the wheel, the hospital visits for alcohol poisoning, the horrible
effects of cirrhosis of the liver and the families torn apart by
alcohol abuse.
The industry indicates that their advertisements do not target young
people, although this is debatable. A January Wall Street Journal
article, detailing a competitive media reporting survey commissioned by
the Journal, found that beer advertisements are often aired during
programs that are watched by large numbers of adolescents. The findings
of this survey are extremely disturbing. In one example, referenced in
the article, a beer ad ran during the airing of a popular cartoon show
on the MTV station of which 69 percent of the audience was comprised of
children under the age of 21.
Mr. President, I ask unanimous consent to have printed in the Record
the Wall Street Journal article.
There being no objection, the article was ordered to be printed in
the Record, as follows:

[From the Wall Street Journal]

Are Beer Ads on Beavis and Butt-Head Aimed at Kids?

(By Sally Beatty)

When a commercial for Schlitz Malt Liquor appeared last
year on MTV during ``My So-Called Life,'' a show about
teenage girls, beer maker Stroh called the airing an
aberration.
Even as the ad helped launch a Federal Trade Commission
probe into alcohol advertising to children, Stroh said it had
a longtime policy of aiming ads only at adults of legal
drinking age; MTV said the ad ran by mistake because of a
last-minute programming switch.
In fact, the commercial was hardly an isolated event.
Despite the beer industry's insistence that it doesn't target
kids, its commercials regularly wash over underage viewers. A
survey by Competitive Media Reporting for the Wall Street
Journal showed that during one arbitrarily chosen week--the
first week of September--youths under the drinking age made
up the majority of the audience for beer commercials on
several occasions.
For instance, Molson beer was advertised during a 10 p.m.
episode of ``Beavis & Butt-Head,'' the popular MTV cartoon
series about two obnoxious teens. Fully 69% of all the
episode's viewers that night were under 21--the legal
drinking age in all 50 states--according to Nielsen Media
Research's widely used ratings data. Molson, which is
marketed in the U.S. by Philip Morris's Miller Brewing, also
advertised on MTV's racy youth dating show, ``Singled Out,''
just after 7 p.m., when 52% of the audience was under 21. And
Stroh advertised Schlitz Malt Liquor during MTV's prime-time
music-video show at 8:30 p.m., when 56% of the audience was
under 21.
That same week, Adolph Coors ran two ads on the Black
Entertainment Television channel after 8 p.m., when 65% of
the audience wasn't old enough to drink. Also that week,
Anheuser-Busch ran an ad for its Budweiser brand just
after 8:30 p.m. on BET during music-video programming,
when 70% of the audience was under 21.
These commercials look like clear violations of the chief
beer industry trade group's own guidelines for TV ads. ``Beer
advertising . . . should not be placed in magazines,
newspapers, television programs, radio programs or other
media where most of the audience is reasonably expected to be
below the legal purchase age,'' states the Beer Institute's
published ``advertising and marketing guidelines.'' The
industry is pointing to these guidelines in an aggressive
lobbying effort against proposed new federal restrictions of
beer and liquor advertising.
The number of ads reaching kids is ``very troubling,'' says
Jodie Bernstein, director of the FTC's bureau of consumer
protection and a top official involved with its ongoing probe
into alcohol marketing to kids on television. Her bureau
enforces laws banning unfair or deceptive ad practices,
including a statute that says it's unfair to aim ads at
people who aren't legally able to buy the products. A company
that runs afoul of such laws can face fines, orders to pull
ads and regular FTC screening of future advertising.
Ms. Bernstein won't comment on the FTC's probe. However,
she says that in any investigation, the commission would look
first at whether alcohol advertisers are ``following their
own guidelines.'' For example, ``Is it OK if [the percentage
of underage viewers] gets up to 70% once in a while? I don't
think it's OK.'' And she says the commission would ``never
act on just one episode or one mistake--we would act on the
pattern.''
Brewers and TV executives insist that it doesn't make sense
to evaluate beer ads on a single night's audience. ``Any
attempt to analyze the beer industry's media-buying practices
by examining only selected broadcast media buys during a one-
week period is misleading and simplistic,'' said Miller
Brewing in a statement responding to questions about the
survey. Miller added that more than 75 percent of the
broadcast audience reached by the programming it buys is over
21.
At Stroh, officials argue that there's a difference between
putting ads in front of kids and targeting them explicitly.
``We understand that when an ad is run it's going to be seen
by some people who are under 21 years of age, whether it's a
billboard, in a magazine or on TV,'' says Stroh general
counsel George Kuehn. ``That does not mean we target the
group that is under 21.''
Whether the beer industry advertises to kids became a hotly
debated question after the liquor industry last year
abandoned its longstanding guidelines banning TV ads. That
sparked a national uproar over exposing kids to alcohol ads--
putting the beer industry in the spotlight.
In Congress, Rep. Joseph P. Kennedy II (D., Mass.) has
introduced legislation that would ban most forms of alcohol
advertising from 7 a.m. to 10 p.m., require health warnings
on print, radio and TV ads and require alcohol ads that run
in publication with a 15% or more youth readership to appear
only in black-and-white text.
There are already signs that brewers and Madison Avenue are
worried about the threat of regulation of beer ads. No. 1
brewer Anheuser-Busch revealed last month that it quietly
pulled all its beer advertising from MTV, saying it hoped to
``ensure that our intent is not misperceived in today's
climate.'' The Madison Avenue's main trade group, the
American Association of Advertising Agencies, recently
abandoned its longtime stand against restrictions on ads
for products like alcohol and cigarettes. It proposed
setting up a new self-regulation committee, warning that
the industry otherwise faces a government crackdown on ads
for beer and other adult products.
But setting reliable guidelines for such ads remains
tricky. TV executives argue that Nielsen ratings aren't
reliable measures of kid viewership--even though the ratings
are the TV industry's gold standard for gauging the cost of
ad time. Says John Popkowski, executive vice president in
charge of ad sales at MTV Networks: ``If you pick one show on
an isolated night you might find one that's an aberration
statistically,'' since cable channels' viewership is
sometimes relatively small.
On the E! Channel, for instance, Miller Brewing ran a
Foster's ad on Sept. 2, just before 7:30 p.m., during the
show ``Melrose Place.'' That night, 41% of the show's
audience was under 21, according to Nielsen. But David T.
Cassaro, senior vice president in charge of ad sales for E!
Entertainment Television, says that from July 1 to Sept. 29
between 7 p.m. and 8 p.m., only about 28% of E!
Entertainment's audience was under 21. Overall, Mr. Cassaro
adds, only 19% of E! Entertainment's total audience isn't old
enough to drink.
``With networks like BET the numbers are so small that they
jump all over the place,'' adds John Goldman, a spokesman for
Adolph Coors. ``You take as much care as you can but the
programming changes often.'' Mr. Goldman says that in the
third quarter, the over-21 audience reached by BET between 7
p.m. and 8 p.m. ranged from 80% to 43%.
Mr. Goldman adds that Coors doesn't buy MTV as a matter of
company policy. ``We want to avoid any misperception that
we're aiming at an underage audience.''

Mr. BYRD. Mr. President, looking at another chart to my left, this
chart demonstrates competitive media reporting estimates that the
alcoholic beverage industry spent more than $1 billion on alcohol
advertising in 1995.
In contrast, in 1995, the Federal investment in the National
Institute on Alcohol Abuse and Alcoholism was a mere $189.8 million for
alcohol research. Does the industry expect us to believe that it would
spend this huge amount of money--$1.1 billion--if it were not getting
something for that money? Some may argue that this legislation would
adversely affect the advertising industry by forcing producers of
alcoholic beverages to eliminate their advertising expenditure.
Poppycock. I do not believe that this would be the case.
Alcoholic beverage producers spend large amounts of money to
advertise their products because it encourages people to consume their
product and it, therefore, increases sales. Eliminating the advertising
deduction will not eliminate the fundamental business practice. By
making these advertisements less profitable, this amendment may reduce
the overall amount of alcohol advertising in our society. However, let
there be no doubt that the alcohol ads will keep on running. You

[[Page S6445]]

can bet your bottom dollar on that. They will. The difference, however,
will be that the American taxpayer will no longer be subsidizing this
activity and that the money will go, instead, to getting the other side
of the alcohol story out. That is what we need to start doing. We need
to start now getting the other side of the alcohol story out. It is
perhaps not the most popular thing politically to attempt to do here,
but it needs to be done.
This amendment is all the more necessary because, last year, the
Distilled Spirits Council of the United States decided to reject its
self-imposed ban on advertising hard liquor on television and radio. I
decried this decision by the Distilled Spirits Council because it is a
step backward at a time when our Nation is working to curb alcohol
abuse. Now hard liquor advertisements will be flowing over the
airwaves. This is not the direction in which our Nation should be
moving.
According to the Joint Committee on Taxation, the elimination of the
tax deduction would result in $2.9 billion in savings over 5 years. My
amendment targets the savings from the elimination of the disallowance
to programs to prevent alcohol abuse among our Nation's young people
and to educate children about alcohol. The Substance Abuse and Mental
Health Services Administration would be given increased funds to
supplement programs to prevent the use of alcohol among young people
and to fund a media campaign designed to counteract the constant
bombardment to which our children are subjected daily by alcohol
advertisements. It is important to give our children information about
the risks associated with the consumption of alcohol. We should not sit
idly by and leave unchallenged the messages of alcoholic beverage
advertisements that only good things happen to those who drink alcohol.
This amendment will also direct funding to the Centers for Disease
Control and Prevention to carry out a comprehensive strategy to prevent
alcohol-related disease and disability. The CDC would be given
authority to enhance and expand fetal alcohol syndrome prevention
activities throughout the Nation. According to the NIAAA, fetal alcohol
syndrome is estimated to affect from one to three children out of every
1,000 live births.
To address the distressing problem of alcohol-impaired driving, the
National Highway Traffic Safety Administration's alcohol-impaired
driving incentive grant program, previously known as section 410, would
receive additional funding. Funding is also made available to NTSA to
launch a media campaign about the perils of driving under the
influence.

The Indian Health Service will receive funding for its alcohol abuse
programs to address the issue of alcohol abuse, which has such a
devastating effect on the first Americans. I don't refer to them as
native Americans. I don't refer to them as native Americans. I am a
native American. If I am not a native American, of what country am I a
native? I refer to them as the original Americans, or the first
Americans.
The harm that alcoholic beverages cause our Nation is not a second-
rate hangover, but a serious affliction that kills more than 100,000
people each year. By adopting this amendment, we would be making a
positive effort to improve the health of our Nation, particularly of
our children, and to send a sober message to those who are capitalizing
on profits generated by recklessly advertising alcoholic beverages
through far-reaching and seductive means, such as television.
We should act in the best interests of the American people and
announce ``last call'' to those who have been receiving tax breaks for
peddling booze, take a step in the right direction and begin to repair
some of the damage brought by alcohol in this country. Let us begin by
putting a cork in the tax loophole that has left American taxpayers
picking up the tab for the alcohol industry.
Now, Mr. President, I am very well aware that a point of order will
be made, or can be made. I am well aware of that. But I think the
debate has to start at some point. I think that point is now. We hear a
great deal about tobacco and we hear a great deal about children, about
children's health. I hope those who support those programs and talk
much about them would support this effort. We are talking here about
children's health. We are talking here about something that kills
100,000 people every year. I am not seeking to ban alcohol. I am not
seeking to regulate alcohol. I am simply seeking to end the
subsidization by the taxpayers of this country of alcohol.
Think about it. Think about it on your way home tonight as you drive
out the George Washington Parkway and see someone in front of you
wobbling from one side of the road to the other. Think again. Suppose
your wife is up at Tyson's Corner getting ready to drive home with the
children and that same fellow who was in front of your car wobbling may
kill your wife and your children.
So let's start talking about it. Let's start airing the subject here.
Let's stop putting it behind the curtain, putting it under the rug,
saying it is taboo. It is not. It is not taboo. Think about our
children, our grandchildren. This is the product that kills other
people. Tobacco may kill me. Tobacco may kill the individual who smokes
it. But alcohol may not kill the person who imbibes; it may kill the
innocent--the driver in the other car.
So I hope that Senators will support my amendment. As I say, I am
sure that there is a process or a motion available, but I am accustomed
to those things. I say let the Senate work its will.
I yield the floor.
Mr. ROTH addressed the Chair.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. I yield 5 minutes to the distinguished Senator from
Kentucky.
The PRESIDING OFFICER. The Senator from Kentucky is recognized.
Mr. McCONNELL. Mr. President, I thank the chairman of the Finance
Committee for yielding me a few moments. I listened very carefully to
my good friend and colleague from West Virginia and to his observations
about the dangers of drinking and driving, with which I completely
concur.
Of course, representing Kentucky, as my friend from West Virginia
knows, not only do we have 60,000 tobacco growers, which is, of course,
the subject of a number of amendments that may come on this bill; we
are also the home of bourbon. If this kind of whiskey is not made in
Kentucky, it cannot be called bourbon. Let me suggest that there are no
industries--and I checked with the Finance Committee staff--that have
been singled out by law and, as a result of being singled out, are not
allowed to deduct their expenses for advertising. So this would be a
first.
To begin with, as a matter of tax policy, certain kinds of legal
industries are not allowed to deduct their advertising, and others are.
There is also--while we are thinking of both cigarettes and alcohol--
another important distinction. There is no argument that misuse of
alcohol is a problem in this country. As a Senator from a tobacco-
producing State, I never make the argument that smoking cigarettes is
good for you. Obviously, it isn't. But there are many in the medical
profession who would say that the consumption of alcohol, if used
properly--properly--is actually good for you. I am not a physician, I
can't make that argument, but there is a growing argument being made by
many in the medical community that a certain amount of alcohol,
properly used, is actually good for you health, not bad for your
health.
So we have here a legal product, Mr. President, which, arguably, if
properly used, might actually be good for you, which the distinguished
Senator from West Virginia, I gather, is saying when misused, of
course, is clearly a terrible thing and a disaster not only for the
person misusing it, but for others who may be affected by that, and
that because a product may be misused, the Government should step in
and say: Your advertising is not allowed.
Regardless of how you may feel about this----
Mr. BYRD. Will the Senator yield?
Mr. McCONNELL. Yes.
Mr. BYRD. For a correction only. My amendment does not say your
advertising will not be allowed. I am not saying that at all. The
alcohol industry may continue to advertise. I am just saying, let's
stop the subsidization of that advertising, the subsidization by the
taxpayers.
Mr. McCONNELL. I thank the Senator. I think I did understand his

[[Page S6446]]

amendment to disallow a deductibility for advertising, which would make
this the only industry of which the Finance Committee is aware where
such deductibility would be disallowed.
Aside from my home State and the product, which, if properly used,
might actually be good for you, I wonder if my friend from West
Virginia doesn't share my concern that once we go in this direction, we
might find other activities that some may find offensive being subject
to the same kinds of efforts to disallow deductibility for certain
kinds of business expenses.
I think, for example, West Virginia and Kentucky used to trade back
and forth in terms of coal production. One year West Virginia would be
first; the next year Kentucky would be the first. Alas, neither are
first anymore. Wyoming is. But there are many Americans who think, as a
result of the burning of coal, that the area is polluted and that, as a
result of that, people contract lung problems. In fact, there is an
initiative by the Clinton administration just announced this week which
the Senator from West Virginia and I both have serious reservations
about designed to cut down on air pollution--so the argument goes--so
there will be less lung disease.
I wonder, if we go down this path of trying to pick out which
industries' deductions for certain kinds of business expenses are to be
allowed or not allowed based upon our judgment about what is harmful to
the public, whether or not somebody might come in and say, ``Well, we
shouldn't allow production costs associated with the mining of coal to
be deductible because, after all, the burning of coal leads to the
pollution of the air, which then leads to lung disease, which then
leads to death.''
I just am concerned that this is a step in the wrong direction. I
understand fully the concerns of the Senator from West Virginia, and I
share them. I think the use of alcohol leads to a great deal of
tragedy.
But I hope we will not single out this legal industry producing a
product, which, if properly used, many people in the medical field feel
is actually good for you, for this kind of selective treatment on
deductibility.
Finally, let me say that I am not an expert on the budget deal. But
it is clear that there is a lot of momentum in this body to hold the
deal together, and this is clearly not part of the budget deal.
I hope that the proposal will not be approved, in all due respect to
my good friend and colleague from West Virginia. I hope this would not
become part of the measure before us.
I yield the floor.
Mr. BYRD addressed the Chair.
The PRESIDING OFFICER. The Senator from West Virginia.
Mr. BYRD. Mr. President, may I say that I fully understand the
economic impact of the tobacco industry on the State of the
distinguished Senator who has just spoken. West Virginia grows good
tobacco crops as well, and the income from those tobacco crops
certainly impact upon many families in many counties of West Virginia.
We are talking about here, though, a product that results in the
maiming and in the killing of people--innocent men, women, and
children.
The distinguished Senator from Kentucky mentions the carbon dioxide
emissions and other greenhouse gas emissions and possible implications
of those emissions on health. People who breathe that air may well,
indeed, suffer an adverse impact on their health. But they don't go out
and maim. They don't go out and drive an automobile, lose their proper
judgment, and end up killing innocent people. They do not go home and
abuse their spouses if they smoke cigarettes or if they breathe air
blown from them. They don't go home and abuse their children. They
don't go home and assault and batter the other members of their family.
I am talking about a product that we all know--it is not just this
Senator's opinion. We all know when we read the daily newspapers about
the effects of drinking and driving. We all read the newspapers in the
spring following the graduation exercises at high schools, and we read,
with horror, the stories of a few young people who get into an
automobile and wrap that automobile around a telephone pole and they
are all killed or maimed--maimed for life.
That is what we are talking about. I am not talking about singling
out an industry. I am talking about an industry that creates a product
that is hurtful--not just hurtful to the person who uses it, but
endangers, as I said already, the lives of others. We all know that.
But I do appreciate the fact that the Senator is from Kentucky, and I
respect him for that, and I respect his viewpoint and count him and his
fellow Kentuckians as good neighbors.
I yield the floor.
Mr. ROTH. How much time would the Senator from Montana like?
Mr. BURNS. Probably no more than 5 minutes.
Mr. ROTH. I yield 5 minutes to the Senator from Montana.
The PRESIDING OFFICER. The Senator from Montana.
Mr. BURNS. I thank my friend from Delaware.
Mr. President, no one on this floor makes his case with such passion
as my friend from West Virginia. We have a couple of things in common
that we will not go into here. But I also know from where he comes. And
when you start talking about this issue of singling out something, then
we have to look at probably the real facts.
First, there is the presumption in this amendment that somehow the
advertising is evil or bad, or that it wreaks health problems on the
American people. There is no question in anybody's mind across this
land that the abuse of alcohol is one of our greatest problems--no
doubt. Yet, there is no scientific evidence that would even suggest the
casual relationship between advertising and abuse.
In order to get to the root of the problem of alcoholism and all of
the problems that it brings, study after study after study has been
made in the relationship of advertising. In fact, during the 1980's,
when the advertising for alcohol products was increasing, actual
consumption per capita actually was decreasing. So not only does
advertising not impact abuse, it doesn't even impact the overall
consumption.
Singling out a product is not, I don't think, what fair tax law is
about.
So let's be upfront about it, because I am familiar with the
broadcast industry. It has economic impacts on small business. It has
economic impacts. And once we start singling out products, do we start
talking about red meat, eggs, or sugar? Where do we draw the line? The
impact it might have on the national pastime? We could say, ``OK, we
don't need it in the broadcasting industry. We can all pay for pay-per-
view''--the impact on an industry within itself. And the list goes on
and on trying to explain to our constituents why different things
happen and cost more, because there is a decrease in advertising
support in free television. That also brings us our weather, our farm
reports, our news, our emergency conditions. All of these things that
are supported by free over-the-air broadcasts will be impacted if this
amendment is successful.
The industry has taken steps to limit or try to curb the abuse that
alcohol has on a person or individual. There is no doubt about it. And
in some areas some would say it is even working.
I know that all of us want a tax cut. All of us want a balanced
budget. But to single out and start limiting an ad tax or deductibility
for legal products is not the right approach. It is not the right
approach--not on a legal product.
So I urge my colleagues to oppose this. It is unwarranted. I think it
is unwise. And I am not real sure, it might have some constitutional
overtones because advertising is still freedom of speech. It cannot be
treated differently than any other form.
The Senator from West Virginia makes a point. It is the abuse of the
product. The advertising has very little to do with the abuse of the
product.
Thank you, and I urge the defeat of this amendment.
I yield the floor.
Mr. BYRD addressed the Chair.
The PRESIDING OFFICER. The Senator from West Virginia.
Mr. BYRD. Mr. President, the Senator talks about red meat, eggs, and
sugar. The Honorable Senator is my friend. Who ever heard of anybody
eating red meat, eggs, and sugar, and getting out in the car and having
that car plunge into a tree, weave all across the road, and kill and
maim other people? Red meat doesn't cause an individual to drive drunk
and get in the car and

[[Page S6447]]

drive all over the highway. Eggs and sugar don't do that in their form
as eggs and sugar, in their natural form.
The Senator also, I think, made reference to the Federal Trade
Commission in 1985, which found ``no reliable basis to conclude that
alcohol advertising significantly affects consumption, let alone
abuse.'' Well, let's see what the conclusions are from the effects of
the mass media on the use and abuse of alcohol.

The National Institute of Alcohol Abuse and Alcoholism, U.S.
Department of Health and Human Services, Research Monograph-28, 1995:

[The] preponderance of the evidence indicates that alcohol
advertising stimulates higher consumption of alcohol by both
adults and adolescents . . . It appears to be a contributing
factor that increases drinking to a modest degree rather than
being a major determinant. (Dr. Charles Adkins, Department of
Communications, Michigan State University.)

Now I shall quote Dr. Sally Casswell, Alcohol and Public Health
Research Unit, School of Medicine, University of Aukland:

[T]here is sufficient evidence to say that alcohol
advertising is likely to be a contributing factor to overall
consumption and other alcohol-related problems in the long
term.

Now quoting Dr. Joel Grube, Prevention Research Center:

[A]lcohol advertising can influence children, particularly
their beliefs about alcohol and, indirectly, their intentions
to drink as adults.

Finally, let me quote Dr. Esther Thorson, School of Journalism,
University of Missouri:

If research were designed to take account of what the
advertiser is trying to do and if it examined the
relationship between the specific structure of the message
and the individual or group for whom that message is
targeted, investigators probably would find ``whopping
effects''.

Mr. President, I appreciate the views that have been expressed by my
friend from Montana and, as I have already indicated, by my friend from
Kentucky. I appreciate their views, and I respect their views.
Mr. President, I don't think there should be any doubts in the minds
of any Senator or any person who is viewing this Chamber via that
electronic eye that the drinking of alcohol affects the judgment of
people, and that there are many other costs that are not tangible, that
cannot be translated into dollars and cents-- the cost of lost
productivity, the cost of broken homes, the cost of children abused.
And I could go on.

I have made my case, and I ask for the yeas and nays on my amendment.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
Mr. BYRD. I yield back the balance of my time.
The PRESIDING OFFICER. The Senator from Delaware has the remaining
time.
Mr. ROTH. Mr. President, I yield back the remainder of my time, and I
make the point of order that the pending amendment is not germane to
the provisions of the reconciliation measure and I therefore raise a
point of order against the amendment under section 305(b)(2) of the
Budget Act.
Mr. BYRD. Mr. President, I move to waive the point of order and ask
for the yeas and nays on my motion.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. There is an hour equally divided on the
motion.
Mr. BYRD. Mr. President, I yield back my time.
Mr. ROTH. Mr. President, I yield back the balance of my time.

Vote on Motion to Waive the Budget Act

The PRESIDING OFFICER. The question is on agreeing to the motion to
waive. The yeas and nays have been ordered. The clerk will call the
roll.
The bill clerk called the roll.
Mr. McCAIN (when his name was called). Present.
Mr. NICKLES. I announce that the Senator from Kansas [Mr. Roberts],
is necessarily absent.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
who desire to vote?
The yeas and nays resulted--yeas 12, nays 86, as follows:

[Rollcall Vote No. 136 Leg.]

YEAS--12

Bumpers
Byrd
Cleland
DeWine
Glenn
Hatch
Helms
Kennedy
Rockefeller
Sarbanes
Thurmond
Wellstone

NAYS--86

Abraham
Akaka
Allard
Ashcroft
Baucus
Bennett
Biden
Bingaman
Bond
Boxer
Breaux
Brownback
Bryan
Burns
Campbell
Chafee
Coats
Cochran
Collins
Conrad
Coverdell
Craig
D'Amato
Daschle
Dodd
Domenici
Dorgan
Durbin
Enzi
Faircloth
Feingold
Feinstein
Ford
Frist
Gorton
Graham
Gramm
Grams
Grassley
Gregg
Hagel
Harkin
Hollings
Hutchinson
Hutchison
Inhofe
Inouye
Jeffords
Johnson
Kempthorne
Kerrey
Kerry
Kohl
Kyl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lott
Lugar
Mack
McConnell
Mikulski
Moseley-Braun
Moynihan
Murkowski
Murray
Nickles
Reed
Reid
Robb
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Specter
Stevens
Thomas
Thompson
Torricelli
Warner
Wyden

ANSWERED ``PRESENT''--1

McCain

NOT VOTING--1

Roberts

The PRESIDING OFFICER. If there are no other Senators wishing to
vote, the yeas are 12, the nays are 86. One Senator responded present.
Three-fifths of the Senators duly chosen and sworn not having voted
in the affirmative, the motion is rejected. The point of order is
sustained and the amendment falls.
Several Senators addressed the Chair.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. Mr. President, I move to reconsider the vote.
Mr. NICKLES. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Several Senators addressed the Chair.
The PRESIDING OFFICER. The Senator from Delaware.

Privilege Of The Floor

Mr. ROTH. Mr. President, I ask unanimous consent that Barbara Angus
and Mel Schwarz of the staff of the Joint Committee on Taxation be
granted full floor access during consideration of S. 949.
The PRESIDING OFFICER. Without objection, it is so ordered.
Several Senators addressed the chair.
The PRESIDING OFFICER. The Senator from Delaware has the floor.
Mr. McCAIN. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The Senator from Delaware has the floor.

Point of Order--Section 602

Mr. ROTH. Mr. President, I move to withdraw the request for a waiver
of the point of order on section 602 of S. 949.
The PRESIDING OFFICER. Is there objection?
Mr. BOND. Mr. President, reserving the right to object, what is the
section?
Mr. KERRY. What is it? Mr. President, I suggest the absence of a
quorum.
The PRESIDING OFFICER. The Senator from Delaware has the floor. Does
he yield?
Mr. BROWNBACK. Will the Senator from Delaware explain the section?
Mr. ROTH. Mr. President, this was a motion to strike section 602,
``Incentives conditioned on other DC reform.'' This part deals with:

Amendments made by section 701 shall not take effect unless
an entity known as the Economic Development Corporation is
created by Federal law in 1997 as part of the District of
Columbia government.

Senator Brownback made a point of order on this matter and I, in
turn, asked for a waiver. We are now asking that the waiver be
withdrawn, so that the point of order will lie.
The PRESIDING OFFICER. Is there objection to withdrawing the waiver?
Mr. KERRY addressed the Chair.
Mr. FORD. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The Senator from Delaware does not lose the
floor.
Is there objection?
Mr. KERRY. Reserving the right to object, Mr. President.
Mr. President, I will not object.
Mr. ROTH. Mr. President, I move to withdraw my waiver of the point of
order.

[[Page S6448]]

The PRESIDING OFFICER. Is there an objection to moving to withdraw
the waiver.
Mr. BROWNBACK. Reserving the right to object, do I understand the
chairman to say now that you are removing your waiver to the point of
order that I have raised?
Mr. ROTH. Yes.
Mr. BROWNBACK. OK. So the point of order would lie.
Mr. ROTH. Correct.
Mr. BROWNBACK. I thank the Senator. I just needed that clarification.
Mr. HARKIN addressed the Chair.
The PRESIDING OFFICER. Without objection, it is so ordered.
Is the Senator reserving the right to object?
Mr. ROTH. Mr. President, I make a point of order that a quorum is not
present.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered. The point of order is withdrawn.
The motion to waive the Budget Act was withdrawn.
Mr. DURBIN addressed the Chair.
Mr. ROTH. Mr. President, please.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. I make a point of order a quorum is not present.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. DORGAN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
Mr. KERRY. I object.
The PRESIDING OFFICER. Objection is heard.
The assistant legislative clerk continued with the call of the roll.
Mr. ROTH. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ROTH. Mr. President, I ask unanimous consent that the following
Senators, in the order listed, be able to bring up their amendments,
the time for each of the amendments be listed and divided equally
between the two sides. The first would be Senator Durbin for 20
minutes, to be equally divided; Senator Nickles 10 minutes, to be
equally divided; Senator Gramm 20 minutes to be equally divided;
Senator Kerry of Massachusetts 20 minutes equally divided, and----
Mr. FORD. Reserving the right to object, Mr. President. Reserving the
right to object.
You have in there Senator Durbin's amendment for, what, 20 minutes
equally divided?
Mr. ROTH. That is correct.
Mr. FORD. Mr. President, I want to object to that one. And you can
jerk it out if you want to, because you have rolled over the tobacco
industry and my farmers long enough. And I don't intend to sit here
without a fight for the additional 11 cents you want to put on after
you have already put on 20 cents.
So if you want to change that one, that is fine; otherwise, Mr.
President, I will have to object.
Mr. GRAMM. Take it off.
Mr. KERRY addressed the Chair.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. ROTH. I yield for a comment.
Mr. KERRY. Can I suggest, Mr. President, the following. We are going
to have to resolve that issue. We are obviously not going to resolve it
immediately if an objection is going to be lodged.
So I recommend that we put in line reserving the time that the
Senator has agreed to already cut it down to, in the event we reach
some agreement that it will be able to be debated, absent that, that we
set it aside temporarily with the understanding we take the order as
you have described it.
Again, let me just ask, if I could, Mr. President, how much time
remains for each side so we know we are dividing this properly?
The PRESIDING OFFICER. The Senator from Illinois has 43 minutes on
his amendment.
Mr. KERRY. I am referring to both sides total on the bill.
The PRESIDING OFFICER. The majority has 1 hour and 35 minutes; the
minority has 1 hour and 18 minutes.
Mr. KERRY. Mr. President, I ask then unanimous consent that added to
that list, for the minority side, the order be as follows: Senator
Dodd, Senator Landrieu, Senator Torricelli, Senator Harkin, Senator
Levin, Senator Bingaman, Senator Wellstone, and Senator Kohl, each of
them to have 10 minutes on our side.
Mr. FORD. Mr. President, reserving the right to object. Reserving the
right to object.
Mr. ROTH. Mr. President, it is obvious we are not close to unanimous
consent as to how to proceed, so I think we will just have to go to
regular order and call upon Senator Durbin to bring up his amendment.
Mr. DURBIN addressed the Chair.
The PRESIDING OFFICER. Does the Senator from Delaware withdraw his
request?
Several Senators addressed the Chair.
The PRESIDING OFFICER. The Senator from Oklahoma.
Mr. NICKLES. Mr. President, I send an amendment to the desk and ask
for its immediate consideration.
Mr. DURBIN. Mr. President, what is the pending business before the
Senate?
The PRESIDING OFFICER. The pending question is the amendment of the
Senator from Illinois.
Mr. DURBIN. I seek the regular order.
The PRESIDING OFFICER. The Senator from Illinois and the Senator from
Delaware control the time.
The PRESIDING OFFICER. Who yields time?
Several Senators addressed the Chair.
The PRESIDING OFFICER. Who yields time?
Mr. DURBIN addressed the Chair.
The PRESIDING OFFICER. The Senator from Illinois.
Mr. DURBIN. I seek recognition on this amendment.
I want to make it clear to my colleagues, I am more than willing to
accommodate on the remainder of the time. As I understand it, there are
about 42 minutes left on this amendment. I do not need all that time. I
am more than happy to reduce it equally on both sides and allocate the
remaining time on this amendment, any time left before the Senate,
among the Members. And I hope that there is no objection to that. But
if there is such an objection, I have no other recourse but to proceed
on this amendment. And I now have the floor.
I yield for the purpose of a question to the Senator from Oklahoma.
Mr. NICKLES. Will the Senator yield, not for the purpose of a
question, but maybe for a suggestion?
Mr. DURBIN. Yes.
Mr. NICKLES. That we go ahead and debate the Senator's amendment
until he is satisfied with it, his cosponsors are satisfied with it,
and then maybe at that time you can set it aside, and we will go ahead
and vote on the other amendments, and you then have had your debate,
and we will have a vote on yours somewhere in the pecking order.
Mr. DURBIN. I thank the Senator.
It is the only way I can proceed at this point since there is no
unanimous consent that is going to be agreed to.
Mr. KERRY. Mr. President, if the Senator would yield for a moment.
Mr. DURBIN. I yield to the Senator from Massachusetts for a question.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KERRY. I believe the Senator from Kentucky will agree to a time.
I believe the Senator would agree to a time. And I think, in fairness
to all the other Senators, that if we could try to establish some kind
of order, I think that everybody will benefit that much more. I think
we were very close to having that arranged, if the Senator from
Oklahoma would just forbear for a moment.
Mr. ROTH. What is the order, Mr. President?
The PRESIDING OFFICER. The Senator from Illinois has the floor.
Mr. DURBIN. Mr. President, I can proceed on this amendment. And if
Members can work out some accommodation, I will do my best to
abbreviate this debate and give everyone a chance, because I know many
people waited.
Mr. President, this--
Mr. KERRY. Would the Senator yield for a question?
Mr. DURBIN. Yes.
Mr. KERRY. Can we get a sense for what the Senator from Illinois
means about abbreviating this? Is there some period of time?

[[Page S6449]]

Mr. DURBIN. Yes. The Senator is going to try to do it in the 20
minutes that was in the UC request, allocating an equal amount of time
to the Senator from Missouri.
Mr. KERRY. Mr. President, if the Senator will yield just for the
purposes of asking something.
Mr. DURBIN. Yes.
Mr. KERRY. Will the Senator from Kentucky agree to a 20-minute time
period on the Senator from Illinois' amendment?
Mr. FORD. Mr. President, since it has been laid on me--and I do not
mind that at all. I have always heard when you tear the hide off it
comes back--you are tougher. And I will agree to the 20 minutes. I do
not want to, but I will agree to it.
All I hear for the last week is banging my State and my farmers and
my tobacco. And I think I ought to have an opportunity to defend myself
and my people. If I am going to be limited to 10 minutes, you know, I
am not sure that my colleague and I, with 5 minutes each, can do it
adequately. We can do as well as anybody else in 5 minutes.
But I hope they would give some consideration to it.
Mr. President, I will agree to the 20 minutes equally divided, since
I have used 5.
Mr. KERRY. I thank the Senator.
Mr. DURBIN. I want to make certain, Mr. President, that I understand.
Is this time being taken from the time allocated on my position on the
amendment?
The PRESIDING OFFICER. Time is being charged to the Senator from
Illinois.
Mr. DURBIN. I hope we can reach agreement quickly then. And I yield
for the purpose of a question to the Senator from Delaware. I believe
the chairman has a suggestion.
Mr. ROTH. I suggest that we proceed with my proposal, Senator Durbin
having 20 minutes equally divided; Senator Nickles 10 minutes divided;
Senator Gramm 20 minutes divided; and then Senator Kerry of
Massachusetts 20 minutes divided.
Mr. DORGAN. Reserving the right to object, Mr. President.
The PRESIDING OFFICER. The Senator from North Dakota.
Mr. DORGAN. Reserving the right to object, and I will not object, but
I do want at this point to try to understand the circumstances.
When the time has expired on this bill--that will occur I guess in an
hour and a half or 2 hours, less than 2 hours--I am wondering what the
intentions of the chairman and the ranking member are with respect to
further proceedings on the bill.
Will we cast record votes this evening, for example, on the Durbin
amendment? How many additional record votes this evening? How long will
we be in session this evening? And when do we intend to begin tomorrow,
and with how many amendments?
Mr. ROTH. It is the intent, I say to the Senator from North Dakota,
that when the 10 hours expires today, to go out until tomorrow morning,
at which time the amendments can be offered and voted upon.
Mr. DORGAN. Further reserving the right to object, is the intent of
the chairman to have the additional recorded votes, for example on the
Durbin amendment?
Mr. ROTH. It is unclear at this time. I urge that we proceed, let the
debate proceed, and we can work out the other details forthwith.
I move the adoption of my unanimous consent request.
Mr. KENNEDY. Reserving the right to object.
Mr. President, like many others here, I would like to just be able to
get a short period of time. To be able to get on the early part of that
queue, I would be glad. But I have an amendment with regard to tobacco
tax. So I wanted to just make sure that we are going to even be able to
discuss this or at least have some idea where we are to have that, too.
Mr. ROTH. Mr. President, in order to get things moving, let us
proceed. Regular order. I urge Senator Durbin to proceed to debate his
amendment, and we can try to work out things.
Mr. KERRY. Mr. President, if I could just answer my senior colleague.
The PRESIDING OFFICER. The Senator from Illinois has the floor.
Mr. DURBIN. I am going to proceed. I hope that my colleagues will
meet and discuss UC's, and Senator Bond and I would like to explain an
important amendment.
Mr. FORD. Are we on 20?
Mr. DURBIN. I do not think we have any agreement at this moment.
Mr. KERRY. Would the Senator yield for one moment? I think we can get
this locked in place.
Mr. DURBIN. I yield only for a question.
Mr. KERRY. Mr. President, will the Senator permit the Chair to
hopefully rule on the unanimous-consent request that was proposed,
during which time we will have whatever Democrat time, whatever time on
this side of the aisle that remains, divided equally among everybody
who has an amendment so that no Senator's preference goes over another,
just divide it equally?
Mr. DURBIN. I say to my colleague from Massachusetts, I would be
happy to do that, so long as I do not yield my right to the floor in
the process.
Mr. ROTH. Mr. President, I move the adoption of my unanimous consent.
Mr. KENNEDY. Mr. President, how much time would remain at the end? I
am glad to divide it all up with my colleague, but how much time
remains?
Mr. ROTH. Mr. President, I have been going around in a circle about
10 times now. I think the best thing to do is to let the Senator from
Illinois proceed with the debate of his amendment, and we can try to
work out further agreements subsequently.
The PRESIDING OFFICER. The Senator from Illinois has the floor.
Mr. DURBIN. Thank you, Mr. President.

Amendment No. 519

Mr. DURBIN. Mr. President, this amendment was offered last night. It
is an amendment which I think most Members are conversant with because
it is not a new issue. This is an issue which has been literally before
Congress for almost 50 years.
It is an issue of rank discrimination. It is an issue of unfairness.
It is an issue of inequality. And it goes to the heart of protecting
American families.
The issue at hand is the deductibility of health insurance premiums.
Those Americans fortunate enough to work for corporations, employees
and management, enjoy a 100 percent deductibility of all health
insurance premiums. I think that is good policy. It encourages health
insurance protection. It protects families.
If you happen to be one of the 23 million Americans who are self-
employed and you buy health insurance for your family, your tax
deductibility is 40 percent. What does that mean? It means,
unfortunately, a higher percentage of self-employed people and their
families are uninsured. It means that the children, of course, of these
self-employed do not have health insurance protection, and it basically
means a discrimination in our Tax Code which should have been removed
long ago.
There are those who have argued for gradualism. Let us very, very
slowly, in a glacial-like pace reach the day when we have equality and
parity, 100 percent deduction for all Americans.
I am happy to be joined by my colleague from Missouri, Senator Kit
Bond, and also my other colleagues who have said that they think as I
do, that it is time for us to end this inequality and to give real
parity and fairness so that both the self-employed and those working
for other businesses have the same opportunity for 100 percent tax
deduction.
I ask unanimous consent Senators Bond, Dorgan Daschle, Harkin, Boxer,
Mikulski and Johnson be added as cosponsors of my amendment No. 519.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DURBIN. Let me say at this point, too, it is easy to come before
this body and to propose new tax benefits. We know the difficult part,
the offsets--how do you pay for them?
I have come up with a means of paying for this which I think you can
detect has some controversy attached to it, but I think it is
reasonable. It would impose an additional 11-cent-per-package tax on
cigarettes sold in America and a parallel percentage increase on spit
tobacco and snuff.
Now, the bill proposed by the Senate Finance Committee already raised
the Federal tax on tobacco and cigarettes, for example, from 24 cents
to 44 cents. This bill would add an additional 11 cents. Make no
mistake, it is a tax. For

[[Page S6450]]

those who have told me, as I have spoken to them, ``Oh, I never vote to
increase the tax,'' I remind you if you are voting for the Senate
Finance Committee bill, you are voting for an increase in this very
same tax.
I ask you to consider whether or not it is worth 11 cents on a
package of cigarettes to extend this kind of protection to over 20
million Americans. I think it is. I hope you will agree with me.
If we do not make this move this evening, if we do not finally grasp
this opportunity, seize this opportunity and increase the deductibility
of this health insurance for self-employed, they will languish for 8,
9, or 10 years before ever approximating or reaching parity. That is
not fair. It is not fair to the self-employed. It is not fair to the
Americans who are disadvantaged by this provision in the Tax Code.
I might also add that many of my colleagues are interested in small
business. They believe, as I do that small business is the real engine
of economic growth in this country. One of the largest associations of
small businesses is the National Federation of Independent Businesses,
over 600,000 businesses. When they surveyed their members nationwide,
they learned last year that the No. 1 issue--the No. 1 issue--on the
minds of their members was the deductibility of health insurance.
Business Week magazine recently noted that this was one of the two top
obstacles to success for many small businesses. So if you want to
encourage small business and the creation of jobs, I urge you to
support this amendment.
Let me speak for a moment about this tobacco tax. I know that my
colleague and friend from the State of Kentucky feels very passionately
about this issue. I might tell him that I do as well. I will tell you
what will occur if you increase the cost of tobacco products. Children
will be less inclined to buy them. As these products become more
expensive, children cannot afford them. It is a fact that has been
proven over and again. It was recently shown just a few years ago in
Canada when they had a dramatic increase in their tobacco tax. So we
know that by increasing this tax by 11 cents, we end up making over 20
million Americans who are self-employed, give them a position of
fairness when it comes to tax treatment, and we reduce the likelihood
that children will end up using these tobacco products.
Now I know there will be a lot said about tobacco farmers in
opposition to my amendment. I want to make this a matter of record. I
have said from the beginning I am prepared to work with those Members
who want to help transition tobacco farmers into other crops and other
livelihoods. I believe that is the wave of the future and it should be
part of any comprehensive change in tobacco policy.
I will conclude and then defer to my colleague from Missouri. An
estimated 4\1/2\ million American children and teenagers smoke
cigarettes and another million use smokeless tobacco. Every 30 seconds
in America a child smokes for the first time--3,000 a day--and a third
of them--1,000--will die with this addiction to nicotine. And teenage
smoking has risen by nearly 50 percent since 1991.
So I say to my colleagues, I think this is a balanced approach. It
helps those who truly deserve it. It says to the tobacco industry, we
will make your product a little more expensive and take it out of the
hands of children. This is a reality. If you look at the State taxes
around the United States, some of them range as high as $1 a package
and they are going up. The States understand this is a source of
revenue which is a reasonable source to turn to for legitimate reasons.
We should turn to the source of revenue, turn to it this evening.
I yield for purposes of debate, but do not yield the floor, to my
colleague from Missouri, Senator Bond.
The PRESIDING OFFICER. The Chair recognizes the Senator from
Missouri.
How much time is yielded?
Mr. DURBIN. Five minutes.
Mr. BOND. Mr. President, I thank my distinguished colleague and
neighbor from Illinois. I commend him for his perseverance in being
able to hold on to the floor. These are very difficult times and this
is a very important amendment. I congratulate him on staying with it so
we can bring this up and debate it while we have the attention of this
body.
I believe my experience in the State of Missouri is probably like the
experience that most of us have had in our own States. As we travel
around and talk to farmers, to people involved in small business, to
truck drivers, day care operators, people who work for themselves, they
ask an unanswerable question: Why is it that I can only deduct, now, 40
percent of what I pay in health insurance premiums for myself and my
family when my neighbor next door who works for a large corporation, or
in the country when my neighbor next door who works for a large
corporate farm gets his or her health care paid and the employer
deducts 100-percent of what they pay and they do not have to include
any of the health insurance on their income tax? Why does the self-
employed person only get to deduct 40 percent?
Frankly, there is no answer, Mr. President. There is a gross inequity
in this system. It is an inequity that has been pointed out by every
farm organization in my State time and time again. It has been pointed
out by organizations representing small business.
At the conclusion of my remarks, I will enter in the Record a letter
from the NFIB of June 26 expressing their strong support for the 100-
percent deductibility for the amounts paid for health insurance for
self-employed business owners.
This is a matter of equity. This is a matter that is absolutely
essential to see that the 5.1 million self-employed individuals in the
country today have health insurance and the 1.3 million children who do
not have health insurance and who live in a family headed by an
entrepreneur, a self-employed business owner.
This, to me, is not only an inequity, but it is a very bad policy
outcome. We are talking about the health of children. One of the best
things we can do is provide 100 percent deductibility.
Mr. President, the reason I am here joining with my colleague from
Illinois, we have pointed out in this tax relief bill, this tax
reduction bill that is before the Senate now, with $85 billion in
taxes, we have pointed out that this is one of the top priorities of
small business and of farmers, of the struggling working middle class
of America.
Before the debate began, I circulated a letter signed by 52 of my
colleagues, in addition, saying that this was important. Unfortunately,
the three top small business priorities were excluded--the self-
employed tax deduction for health care, the home office business
deduction, and the independent contractor. This measure, unfortunately,
is not in either the House or the Senate bill. We feel it is vitally
important to put it there. I congratulate my colleague from Illinois in
choosing the tobacco tax. Tobacco taxes are being raised in this bill.
There is no more important place to put those taxes than this,
guaranteeing health for self-employed and their children.
In addition to the figures that my colleague from Illinois stated,
about 3,000 children becoming regular smokers every day, last week when
Senator Bumpers and I introduced a measure to encourage pregnant women
to stop smoking, I pointed out that while tobacco use among most
pregnant women is declining, tobacco usage among teenage pregnant women
is on the increase. In my State it is 50 percent above the national
average, and not surprisingly our birth-defect rate is 50 percent above
the nationwide average. This will have an impact on discouraging
teenagers from starting to smoke. It will help encourage pregnant
women, particularly pregnant teenagers, to stop smoking.
Mr. President, this is an important matter of equity. It is a matter
of health care policy. I urge my colleagues to support what I know will
be a required budget waiver so that this could be included.
Before I yield the floor, I ask unanimous consent to have printed in
the Record the letter of June 26 from the vice president for Federal
Government relations of NFIB, Dan Danner, saying, ``The self-employed
have an extremely difficult time purchasing health insurance. This is
why 3 million self-employed business owners have no health insurance,
nor do 1.3 million of their children.''
There being no objection, the material was ordered to be printed in
the Record, as follows:

[[Page S6451]]

National Federation of

Independent Business,

June 26, 1997.
Hon. Christopher Bond,
U.S. Senate, Washington, DC.
Dear Senator Bond: On behalf of the 600,000 members of the
National Federation of Independent Business, I am writing to
express our strong support for 100% deductibility of the
amounts paid for health insurance for self-employed business
owners.
The CEOs of large corporations can deduct 100 percent of
their health care costs, while the self-employed can only
currently deduct 40 percent of their health care costs. This
is simply not fair. The Kassebaum/Kennedy health care law was
a good first step, but still does not give the self-employed
the fairness they deserve in that the law only allows the
self-employed to deduct 80 percent of their health care costs
by the year 2006.
The self-employed have an extremely difficult time
purchasing health insurance. This is why 3 million self-
employed business owners currently have no health insurance,
nor do 1.3 million of their children. Full deductibility will
help make health insurance more affordable for these small
business owners. Therefore, the self-employed need full
deductibility now.
Sincerely,

Dan Danner,

Vice President,
Federal Governmental Relations.

Mr. BOND. I yield the floor.
Mr. NICKLES. Mr. President, would the Senator from Delaware give me 4
minutes?
Mr. ROTH. I yield 4 minutes to the Senator from Oklahoma.
Mr. NICKLES. Mr. President, one, I want to ask my colleagues to vote
no on the Durbin-Bond amendment and tell them I think I have a pretty
good record--I heard the support of NFIB for deductibility for the
self-employed. I used to be self-employed, so I support that.
For my colleagues' information, I will be offering an amendment after
the Durbin amendment, very soon, that will accelerate and allow self-
employed people to deduct a greater percentage for their health
insurance at a much faster rate than now is under existing law. It does
not go to 100 percent, but likewise we do not increase taxes another 10
cents, which I think a lot of people, not just from tobacco States, are
saying ``Wait, we are already increasing it 20 cents, almost doubling
the tax, should we do another 10 cents?''
I might mention the Finance Committee said we would stop at 20 cents.
I do not think the Durbin amendment will become law. I want to let my
colleagues know we will offer an amendment that will accelerate
deductibility for the self-employed. We will be offering that
subsequent to this so they can vote no on the Durbin amendment, vote
yes on the amendment that Senator Hagel and I will be introducing
momentarily that will give the self-employed a greater benefit for
deducting their insurance.
I yield the floor.
Mr. ROTH. I am pleased to yield 5 minutes to the Senator.
Mr. FORD. My other colleague will need some time, too. I thank the
chairman.
You know, Mr. President, this has been an interesting week. We had a
negotiation with the attorneys general around the country, and the
tobacco industry is stuck for almost $370 billion. The price of
cigarettes go up. How much more do you want? And then the Finance
Committee puts on 20 cents more, and that raises the price of
cigarettes and smokeless tobacco. And now we want to put on 11 cents
more. Why? To help the small businessman get a deductible on his health
insurance?
At the same time, you are putting 65,000 farm families out of work in
my State. You say you are going to help. You may never get the bill to
help. I think it is time to stop it. It is time we quit. My farmers
have to survive. And we hear all the States have an excise tax. Well,
we had a good many here in the past that would vote against any excise
tax because they thought it all should go to the States. It is their
prerogative. But when you add 20 cents onto the State, and you add
another 11 cents onto the State, then you add 75 cents on, if you get
the negotiated agreement out there, the income to the community and to
the Federal Government are going to go straight down. They are playing
with funny money, because the more you increase it, the less income you
are going to have. When you increase the tax, the less income you are
going to have. So now you say you have all this income coming in--you
are playing with funny money.
One other point, Mr. President. You talk about low income--59.5
percent of this tax will come out of those who make less than $30,000 a
year--$30,000 a year--and 34 percent of the money the Senator from
Illinois and the Senator from Missouri want will come from those that
make less than $15,000. Talk about the little man--you are talking away
from the man that makes $15,000 and a man with a family that makes less
than $30,000. You are going to take 60, 65 percent of that money from
that group. What do they benefit? You put them out of business.
I ask unanimous consent to have printed in the Record the Tax
Foundation's analysis on where the cigarette tax and smokeless tax
would come from and how many States would lose what money, and how many
individuals of what financial income category would have to pay for
this.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Bottom Line on Finance Committee's Proposed 20 cents Cigarette Excise
Hike: Bottom Income Earners Would Pick Up Most of the Tab

Washington, D.C., June 20, 1997.--The Senate Finance
Committee' proposed 20 cents per pack addition to the current
24 cents federal cigarette excise could play havoc with
lower-income Americans' pocketbooks, according to an analysis
by the Tax Foundation.
Tax Foundation Economist Patrick Fleenor says that, judging
by historic cigarette consumptions patterns, over a third of
the $15 billion that the Finance Committee hopes to bring in
over five years will be paid by those earning less than
$15,000 a year (see Chart 1). Another 25 percent of the total
revenues will be paid by Americans earning between $15,000
and $30,000. In all, those earning $30,000 or less would foot
about 60 percent of the total bill for the new tax.

CHART 1: NEW COLLECTIONS BY INCOME GROUP BASED ON FINANCE COMMITTEE'S 20
cents CIGARETTE EXCISE HIKE
------------------------------------------------------------------------
Share of
5-year tax
Adjusted gross income total burden
(millions) (percent)
------------------------------------------------------------------------
under $15,000.................................... $5,098.2 34.0
$15,000 under $30,000............................ 3,819.9 25.5
$30,000 under $45,000............................ 2,315.2 15.4
$45,000 under $60,000............................ 1,318.8 8.8
$60,000 under $75,000............................ 911.6 6.1
$75,000 under $115,000........................... 982.5 6.6
$115,000 under $300,000.......................... 474.2 3.2
$300,000 and over................................ 80.0 0.5
----------------------
Total........................................ 15,000.0 100.0
------------------------------------------------------------------------
Source: Tax Foundation estimates based on data from IRS, Bureau of the
Census, and Center for Disease Control.

Juxtaposed to this, those earning $115,000 or more will
account for less than four percent of the additional tax
revenues.
``Whether the Finance Committee recognizes it or not, the
proposed tax will really make a dent in the budgets of
America's lower-income households,'' Mr. Fleenor stated.
In a state by state comparison, California will bear the
single largest burden if the new tax is enacted, paying $1.16
billion to the U.S. Treasury over five years (see Chart 2).
The 10 states with the highest projected tax payments will
pay 50 percent of the overall tax increase, according to Mr.
Fleenor's calculations (see Chart 3).

Chart 2: New collections by State based on Finance Committee's 20 cents
cigarette excise hike, 5-year total

[Share of tax burden; in millions of dollars]

Alabama..........................................................$278.1
Alaska.............................................................35.0
Arizona...........................................................200.0
Arkansas..........................................................177.7
California......................................................1,155.5
Colorado..........................................................199.2
Connecticut.......................................................167.5
Delaware...........................................................57.7
Florida...........................................................852.0
Georgia...........................................................452.2
Hawaii.............................................................34.9
Idaho..............................................................56.3
Illinois..........................................................638.8
Indiana...........................................................501.8
Iowa..............................................................169.4
Kansas............................................................148.0
Kentucky..........................................................429.5
Louisiana.........................................................293.7
Maine..............................................................81.8
Maryland..........................................................251.2
Massachusetts.....................................................299.7
Michigan..........................................................507.3
Minnesota.........................................................246.5
Mississippi.......................................................183.3
Missouri..........................................................420.7
Montana............................................................48.8
Nebraska...........................................................92.1
Nevada.............................................................92.1
New Hampshire.....................................................115.6
New Jersey........................................................413.1
New Mexico.........................................................70.2
New York..........................................................829.5
North Carolina....................................................563.5
North Dakota.......................................................33.0
Ohio..............................................................801.8
Oklahoma..........................................................229.0
Oregon............................................................186.8
Pennsylvania......................................................743.4
Rhode Island.......................................................59.1
South Carolina....................................................258.1
South Dakota.......................................................45.7
Tennessee.........................................................413.7

[[Page S6452]]

Texas.............................................................880.9
Utah...............................................................62.9
Vermont............................................................46.0
Virginia..........................................................448.9
Washington........................................................229.7
West Virginia.....................................................135.8
Wisconsin.........................................................306.5
Wyoming............................................................34.7
District of Columbia...............................................21.5

Source: Tax Foundation estimates based on data from IRS, Bureau of the
Census, and Centers for Disease Control.

Chart 3: Top Ten State Contributors to Senate Finance Committee's
20 cents Cigarette Excise Hike

1. California..................................................$1,155.5
2. Texas..........................................................880.9
3. Florida........................................................852.0
4. New York.......................................................829.5
5. Ohio...........................................................801.8
6. Pennsylvania...................................................743.4
7. Illinois.......................................................638.8
8. North Carolina.................................................563.5
9. Michigan.......................................................507.3
10. Indiana.......................................................501.8
__________

Total.......................................................7,474.5

Source: Tax Foundation estimates based on data from IRS, Bureau of the
Census, and Centers for Disease Control.
``What's ironic about this tax,'' noted Tax Foundation
Executive Director J.D. Foster, ``is that, with over half of
it earmarked for healthcare costs for poor children, it
amounts to a case of the poor paying for new programs for the
poor.''
____

New Tax Foundation Analyses Question Role of Excise Taxes in Sound
Federal and State Tax Policy

Washington, D.C., June 20, 1997.--Do excise taxes represent
good or bad tax policy? The Tax Foundation recently published
the first two in a series of five Background Papers focusing
on this and other questions relating to the role excise taxes
play in our economy.
In ``Excise Taxes and Sound Tax Policy,'' Dr. John R.
McGowan, Associate Professor of Accounting at Saint Louis
University's School of Business, provides an overview of how
and why the federal excise system evolved.
Excise taxes have always played a large role in the federal
government's revenue collections, forming the bulk of total
revenues in the early years of the republic.
While excise taxes constitute under five percent of total
revenues today, the federal government still imposes excises
on a wide variety of goods and services, including gasoline
and diesel fuel, tobacco and alcohol products, airline
tickets, firearm sales and firearm dealers, heavy trucks and
trailers, large tires, coal, vaccines, fishing equipment, and
even bows and arrows. Federal excise receipts recently
approached $60 billion.
Today, about 70 percent of excise revenues come from the
taxes on alcohol, tobacco, and gasoline and diesel fuel, says
Dr. McGowan. The accompanying charts shows that federal
excises on distilled spirits, beer, and wine, raised about
$7.2 billion in 1995, while the tobacco excise raised about
$5.9 billion, and gasoline and diesel fuel taxes raised over
$22.6 billion.
Dr. McGowan concludes that while excise taxes are
relatively easy for governments to impose, they generally do
not represent sound tax policy. Excise taxes can introduce
significant amounts of inefficiencies into the economic
marketplace and create a net reduction of benefits for
consumers. Most significantly, excise taxes are widely
believed to be regressive and therefore contrary to long-held
concepts of fairness in the United States tax system.
In ``The Use and Abuse of Excise Taxes,'' Dr. Dwight R.
Lee, of the University of Georgia, examined the
inefficiencies of the excise tax. While he acknowledged that
inefficiencies are inherent in any taxation, because taxes
distort the economic choices that people make, Dr. Lee
observed that the most efficient tax system minimizes this
type of distortion.
Excise taxes, however, are conspicuously at odds with the
goal of reducing tax distortions, says Dr. Lee. They are the
most distorting of all taxes per dollar raised. Instead of
spreading the tax burden as neutrally as possible over a
broad tax base, excise taxes single out a few products for a
high and discriminatory tax burden. While obviously unfair to
the consumers of the taxed product, imposing or increasing
excise taxes to fund tax relief for other taxpayers only
exacerbates the problem.
Excise taxes are sometimes proposed to fund specific
government spending programs, called ``earmarking.'' Only in
a very few situations--where the consumption of a product is
complementary to the use of some other good that cannot
easily be priced directly--can earmarked excise taxes be
efficient. But even here the efficiency of the excise tax
depends upon the revenues being unconditionally allocated to
the complementary use to reduce the cost of rent seeking. The
greater the rent seeking over the allocation of the revenues
from a potentially efficient excise tax, the less efficient
it is and the lower the efficient rate of taxation (under
reasonable assumptions about the relevant elasticity of
demand).
Mr. FORD. Mr. President, let's be fair. We had a negotiated
agreement. It wasn't good enough. That may be the floor. So here we
come with 20 cents more, and then 11 cents more. I have 65,000 farm
families that this legislation will put out of business. Oh, we are
going to take care of them. Well, you take care of them, then I will
talk about taxes. You take care of my farmers and I will talk about
taxes after that. I will talk about how much you get from the tobacco
industry. I will talk about how much you are going to do for this group
or that group. So take care of my farmers, take care of my people. I
have stood by and watched these people be run over long enough. Oh, you
can come out here with crocodile tears. I can tell you all the sad
stories. But small businessmen are small businessmen, and a small
farmer is still a small farmer. And 69 percent of my farmers have
another job. It becomes a husband, wife, and family occupation. You
want to put them out of work.
I understand smoking. I have been smoking for 54 years and I am still
here, thank God. I understand smoking. My grandchildren don't smoke,
and I understand all of that. But then, a while ago, we didn't put a
little deductible, or eliminate the deductible on the distilled spirits
industry--beer, wine, and distilled spirits. Here we have tobacco and
you pile on and pile on and pile on.
Mr. President, I hope my colleagues will do the best they can to help
in this case. It is an additional tax. It is putting my people out of
work. It is saying to children on the farm--children on the farm--that
you are going to have less income next year. You are going to have less
next year. Substitute another crop. That indicates that you don't know
what tobacco brings, you don't know what corn brings, or what soybeans
brings--$1,844 net profit for an acre of tobacco, and $100 from
soybeans. You have to plant acres and acres and acres of soybeans and
one acre of tobacco.
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. FORD. I suppose it's time. I was sweating anyhow.
Mr. ROTH. Mr. President, I yield 5 minutes to the Senator from
Kentucky, [Mr. McConnell].
Mr. McCONNELL. Mr. President, if I were a Senator from any other
State listening to this debate, I guess I would have to conclude that I
don't have any tobacco growers. Cigarette smoking is obviously not good
for your health. Why should I not vote for the Durbin-Bond amendment?
Reason No. 1: We entered into a budget agreement and this breaks it
wide open. There has been a lot of momentum in this Chamber over the
last week to stick to the budget agreement. This is a deal breaker. It
wasn't negotiated by the President and the leaders of the Republican
Congress. It wasn't even voted on by the Senate Finance Committee.
So the stake you have in this, I say to my colleagues, you will be
voting to bust the budget deal wide open, in order to raise taxes on
low-income Americans. What a great idea. This is supposed to be a
package about lowering taxes by $85 billion, or close thereto, over the
next 5 years, and a vote for the Durbin-Bond amendment turns it into a
tax increase bill--a tax increase bill on the lowest income people in
America. In fact, 60 percent of any tobacco tax increase will be borne
by Americans making less than $30,000 a year. So you will be
transforming this bill, which has been criticized by some downtown as
somehow a benefit for the wealthy, into a major tax increase on the
most vulnerable, low-income people in our society.
Regardless of how you feel about tobacco, regardless about how you
feel about smoking--I don't smoke and don't support it particularly; I
think it is not good for you--it is a legal product. That isn't the
issue here. Why in the world, in a bill designed to lower taxes, would
we want to have a whopping tax increase on the lowest income people in
America?
My good friend from Missouri said it is a matter of equity. It sure
is. What is equitable about it? We are singling out one industry and
one socioeconomic group in America for a major tax increase in a bill
designed to lower taxes on working American families. It absolutely
distorts everything this tax reduction bill is supposed to be about.
Obviously, it has an impact on my State. Senator Ford and I feel
passionately about this. Maybe some product

[[Page S6453]]

in your State will be next. But this transforms this bill into a major
tax increase on low-income Americans. I can't think of a worse
direction to go in.
Finally, let me say that it is estimated that it will cost our State
of Kentucky 2,700 jobs, just like that. Clearly, that is a matter of
major concern to us. But the consumers of cigarettes are all over
America, not just in Kentucky, not just in North Carolina. They are, by
and large, lower income people, who will continue to smoke after that,
and you have just socked them with a major tax increase, Mr. President.
I certainly hope my colleagues will not, A, break the budget deal
and, B, have a whopping tax increase on low-income Americans.
I yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. ROTH. Mr. President, I yield 5 minutes to the Senator from North
Carolina.
The PRESIDING OFFICER. The Senator from North Carolina is recognized
for 5 minutes.
Mr. FAIRCLOTH. Mr. President, I don't know of a lot more that can be
said on the subject. It has been very adequately and eloquently
addressed by the two Senators from Kentucky. But we talk about equity
and we talk about fairness, but the truth of it is that is not even in
the vernacular of what we are saying here tonight. What we are doing is
very simply this--I said it yesterday, I think, or the day before--they
said it was a historic session. Yes, it is a historic session. We are
destroying an industry that has served this country for 300-plus years,
and we are simply wiping it out.
Now, when you go to the 77,000 workers in North Carolina and say to
them, your job is gone, your industry is gone, but the good news is
that international air travel is cheaper for you--most of them haven't
been out of the county. So that is what we are saying here.
I don't doubt that the real interest here is to reduce and enable
people to deduct their health insurance. I didn't notice that it was
proposed to be paid for by any 10-cents-a-bushel tax on corn. And they
go back to Illinois and Missouri and explain to the corn farmers there
that we really have done you a great favor. No, it is on tobacco, which
has been the whipping boy. Anybody in the Senate or in the Congress in
the last year or two that had an ax that needed to be ground, they have
come to the tobacco industry to grind it for them. That is very simply
what happened. This is a source of money for whatever eleemosynary or
good feeling or cause we have. This is a source of money.
As has been said earlier, enough is enough. I hope colleagues in the
Senate will recognize that this has gone far enough. It breaks a budget
agreement, and it is time to stop it.
I thank the Chair.
The PRESIDING OFFICER. Who yields time?
Mr. ROTH. Mr. President, I yield 5 minutes to the distinguished
Senator from North Carolina, Mr. Helms.
The PRESIDING OFFICER. The Senator from North Carolina, Mr. Helms, is
recognized.
Mr. HELMS. Mr. President, we have taken on the air of a Gilbert and
Sullivan comic opera here tonight and all this week. I heard on the
radio, I say to my colleague from North Carolina, on the early morning
news, several days ago, I heard a Senator say, ``Yes, we are going to
give umpteen hundred million dollars to children''--he didn't say
children, he said ``chillin,'' and, oh, how benevolent he was--
``because we are going to raise the cigarette tax,'' we are going to
sock the tobacco companies. Well, he is not going to do any such thing.
But that is what he wants the folks back home to think.
Speaker after speaker has pointed out that you are not taxing the
tobacco companies; you are taxing the lower income people of this
population of the United States. If you don't believe it, look at the
record. Yet, they say, we are socking it to the tobacco companies--the
evil tobacco companies--and they have all sorts of statistics that they
pulled out of their hip pocket, saying how many lives it is going to
save. They are not going to save any lives.
The point is, I say to my friend from Kentucky, it is so much hot
air. They know it is hot air, but they have nothing else to say. And
they want a headline back home that Senator Joe Blow really socked it
to the tobacco companies. No, Joe Blow is not socking it to the tobacco
companies.
He is socking it to the low-income people of this country who do
something that maybe Joe Blow doesn't do--enjoy cigarettes. I don't
smoke. Nobody in my family does. But I will tell you one thing. When
you get down to it, it's a matter of choice and statistics--and you can
play all sorts of games with statistics. But Lauch Faircloth has it
right and so does the distinguished Senator from Kentucky. Both of them
have it right about how many jobs this is going to adversely affect.
This is the game we play. Go ahead and play it if you think you can
win. I hope you can. But get you a little monkey and one of these organ
grinders and sing this debate that you are making about tobacco, then
you can be really funny.
I thank the Senator. I yield such time as I may have.
Ms. MOSELEY-BRAUN. Mr. President, I would like to express my support
for the spirit embodied in Senator Durbin's amendment to S. 949. This
amendment seeks to increase the health insurance deduction for self-
employed individuals to 100 percent. I agree that this is the right
thing to do and that the Senate should consider options for ensuring
that small business owners, particularly women, and farmers have access
to the same tax deductions that are available to large corporations. I
do not, however, agree with the way my Illinois colleague has suggested
we pay for this particular increase, and for that reason, I cannot
support this amendment.
The bill before us today reflects a long and tedious, bipartisan
compromise among the members of the Finance Committee. That compromise,
which provides for increased access to education, increased savings
incentives, family tax relief, and agricultural and business investment
incentives, also reflects some hard choices regarding upon whom the
burden to pay for such benefits should fall. A part of the compromise
made by the members of the Finance Committee was the decision to forgo
increasing tobacco taxes at the present time. This decision was made
with due consideration to the ongoing tobacco litigation, which may
result in a dramatic increase in current tobacco taxes.
I definitely support the spirit of Senator Durbin's amendment. A 100
percent deduction for health insurance premiums could reduce the annual
net cost of health insurance for a typical family by as much as $500 to
$1,000. In addition, such a deduction could provide tax equity for the
10.6 million self-employed Americans who currently can only receive a
40 percent deduction, unlike large corporations, who currently can
deduct 100 percent of incurred health insurance premiums. There is no
doubt that there is merit to the goals of this amendment.
As much as I would like to support the amendment presented by my
colleague today, however, I believe that the compromise made by the
Finance Committee should be honored. To do otherwise could place other
programs and incentives of vital importance to the average American
family and small business at risk. Because I believe that we have an
obligation to make good on the promises of this bill, I cannot support
this amendment.
The PRESIDING OFFICER. Who yields time?
Mr. NICKLES. Would the Senator yield 1 minute to me?
Mr. ROTH. I yield 1 minute to the Senator from Oklahoma.
Mr. NICKLES. I again remind my colleagues. I urge them to vote ``no''
on the Durbin amendment. There may be a point of order raised on it. I
hope they sustain the point of order. I again remind them that right
after this amendment, we will be offering an amendment that will have a
significant improvement on deductibility for self-employed persons, one
that I believe we cannot only pass but hopefully prevail in conference
on as well.
The PRESIDING OFFICER. Who yields time?
Mr. DURBIN addressed the Chair.
The PRESIDING OFFICER. The Senator from Illinois.
Mr. DURBIN. Could I ask my friend and colleague from Delaware, are
there

[[Page S6454]]

any more requests for time on their side of the aisle?
Mr. ROTH. No. I will yield back my time.
Mr. DURBIN. Might I have 3 or 4 minutes? Then I will be prepared to
yield back the floor as well.
Mr. ROTH. Does the Senator have time remaining?
Mr. DURBIN. Yes. I believe I have some time remaining.
The PRESIDING OFFICER. The Senator from Illinois has 23 minutes left.
Mr. DURBIN. I will not use that, I guarantee you.
Let me say this. I want to respond to some of the points raised in
this debate. I have been involved in this debate for over a decade and
have heard many of these arguments, and I disagree with them. But I do
respect my colleagues both in the House and in the Senate who make
these arguments. I believe they are heartfelt and sincere. I believe
they are speaking for the people that they represent.
I believe I am speaking for the people that I represent not only in
Illinois but across the Nation when I talk about the need to have some
fairness when it comes to hospitalization insurance premiums and to
stop all of the promises that have gone on for more than a decade that
we are going to give these people fairness. ``Oh, we love small
business. Oh, we love the family farmer. We are going to get around to
helping you on health insurance matters in the next year 2 years.''
Senator Nickles said maybe 10 years from now we are going to get around
to it.
Please. I have been involved in that debate. Senator Dorgan has.
Senator Conrad has. This has gone on for more than a decade.
All of these promises we can deliver on tonight.
Listen to the arguments. Again, I find it incredible.
One of my colleagues from Kentucky stands up and says this busts the
budget deal. What? There was a provision in the budget deal that I
voted for on this floor that limited the tobacco tax to only a 20-cent
increase? I missed that provision. I don't think it was in there. If
you will read it closely, that wasn't part of the budget deal.
I might say to my colleagues. This is meddling strange--that you can
impose a 20-cent increase in the Finance Committee, and it has no
impact on employment in Kentucky or North Carolina, but Durbin wants to
put 11 cents on, and all of a sudden we have thousands of people out of
work. My goodness. Twenty cents has no impact, and 11 cents more we
have tipped the scales, and it is all over for tobacco? Give me a
break. Give me a break.
What we are talking about here is an 11-cent increase on an item
which is going to cost you $2, $3, or $4 a pack anyway.
You know, they talk about it being a regressive tax. Poor people
smoke. Yes, they do. Yes, they do. They are correct in saying that.
Eighty-five percent of the people smoking today--poor and rich, it is
the same thing--``I wish I could quit. I really wish I could quit.''
Some of them say, ``You know, if the tax gets too high, I might not be
able to afford these darned things.''
So you are talking about helping poor people. You are going to help
them quit smoking, and help them live a little longer. That is a real
help.
Again, one of my colleagues said, ``Why don't you go around and tax
corn? You have corn in Illinois. Why are you taxing tobacco from my
State?''
There is a big difference. The corn in Illinois and the corn in
Missouri can be used for nutritious purposes. When it comes right down
to it, tobacco is neither food nor fiber--neither food nor fiber.

And let me add this. Tobacco is the only crop regulated by the U.S.
Department of Agriculture which has a body count, the biggest single
preventable cause of death each year. Don't stand up and tell me this
is another agricultural product, another farm commodity. This is an
item which, used according to manufacturers' directions, will kill you.
That is what tobacco is all about. It is not another agricultural
product.
So when you talk about imposing a tax on this, we are talking about
the health of America and the health of children. Oh, yes, in that low-
income group, that regressive tax, that tobacco tax--the low-income
group includes a lot of Americans who live on allowances they get from
their parents. Those are the low-income Americans, too, kids going and
buying tobacco on the corner.
Mr. FAIRCLOTH. Will the Senator yield?
Mr. DURBIN. I am happy to yield.
Mr. FAIRCLOTH. Would you give me an estimate of how many people are
sick or die from drinking liquor a year made out of corn?
Mr. DURBIN. I can't answer you that question.
Mr. FAIRCLOTH. If you know a lot about tobacco, then you should know
something about corn.
Mr. DURBIN. I know that corn is a nutritious product and can be used
and is probably consumed on a regular basis by the Senator who asked me
the question. He looks pretty healthy.
I will tell you something else. Tobacco is the No. 1 preventable
cause of death in America today. You can't say that about corn,
soybeans, wheat or any other commodity. You can't say that about it.
You know it as well as I do. You can't make light of the fact that a
product, if used as intended, kills people. You can't make light of the
fact that when you follow the manufacturers' directions, you die when
you use that product.
Mr. FAIRCLOTH. What is the point? I am not trying to--
Mr. DURBIN. Mr. President, let the Senator speak on his own time.
Mr. President, regular order.
The PRESIDING OFFICER. The Senator from Illinois has the floor.
Mr. DURBIN. Let me tell you this in closing.
I have heard a lot of arguments tonight made about the defense of
tobacco. I say to my colleagues on both sides, if you are ready to vote
for this tax bill, you are already imposing a tax on tobacco of 20
cents. I am saying to you that 11 cents is going to buy a lot of good
for America--not only keeping the products out of the hands of kids but
finally keeping our promise to small business and family farmers.
I urge you to look beyond some of the arguments that you have heard
tonight, that you have heard over and over again, and think about the
bottom line when this is done. Thirty-one cents on a package of tobacco
is not going to break the tobacco industry. But it is going to save a
lot of small businesses which will have a chance to survive.
I yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. ROTH. Mr. President, I make a point of order that a quorum is not
present.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. ROTH. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ROTH. Mr. President, has the distinguished Senator from Illinois
returned all time?
The PRESIDING OFFICER. No. The Senator from Illinois has 18 more
minutes remaining.
Mr. ROTH. Does the Senator want to yield back?
Mr. DURBIN. I am prepared to yield back my time.
Mr. ROTH. I am prepared to yield back the remainder of the time.
The PRESIDING OFFICER. All time is yielded.
Mr. ROTH. Mr. President, the pending amendment is not germane to the
provisions of the reconciliation measure. I, therefore, raise a point
of order against the amendment under section 305(b)(2) of the Budget
Act.
I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
Mr. DURBIN. I move to waive the Budget Act, and I ask for the yeas
and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
Mr. ROTH. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. ROTH. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.

[[Page S6455]]

The PRESIDING OFFICER. Without objection, it is so ordered.

Vote on Motion to Waive the Budget Act

The PRESIDING OFFICER. The question occurs on agreeing to the motion
to waive the Budget Act in relation to the Durbin amendment No. 519.
The yeas and nays have been ordered. The clerk will call the roll.
The legislative clerk called the roll.
Mr. NICKLES. I announce that the Senator from Kansas [Mr. Roberts] is
necessarily absent.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
who desire to vote?
The yeas and nays resulted--yeas 41, nays 58, as follows:

[Rollcall Vote No. 137 Leg.]

YEAS--41

Abraham
Biden
Bingaman
Bond
Boxer
Bumpers
Collins
Daschle
DeWine
Dodd
Dorgan
Durbin
Feingold
Feinstein
Glenn
Gorton
Gregg
Harkin
Hutchison
Johnson
Kennedy
Merry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lugar
McCain
Mikulski
Murray
Reed
Reid
Santorum
Sarbanes
Shelby
Specter
Torricelli
Wellstone
Wyden

NAYS--58

Akaka
Allard
Ashcroft
Baucus
Bennett
Breaux
Brownback
Bryan
Burns
Byrd
Campbell
Chafee
Cleland
Coats
Cochran
Conrad
Coverdell
Craig
D'Amato
Domenici
Enzi
Faircloth
Ford
Frist
Graham
Gramm
Grams
Grassley
Hagel
Hatch
Helms
Hollings
Hutchinson
Inhofe
Inouye
Jeffords
Kempthorne
Kerrey
Kyl
Lott
Mack
McConnell
Moseley-Braun
Moynihan
Murkowski
Nickles
Robb
Rockefeller
Roth
Sessions
Smith (NH)
Smith (OR)
Snowe
Stevens
Thomas
Thompson
Thurmond
Warner

NOT VOTING--1

Roberts

The PRESIDING OFFICER. On this vote, the yeas are 41, the nays are
58. Three-fifths of the Senators duly chosen and sworn not having voted
in the affirmative, the motion is rejected.
The point of order is sustained and the amendment falls.
Mr. ROTH. Mr. President, I move to reconsider the vote.
Mr. MOYNIHAN. I move to lay that motion on the table.
The motion to lay on the table was agreed to.

Amendment No. 518

Mr. BAUCUS. Mr. President, I opposed the Bumpers Amendment that would
repeal percentage depletion for hardrock mining companies operating on
public and formerly public lands. I believe this amendment is the wrong
approach to bringing about mining law reform.
Hardrock mining provides many high-paying jobs and is essential to
the economy of Montana. This amendment would raise taxes on the
hardrock mining industry which will negatively effect everyone that
depends on mining for their economic livelihood.
The intent of this amendment is not about percentage depletion. This
amendment is an overt attempt to punish the hardrock mining industry
for the lack of success in reforming the 1872 Mining Law. Percentage
depletion is being used as a surrogate to bring about reform. If there
are problems with the 1872 Mining Law, we should approach those
problems directly--not in the form of repealing percentage depletion.
Let's not wage economic warfare against an entire industry.
The repeal of percentage depletion is the wrong tool for bringing
about mining law reform. The Bumpers amendment could have potentially
devastating effects on the hardrock mining industry.

children's health care provision

Mr. McCAIN. Mr. President, today, I voted for an amendment to the
Budget Act which would improve access to health insurance for uninsured
children in our country by providing an additional $8 billion to the
$16 billion already contained in this bill for children's health care.
This $24 billion in new Federal funding will allow us to expand
Medicaid coverage for very low-income children and will put affordable
health care insurance within the reach of every family.
I am deeply concerned about the approximately 10 million children in
our country who are currently lacking health insurance coverage. It is
distressing that such a large number of our children lack access to
primary and preventative care. I find it even more disconcerting that
recent reports indicate that most of these children reside in families
with one or more working parents.
Providing access to health care for uninsured children has been a
priority for me since coming to the Senate. During the 103d Congress, I
offered legislation which attempted to address this problem and provide
access to health care for many of our Nation's uninsured children. This
issue has remained a high priority for me in the 105th Congress and I
am pleased that we were able to pass this amendment today.
This amendment is financed by a 20-cent-a-pack increase in the
cigarette tax, which will raise enough revenues to provide the
additional $8 billion for children's health insurance coverage.
Although I have traditionally opposed new taxes, I believe that this
proposal is necessary to help working parents purchase affordable
health care coverage for their children.
I wholeheartedly believe that every child deserves a healthy
beginning in life. There should not be any children in our country who
cannot count on access to quality health care when they need it. I
believe that this bipartisan children's health insurance proposal will
address this problem in a fiscally responsible manner and allow us to
provide coverage to our Nation's most vulnerable population.
Mr. MURKOWSKI. Mr. President, I rise in strong support of the tax cut
bull that forms the heart of the second reconciliation bill.
I want to take this opportunity to commend the chairman of the
Finance Committee, Senator Roth and the ranking member, Senator
Moynihan, for their efforts in ensuring that the Finance Committee's
bill was reported with strong bipartisan support. I hope the spirit of
bipartisanship that permeated the committee's work will extend to our
debate on the Senate floor.
Mr. President, during this past week, we considered the first budget
reconciliation bill which was designed to slow the growth of Federal
spending and to stop the hemorrhaging of the Medicare Program. And we
successfully achieved both goals while at the same time making a
commitment to boost funding by $16 billion to enable more children in
America to obtain health insurance.
The tax bill we are considering today builds on that achievement by
earmarking $8 billion from increased tobacco taxes for expanded
children's health insurance. With this unprecedented $24 billion
commitment of funds for children's health insurance, I believe the
Senate has made an investment in the health of the children of America
that should alleviate the anxieties and fears of millions of parents
about paying for the health care of their children.
What is even more remarkable about the reconciliation bills we are
considering this week is that at the end of the process, we will have
set this Government on course to finally achieve a balanced budget.
While I believe the tax cuts contained in this bill provide much needed
financial relief for the vast majority of working Americans, I believe
our greatest achievement is balancing the budget.
What that means is that when this agreement is fully implemented in 5
years, the Federal Government will no longer have to borrow to keep
this Government operating. Most importantly, the balanced budget will
give us the opportunity to finally begin paying down our enormous $5-
plus trillion national debt.
Mr. President, on Monday, the world's financial markets were reminded
of the enormity of the American Government's debt and the impact that
debt has on the global marketplace. When Japanese Prime Minister
Hashimoto suggested that he was tempted to sell off portions of Japan's
American debt portfolio to stabilize the yen/dollar exchange rate,
markets plummeted throughout the world. On Wall Street, we saw the Dow
Jones average drop 192 points, the second largest point decline in
exchange history.
Although markets recovered after Japan's Finance Minister dismissed
the idea that Japan would dump it's Treasury securities, the lesson is
unmistakable. The security of our economy can

[[Page S6456]]

never be assured so long as this country continues to run deficits and
pile up billions in additional debt. As long as we must turn to world
markets to finance Government spending, our economy's health is always
in danger of being held hostage to the political whims of foreign
governments and speculators.
That is why it is so important that we balance the budget and begin
to pay down the debt. And that is why these reconciliations bills are
vital to our Nation's economic security.
Mr. President, the tax bill before us provides much-needed relief for
the hard-working middle-income families who have not seen their tax
burden reduced in 16 years. Despite what some of my colleagues on the
other side of the aisle may allege about this tax bill, the lion's
share of the income tax cuts--81 percent--will go to families earning
between $12,000 and $62,000.
This bipartisan bill will reduce the taxes paid by every low- and
middle-income family with a child by $500. For a family with three
children under 13, their tax burden will be reduced by $1,500. That's
$1,500 that the family will have available to pay off bills, buy
clothing for their children or spend as they see fit.
A provision in the bill requires families with children between the
ages of 13 and 17 to invest their $500 children's tax credit in an
educational savings account. While I think it is important that we do
as much as we can to encourage families to save for college, I think it
is inappropriate for us to require families to establish these
accounts. I will support an amendment that will debate this provision
from the bill.
The bill also provides more than $30 million in tax relief for
families that are facing enormous college education bills. And it
encourages economic growth and savings by reducing the capital gains
tax and expanding individual retirement accounts.
I also applaud the changes the committee made to the estate tax, with
the goal that family businesses should be kept together rather than
split apart in order to pay estate taxes. In fact, Mr. President, it is
my hope that we can fundamentally change, if not eliminate, the estate
tax with what can only be called confiscatory tax rates. Although we
have not been able to achieve that result in this bill, I think that
should be one of our goals when we consider fundamental tax reform in
the future.
Mr. President, the items I have just noted represent the highlights
of the bill. What is again worth mentioning is how we were able to
craft this bill. We did it with input and good debate between
Republicans and Democrats on the committee. There was no rancor. We
were not partisan, we tried to work within the confines of the budget
agreement negotiated by our leadership with the White House.
I would hope that that spirit of bipartisanship will continue as we
debate this bill since I think we can all agree that the goal of
providing tax relief for hard-working Americans and encouraging savings
and investment are in the best long-term interests of our Nation.

Amendment No. 518

Mr. KYL. Mr. President, as he has done numerous times over the past
10 years, Senator Bumpers again attacked the hardrock mining industry
in the United States. This time, he chose to introduce an amendment to
the Tax Reconciliation Bill to repeal the percentage depletion
allowance. This allowance has been in the tax code for over 60 years
and repeal would be an arbitrary tax increase on the industry.
Repeal of the allowance is a tax increase. Mining companies cannot
recover higher costs, including higher taxes, by raising prices because
mineral prices are set by international commodity market. It should be
noted that the mining industry already pays high average federal tax
rates--32 percent per a GAO study--because of the corporate alternative
minimum tax.
In addition to the damage that would be done by this arbitrary tax
increase, I would emphasize that this is not the way to reform the
mining law. Although Senator Bumpers and I may not agree on the
specific reforms necessary, we do both agree that a comprehensive,
responsible reform is necessary. Along with my other Western
colleagues, I would like to see reform that is environmentally sound
and allows industry to thrive in a healthy and supportive atmosphere. A
one-shot tax increase on the Senate floor is neither comprehensive nor
responsible. Any reform of such an economically significant domestic
industry should be done through the committee process where all parties
have a chance to be heard and the issues can be dealt with in a
thoughtful and meaningful manner.
I voted against the Bumpers amendment today and I am pleased that it
was defeated.

broad base reform

Mr. SHELBY. Mr. President, the bill before the Senate tonight,
promises to provide about $75.8 billion in tax relief over the next 5
years and approximately $238 over 10 years. Mr. President, that is a
good step forward. But, Mr. President, I rise tonight to remind and
encourage my colleagues that while this bill might be viewed as a good
step forward in providing tax relief to the American people. It is just
that: a step forward--hopefully, toward greater reform in the future.
I will offer a sense-of-the-Senate resolution for a very simple, but
very important purpose: We must not forsake our broader agenda to seek
comprehensive reform of our tax system. Tax cuts are not a substitute
for broad based reform.
Mr. President, while we live in a society that accepts the notion
that some level of taxation is necessary to finance the cost of
government, our challenge has always been how much government and at
what cost.
In my view, the power to tax is the most ominous and potentially
destructive power granted to government by the people and that is
because taxes empower governments, not people, With that in mind, our
tax policy should do no more harm than is necessary to achieve its
stated good. This maxim underscores why we need to change our current
system, and specifically eliminate the estate and capital gains taxes.
Our current tax system promotes waste and inefficiency, penalizes
savings and investment and rewards dependency. Not only is the current
Tax Code inequitable in who and how it taxes, it is responsible for
fueling much of the growth of government and Federal spending. Changing
how we collect revenue to pay for the cost of government will be a
significant step in helping devolve power from Washington back to the
people and restoring greater freedom.
We need to address significant tax policy changes that will not only
provide taxpayers' relief, but will simplify and equalize tax
collection. Taxation is bad enough without administering that tax
through an inefficient, inequitable, complex and unresponsive tax
system.
Yesterday, the National Commission on Restructuring the IRS came out
with their report and recommendations. I have not had an opportunity to
review their report completely, but I did note that simplification on
the Tax Code was among one of their primary recommendations, including
establishing one broad based tax system.
While the Commission was not tasked and did not address specific
legislative proposals to reform the tax system, I believe that the
underlying principle of seeking a``truly fair and comprehensive'' tax
system is something we can all agree on And I would take this
opportunity to commend my colleagues from Nebraska and Iowa for their
leadership on this issue.
While I believe a flat tax is the most equitable replacement that
supports the most freedom at the least cost--this resolution is not an
endorsement of the flat tax. It only calls for Congress and the
President to move forward with consideration of broad based reform.
While this bill attempts to reverse the punitive effects of our tax
policy and tax system which currently punishes the basic values of
work, savings and individual liberty, it is not sufficient to undo the
basic premise that seems to underlie the current system and that is
that the Government is entitled to all that you earn. And only through
selected, targeted tax credits, deductions, exemptions and the like are
the American people allowed to keep portions of the income that they
work hard every day to earn.

[[Page S6457]]

Our tax policy should support the most freedom at the least cost and
embody the least intrusive means of levying and collecting taxes. But
most importantly of all, Mr. President, we need a policy that does not
punish the basic values of work, savings and individual liberty.
Mr. President, without comprehensive tax reform, we will never truly
be able to say that the era of big government is over.
Mr. President, I would encourage my colleagues to join me and the
Senator from Idaho in supporting this sense-of-the-Senate resolution.
Mr. LOTT. Mr. President, I do want to propound a unanimous consent
request here, that would allow us to carry out the indication that we
have put at the table here that this would be the last vote of the
night.
Before I do that, I want to say again I really appreciate the
bipartisan cooperation that we have had throughout this week. I think
it has made the Senate look good and it has taken a lot of work and
several of us have had to keep our commitments in a way that was not
always easy, but we have stuck by it on both sides of the aisle. I
thank the Senators for doing that. I appreciate also your tolerance
when I suffered mightily on one of the votes myself today.
The chairman and the ranking member have been a pleasure in working
through all of this. I thank them and their staff. It is a little
premature. I think we are tired, we are trying to find a way to
complete our work, but it is important we also take note of the fact
that we have been doing some good work working together. We want to
keep that going.
So we have a unanimous consent request that we have worked with
Senator Daschle on. He has made a lot of very positive recommendations.
We think this would be the fairest way under the process that we have
now to complete our work.
I want to say, Senator Daschle and Senator Domenici, Senator Byrd and
I have been talking about the fact that we need to take a look at the
process and see if we cannot come up with a little better way to do it
without the votes in seriatim at the end of this process. Senator Byrd
has a resolution he is going to introduce. Senator Daschle and I are
going to appoint a task force of senior Senators to see if we cannot
come up with some ideas we can agree to, to allow this process to be
done better in the future.

Unanimous Consent Agreement

Mr. LOTT. But, in view of what we have to deal with, I ask unanimous
consent, now, that during the remainder of the consideration tonight of
S. 949, the following be the only amendments in order, other than
agreed-upon amendments to be offered by the managers: The Nickles
amendment, the Gramm amendment, and Kerry of Massachusetts amendment. I
further ask at the conclusion of the debate on the above listed
amendments, it be in order for any Member of the Senate to address the
Senate with respect to an amendment that may be offered after all time
is expired, but there be no further amendments to be in order this
evening.
I further ask that at the conclusion of the remainder of the time on
S. 949, the Senate automatically proceed to a period of morning
business with Senators permitted to speak for up to 10 minutes each.
That way, if all time has expired and you have an amendment that you
are going to offer tomorrow, you have that 10 minutes in which you can
explain tonight what your intentions are, what is in the amendment; so
I ask at the conclusion of the remaining time on S. 949 the Senate
automatically proceed to this period of morning business.
Mr. BIDEN. Reserving the right to object.
The PRESIDING OFFICER. Is there objection?
Mr. DOMENICI. Reserving the right to object. Mr. Leader, would you
clarify for me please, and I regret to take your time, will there be no
amendments offered tomorrow that are not offered tonight?
Mr. LOTT. No. Under this agreement, if a Senator has not had the
opportunity to offer his amendment today, he or she would be able to
offer their amendment in the morning with time equally divided between
those for and against it, 2 minutes each--the usual 1 minute on each
side to explain that amendment and a vote.
Mr. DOMENICI. Mr. Leader, they would have 1 minute on a side
tomorrow?
Mr. LOTT. Yes. Right.
Mr. DOMENICI. Mr. Leader, we have worked with everybody that had
process amendments. They don't have to offer them, and I am not asking
especially for them to offer them, but I wonder if we couldn't get an
agreement that would set in motion, so everybody would understand,
these process amendments? Could I try a request on for you and see if
you can agree?
I ask consent that the withdrawn amendment No. 537, that withdrawal
be vitiated--that is the one I offered--and that a motion to waive with
respect to amendment 537 be made and that it not be amendable, the
motion to waive is agreed to the amendment, and if it is, it be treated
as original text. Then I ask consent that the following Senators, if
they choose, be authorized to offer amendments for budget process:
Biden, Gramm--Senator Gramm of Texas, Senator Bumpers, Senator Gregg,
Senators Brownback, Frist, and Abraham. And if they offer them they
would be taken up in that order tomorrow.
Mr. LOTT. These are the amendments having to do strictly with process
questions. I know there is a lot of interest in these process
amendments. I am not familiar with the content of all of them.
Several Senators addressed the Chair.
Mr. LOTT. Our understanding is Senator Byrd is going to offer his
separately.
Mr. President, I renew my request based on the three-unanimous
consent request paragraphs I read, with the addition of the Domenici
request.
Mr. REID. Reserving the right to object.
Several Senators addressed the Chair.
The PRESIDING OFFICER. The Senator from Nevada.
Mr. REID. Mr. President, I direct the question to both leaders. I
have some trouble understanding why there would be amendments in order
in the morning. It would seem to me this process has gone on for
several days and there should come a time when you make a decision
whether you are going to offer an amendment. The leaders have been very
generous, they are going to allow amendments to be offered after the
time has expired. But I would think that should end sometime tonight. I
don't think we should come in here in the morning, fresh as daisies,
with a big pile of new amendments.
Mr. LOTT. The Senator's point is well taken and I certainly agree.
Senator Daschle and I would hope there would not be a long series of
amendments offered tomorrow.
Some Senators will feel very strongly and feel like they should have
that opportunity. Under the rules as they now exist we could not cut
them off. We have had a good debate. We have had the alternative
amendment offered by the Democratic leader. We have had other good
amendments and debates that occurred. We hope we could bring it to a
conclusion at a reasonable time tomorrow.
I remind my colleagues we had 16 votes yesterday, I believe it was.
We started at 9:30 and we finally concluded that at about 5 o'clock
yesterday afternoon. Now I believe we can do a better job. We'll start
earlier tomorrow and we will stick to the 10-minute vote after the
first vote. And we will try to move it right along. But we found the
other night that when we said OK, just leave your amendment with the
managers of the bill, when we came in in the morning we had 61
amendments. Then the leadership, Senator Daschle and his whip team, as
we were, were running around trying to find out which amendments
really--what they do. You know, will the Senator insist on offering it?
Can we get them accepted? It really complicated the process.
We really believe by this process Senators will be able to debate
these amendments and other amendments tonight. Then they, based on
their thinking tomorrow, they would have the opportunity or perhaps
would choose not to offer the amendments tomorrow. But if they do we
cannot--we cannot cut off the Senators' right to offer an amendment.
Mr. REID. Reserving the right to object, continuing my reservation, I
say

[[Page S6458]]

to my friend the majority leader, I am going to withdraw my
reservation. But I do say this. I want everyone to hear, including the
senior Senator from West Virginia. If we don't get a change in the
process by next year I am going to object to everything. This is a
ridiculous process. I don't think it is good for the system and I hope
we change it.
Mr. LOTT. I agree and I appreciate the Senator's comment on that. I
have been thinking that for several years. I remember one day here we
had, what, 39 votes and set a record, a historical record Senator Byrd
told us. It is just not a good process.
We are committed to coming up, by September 8, within the next couple
of months, with a way to change the process. In fact, Senator Byrd has
some good ideas. But I just want to make sure that we have thought it
through and we don't start and change it without thinking about
unintended consequences. I don't believe anybody intended 10 years ago,
when reconciliation was set up, that it would lead to this type of
voting process. We are committed on both sides, the leadership and our
senior Members, to coming up with a better process. We are going to do
that. We certainly would like the input of the Senator from Nevada,
too.
Mr. DASCHLE. Mr. President, reserving the right to object?
Mr. ALLARD. Mr. President, I say to the majority leader, I did not
hear my name listed on that list of amendments, it is the Allard-
4Abraham-Brownback amendment.
Mr. DOMENICI. We have Senator Brownback. Do you have a separate one
from Senator Brownback?
Mr. ALLARD. It's under my name actually, Allard-Brownback; Senator
Abraham is a cosponsor.
Mr. LOTT. It's Allard-Brownback. OK. We got that.
Mr. DASCHLE. Mr. President, reserving the right to object.
The PRESIDING OFFICER. The Democratic leader.
Mr. DASCHLE. For purposes of clarification, let me first say I
subscribe to what the majority leader is attempting to do here. We hope
that we can accommodate the largest number of Senators with this
process. I think there are some questions, however, about what happens
tomorrow morning beginning with what time we vote. I think the majority
leader has now indicated 9 o'clock.

Mr. LOTT. Yes, 9 o'clock, so we will start earlier and we will start
voting--we would have the brief explanation and we would start voting
immediately after that. We would then vote one after the other until we
completed the process.
Mr. DASCHLE. The second question has to do with the request made by
the distinguished Senator from New Mexico. As I understand it, what he
is attempting to do is sequence a series of amendments. I guess the
question would be, at what point tomorrow does that sequencing begin?
Mr. DOMENICI. I think that's up to the floor manager as he sequences
over the evening. He'll go over all the amendments and I assume he'll
sequence the way we did and put the whole list together. We are not
seeking any special preference in that list.
Mr. DASCHLE. It doesn't preclude any other Senator from offering
amendments?
Mr. LOTT. Not at all. It would not preclude other Senators from
offering amendments. I want to say to the Senator--
Mr. DASCHLE. The question would be--I'm sorry, if I can just
interject? If there was an amendment on one of the amendments offered,
would the sequencing preclude an amendment to one of the amendments?
Mr. DOMENICI. I did not make that request.
Mr. DASCHLE. I ask consent that be considered. I don't think that
would matter, but I think we need to protect Senators in that regard.
Mr. DOMENICI. If a Senator wants an up-or-down vote on his process I
would not object to that request.
Mr. LOTT. I have not had a chance to get into the specifics of each
one of these amendments, but I hope we could pursue the possibility of
not going through the long list of process amendments. At least half of
these are on our side of the aisle. So I hope we could find another
time, another day, another way to do these process amendments. I will
certainly be working on that later on tonight and in the morning.
Since we have the first 3 votes already lined up that would give us
time to do some work on exactly whether or not this is essential. I
will work with Senator Daschle on that.
Mr. DOMENICI. Mr. President, there are points of order not waived on
any of these. The points of order--if people want to make them you have
to get 60 votes and everybody knows that.
The PRESIDING OFFICER. Is there objection? The Senator from
Minnesota.
Mr. WELLSTONE. Mr. President, this is not an objection. I am not
going to object. But just the question, if I could ask it. My
understanding is--I mean, there are a number of us--all of us would
like to finish. Some of us have been waiting a long time, many, to have
amendments and to discuss them and I don't think we want to prolong the
matter. My understanding is as opposed to the beginning of the week, we
don't actually have to lay the amendment down tonight in order to have
that amendment up tomorrow; am I correct? My second question is,
wouldn't it be a little bit more expeditious if in fact the amendment
could be laid down so we don't have to go through that process at all
tomorrow morning with the requirement if they are not laid down tonight
they would be out of order?
Mr. LOTT. We have discussed that back and forth. We tried to again,
in a bipartisan way, figure the best way to deal with this, the fairest
way, and also the way that would hopefully not lead to the largest
number of amendments. We really think that we may actually wind up
having fewer amendments finally voted on tomorrow by doing it this way.
We tried it the other way. Bear with us as we try it this way.
Again I urge, unless you just really feel you have to have a vote on
your amendment tomorrow I urge you, and I will be saying it on this
side--but but if you feel strongly, you can talk about it tonight and
offer your amendment tomorrow.

Mr. DODD. Reserving the right to object.
The PRESIDING OFFICER. The Senator from Connecticut.
Mr. DODD. I inquire of our leader or our friend from New Mexico, is
it necessary the process amendments be considered as part of this
budget agreement, or would it not be better to deal with that as a side
issue and deal with the amendments that bear directly on the tax bill
and then bring up the process amendments on a separate occasion? Is
there reason that has to be a part of this, I inquire of the leader or
distinguished Senator from New Mexico?
Mr. DOMENICI. I could have offered a process amendment that I think
is needed and other Senators think are needed. I could have offered it
on the first bill that went through here, the reconciliation bill. I
chose to wait for this bill. It is just as in order on this bill and
just as subject to a point of order on this bill as on the other bill,
but there is no other reconciliation bill coming down the field.
Mr. DODD. I understand. If my colleague will yield, I understand
this. Time is running out. If we don't debate it this evening or during
morning business, tomorrow we will be limited to a 1-minute explanation
of process amendments that have to do with the budget process that I
think are rather significant.
I am concerned that something as profound as dealing with the budget
process is left to seconds to debate them, and unnecessarily so. I
raise the issue of whether we ought to set that for a separate time,
rather than deal with this?
Mr. LOTT. Mr. President, if I can respond again, I share a lot of the
Senator's feelings. We will work to see if there is some way we can get
an agreement on these process amendments to limit the number or to find
another time and opportunity for them to be offered.
I remind you that yesterday, one unanimous consent agreement that we
worked out took nine amendments off the board in one swoop, and we
agreed to something that was passed by voice vote. I am not sure we can
do that here. Part of what we need is a little time to work with what
we have left.
Mr. DODD. I understand.
Mrs. BOXER. Reserving the right to object, and I shall not object, I
have a

[[Page S6459]]

question for the majority leader. If we were able to work out
amendments cleared on both sides, is it necessary for us to personally
offer it, or can one of the managers offer it in our name if it has
been cleared, because that would speed things along.
Mr. LOTT. The UC specifically says ``other than agreed upon
amendments to be offered by the managers.''
Mrs. BOXER. I want to make sure they will be offered in the name of
the Senator who wrote them rather than the manager.
Mr. LOTT. I believe that is the way they do them.
Mrs. BOXER. I have no objection.
Mr. COATS. Reserving the right to object.
Mr. BYRD. Mr. President, reserving the right to object.
The PRESIDING OFFICER. The Senator from Indiana.
Mr. COATS. Mr. President, I have a question for the majority leader.
He listed three amendments to be debated this evening, I believe those
of Senator Nickles, Senator Gramm of Texas, and Senator Kerry. Is there
a time limitation on the debate of those? The reason I ask is because
for those who want to stay afterward and take the 10 minutes to
describe an amendment that will be offered tomorrow, it will be good to
know that there is some limitation on the time for debate for those
three particular amendments.
Mr. LOTT. In answer to the Senator, I say there was no time agreement
worked out, partially because the Senators didn't want that time
agreement. I am hoping they will be actually relatively short in time.
I know Senator Nickles doesn't need a lot of time. I believe these
amendments will go relatively quickly, and there will be time left for
other Members to address the Senate on their amendments. And then after
that, when all time has expired, Senators can still talk in morning
business for up to 10 minutes. We did not get a time agreement in our
effort to get the UC worked out, but I think we are talking about a
relatively short period time of time.
Mr. BYRD. Mr. President, reserving the right to object.
The PRESIDING OFFICER. The Senator from West Virginia.
Mr. BYRD. My reservation, Mr. President--
The PRESIDING OFFICER. May we have order in the Senate, please? The
Senator from West Virginia.
Mr. BYRD. While I have submitted a reservation, may I offer a
parliamentary inquiry? Will a motion to recommit, either a straight
motion to recommit or a motion to recommit with instructions, still be
in order, even though a Senator has not reserved a spot on this list?
The PRESIDING OFFICER. Under the Budget Act, the only motion to
recommit that can be considered is one that occurs within 3 days; it
specifies the bill be reported back in 3 days.
Mr. BYRD. And is that motion in order any time prior to the
conclusion of action on the bill?
The PRESIDING OFFICER. That is correct.
Mr. BYRD. Mr. President, reserving the right to object--I will not
object--I am concerned about these process amendments. I am
particularly concerned that there may be a process amendment that would
wipe out the Byrd rule. I am also concerned that there might be a
process amendment that would wipe out all 60-vote points of order.
Either of those would be pretty fatal to this process.
And I hope that while we have both leaders here and a good size
attendance, that we will be very aware, very alert to the possibility
of either of those, which would mean that the reconciliation process,
as we know it--perhaps we don't like it as we know it--but it will be
gone. Period. I hope it won't happen. Would the Senator include me as a
Senator who might offer a process amendment or a motion?
Mr. DOMENICI. I so request. May I say to Senator Byrd, we very
carefully looked at these amendments with the view that you have in
mind, and I can tell you that none of the process amendments that are
listed in the unanimous-consent request address either the Byrd rule,
nor do any of those amendments--what was your other?
Mr. BYRD. Wipe out 60-vote points of order.
Mr. DOMENICI. Nor do they attempt to permit us to vote with less than
60 votes on any of these matters that are subject to a point of order.
Mr. BYRD. Mr. President, I am greatly relieved, and I thank the
Senator.
Mr. LOTT. Mr. President, before I put forth the unanimous-consent
request one more time, we did add the Byrd resolution or amendment to
the process list of amendments, and I renew my unanimous-consent
request.
The PRESIDING OFFICER. Is there objection? Without objection, it is
so ordered.
Mr. LOTT. For the information of all Senators, then, there will be no
further votes tonight. Following debate on the three amendments, any
Senator wishing to discuss an amendment that may be offered tomorrow
may do so. The Senate would then begin voting at 9 a.m. on Friday, on
or in relation to the three listed amendments and any amendments
offered tomorrow. If Senators do intend to offer amendments tomorrow, I
urge them to please give a copy to the managers, since there will be no
debate time other than the 2-minute-equally-divided time. It will be
very helpful to all Senators to have these amendments available so they
can be given to interested Senators.
I yield the floor. We have approximately 1 hour and 5 minutes left of
time on the bill.
Mr. NICKLES addressed the Chair.
The PRESIDING OFFICER. The Senator from Oklahoma is recognized.
Mr. NICKLES. Mr. President, the Senate is still not in order.
The PRESIDING OFFICER. May we have order in the Senate so we can
continue on the 1 hour and 5 minutes that is rapidly dissolving? If
staff will please take their seats and if conversations will please
cease, we can continue with the business of the Senate.
The Senator from Oklahoma.
Mr. NICKLES. Mr. President, I thank you for getting order in the
Senate.
Mr. KOHL addressed the Chair.
Mr. NICKLES. Mr. President, I will be happy to yield to the Senator
from Wisconsin for 2 minutes without losing my right to the floor.
The PRESIDING OFFICER. The Senator from Wisconsin.

Amendment No. 524

Mr. KOHL. Mr. President, tomorrow I will up amendment No. 524 which I
believe is at the desk. This amendment creates a tax incentive for
companies that provide child care for the dependents of their
employees. The amendment is also cosponsored by Senators Daschle,
DeWine, Boxer, D'Amato, Moseley-Braun, Snowe, Specter, and Johnson.
Our amendment creates a tax credit for employers who get involved in
increasing the supply of quality child care. The credit is limited to
50 percent of $150,000 per company per year.
The amendment is based on S. 82, the Child Care Infrastructure Act,
which has received praise from businesses, parents, and day care
workers alike. Working Mother magazine gave the initiative its
``Lollipops'' award in the January issue, and the Children's Defense
Fund has endorsed it. S. 82 is also endorsed by the National Center for
the Early Childhood Work Force and the National Child Care Association.
The amendment responds to a great need, a great challenge, and a
great opportunity. The need is to provide a safe and stimulating place
for our youngest children to spend their time while their parents are
at work. The challenge is to make the American workplace more
productive by making it more responsive to the needs of the American
family. And the opportunity is to take what we are learning about the
importance of early childhood education and use it to help our children
become the best educated adults of the 21st century.
The credit is offset by authorizing an anti-fraud program that will
keep parents who do not have custody of their children from unlawfully
claiming child-related tax benefits.
Child care is an investment that is good for children, good for
business, good for our States, and good for the Nation. We need to
involve every level of government--and private communities and private
businesses--in building a child care infrastructure that is the best in
the world. Our amendment is a first, essential and deficit neutral step
toward that end, and I urge all my colleagues to support it.
Mr. HATCH. Mr. President, I rise to support Senator Kohl's amendment.
This amendment would provide tax credits to encourage businesses and
other institutions to provide child care for their employees.

[[Page S6460]]

This proposal, which is similar to one that I included in my original
child care bill several years ago, would provide a tax credit for
businesses that build on- or near-site day care centers, jointly
participate with other businesses in running child care centers, or
contract with child care facilities. This amendment is important in
order to meet the rapidly increasing demand for child care. I recognize
the importance of finding safe places for our children while their
parents are at work, preferably places where they can learn and have
wholesome fun. We use the Tax Code to encourage a variety of private
endeavors; we should not hesitate to use the tax code to encourage
private businesses to become involved in providing child care for
dependents of their employees.
This tax credit would be equal to 50 percent of the qualified child
care expenditures up to a maximum of $150,000, paid or incurred by the
employer during the taxable year to acquire, construct, rehabilitate,
expand, or operate a qualified child care facility.
Parents of young children are joining the work force in record
numbers, leading to more young children in the need of care as their
parents go off to work. There are more single parents today than ever
before. In has been reported that up to 62 percent of working mothers
have children under 6 years old and 59 percent had children under 3
years of age. This amendment would give incentives for any company,
small or large, to provide child care to its employees.
Studies have shown that organizations that provide child care
benefits to their employees attract and retain better qualified
applicants and experience reductions in employee absenteeism. But, the
argument goes that if the employer benefits from providing child care
benefits, why should we subsidize the costs with a tax credit. That is
not a bad question.
But, I suggest that society has a stake in this as well. Not only
will our workforce respond positively given the peace of mind that
comes from knowing that your children are safe and thriving, but also,
we must be concerned with the health and safety of our children. It is
disturbing whenever we read about children left alone or children in
inadequate or unsafe facilities. I believe that the small innovation of
a tax credit to defray the costs of employer-sponsored child care will
do wonders to address this increasing need of American families.
Mr. President, child care is an investment for the future. It is good
for business, good for our communities, and good for the Nation. There
certainly is a need for quality child care. As a nation, we have made
significant increases in the education of our older children, aged 5 to
25. We have increased Headstart. But, we need to do more. And, we need
to create more options.
This tax credit proposal made by Senator Kohl is the least intrusive
and least expensive way I can think of to stimulate private sector
investments in child care. It is now time to set the infrastructure in
place for the most important years in the development of our children.
There is an increasing struggle to balance work and family. How well we
respond will determine the success of our future.
I encourage my colleagues to support this important amendment, and I
commend Senator Kohl for his work on it.
Mr. KOHL. I ask unanimous consent that this be the first amendment
taken up tomorrow morning for a vote after the three amendments laid
down tonight.
The PRESIDING OFFICER. Is there objection?
Mr. KENNEDY. Reserving the right to object.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KENNEDY. Can I ask a question about whether we can at least get
an understanding about the sequence? I don't mind whether I am fourth
or eighth.
Mr. NICKLES. Mr. President, I think I have the floor.
The PRESIDING OFFICER. The Senator from Oklahoma has the floor.
Mr. NICKLES. Mr. President, I yielded to the Senator from Wisconsin
for 2 minutes, and now I wish to reclaim the floor.
The PRESIDING OFFICER. The Senator from Oklahoma has the floor.

Amendment No. 551

(Purpose: To increase the deduction for self-employed health insurance
costs, and for other purposes)

Mr. NICKLES. Mr. President, tonight I offer an amendment on behalf of
myself, Senator Hagel, Senator Cleland, and Senator Domenici which
would increase the deductibility of health insurance for self-employed
individuals. I will not take long. I mentioned it a couple of times
during debate on the Durbin amendment.
The current law allows for self-employed persons to deduct 40 percent
in 1997. We actually increased that--if I remember, Senator Dole,
Senator Roth and several of us last year in the last Congress increased
that--over several years, and eventually by the year 2004, it would be
at 60 percent. We would like to accelerate that. That is what this
amendment does. It would improve it from 1997, the year we are in, from
40 percent to 50 percent. In 1999, it improves it from 45 percent to 60
percent, and in the year 2003, it improves it from 50 percent to 80
percent, and so on. We want to improve and accelerate health insurance
deductibility for the self-employed.
Mr. President, I used to be self-employed, and it always bothered me
that I used to manage a corporation and the corporation could deduct
100 percent of health care premiums, but my company, when I was self-
employed--it was a janitor service--could only deduct 40 percent. I
would like parity, and, hopefully, eventually we will get there.
In this amendment, we don't get there for several years, but at least
we will accelerate it and make a better deal for self-employed persons
at a more rapid rate.
On behalf of my colleagues cosponsoring this amendment, I send the
amendment to the desk and ask for its consideration.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Oklahoma [Mr. Nickles], for himself, Mr.
Hagel, Mr. Cleland, Mr. Domenici, and Mr. Thurmond, proposes
an amendment numbered 551.

Mr. NICKLES. Mr. President, I ask unanimous consent that the reading
of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

On page 212, between lines 11 and 12, insert:

SEC. __. INCREASE IN DEDUCTION FOR HEALTH INSURANCE COSTS OF
SELF-EMPLOYED INDIVIDUALS.

(a) In General.--The table contained in section
162(l)(1)(B) is amended to read as follows:

The applicable percentage is--in calendar year--
1997..........................................................50 ....

1998..........................................................55 ....

1999 through 2001.............................................60 ....

2002..........................................................65 ....

2003 through 2005.............................................80 ....

2006..........................................................90 ....

2007 or thereafter.........................................100.''....

(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
1996.
On page 159, line 15, strike ``December 31, 1999'' and
insert ``May 31, 1999''.
On page 159, line 18, strike ``42-month'' and insert ``35-
month''.
On page 159, line 19, strike ``42 months'' and insert ``35
months''.
On page 160, lines 10 and 11, strike ``December 31, 1999''
and insert ``May 31, 1999''.
On page 160, lines 19 and 20, strike ``December 31, 1999''
and insert ``May 31, 1999''.
On page 400, between lines 14 and 15, insert:

SEC. __. MODIFICATION OF RULES FOR ALLOCATING INTEREST
EXPENSE TO TAX-EXEMPT INTEREST.

(a) Pro Rata Allocation Rules Applicable to Corporations.--
(1) In general.--Paragraph (1) of section 265(b) is amended
by striking ``In the case of a financial institution'' and
inserting ``In the case of a corporation''.
(2) Only obligations acquired after June 8, 1997, taken
into account.--Subparagraph (A) of section 265(b)(2) is
amended by striking ``August 7, 1986'' and inserting ``June
8, 1997 (August 7, 1986, in the case of a financial
institution)''.
(3) Small issuer exception not to apply.--Subparagraph (A)
of section 265(b)(3) is amended by striking ``Any qualified''
and inserting ``In the case of a financial institution, any
qualified''.
(4) Exception for certain bonds acquired on sale of goods
or services.--Subparagraph (B) of section 265(b)(4) is
amended by adding at the end the following new sentence: ``In
the case of a taxpayer other than a financial institution,
such term shall not include a nonsalable obligation acquired
by such taxpayer in the ordinary course of business as
payment for goods or services provided by such taxpayer to
any State or local government.''

[[Page S6461]]

(5) Look-thru rules for partnerships.--Paragraph (6) of
section 265(b) is amended by adding at the end the following
new subparagraph:
``(C) Look-thru rules for partnerships.--In the case of a
corporation which is a partner in a partnership, such
corporation shall be treated for purposes of this subsection
as holding directly its allocable share of the assets of the
partnership.''
(6) Application of pro rata disallowance on affiliated
group basis.--Subsection (b) of section 265 is amended by
adding at the end the following new paragraph:
``(7) Application of disallowance on affiliated group
basis.--
``(A) In general.--For purposes of this subsection, all
members of an affiliated group filing a consolidated return
under section 1501 shall be treated as 1 taxpayer.
``(B) Treatment of insurance companies.--This subsection
shall not apply to an insurance company, and subparagraph (A)
shall be applied without regard to any member of an
affiliated group which is an insurance company.''
(6) De minimis exception for nonfinancial institutions.--
Subsection (b) of section 265 is amended by adding at the end
the following new paragraph:
``(8) De minimis exception for nonfinancial institutions.--
In the case of a corporation, paragraph (1) shall not apply
for any taxable year if the amount described in paragraph
(2)(A) with respect to such corporation does not exceed the
lesser of--
``(A) 2 percent of the amount described in paragraph
(2)(B), or
``(B) $1,000,000.

The preceding sentence shall not apply to a financial
institution or to a dealer in tax-exempt obligations.''
(7) Clerical amendment.--The subsection heading for section
265(b) is amended by striking ``Financial Institutions'' and
inserting ``Corporations''.
(b) Application of Section 265(a)(2) With Respect to
Controlled Groups.--Paragraph (2) of section 265(a) is
amended after ``obligations'' by inserting ``held by the
taxpayer (or any corporation which is a member of a
controlled group (as defined in section 267(f)(1)) which
includes the taxpayer)''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.

Mr. NICKLES. Mr. President, for the information of all my colleagues,
I think under the unanimous-consent request, already agreed to by the
leader, it has been agreed upon that we will vote on this amendment, I
believe it will be the first amendment we will vote on at 9 o'clock
tomorrow morning.
Mr. MOYNIHAN. Mr. President, might the Senator from Illinois have 1
minute to comment at this point?
Mr. NICKLES. Certainly.
Mr. DURBIN. Mr. President, I thank the Senator from New York.
I will be supporting the Senator from Oklahoma. He is improving the
process. I will continue to fight for 100 percent. Maybe the day will
come when he and I can both agree on a way to do it.
Mr. NICKLES. I hope so.
Mr. HARKIN. Mr. President, parliamentary inquiry.
The PRESIDING OFFICER. The Senator from Iowa.
Mr. HARKIN. Mr. President, are we in morning business?
The PRESIDING OFFICER. We are not in morning business yet. We have
some time remaining yet on the actual debate of the bill.
Mr. HARKIN. Further parliamentary inquiry.
Under the rules of the Senate, under the rules of which we are
debating this bill, if someone is recognized, since there is no time
limit, can that Senator yield time to other Senators for purposes other
than asking a question?
The PRESIDING OFFICER. It is my understanding that when there is no
time limit, that each Senator would have to get his own time on the
bill.
Mr. HARKIN. Therefore, a Senator may only yield for a question; is
that correct?
The PRESIDING OFFICER. He could yield for a question provided it were
a question and not another speech.
Mr. GRAMM. Regular order, Mr. President.
Mr. NICKLES addressed the Chair.
The PRESIDING OFFICER. The Senator from Oklahoma.
Mr. NICKLES. I have completed my statement.
I ask unanimous consent that Senator Thurmond be added as a
cosponsor.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. GRAMM addressed the Chair.
The PRESIDING OFFICER. The Senator from Texas.

Amendment No. 552

(Purpose: To let families decide for themselves how best to use their
child tax credit)

Mr. GRAMM. Mr. President, I send an amendment to the desk and ask for
its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Texas [Mr. Gramm], for himself, Mr. Coats,
Mr. Nickles, Mr. Hutchinson, Mr. Grams, Mr. Smith of New
Hampshire, Mr. Sessions, and Mr. Abraham, proposes an
amendment numbered 552.

Mr. GRAMM. Mr. President, I ask unanimous consent that further
reading of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

SECTION 1. CHILD TAX CREDIT FLEXIBILITY.

On page 12, line 13, strike all through page 13, line 8,
and on page 16, line 3, strike all through page 17, line 6.

Mr. GRAMM. Mr. President, I have sent this amendment to the desk on
behalf of myself, Senator Coats, Senator Nickles, Senator Hutchinson of
Arkansas, Senator Grams, Senator Smith of New Hampshire, Senator
Sessions of Alabama, and Senator Abraham of Michigan. I am going to try
to be very brief. I have a couple of my cosponsors here who have waited
to speak on this amendment, and I hope we can accommodate them. We will
all try to be brief.
This is a very simple amendment. For the last 4 years we have been
talking about a $500-per-child tax credit. Our argument has always been
the same: We want to let families decide how to invest their own money
in their own children and for their own futures.
The whole purpose of a $500 tax credit was to allow families to
invest their own money--which after all they earned--in the education,
housing, nutrition, nurturing, and health care of their children.
This is what the whole tax debate is about: It was in the Contract
With America and even President Clinton has endorsed it. Nobody ever
disputed the fact that the purpose here was a clear-cut tax cut to let
families decide how to spend their own money on their own children.
Remember, this is not all of their money; only $500 per child.
Out of the Finance Committee has come a provision that says for
children 13 to 16, in order to get the tax credit, you have to put it
into an education account. And remarkably, it saves money for one, and
only one, reason: because some people will not take the tax credit.
Mr. President, if there has ever been an effort to go back on a deal,
this is it. I think families ought to be able to invest in an
individual retirement account. I think they ought to be able to set
aside the money for that purpose. But the idea of making them do it is
Government paternalism in its worst form.
So what I am asking that we do is live up to what we said. I am
asking that we give the $500 tax credit and that we give it for every
age of a child covered, and that we let that child's father and that
child's mother decide what is in their best interest.
I think what we are trying to do here is dissuade people from taking
their $500 tax credit by playing God with what they are supposed to use
that money for. I know the intentions are good. I know they were aimed
at trying to bring people together. But a deal is a deal. I have heard
everybody here talk about a budget deal and what the President got and
what we got and what we agreed to; but we had a deal with the American
family. The deal with the American family was a $500 tax credit that
the family got to spend.
If we were reneging on a deal with the President, oh, people would be
jumping up and down screaming, hollering, ``But we promised the
President,'' or if the Democrats were trying to do something that was
not in the budget deal, some would say, ``Well, the President promised
us.'' This does not have to do with the President. This does not have
to do with us--it has to do with the families of America.
We are not living up to the deal. This is a lousy provision, and it
should be removed. I am not saying there are not good intentions and I
am not saying this is not part of some political deal. I am saying it
is an unacceptable provision. It should not be in here. It fails to
live up to the deal we made with the American people, and it needs to
come out.

[[Page S6462]]

Mr. President, I ask unanimous consent to have two letters printed in
the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Concerned Women for America,

June 25, 1997.
Dear Senator: The over 500,000 members of Concerned Women
for America (CWA), many of whom reside in your state, urge
you to pass an unencumbered $500-per-child tax credit for
children.
We strongly oppose the current Senate Finance Committee
version of the $500-per-child tax credit because it requires
parents of teens 13-17 to put their tax refund into an
Individual Retirement Account (IRA). This credit was created
to give needed tax relief to American families; it was never
intended to become a new way for the government to tell
families how they should and should not spend their own
money.
Therefore, CWA urges you to support the Gramm Amendment.
This amendment will remove the IRA restrictions and allow
parents of teens to use the child credit for immediate needs,
such as food and healthcare. Only families are capable of
deciding the best use of family funds.
Thank you for your attention to this important matter. The
over half million members of CWA appreciate your support for
the Gramm Amendment.
Sincerely,
Beverly LaHaye,
Chairman and Founder.
____

Christian Coalition,

Washington, DC, June 25, 1997.

Tax Bill Key Votes

vote for the gramm motion to strike which will qualify teenagers for
the $500 per child tax credit

vote against the daschle amendment

vote for final passage if the gramm amendment passes

Dear Senator: Sen. Phil Gramm and many others intend to
offer a motion to strike that will restore teenagers to the
$500 per child tax credit. We strongly urge you to vote for
the Gramm motion.
Family tax relief in the form of a $500 per child tax
credit has been our highest legislative priority since 1993.
We are pleased that the Finance Committee has included the
credit in the tax bill. However, we cannot support the bill
in its current form. The single biggest disagreement we have
with the Finance Committee version of the $550 per child tax
credit is the exclusion of teenagers. Under the bill, only
children up to age 12 qualify for the credit. The Gramm
motion will restore teenagers to coverage of the $500 per
child tax credit.
Excluding teenagers would be a deep disappointment for the
families of teenagers that struggle to meet the financial
pressures they must endure during the costly teenage years.
Indeed, caring for children reaches its most expensive point
during these years. The high cost of teenagers has been well
documented by the Clinton Administration's recent 1996
report, titled ``Expenditures on Children by Families''
published by the Department of Agriculture. This report
compares the cost of food, clothing, health care, housing,
child care, education, and transportation by age group.
This report documents that teenagers are by far the most
expensive age group. It concludes that it costs between $710
and $1,140 more to raise a child age 15-17, than it does to
raise a child age 9-11.
Cutting off teenagers from the child tax credit would be a
double blow to the families of eleven million teenagers.
These families will already spend dramatically more than
previously to raise their children. Under the bill, they
would also begin paying an extra $500 in taxes once the child
credit is taken away from them. Added together, families with
teenagers would face a whopping $1,210 to $1,640 in extra out
of pocket costs.
Here is how the Gramm motion would operate vis-a-vis the
Finance Committee provision. Instead of a $500 per child tax
credit for teenagers, the Finance bill creates a second
education IRA for teenagers. It mandates that a tax credit
worth $500 be placed into an education IRA. If the money
is not put into the IRA, the $500 is forfeited. The Gramm
motion strikes the mandatory language, making the IRA
optional. In other words, parents who don't choose the IRA
would then have an unrestricted $500 per child tax credit.
This makes much more sense. Parents are the only ones who
should make these decisions. The federal government should
not mandate the choice of saving for education over other
more pressing needs. There are many financial needs
families must meet apart from the worthy goal of saving
for education.
We strongly urge you to vote against the Daschle amendment.
The amendment diminishes the value of the $500 per child tax
credit in several ways. It cuts the amount of $350, phases it
in unnecessarily, exempts teenagers for five years, and
eliminates the tax credit all together for some middle class
families by drastically lowering the income caps.
If the Gramm motion prevails (and no amendments are passed
which would weaken the $500 per child tax credit), we
certainly urge you to vote for the tax bill on final passage.
If the Gramm motion fails, we regrettably will not be able to
support the tax bill at this time. We would actively work to
add coverage of teenagers in conference, and reserve judgment
on the conference report until it is finalized. We certainly
hope that in the end, we will be able to support the report.
That certainly is our goal.
We will select a vote to be included in our Congressional
Scorecard relating to the $500 per child tax credit. At this
time, we can not predict which vote will be selected. Thank
you for your consideration of our views.
Sincerely,

Brian Lopina,

Director,
Governmental Affairs Office.

Mr. GRAMM. Mr. President, I ask unanimous consent to add Senator
Thurmond as a cosponsor to the amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MOYNIHAN. I wonder if my friend from Texas would wish to modify
the term ``rotten.''
Mr. GRAMM. This abrogates the deal with the working men and women of
America. Some may see it as rotten and some may not. Some may see it--
Mr. MOYNIHAN. Surely the Senator does not mean it as rotten.
Mr. GRAMM. Some may see it as an acceptable deal and some may see it
as a rotten deal. But the point is--I am happy to strike the word if it
offends our dear colleague. But I feel strongly about it because the
tax cut, after all, is about families. That is what it has been about
to begin with.
I have several of my colleagues here. If I could just let them all
speak for 2 or 3 minutes, we would all be happy.
I ask unanimous consent that each of them may have 2 minutes each.
Mr. KERREY. Reserving the right to object.
Mr. MOYNIHAN. I know they will be kind and thoughtful and even
benevolent remarks.
Mr. KERREY. No. Mr. President, reserving the right to object, I would
like the Senator to be a little more specific. He said, ``I have a
number of colleagues.''
Mr. GRAMM. We have one, two, three, four; and they will speak 2
minutes each.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. GRAMS addressed the Chair.
The PRESIDING OFFICER. The Senator from Minnesota.
Mr. GRAMS. Mr. President, I commend Chairman Roth for the great
leadership he has demonstrated in bringing this legislation before us.
And I commend Senator Gramm for this amendment tonight.
My good friend and colleague from Arkansas, Senator Tim Hutchinson,
and I were freshman Members of the House in 1993 when we came together
with Senator Coats of Indiana to develop a budget proposal called
Family First that could serve as the taxpayer's alternative to the
higher taxes and bigger Government plan offered by President Clinton.
The key component of our legislation was family tax relief through a
$500 per child tax credit.
We convinced the House and Senate leadership to make our Families
First bill--with the $500 per child tax credit as its centerpiece--the
Republican budget alternative in 1994.
For overtaxed American families, 1997 looks to be the year this long-
promised, long-overdue middle-class tax relief is finally delivered.
As you know, working families today need tax relief more than ever.
Factor in State and local taxes and the hidden taxes that result from
the high cost of Government regulations, and a family today gives up
more than 50 percent of its annual income to the Government. So all we
are saying is let us let the working people of this Nation keep a
little bit more of their own money.
The $500 per child tax credit proposal in the bill before us goes a
long way toward delivering tax relief to working families raising
children. However, it imposes restrictions that will significantly
dilute the purpose of the child tax credit.
The legislation before us tells families that, yes, we will give you
a tax credit, but if your children are between the ages of 13 and 16,
you are going to have to spend it the way Washington thinks it should
be spent. In this case, it would have to be spent on education. By
mandating how the tax credit must be spent, we are in effect denying it
to teenagers, leaving 11 million children out in the cold.
And if your child is 17 or 18, you do not get it at all.

[[Page S6463]]

Mr. President, I applaud the parents that take the $500 per child tax
credit and dedicate it to an IRA or their child's college education.
But that is a decision that belongs with parents, not with
Washington. It is not our place to tell families how they can spend
their money.
The family tax relief provisions in the bill before us can be greatly
improved by striking the mandate that the tax credit be dedicated to
education. I am pleased to be joining my colleagues in offering this
amendment to give that choice back to families. And I urge all my
colleagues to support this amendment.
Thank you, Mr. President.
Mr. HUTCHINSON addressed the Chair.
The PRESIDING OFFICER. The Senator from Arkansas.
Mr. HUTCHINSON. Mr. President, I also want to commend Senator Roth.
The $500 per child tax credit is truly the heart of this tax relief
bill. I especially want to thank Senator Gramm for taking the lead in
solving this problem, which is a very serious problem.
There are 382,000 families in Arkansas who benefit from the $500 per
child tax credit, but there are many teenaged children who are excluded
because of the provision that is in the Finance Committee's bill. I
believe parents should have the right to decide. They are better
arbiters, they are better decisionmakers on the use of that money than
bureaucrats and even lawmakers in Washington, DC. And no matter how
good educational savings for teenagers may be, it is better to let the
parents make that decision.
I think I will have a hard time explaining to those parents of that
13-year-old why, when their child was 12 he was eligible or she was
eligible for the $500 per child tax credit, but at the age of 13 they
are not. Perhaps that 13-year-old will have an emergency. Perhaps that
13-year-old needs braces. Perhaps that 13-year-old needs a math tutor
to enable that child to ensure that he or she is ready to go to college
when they graduate from high school. The parents will not have the
option, will not have the opportunity, will not have the eligibility
under the current bill. That is why this amendment is so important that
we ensure that the parents have the ultimate decisionmaking authority.
Forty percent of young people who graduate from high school do not go
straight on to college. They should not be excluded from the benefits
of this tax bill. Parents should decide, not Washington, DC.
I yield the floor.
Mr. NICKLES addressed the Chair.
The PRESIDING OFFICER. The Senator from Oklahoma.
Mr. NICKLES. Mr. President, I compliment my colleague, Senator Gramm.
We tried to do this in the Finance Committee. Unfortunately, we fell a
couple votes short. But the basic principle is we want to tell
everybody their kids are going to get the $500 tax credit, not to say,
well, it only applies to people 13 or younger, that if you are older
you have to put it into an educational IRA.
I think educational IRA's are a good idea. I compliment Senator Roth
because he has been the champion of IRA's, but it should be an option.
It should not be mandatory. We should allow them to have this choice. I
hope a lot of them choose it before age 13. I think it would be a great
idea for a parent, if they can do it, if they can afford it, to put the
$500 into an IRA for their child and let that accumulate and do that
every year so they have a nest egg for their college expenses. It would
be a positive thing for them and our country.
But we should not mandate it. Presently, under the bill we mandate it
for kids that are 14, 15, 16, 17 years old. I compliment my colleague
from Texas and the cosponsors.
I urge my colleagues to vote for this amendment to allow parents to
choose whether they get the $500 tax credit to spend as they choose or
whether or not to put it into an IRA. They should make that choice. We
should not mandate it from Washington, DC.
Mr. SESSIONS addressed the Chair.
The PRESIDING OFFICER. The Senator from Alabama.
Mr. SESSIONS. I want to thank Senator Roth for his outstanding
leadership that he has given on this important issue. But I feel very,
very strongly that we need to do more for working families. Working
middle-class American families today are struggling to get by.
My youngest son will start college this fall. But I will tell you, I
have children; three of them under age 13 and three of them over age
13. It costs more for a 14- or 15- or 16-year-old than it does for a
12- or 10-year-old. Anybody who has raised a family knows that.
The demands on those families are fierce today. They are struggling
to get by. This is the heart and soul of a family middle-class tax cut.
Many kids will not be going off to college. They will never be going to
college. But even if they are, many of those families need the money
now. They have a flat tire and they need to replace a tire. They need
shoes or to go on a school trip. They need to make their own decision
about how to spend their money.
This is important to me. It is important to American families. I
salute Senator Gramm for raising this issue, and I am in support of
this amendment.
I yield the floor.
Mr. MOYNIHAN. Mr. President, I yield to the Senator from Louisiana
such time as he may require.
The PRESIDING OFFICER. Under the previous order, the Senator from
Massachusetts has the floor.
Mr. MOYNIHAN. Would the Senator from Massachusetts, who has been Job-
like--he has been No. 2 since 9:30--would he allow 3 minutes to the
Senator from Louisiana and 3 minutes to the Senator from Nebraska to
respond, and the remainder of the time is his?
Mr. KERRY. Mr. President, could I inquire how much the remainder of
the time is?
The PRESIDING OFFICER. There is approximately a half an hour in total
time.
Mr. KERRY. I would be very content with that.
Mr. MOYNIHAN. You have been very patient. We thank you, sir.
The PRESIDING OFFICER. That would require unanimous consent.
Mr. MOYNIHAN. I ask unanimous consent that that may occur.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BREAUX addressed the Chair.
The PRESIDING OFFICER. The Senator from Louisiana.
Mr. BREAUX. My friend from Texas would refer to this provision as the
``rotten'' provision. I am sure what he meant to say was the
``forgotten'' provision, because he obviously forgot what we did to
this in the Finance Committee when we greatly improved it. If anyone
wants to have a $500-per-child tax cut, we presume that it is for the
children.
Under the suggestion of the Senator from Texas, we would give the
family a $500 tax rate to use for whatever they want. If they want to
use it to go to the casino, fine. If they want to use it to buy a six-
pack of booze every week, fine. It is about $9.66 a week, so under the
provision of the Senator from Texas they could take it, put it in their
pocket, and don't use it for children at all--just do whatever you want
with it.
Interestingly, the Citizen Council, a respected voice of both
parties, says, ``In our view, a no-strings child credit is a cruel hoax
on the very children who are supposed to benefit from it. We expect
that most of the credits would disappear into the family's general
budgets, or be used to pay bills''--and I add, not for the children,
that the tax credit is supposed to be for.
What we have done is to craft a compromise from zero to 13, the
family can use it for anything they would like, no strings attached,
but from 13 to 17, when children need to be educated, there is an
obligation that the tax credit be used to educate the children. For all
of us who want to help children and our families and help parents raise
those children, what is better than to give that family help and
assistance in educating that child?
Some say the Tax Code should not tell people what to do. The Tax Code
is full of examples--a mortgage deduction is only available if you buy
a house; a charitable contribution is only available if, in fact, you
give to charity. So what I think the Finance Committee was able to do
was to erect a compromise, a blending of what that suggestion was
coming from this side, blending it with what many of our people said,
use it for educating children. If we are going to have a tax credit for
children, let's at least ensure that part of the time it is used for
one of the basic functions that a family has as an

[[Page S6464]]

obligation to those children, and that is to educate those children.
So I think that what we have come forward with makes a great deal of
sense. It is a legitimate compromise. It adds to the education package
which I think everyone is for, and it helps families with small
children.
The PRESIDING OFFICER. The Senator from Nebraska.
Mr. KERREY. This proposal began in 1995. I heard the Senator from
Texas describe it as a sacred part of the Contract With America.
In 1995, Senator Lieberman and I introduced KIDSAVE as a modification
to this $500 per child tax credit, and it set up a savings account for
children. It was mandatory. The idea was that Americans are not saving
enough money, they are struggling to put aside savings, and that is
especially revealed when you look at one of the most important parts of
this tax proposal, which is the reduction of tax on estates.
Mr. President, about 1 percent or 2 percent of Americans have estates
over $600,000. It is a provision that affects a relatively small number
of Americans. I appreciate my colleagues on the other side of the aisle
saying that is one of their top concerns, that 1 percent or 2 percent
of Americans who have estates over $600,000. KIDSAVE is put together as
a consequence of our concern for the 98 percent of Americans that do
not. The only way that you will be able, particularly for middle-income
people, to acquire that wealth is to save a little bit of money over a
long period of time.
So I say we are not breaking any deal. We introduced this bill in
1995. It was endorsed at the time by the Heritage Foundation. The only
thing that is going on here, in my judgment, is the Christian Coalition
is arguing that this is a violation of something they want. So they are
rallying the troops and trying to get it changed. I appreciate the
Senator from Texas does not like the proposal, but it was introduced in
1995, and its purpose is to help Americans generate wealth. We know we
cannot redistribute wealth. We are trying to enable Americans to create
wealth by saving their money.
The $500 child tax credit goes from 0 to 17. That is the law. It ends
at age 17. I would have preferred 0 to 4, frankly, for this thing to go
into effect. It was a compromise. We agreed to do this as a consequence
of the desire to increase the amount of money that Americans have, not
only for education but this money, particularly for those that are not
going to school, would be better off staying in a savings account until
retirement so those individuals can look to their retirement and say in
addition to having Social Security there for them they will have a
source of wealth.
So in my view, this is an amendment that would deny Americans the
opportunity to acquire wealth. I think it is a very important provision
in this Tax Code.
I hope my colleagues will vote against the Gramm motion to strike.
Mr. MOYNIHAN. I endorse wholeheartedly the position that the Senators
from Louisiana and Nebraska have stated on behalf of the committee
bill. I thank them.
I yield the balance of our time to the distinguished Senator from
Massachusetts.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KERRY. Mr. President, I thank the distinguished party manager. I
will probably not use all the time but I ask unanimous consent that the
balance of the time I have be divided between Senator Dodd and Senator
Kennedy.

The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. KERRY. Mr. President, we just heard a debate about the $500 tax
credit. We heard a number of Senators state what a critical component
of the effort to restore families this is and how important it was to
the early efforts of the contract. The fact is that the committee bill
will deny 38 percent of the children in the United States with the
lowest incomes access to a tax credit. In Massachusetts, as a matter of
fact, 46 percent of all children would be excluded from receiving this
important tax credit. That means about 850,000 children, plus, in my
State, will not receive a tax credit.
Now, I ask my colleagues what kind of profamily policy takes $81
billion over the next 5 years but completely denies this help to the
9.5 percent of all children in families with the lowest 20 percent of
incomes, and denies the tax credit to 86.6 percent of all the families
in the second 20 percent of income.
I direct my colleagues' attention to this chart. These are the
percentage of children ineligible for the child tax credit, the way it
has been structured by the Finance Committee. Fully 99.5 percent of the
lowest 20 percent, and 86.6 percent of the children in the second fifth
will not get the benefit of this credit.
I propose, therefore, a very simple amendment so that working
families could have access to this credit. My amendment that I will
send to the desk momentarily lets those families whose net Federal
taxes are greater than zero get a full or partial children's tax
credit, and the amount accomplishes this in a very simple way. It makes
the credit refundable to the full extent of the family's Federal
payroll taxes once it has offset all of the family's income tax
liability.
This refundability, I want to emphasize, is not my idea. The
refundability was a provision of the Republican's Contract With
America. It was in the child tax credit bill which was sponsored by the
Senator from Texas, who a few moments ago was talking about the virtues
of providing a $500 tax credit to children. In fact, Senator Coats,
Senator Lott, Senator Gramm and others on the Republican side supported
the very proposal that I am now offering which would, indeed, allow
those children to be able to get that credit.
My colleagues on the other side of the aisle were right when they
proposed a refundable credit. And Speaker Gingrich was right when he
called the refundable credit in the Contract With America the ``crown
jewel'' of the contract.
As Marshall Wittman, the Legislative Affairs Director for the
Christian Coalition, said, ``Allowing families with children to retain
a larger share of their hard earned income will be a first step toward
freeing America's parents from the national treadmill of working long
hours at the expense of time with their children.'' The Heritage
Foundation endorsed the children's tax credit in the contract, which
was a refundable tax credit.
Mr. President, I am proposing that we adopt the Contract With
America's refundable tax credit which would provide 7 million more
children with access to the credit, to the tax credit. The simple
question is, why would you want to deny those people who work--we are
not talking about people who are solely relying on welfare, or people
who get the earned-income tax credit; we are talking about two-parent
families with two children who are working and paying taxes, who still
will not get credit the way it has been structured under the Republican
proposal. These children live in families that pay income or payroll
taxes, and payroll taxes are a reflection of work. Work, after all, is
what we are trying to put a premium on--both in the welfare reform
bill, as well as, I think, in a $500 credit.
My amendment would take the refundability against payroll taxes from
the Contract With America and it lowers the income phaseout more slowly
and phases in the credit by the age of the child. The reason we phase
in the credit and the reason we do the income difference is to keep
this revenue neutral. It is revenue neutral. I want to emphasize, this
amendment takes the Contract With America payroll provisions but it
remains revenue neutral.
It would seem to me, Mr. President, that all of us would want to try
to find a way to guarantee that families earning $110,000 are not going
to get a $500 tax credit, while a family working and earning $20,000
gets nothing--nothing. That is exactly what happens under this proposal
the way it is done.
My credit would begin to phase out at $60,000 and it would finish at
$75,000. By doing that, we manage to spread it to those people at the
lower end of the income scale, most of whose income goes into the
payroll tax but who nevertheless are working and deserve as much of a
break as anybody else. My amendment would allow the bottom 80 percent
of American families to get a full or partial credit, and the richest
20 percent would not. A very simple tradeoff.

Mr. President, I think it is critical to understand that the tax
bill, as it

[[Page S6465]]

comes out of the Finance Committee, which we are voting on, that the
tax bill credit for children as currently written, most of the children
who would be denied the credit or have the credit reduced live in
families who are working and paying Federal taxes. It is just that
their tax burden often amounts to several thousand dollars, even after
the effects of the earned-income tax credit are accounted for. The
claims that these peoples pay no taxes is simply incorrect.
The Joint Tax Committee data issued this week shows that taxpayers
with incomes between $10,000 and $20,000 will owe an estimated $191
billion in Federal taxes. Taxpayers with incomes between $20,000 and
$30,000 will owe $442 billion in Federal taxes between 1997 and the
year 2002. These figures from the Joint Tax Committee reflect the fact
that these taxes are owed after the EITC benefits are subtracted.
Mr. President, the vast majority of the taxes that these families
pay--we have to acknowledge, if they are working and they are playing
by the rules and they are trying to climb up the economic ladder, why
should they be denied access to the $500 credit--the taxes that they
pay consist mostly of payroll taxes because that is the way life is for
people at that end of the income scale.
I hope my colleagues who say that this is a fair way to adjust more
appropriately what has happened in the committee mark --I want to
emphasize that a two-parent family, the kind of family that most people
in the Christian Coalition or in the Heritage Foundation or others feel
have been the most hard hit in America in the recent years, a two-
parent family with two children with an income of $20,000, under my
proposal, would get the full $1,000 credit, $500 for each child under
this proposal, which is the contract proposal. They would not get that
under the proposal of the Finance Committee.
Mr. President, I think if we are going to accept the notion that we
will provide the children's credit for as many working taxpaying
families as possible, it is important to change the base and to
guarantee we are reaching those kids.
Everybody knows what has happened to income distribution in America
in the last 15 years, how the bottom has not been the part of America
that has grown. I might add, here is a chart that shows the percentage
of working families whose payroll taxes exceed their income taxes. They
are all in the bottom three-fifths of America. You have 99 percent in
the bottom fifth, 97 percent in the second fifth, and 90 percent in the
next fifth--all work, all have payroll taxes that exceed their income
tax, and, therefore, do not get the full benefit of the credit.
Finally, I simply point out to my colleagues that income for young
working families has not increased in over 20 years. These are the
young families of America earning $18,000 in the lowest quintile on
average, and $30,000 in the second quintile on average. Look at what
happened to payroll taxes during that period of time. Payroll taxes in
1975 were $374 for that family. But, in 1985, they were $2,171. In
1995, they were $2,523. So the payroll taxes went up, but at the same
time in both quintiles and, yet, their income went down and they are
not going to get the credit.

So I respectfully hope that my colleagues will join in an effort to
rectify what I hope is simply an oversight in distribution and help to
guarantee that every family in America that works, that is struggling
to raise their children, can actually have the benefit of this $500
credit, and that would, I think, be deemed a benefit to the Senate and
to the country if we were to make that happen.
Mr. President, under the previous agreement, I yield the balance of
time divided equally to Senator Dodd and Senator Kennedy.
The PRESIDING OFFICER. There are 10 minutes left on the Democratic
side.
Mr. DODD. On the bill?
The PRESIDING OFFICER. There are 10 minutes on the proponents' side.
Mr. COATS. Parliamentary inquiry, Mr. President.
The PRESIDING OFFICER. The Senator will state it.
Mr. COATS. Mr. President, I don't understand why we are allocating
time here because in the unanimous-consent request--I specifically
asked the Chair and asked in the request if the three amendments agreed
to under the unanimous-consent request were on any kind of a time
limit. The answer was, no, they are not on any kind of a time limit.
I further raised the statement saying that there are a number of
Senators under the agreement that would stay beyond the three to offer
and discuss their amendments this evening. They would be allowed to
speak for up to 10 minutes in support of their amendments. I don't
believe we are under a time agreement and that there needs to be
allocation of a time agreement. This Senator has not yet spoken on the
Gramm amendment, which I would like to do. I don't feel there is any
constraint on the amount of time I have to speak.
The PRESIDING OFFICER. Under the consent agreement, there was still
time remaining on the bill. The time remaining on the bill could be
used by each side presenting their amendments. There was an order to
the amendments. We are on the third one, which was the Kerry amendment.
Senator Kerry was allotted the time on the proponents' side, which was
20 minutes. There is an opponent side of 20 minutes that would be
allocated, which would be the majority party side.
Following the expiration of all time, which would be the remaining 38
minutes, then there will be a period for morning business where any
Senator can be recognized for up to 10 minutes to introduce his motion,
which would put it in order for tomorrow, but in no particular order
for tomorrow.
The Senator from Massachusetts is recognized.
Mr. KERRY. If I could say to my colleague, I had the full amount of
time under the unanimous-consent agreement. I chose to truncate my
remarks in order to accommodate my colleague within that. I don't mean
to upset the order.
Mr. COATS. No. Mr. President, I am perfectly content to let the
Senator take whatever time he wants. It is this Senator's understanding
that the unanimous-consent agreement supersedes the reconciliation
instructions regarding time under the agreement. The Senator from
Massachusetts can offer any amount of time he wants to his colleagues.
I am more than willing to wait for that.
The PRESIDING OFFICER. We have already ruled that, as far as
allocating time to anybody else, there would have to be a unanimous
consent agreement by that particular person who is speaking; otherwise,
the time is up for grabs.
Mr. COATS. Further parliamentary inquiry. That is not my
understanding of what the unanimous consent request was. The reason I
am stating this is that I specifically asked the majority leader if my
interpretation was correct, and he specifically said yes and included
it in the unanimous-consent agreement. The Parliamentarian may not have
heard that. I don't believe there is a ruling of that. In any event, I
don't want to split hairs. I think everybody will have an opportunity
to speak. He doesn't have to limit the Senator from Connecticut to 2
minutes. He can talk for 20, as I understand the unanimous-consent
agreement.
Mr. KERRY. Mr. President, if I can simply clarify something. But
before I do, I will send my amendment to the desk.

Amendment No. 554

(Purpose: To allow payroll taxes to be included in the calculation of
tax liability for receiving the children's tax credit, and for other
purposes)

Mr. KERRY. Mr. President, I send an amendment to the desk and ask for
its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Massachusetts [Mr. Kerry], for himself,
Mr. Conrad, and Mr. Johnson, proposes an amendment numbered
554.

Mr. KERRY. Mr. President, I ask unanimous consent that reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

On page 13, beginning with line 9, strike all through page
17, line 12, and insert the following:
``(2) Limitation based on adjusted gross income.--The
dollar amount in subsection (a)

[[Page S6466]]

shall be reduced (but not below zero) ratably for each $1,000
(or fraction thereof) by which the taxpayer's modified
adjusted gross income exceeds $60,000 but does not exceed
$75,000. For purposes of the preceding sentence, the term
`modified adjusted gross income' means adjusted gross income
increased by any amount excluded from gross income under
section 911, 931, or 933.
``(3) Limitation based on amount of tax.--The aggregate
credit allowed by subsection (a) (determined after paragraph
(2)) shall not exceed the sum of--
``(A) the excess (if any) of--
``(i) the taxpayer's regular tax liability for the taxable
year reduced by the credits allowable against such tax under
this subpart (other than this section), over
``(ii) the taxpayer's tentative minimum tax for such
taxable year (determined without regard to the alternative
minimum tax foreign tax credit), plus
``(B) the excess (if any) of--
``(i) the sum of--

``(I) the taxpayer's liability for the taxable year under
sections 3101 and 3201,
``(II) the amount of tax paid on behalf of such taxpayer
for the taxable year under sections 3111 and 3221, plus
``(III) the taxpayer's liability for such year under
sections 1401 and 3211, over

``(ii) the credit allowed for the taxable year under
section 32.
``(c) Qualifying Child.--For purposes of this section--
``(1) In general.--The term `qualifying child' means any
individual if--
``(A) the taxpayer is allowed a deduction under section 151
with respect to such individual for the taxable year,
``(B) such individual has not attained the applicable age
as of the close of the calendar year in which the taxable
year of the taxpayer begins, and
``(C) such individual bears a relationship to the taxpayer
described in section 32(c)(3)(B).
``(2) Applicable age.--For purposes of paragraph (1), the
applicable age is 13 in calendar year 1997, and increased by
1 year for each of the next 4 succeeding calender years.
``(3) Exception for certain noncitizens.--The term
`qualifying child' shall not include any individual who would
not be a dependent if the first sentence of section 152(b)(3)
were applied without regard to all that follows `resident of
the United States'.
``(d) Taxable Year Must Be Full Taxable Year.--Except in
the case of a taxable year closed by reason of the death of
the taxpayer, no credit shall be allowable under this section
in the case of a taxable year covering a period of less than
12 months.
``(e) Recapture of Credit.--
``(1) In general.--If--
``(A) during any taxable year any amount is withdrawn from
a qualified tuition program or an education individual
retirement account maintained for the benefit of a
beneficiary and such amount is subject to tax under section
529(f) or 530(c)(3), and
``(B) the amount of the credit allowed under this section
for the prior taxable year was contingent on a contribution
being made to such a program or account for the benefit of
such beneficiary,

the taxpayer's tax imposed by this chapter for the taxable
year shall be increased by the lesser of the amount described
in subparagraph (A) or the credit described in subparagraph
(B).
``(2) No credits against tax, etc.--Any increase in tax
under this subsection shall not be treated as a tax imposed
by this chapter for purposes of determining--
``(A) the amount of any credit under this subpart or
subpart B or D of this part, and
``(B) the amount of the minimum tax imposed by section 55.
``(f) Other Definitions.--For purposes of this section, the
terms `qualified tuition program' and `education individual
retirement account' have the meanings given such terms by
section 529 and 530, respectively.
``(g) Phasein of Credit.--In the case of taxable years
beginning in 1997, subsection (a)(1) shall be applied by
substituting `$250' for `$500'.''

Mr. ROTH. Mr. President, parliamentary inquiry.
The PRESIDING OFFICER. The Senator will state it.
Mr. ROTH. Is it proper to offer an amendment under the unanimous-
consent agreement?
The PRESIDING OFFICER. The Senator from Massachusetts, under the
unanimous consent agreement that we had earlier, is allowed to offer
one tonight.
Mr. KERRY addressed the Chair.
The PRESIDING OFFICER. The Senator from Massachusetts is recognized.
Mr. KERRY. Mr. President, it may be that the Senator from Indiana
missed it, but I asked unanimous consent at the opening of my comments,
when I was yielded the full amount of time, that the balance of time
that I didn't use be divided equally, and that consent order was
entered into. I might add, if the Senator was correct, it was all of
our understanding that after the expiration of all the time on the
bill, the Senate would go into morning business, during which time
Senators would have the opportunity to speak for as long as they
wanted. So there is not in effect a time limitation with respect to the
after period of the bill.
The PRESIDING OFFICER. A clarification on that. The consent order did
call for 10 minutes per person in morning business.
Mr. KERRY. Well, Mr. President, I have been informed that Senator
Kennedy now does not wish to use his time. I ask unanimous consent that
the balance now go to Senator Dodd, at which point it would revert to
the other side.
The PRESIDING OFFICER. The Senator from Indiana and those on this
side have up to 20 minutes following the 8\1/2\ minutes of the Senator
from Connecticut that will be allocated under the unanimous-consent
agreement. The Senator from Connecticut is recognized for up to 8\1/2\
minutes.
Mr. DODD. Mr. President, rather than confuse this situation even
further, I am going to yield for the purposes of offering an amendment
to the distinguished Senator from Vermont. It is his amendment, and I
am a cosponsor with him. I yield for that purpose. I ask unanimous
consent that I may yield for that purpose.
The PRESIDING OFFICER. The Senator doesn't have the right to offer an
amendment under this agreement. Only the managers can offer amendments
under the agreement, until we get into the period for morning business,
at which time--
Mr. DODD. I ask unanimous consent that I be allowed to offer an
amendment.
Mr. JEFFORDS. I ask unanimous consent--
Mr. COATS. Mr. President, I hate to be a fly in the ointment here. I
have been waiting to speak on one of the three designated amendments in
the unanimous consent agreement, the Gramm amendment. I have not yet
had that opportunity. My understanding is that further amendments come
after these three. I think if we just get going, we can get this done
and get to the other amendments.
The PRESIDING OFFICER. The right to offer amendments is limited to
the managers. The right to speak is not.
Who wishes recognition?
Mr. COATS. Mr. President, I would like to take just a few moments and
I will be brief.
The PRESIDING OFFICER. The Senator from Indiana is recognized.

Amendment No. 552

Mr. COATS. Mr. President, the hour is late and the week has been
long. We all need our rest. I want to take a few moments to speak in
support of the Gramm amendment, the amendment we discussed just before
the discussion of the Kerry amendment.
The reason I want to speak in favor of the Gramm amendment is that,
as someone who has been an original sponsor and long-time proponent of
the child tax credit, we were surprised--first of all, we were
delighted when, first, the President, and then the Budget Committee
endorsed the concept of the $500-per-child tax credit. It is long
overdue. It is only a partial step in remedying an inequity that has
existed for a long, long time, in terms of giving families the ability
to provide for their children.
Way back in the 1940s, Congress decided that raising families and
raising children was a good thing. They provided a dependents exemption
for that purpose. They did not index it for inflation. And over the
years, because it was not indexed for inflation and because it was not
raised by an act of Congress, the value of that particular exemption
decreased--that is, the dependents exemption. Now, we finally doubled
that exemption, and now index it, after the 1986 tax law. But it was
still a third to a fourth of what it should have been if it had
maintained pace with the cost of raising children. So families were
squeezed and fell further and further behind other special interests
that were granted benefits in the Tax Code.
We finally focused on the importance of raising children and the
importance of families and the importance of providing support for the
family. I am pleased that we are here discussing the $500 tax credit. I
am pleased that the chairman of the Finance Committee incorporated the
$500 tax credit in their mark. But I rise in support of the Gramm
amendment because, in doing so, a provision was made whereby the credit
would only be available up through the age of 12. At that point, the
credit was available, but it was

[[Page S6467]]

conditioned on the fact that the money be put into an education savings
account.

Now, it is ironic that, at the very time when the cost of raising
children takes a dramatic jump, we take away the ability of parents to
use that credit to pay for expenses related to those children.
As this chart shows, entitled ``Annual Child Rearing Costs; Children
Ages 0 to 17,'' there is roughly a $7,850 cost per child for children,
ages 0 to 2. It jumps to over $8,000 for children, ages 3 to 5. It goes
to nearly $8,200 for children, ages 6 to 8. And it stays about that
level through the age of 11. But at the age of 12--at no surprise to
any parent in this room, or any parent trying to raise young children--
there is a dramatic increase in the cost per child when you hit the
ages of 12 to 14, and it continues to 15 to 17. Why is that? It is
because no longer are you able to tell your children that the $5 Kmart
tennis shoes are good enough to wear to school. All of a sudden, they
discover the Michael Jordan tennis shoes, and it is now $140 a pair.
All of a sudden, the dentist says it is time that you saw an
orthodontist, because if you want your child to have straight teeth,
this is the time. The baby teeth are gone, the new teeth have come in,
and we all want our kids to have perfect smiles. Some might be for
cosmetic reasons, and many might be for a misaligned jaw or an
overbite, and so forth. And clothes begin to cost more. Kids start
thinking about the opposite sex. So that involves the thought of
beginning to date and, suddenly, you are buying movie tickets and,
suddenly, they are going out for burgers, et cetera. It is no surprise
to any parent that that is the point in time which the cost really
escalates, particularly when they get into the 15 to 17 age range. Then
they are starting to work after school and they need transportation.
Heavens, what an embarrassment it would be to have to ride the school
bus. You need a car, et cetera, et cetera. There are a lot of necessary
costs at this particular time, also.
At that very time when it costs more, the Finance Committee has said,
``We recognize that it costs more, but you can't use the money for
anything except the purpose we deem is acceptable.''
Now, it is a worthy thing to begin to save money for college, for
secondary education, but not all children go to college. In fact,
apparently, a large percentage don't go to college. So the education
savings account that is begun or is mandated at the age of 13--they
must use the child credit for that. I think that serves a purpose that
we should not support.
Now, some have suggested that the reason all this was done was to
make the budget numbers balance, that it was to save money because
those families that would not send their children to college, or didn't
have plans to send their children to college, or didn't have the funds
to accumulate for college, would not take the $500 tax credit and,
therefore, are a savings. I hope that is not the motivation. I don't
think it was the motivation, but that may be the unintended result. So
we have a situation here where, ultimately, what we come down to is
that either the parents are going to decide how to use the funds on the
child tax credit in the best interest of their children, or the Senate
Finance Committee will decide.
Once again we continue the practice of Government knows best--not
father knows best, not mothers know best, not family knows best, but
Government knows best. We will tell you how you should spend or save
money for your child. We will determine that it can only be used for
one purpose. You have to continue a secondary education--a noble goal,
a worthy goal, and one that I think we want to hold out as an option.
But it should not be a mandate. It should not be limited to that
particular goal.
There are a lot of families in this category that have expenses for
their children at the ages of 13, 14, 15, and 16 that are more critical
than forcing them to put the money into a savings account. Hopefully,
they will be in a financial position, if we think they can put the
money into a savings account. Again, I say it is a worthy goal. But it
ought to be an option to those parents. It shouldn't be a mandate. We
should not have a Government entity--whether it is an elected
Government entity or a nonelected Government entity--making a decision
as to how that money should be used.
It is almost humorous to say we know better about how a mother and
father ought to spend money for their child than they do, that we know
their family situation better, we know their education situation of
their children better, we know their future plans better than the
family knows its own plans.
So, as well-intended as this mark in the Finance Committee package
might be, I think that the amendment of the Senator from Texas makes
perfect sense because it simply says if you want to do that with a $500
tax credit, fine, you can do that. We will allow you to set up an
education savings account.
One of the first bills I introduced when I came to Congress a long
time ago was an education savings account. I think it is a worthy goal,
a worthy idea. But if you deem that there are other purposes more
appropriate, then we will allow you to do that also.
To suggest that at the age of 13 suddenly the 13-year old is given
the money and the parents are going to say, ``I am going to take the
money and go down to the casino,'' like the Concord Coalition
suggested--talk about arrogance. Talk about an arrogant conclusion;
that is, that parents don't care about their kids, that they are either
going to spend the money on beer or they are going to spend the money
at the casino almost defies belief.
Who do we trust here? Do we trust the parents? Do we trust the
family? I am sure there will be examples. You can pick up the paper and
read about some wayward father who took the tax credit and went down to
the casino. Sure, that will happen. But that doesn't begin to describe
the average American family who cares about their children, who want
the best for their children, and are in the best position to make the
decision as to how that money ought to be spent.
So I am a strong supporter of the Gramm amendment. I think that we
ought to modify this. Whether this is put together to create a deal--it
is a lousy deal. I won't call it a rotten deal. It is a lousy deal, and
the wrong way to allocate these resources. Let's leave that decision in
the hands of the parents and not in the hands of the Government.
Mr. SESSIONS. Mr. President, will the Senator yield for a question?
Let's imagine a single mother who is teaching school with three
children ages 17, 15, and 12 hoping to save money for college and just
getting by. The transmission breaks on the car, and there is a $400
bill. Who should decide who ought to spend that money? The Members of
this body, or that mother?
Mr. COATS. Maybe that mother needs that car to get to work so she can
continue to make money so she can send her children to school, but we
will be effectively telling her, ``You can't fix that transmission.''
We will tell that mother, ``You can't use that money to buy a computer
because maybe your child needs special tutoring.'' And, ``You can't buy
a software program to give that child better math tutoring so they will
be able to go to college. You can't use that money for that. You can't
use that money to hire a learning center or some other organization to
help your child prepare for the SAT's so that they can get into
college. No. You have to do what the Finance Committee says. The
Finance Committee says you have to put it in an education savings
account.''

I just think it is wrong. As I said, it may be well intended and well
motivated, but the consequences are such that I don't think we have
thought these things through.
That is why the amendment of the Senator from Texas ought to be
supported.
I thank my colleague from Alabama for his contributions.
Mr. President, I yield the floor.
The PRESIDING OFFICER. There are approximately 8 minutes left on the
debate.
Mr. JEFFORDS addressed the Chair.
The PRESIDING OFFICER. The Senator from Vermont.

[[Page S6468]]

Mr. JEFFORDS. Mr. President, may I make an inquiry? Is it in order
for me to ask unanimous consent to offer my amendment at this time?
The PRESIDING OFFICER. The Senator may ask.
I have been authorized to object.

Child Care

Mr. JEFFORDS. We will discuss the amendment which we will be offering
on the floor at the appropriate time.
Mr. President, it is difficult to find high quality child care that
is appropriate, affordable, and convenient for children today. How
government can help parents achieve that goal is a very difficult and
compelling question. I have, with my cosponsors Senators Dodd, Roberts,
Kohl, Snowe, Landrieu, and Johnson put together an amendment which we
will be offering. On the one hand the amendment will make it easier to
find better child care that is more affordable. At the same time the
amendment does some engineering by making it possible for more child
care facilities and individual providers to improve their services and
receive higher tax deductions for those efforts. My amendment also to
shifts the amount of money that is available to parents in the child
care tax credit and the dependent care assistance program to help them
afford a better quality of care they may now be available to them. This
combination of assistance for providers and parents will encourage that
the child care facilities and individual providers will provide better
care for the 12 million children who are in child care.
How we accomplish this is: First of all, to help middle- and low-
income families, the amendment increases the level of income which
qualifies for the maximum amount of the child care tax credit benefits
$10,000 to $20,000. We make the child care tax credit refundable for
low-income working families who qualify for the EITC. Then we go to the
other end of the scale and phase the tax credit down, but not out, for
wealthier people with incomes over $70,000, then we can pay for the
increases at the lower end.
I also feel strongly that it is important to assist those businesses
that are providing child care for their employees. The amendment
creates an incentive which will allow businesses to receive a 50
percent tax credit for up to $150,000 in expenses to operate, improve,
and develop appropriate child care for their employees.
As we all know from recent studies, the healthy development of
children can very dramatically enhance, including their potential for
future educational and social achievement, depending upon the kind of
nurturing and affection they receive early in life, and the
developmental and educational activities they are exposed to at birth.
In order to make sure that kind of care is available for those children
who need to be in child care while their parents work. This amendment
provides the necessary incentives so they can find and afford to
receive the care that will be safe and provide their children with a
better chance for healthy development. That will be required if we
expect to have a skilled workforce in the new world of the future.
What we are trying to do here is to balance the need to reduce the
deficit and get the budget under control, with the need to improve the
quality of child care for all children who must use it. Keeping in mind
the funds that are available. We have offsets to pay for this child
care amendment, which I think are very appropriate.
I yield to the Senator from Connecticut for a further explanation.
Mr. DODD. Mr. President, first of all, I want to commend my colleague
from Vermont. This is an amendment which will be offered by the
distinguished Senator from Vermont, along with myself, Senator Roberts
of Kansas, Senator Kohl of Wisconsin, Senator Landrieu, Senator Snowe,
Senator Johnson, and others.
Mr. President, this is a modest proposal that is designed to do what
all of us agree needs to be done.
We have provided over the last number of years some significant
support for child care in this country. For example, there is the Child
Care Development Block Grant program which Senator Hatch and I authored
back in the mid-1980's. There is also the Head Start program, which has
been very, very helpful to so many families in this country in
providing a positive learning environment for children. There is also
the current child care tax credit. All of these are designed to provide
assistance to those families today who are trying to juggle the very
difficult task of providing an income for their families and also a
safer environment for their children.

Good quality child care can no longer be considered a luxury. There
are 13 million children every day in this country who are placed in
child care settings. There are an awful lot of single parents out there
raising families. There are two-income families that are providing for
their children. These families want to be sure that their children are
in a safe place.
We have done a great deal to help families with the affordability of
child care. We have done a lot to increase the availability of child
care.
What Senator Jeffords, Senator Roberts, Senator Kohl, myself, Senator
Snowe, Senator Landrieu, Senator Johnson, and others are trying to do
is to use the Tax Code to try to do a better job of dealing with
quality.
I want to be very clear that there is nothing in this amendment which
sets national standards for quality--as our colleagues over the years
have had some serious reservations about setting national child care
quality standards. This amendment simply defines a quality setting as
one that meets standards or certification set by States, local
governments or private, non-profit entities--we don't specify any
standards--what those standards must be. With this amendment we just
try to create incentives so that child care settings will get some
encouragement to improve quality.
Let me just enumerate what some of those incentives are.
We expand the tax deductions for businesses who contribute
educational equipment and supplies to public child care providers.
We provide tax incentives to families who seek out higher quality
care, realizing that such care is more expensive.
Let me step back, if I can, for a minute.
Mr. President, earlier this year, national magazines had cover
stories on early childhood development. We now know that in the
earliest stages of a child's life--zero to 36 months--it is absolutely
critical that they be nurtured and cared for so that they can develop
to their fullest potential. We've all heard by now about how the
synapses in the brain of a child are formed --1,000 trillion of them
just in those earliest years. Now we have scientific evidence of how
important it is to read to children, to hold children, and to play with
children in order to wire their brains for the skills they'll need
later.
Obviously, the best caretakers of children are loving parents. That
is the best child care--be cared for by prepared parents. No one can
argue against that. But we also know that there are a lot of these
parents who can't be there all day with their children.
So what do we do to proximate that caring, prepared parent situation
when the parent is unable to be there? What are we trying to do? Do we
leave the situation to chance and say to parents, ``Good luck. Do what
you can. Hopefully you can find the kind of care you would provide if
you were there.'' That is a difficult statement to make to parents
since we all understand that not every setting is a safe one or a
healthy one, that in fact there are vast differences in the quality of
child care.
Rather than applying any rigid standards here, however, we will leave
to the States and to communities to decide what works best. And then we
provide the tax incentives to businesses to contribute equipment and
supplies to help to improve the quality child care. We provide the
incentives to those parents who seek out quality child care because it
can cost a bit more. In doing all this we will hopefully encourage
other child care providers to improve their own quality and to
ultimately raise the levels of quality around the country.
With this amendment we also make the child care tax credit refundable
because we realize that as we go from welfare to work that we are going
to have a lot of these poorer families out there who are going to have
difficulty affording quality child care. Refundability is critical--if
we only provide tax credits to those who pay

[[Page S6469]]

taxes, then we miss helping a lot of these poorer families who can
truly use the assistance.
It is certainly a lot more expensive to provide child care than it is
to provide welfare in most States. So as people move from welfare to
work, do we want them leaving kids in the street, where hopefully a
neighbor or someone else is around to keep an eye on them, or should
they be in a quality environment? I think all of us agree they should
be in a quality environment and one that their parents hopefully can
afford.
Senator Jeffords has provided us with a way to reach this goal by
using the Tax Code. It is not a direct appropriation. We realize how
difficult it is to get funding for child care programs. Through the
largess of our membership here over the last number of years, we have
increased the child care block grant to $1 billion. That amount of
money, but it does not even approximate the demand. And only 4 percent
of that total amount is there for quality--hardly enough, really, when
you think of the tremendous increase in demand for child care that is
now going to occur across the country as a result of the enactment of
welfare reform.
This proposal is designed to provide incentives to businesses to set
up quality child care center and to families to seek quality care. We
pay for this by making minor adjustments for those receiving the tax
credit at the highest income levels by reducing the credit
progressively by 1 percent, but never going below a credit of 10
percent of allowable expenses. So by just adjusting the benefit a bit
we can provide the resources here to promote quality.
I urge our colleagues' support. This is going to need 60 votes, and
that is a hard number to reach, but we ought to be doing everything we
can to improve the quality of child care. This ought not to be a
partisan debate. We have come up with an offset. We pay for this with
minor adjustments to the Tax Code. This is a bipartisan amendment. With
my colleagues from Vermont, Kansas, from Maine, from Louisiana, from
Wisconsin and South Dakota, we have come up with a good proposal that
we think meets the concerns that some have raised and still provides a
way to ensure through the Tax Code that child care is not only
available and affordable but also high quality.
And so, at the appropriate time, Mr. President, when the amendment is
offered by the distinguished Senator from Vermont, we would urge our
colleagues to be supportive.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. DODD. I thank my colleague from Vermont.

Amendment Nos. 556, 557, 558, 559, 560, 561, 562, 563, 564, and 565, en
bloc, and 553

Mr. ROTH addressed the Chair.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. I ask unanimous consent that the following amendments be
considered and agreed to en bloc: first, McCain-Levin: Sense of the
Senate regarding stock options with a statement; 2. Enzi: Sense of the
Senate regarding estate tax with a statement; 3. Dodd: Forgiveness of
student loans; 4. Grams: Exception to UBIT for charitable giving; 5.
Dorgan: Disaster relief. 6. Dorgan: IRA withdrawal for disaster relief;
7. Biden: Survivors' benefits/public safety officials; 8. Dodd-D'Amato:
Disability benefits for firefighters and officers; 9. Boxer: Section
401(k) and employer stock; and No. 10. Daschle: Non-Amtrak States. I
urge their adoption.
In addition, I ask that amendment 553 be called up and agreed to.
Mr. COATS. Mr. President, reserving the right to object--
The PRESIDING OFFICER. Is there objection?
Mr. COATS. Reserving the right to object--
The PRESIDING OFFICER. The Senator from Indiana.
Mr. COATS. I am only inquiring from the standpoint that I am a little
lost again on procedure. How much time is left under the bill? Because
I would like to respond to the arguments on the amendment of the
Senator from Vermont.
The PRESIDING OFFICER. There are 3 minutes remaining on the bill. If
the Senator will wait until the 3 minutes have expired, then he can
have up to 10 minutes in his own right.
Mr. COATS. Further reserving the right to object, I asked relative to
the unanimous consent request of the Senator from Delaware. I just
wanted to make sure it didn't include--maybe I misunderstood, but it
didn't include a request to go immediately to those amendments.
The PRESIDING OFFICER. These are amendments on which there appears to
be agreement on both sides of the aisle.
Mr. COATS. To be accepted en bloc.
Mr. ROTH. I asked they be--
Mr. COATS. I withdraw my reservation.
The PRESIDING OFFICER. If there is no objection, the clerk will
report the amendments en bloc.
The legislative clerk read as follows:

The Senator from Delaware [Mr. ROTH] proposes amendment No.
556 for Mr. McCain, amendment No. 557 for Mr. Enzi, amendment
No. 558 for Mr. Dodd, amendment No. 559 for Mr. Grams of
Minnesota, amendment No. 560 for Mr. Dorgan, amendment No.
561 for Mr. Dorgan, amendment No. 562 for Mr. Biden,
amendment No. 563 for Messrs. Dodd and D'Amato, amendment No.
564 for Mrs. Boxer, and amendment No. 565 for Mr. Daschle.

The PRESIDING OFFICER. If there is no objection, the amendments are
considered and agreed to en bloc.
The amendments considered and agreed to en bloc are as follows:

amendment no. 556

(Purpose: To express the sense of the Senate that the Finance Committee
should hold hearings on the tax treatment of stock options)

On page 267, between lines 15 and 16, insert the following:

SEC. . SENSE OF THE SENATE REGARDING TAX TREATMENT OF STOCK
OPTIONS.

(a) Findings.--The Senate finds that--
(1) currently businesses can deduct the value of stock
options as a business expense on their income tax returns,
even though the stock options are not treated as an expense
on the books of those same businesses; and
(2) stock options are the only form of compensation that is
treated in this way.
(b) Sense of the Senate.--It is the sense of the Senate
that the Committee on Finance of the Senate should hold
hearings on the tax treatment of stock options.

Mr. McCAIN. Mr. President, I am pleased to join my colleague from
Michigan, Senator Levin, in offering an amendment regarding the current
double standard employed by corporations today in accounting for stock
options.
The amendment expresses the sense of the Senate that hearings should
be held on S. 576, a bill sponsored by Senator Levin and myself.
S. 576 would close a tax loophole by requiring companies to treat
stock options granted as compensation to employees as an expense for
bookkeeping purposes, if they want to claim this expense as a deduction
for tax purposes. The bill protects average workers by exempting
companies from the requirements of the amendment if they provide stock
options to substantially all of their employees, with more than half
the stock options going to nonmanagement personnel and not more than 20
percent going to a single employee. The bill does not require a
particular accounting treatment; that decision is left to the company.
It simply requires companies to treat stock options the same way for
both accounting and tax purposes.
The Joint Committee on Taxation provided an estimate of the revenue
that is being lost because of this tax loophole. If this loophole is
not closed, over the next 10 years, from 1998 to 2007, the U.S.
Treasury will lose $1.6 billion. That's real money that could be used
to reduce our ever-increasing $5.4 trillion national debt.
A great deal of attention has been focused recently on the
outrageously high levels of executive compensation paid by some
companies. The New York Times printed an article on March 30, 1997,
that listed the compensation levels of several top corporate executives
in 1996. For example:

IBM's Chairman, Louis V. Gerstner, Jr., received a
compensation package worth $20.2 million.
General Electric gave its Chairman, John F. Welch, Jr., a
package worth $30 million.
And Michael Eisner, Chairman of Walt Disney Corporation,
got $8.7 million in salary and bonuses, plus stock options
worth $181 million in today's market--the largest single
grant in corporate history, according to the article.

Under current law, corporations can easily hide these multimillion
dollar executive compensation plans from their stockholders or other
investors. That is because the stock options that make up a large and
increasing portion of these packages need not be counted

[[Page S6470]]

as an expense when calculating company earnings.

Simply put, if a company pays $100 to an employee as salary, that
$100 is deducted from the company's total profits. That seems logical.
But if a company gives that same employee 100 dollars' worth of stock
options as part of their compensation package, the company's total
profits are unaffected. And the actual value of those stock options may
very well increase several fold over time.
Stock options given as compensation to company employees are simply
mentioned in a footnote in the annual report to shareholders--which, by
the way, is a much-needed yet inadequate change in the accounting rules
required by the Federal Accounting Standards Board starting this year.
The result is the shareholders are given an inflated picture of the
company's profits, and the top executives can take credit for those
artificially inflated profits.
An article in the Wall Street Journal, dated January 14, 1997, stated
these new rules could reduce some companies' annual earnings by as much
as 11 to 32 percent. Yet, the required footnote could be overlooked by
all but the most astute of stockholders.
One might reasonably ask how an arcane accounting rule could have
such a large effect on the bottom line of corporations. The answer lies
in the growth and value of stock options as a means of executive
compensation.
Stock option plans in 1996 accounted for almost 45 percent of total
executive compensation at 56 of our Nation's largest corporations, an
increase of 5 percent in just 1 year. The portion of compensation made
up of actual cash salary declined by 5 percent in just 1 year.
At the same time, the value of stock options increased dramatically
as overall market performance soared in the last few years. The New
York Times piece cited earlier also estimated the future value of stock
options to those top executives, based on the most likely time the
options would be exercised. The most impressive gain would be realized
by Mr. Eisner, whose $181 million in Disney options received last year
would be worth $583.7 million in 2007.
Yet, if any Disney shareholder looked at the annual report, all they
will find is a footnote about the value of stock options granted to Mr.
Eisner and other top executives. The bottom line--the profit
statement--will be overstated by at least $181 million.
Why shouldn't the true value of Mr. Eisner's compensation package be
included in calculating Disney's earnings? How can stockholders
evaluate the true value of executive compensation if the value is just
buried in a footnote somewhere in the annual report?

I recognize that there is a serious opposition to S. 576 in the
business community. And I fully understand why. Companies save millions
every year by claiming the value of stock options granted to employees
as a deductible expense on their taxes. The Wall Street Journal article
states that companies saved hundreds of millions of dollars in 1996
taxes because of this loophole:

Microsoft saves $352 million.
Intel saved 196 million.
Disney Corporation saved $44 million.

No other type of compensation can be treated as an expense for tax
purposes, without also being treated as an expense on the company
books. This double standard is exactly the kind of inequitable
corporate benefit that makes the American people irate and must be
eliminated. If companies do not want to fully disclose on their books
how much they are compensating their executives, then they should not
be able to claim a tax benefit for it.
S. 576 would end an inequitable corporate subsidy and restore
fairness in the treatment of stock options. It would provide an
additional $1.6 billion in deficit reduction by closing this corporate
tax loophole.
The amendment Senator Levin and I are offering today is intended to
urge full and open hearings on this issue. Industry will have an
opportunity to express their views and explain their opposition to S.
576. I urge my colleagues to vote for the amendment, and I look forward
to the hearings.

At the appropriate place in the bill, insert the following:

SEC. . SENSE OF THE SENATE ON ESTATE TAXES.

(a) The Senate finds that whereas--
(1) The Federal estate tax punishes hard working small
business owners and discourages savings and growth; and
(2) The Federal estate tax imposes an unfair economic
burden on small businesses and reduces their ability to
survive and complete with large corporations; and
(3) A reduction in Federal estate taxes for family-owned
farms and enterprises will help to prevent the liquidation of
small businesses that strengthen American communities by
providing jobs and security;
(b) It is the Sense of the Senate that--
(1) The estate tax relief provided in this bill is an
important step that will enable more family-owned farms and
small businesses to survive and continue to provide economic
security and job creation in American communities; and
(2) Congress should eliminate the Federal estate tax
liability for family-owned businesses by the end of 2002 on a
deficit-neutral basis.

Mr. ENZI. Mr. President, I rise to offer a sense of the Senate
amendment that calls for a repeal of the Federal estate tax on family
owned businesses by 2002. I commend Chairman Roth and the Finance
Committee on the progress they have made by increasing the estate tax
exemption for individuals and by excluding the first $1 million family
owned businesses from Federal death tax liability. I look forward to
working with my colleagues toward repealing the death tax on family
businesses.
I introduce this resolution because I believe there is still much
work to be done. The Federal death tax on family owned business tax
punishes those who have worked hard their entire life building up a
small business or a family farm only to have their children see it
disappear in order to pay the Federal death taxes. The death tax
discourages thrift and pierces the very heart of the American economy--
small businesses.
Mr. President, small businesses are the backbone of the American
economy. The simple fact is that most businesses in this country are
small businesses. Out of the nearly 5\1/2\ million employers in this
country, 99 percent are businesses with fewer than 500 employees.
Almost 90 percent of those businesses employ fewer than 20 employees.
Since the early 1970's, small businesses have created two out of every
three net new jobs in this country. This remarkable job growth
continued even during periods of slow national growth and downturns
when most large corporations were downsizing and laying off workers.
Small businesses employ more than half of the private sector workforce
and are responsible for producing roughly half our Nation's gross
domestic product. By punishing small businesses, the Federal death tax
stifles our economy, discourages ingenuity, and threatens the economic
security of many of our families.
The Federal death tax also tears at the bonds that unite parents and
children and families and communities. The family business has
historically been one of the primary means for children to learn skills
and virtues that help throughout their entire lives. Many of the small
business in Wyoming are ranches and farms, and I know many of the hard-
working men and women in Wyoming who run these family ranches and
farms. The whole family pitches in to harvest the crops, feed the
livestock, mend the fences, fix the irrigation ditches, plow the roads,
herd the sheep and cattle, and plan for next year's yield. Children
learn that hard work and responsible planning are necessary ingredients
for success in work as in life. They learn respect for the land that is
their livelihood. They learn to appreciate the labor of their parents
and grandparents and they realize their own labor is an investment in
their future and the future of their children.

I myself ran a small family owned shoe store in Gillette, WY. We
didn't have a separate division for merchandising and marketing. We
didn't have an accounting department to sort out the complicated Tax
Code. We all wore many hats. We had to sell the shoes, balance the
books, keep track of our inventory, and straighten out the shelves. Let
me tell you that we all learned to pitch in to get the job done. We
learned to work together and we learned to appreciate the hard work and
sacrifices each of us made to keep the store running smoothly. We also
learned firsthand the importance of living by the golden rule. If you
don't treat your customers well in the retail business they don't
forget. This is especially true of folks in small towns

[[Page S6471]]

where there are always a few people who remember what you did as a kid
and who can even tell you stories about your parents and grandparents.
The joy is, they also remember you when you treat them well. The family
owned business is an important medium through which we pass on our
heritage from one generation to the next.
Mr. President, our Tax Code represents our tax policy and we should
be ashamed at a code which punishes families and stifles our economy.
Every year our Tax Code forces thousands of families to sell their
businesses just to pay the repressive Federal death tax. It is time we
correct this injustice by providing meaningful relief for America's
families and their small businesses. I commend the chairman for his
diligent work in crafting a tax bill that takes an important first step
toward reforming the death tax. I look forward to working with my
colleagues in repealing this burdensome tax in the near future. This
sense of the Senate resolution expresses our firm intent to work
together toward this end. I ask for your support in this important
endeavor.
I thank the chair and yield the floor.

amendment no. 558

(Purpose: To amend the Internal Revenue Code of 1986 regarding the
treatment of cancellation of student loans)

On page 77, between lines 11 and 12, insert the following:

SEC. . TREATMENT OF CANCELLATIION OF CERTAIN STUDENT LOANS.

(a) Certain Loans by Exempt Organizations.--
(1) In general.--Paragraph (2) of section 108(f) (defining
student loan) is amended by striking ``or'' at the end of
subparagraph (b) and by striking subparagraph (D) and
inserting the following:
``(D) any educational organization described in section
170(b)(1)(A)(ii) if such loan is made--
``(i) pursuant to an agreement with any entity described in
subparagraph (A), (B), or (C) under which the funds from
which the loan was made were provided to such educational
organization, or
``(ii) pursuant to a program of such educational
organization which is designed to encourage its students to
serve in occupations with unmet needs or in areas with unmet
needs and under which the services provided by the students
(or former students) are for or under the direction of a
governmental unit or an organization described in section
501(c)(3) and exempt from tax under section 501(a).

The term `student loan' includes any loan made by an
educational organization so described or by an organization
exempt from tax under section 501(a) to refinance a loan
meeting the requirements of the preceding sentence.''
(2) Exception for discharges on account of services
performed for certain lenders.--Subsection (f) of section 108
is amended by adding at the end the following new paragraph:
``(3) Exception for discharges on account of services
performed for certain lenders.--Paragraph (1) shall not apply
to the discharge of a loan made by an organization described
in paragraph (2)(D) (or by an organization described in
paragraph (2)(E) from funds provided by an organization
described in paragraph (2)(D)) if the discharge is on account
of services performed by either such organization.''
(b) Certain Student Loans the Repayment of Which Is Income
Contingent.--Paragraph (1) of section 108(f) is amended by
striking ``any student loan if'' and all that follows and
inserting ``any student loan if--
``(A) such discharge was pursuant to a provision of such
loan under which all or part of the indebtedness of the
individual would be discharged if the individual worked for a
certain period of time in certain professions for any of a
broad class of employers, or
``(B) in the case of a loan made under part D of title IV
of the Higher Education Act 1965 which has a repayment
schedule establish under section 455(e)(4) of such Act
(relating to income contingent repayments), such discharge is
after the maximum repayment period under such loan (as
prescribed under such part).''
(c) Effective Date.--The amendments made by this section
shall apply to discharges of indebtedness after the date of
the enactment of this Act.

Mr. DODD. Mr. President, I rise today to offer a modest amendment
that will make a major difference to thousands of young men and women
who chose careers in community service.
As is well-known, the rewards of a community service job are not the
salaries. Few choose teaching in Head Start, working for the Jesuit
Volunteer Corps, or a career in nursing with the expectation of riches,
big houses or luxurious vacations. In fact, for too many in these
fields the salaries are substandard and pension and other benefits are
questionable. The rewards come from knowing at the end of the day that
they have made a difference in the lives of children and others in
their communities.
Many of these careers require post-secondary education, and today,
higher education means debt. In 1995-96, total federal student loan
debt rose to over $24 billion dollars; $264 million in my home state of
connecticut. Nearly 7 million students borrowed to meet the costs of
college.
Mr. President, I believe we must do more about this problem of rising
student debt. Not only are students deterred from pursuing rewarding,
community-related work, but they and their families are also being
scared off from pursuing the dream of higher education at all. This
undermines our economy and nation as a whole; it is clear we will not
be able to meet the challenges of the next century without harnessing
and nurturing the talents of all Americans.
For nearly 40 years, this is what federal higher education policy has
been about--from the GI bill to Pell grants, the federal government has
provided the means for millions of Americans to attend college. Rising
costs, and the increasing reliance on loans to finance them, is
beginning to undermine our central federal commitment.
There are some good things, but many missed opportunities, In the
bill before us today. The modified HOPE Scholarship should be improved
and I support amendments to do so. The tax deduction for student loan
interest, and some of the family savings provisions will also assist
families in meeting the costs of higher education.
But there is a great deal missing. Most notably, the President's
proposal to support lifelong learning through a $10,000 tax deduction
for tuition. This tax relief is critical to America's families and
others pursuing higher education beyond the first two years. Continuing
education is vitally important for nurses, teachers, technical workers
and others. Yet this package does little for them to assist in these
efforts. The Democratic alternative rightly restored this critical
benefit.
In addition, few of these tax advantages go to the neediest students
and their families, despite the fact that this is the group with the
most limited access to higher education. I hope that we can make
progress on these fronts during today's consideration of this bill.
Mr. President, this amendment also helps fill in the gaps in this
bill. With rising student indebtedness, students literally cannot
afford to take jobs as Head Start teachers, nurses or police officers.
As a result, we and all our communities lose the talents and energies
of these trained and motivated young people.
The Dodd amendment supports the work of students who chose a career
in community service by ensuring that they are not disadvantaged in the
treatment of loan forgiveness associated with their work.
It is not uncommon that public and private non-profit student loan
programs provide for the forgiveness of a student's loans should that
student chose to go into certain community service fields. For
instance, the Federal Perkins Loan programs provides forgiveness for
Head Start teachers, teachers in certain urban and rural areas, police
officers, nurses, members of the Armed Forces and certain others.
However, the Tax Code currently disadvantages those students who
receive loan forgiveness from the private sector. The amount forgiven
by nonpublic entities is currently treated as income, which can result
in much higher tax liability for the student, undermining the effect of
this important benefit.
Specifically, this amendment would expand section 108(f) of the
Internal Revenue Code so that an individual's gross income does not
include forgiveness of loans made by tax-exempt charitable
organizations, such as universities or private foundations, if the
proceeds of such loans are used to pay costs of attendance at an
educational institution or to refinance outstanding student loans and
the student is not employed by the lender organization. As under
present law, the Section 108 (f) exclusion would apply only if the
forgiveness is contingent on the student's working for a certain period
of time in certain professions for any of a broad class of employers,
so long as a public service requirement is met.
The exclusion also corrects an oversight in the enactment of the
income

[[Page S6472]]

contingent repayment option under the current student loan program,
which provides low-income, high-debt students with the option of
stretching out their payments over 25 years. This program allows
students to pursue interests in lower paying fields while continuing to
meet their obligations to the tax payers to repay their student loans.
If the student makes payments for 25 years and still has a remaining
balance, the Government forgives their loan. Unfortunately, when we
enacted this vital program, we neglected to clarify that this
forgiveness should not be taxable. This amendment would make this
correction and fulfill the Government's promise to needy students.
This initiative has been scored by the Joint Tax Committee to have a
minimal impact on revenue and therefore this amendment does not require
offsetting revenues. The administration supports this initiative and it
is also included in Chairman Archer's house bill.
Mr. President, I believe this is a simple step we can take to assist
thousands of young people who chose careers in community service, and I
urge my colleagues to support it.

amendment no. 559

(Purpose: To exclude from unrelated business taxable income for certain
charitable gambling)

``(j) Qualified Games of Chance.--
(1) In general.--The term ``unrelated trade or business''
does not include the activity of qualified games of chance.
(2) Qualified games of chance.--For purposes of this
subsection, the term ``qualified games of chance means any
game of chance, other than provided in subsection (f),
conducted by an organization if--
``(A) such organization is licensed pursuant to State law
to conduct such game,
``(B) only organizations which are organized as nonprofit
corporations or are exempt from tax under section 501(a) may
be so licensed to conduct such game within the State, and
``(C) the conduct of such game does not violate State or
local law.''
____

On page 211, between lines 5 and 6, insert the following:

SEC. 724. DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT ACCOUNTS
MAY BE USED WITHOUT PENALTY TO REPLACE OR
REPAIR PROPERTY DAMAGED IN PRESIDENTIALLY
DECLARED DISASTER AREAS.

(a) In General.--Section 72(t)(2) (relating to exceptions
to 10-percent additional tax on early distributions), as
amended by sections 203 and 303, is amended by adding at the
end the following new subparagraph:
``(G) Distributions for disaster-related expenses.--
Distributions from an individual retirement plan which are
qualified disaster-related distributions.''
(b) Qualified Disaster-Related Distributions.--Section
72(t), as amended by sections 203 and 303, is amended by
adding at the end the following new paragraph:
``(9) Qualified disaster-related distributions.--For
purposes of paragraph (2)(E)--
``(A) In general.--The term `qualified disaster-related
distribution' means any payment or distribution received by
an individual to the extent that the payment or distribution
is used by such individual within 60 days of the payment or
distribution to pay for the repair or replacement of tangible
property which is disaster-damaged property.
``(B) Limitations.--
``(i) Only distributions within 2 years.--The term
`qualified disaster-related distribution' shall only include
any payment or distribution which is made during the 2-year
period beginning on the date of the determination referred to
in subparagraph (D).
``(ii) Dollar limitation.--Such term shall not include
distributions to the extent the amount of such distributions
exceeds $10,000 during the 2-year period described in clause
(i).
``(C) Disaster-damaged property.--The term `disaster-
damaged property' means property--
``(i) which was located in a disaster area on the date of
the determination referred to in subparagraph (C), and
``(ii) which was destroyed or substantially damaged as a
result of the disaster occurring in such area.
``(D) Disaster area.--The term `disaster area' means an
area determined by the President during 1997 to warrant
assistance by the Federal Government under the Robert T.
Stafford Disaster Relief and Emergency Assistance Act.''
(c) Effective Date.--The amendments made by this section
shall apply to payments and distributions after December 31,
1996, with respect to disasters occurring after such date.

SEC. 725. ELIMINATION OF 10 PERCENT FLOOR FOR DISASTER
LOSSES.

(a) General Rule.--Section 165(h)(2)(A) (relating to net
casualty loss allowed only to the extent it exceeds 10
percent of adjusted gross income) is amended by striking
clauses (i) and (ii) and inserting the following new clauses:
``(i) the amount of the personal casualty gains for the
taxable year,
``(ii) the amount of the federally declared disaster losses
for the taxable year (or, if lesser, the net casualty loss),
plus
``(iii) the portion of the net casualty loss which is not
deductible under clause (ii) but only to the extent such
portion exceeds 10 percent of the adjusted gross income of
the individual.

For purposes of the preceding sentence, the term `net
casualty loss' means the excess of personal casualty losses
for the taxable year over personal casualty gains.''
(b) Federally Declared Disaster Loss Defined.--Section
165(h)(3) (relating to treatment of casualty gains and
losses) is amended by adding at the end the following new
subparagraph:
``(C) Federally declared disaster loss.--
``(i) In general.--The term `federally declared disaster
loss' means any personal casualty loss attributable to a
disaster occurring during 1997 in an area subsequently
determined by the President of the United States to warrant
assistance by the Federal Government under the Robert T.
Stafford Disaster Relief and Emergency Assistance Act.
``(ii) Dollar limitation.--Such term shall not include
personal casualty losses to the extent such losses exceed
$10,000 for the taxable year.''
(c) Conforming Amendment.--The heading for section
165(h)(2) is amended by striking ``Net casualty loss'' and
inserting ``Net nondisaster casualty loss''.
(d) Effective Date.--The amendments made by this section
shall apply to losses attributable to disasters occurring
after December 31, 1996, including for purposes of
determining the portion of such losses allowable in taxable
years ending before such date pursuant to an election under
section 165(i) of the Internal Revenue Code of 1986.
____

amendment no. 561

(Purpose: To authorize the Secretary of the Treasury to abate the
accrual of interest on income tax underpaymnets by taxpayers located in
Presidentially declared disaster areas if the Secretary extends the
time for filing returns and payment of tax (and waives any penalties
relating to the failure to so file or so pay) for such taxpayers)

Ordered to lie on the table and to be printed.
Amendment intended to be proposed by Mr. Dorgan.
Viz:
On page 211, between lines 5 and 6, insert the following:

SEC. 724. ABATEMENT OF INTEREST ON UNDERPAYMENTS BY TAXPAYERS
IN PRESIDENTIALLY DECLARED DISASTER AREAS.

(a) In General.--Section 6404 (relating to abatements) is
amended by adding at the end the following:
``(h) Abatement of Interest on Underpayments by Taxpayers
in Presidentially Declared Disaster Areas.--
``(1) In general.--If the Secretary extends for any period
of time for filing income tax returns under section 6081 and
the time for paying income tax with respect to such returns
under section 6161 (and waives any penalties relating to the
failure to so file or so pay) for any individual located in a
Presidentially declared disaster area, the Secretary shall
abate for such period the assessment of any interest
prescribed under section 6601 on such income tax.
``(2) Presidentially declared disaster area.--For purposes
of paragraph (1), the term `Presidentially declared disaster
area' means, with respect to any individual, any area which
the President has determined during 1997 warrants assistance
by the Federal Government under the Robert T. Stafford
Disaster Relief and Emergency Assistance Act.
``(3) Individual.--For purposes of this subsection, the
term `individual' shall not include any estate or trust.''
(b) Effective Date.--The amendment made by this section
shall apply to disasters declared after December 31, 1996.
____

amendment no. 562

At the appropriate place, insert the following:

SEC. SURVIVOR BENEFITS FOR PUBLIC SAFETY OFFICERS KILLED IN
THE LINE OF DUTY.

In General.--Part III of subchapter B of chapter 1
(relating to items specifically excluded from gross income)
is amended by redesignating section 138 as section 139 and by
inserting after section 137 the following new section:

``SEC. 138. SURVIVOR BENEFITS ATTRIBUTABLE TO SERVICE BY A
PUBLIC SAFETY OFFICER WHO IS KILLED IN THE LINE
OF DUTY.

``(a) In General.--Gross income shall not include any
amount paid as a survivor annuity on account of the death of
a public safety officer (as such term is defined in section
1204 of the Omnibus Crime Control and Safe Streets Act of
1968) killed in the line of duty--
``(1) if such annuity is provided under a governmental plan
which meets the requirements of section 401(1) to the spouse
(or a former spouse) of the public safety officer or to a
child of such officer; and
``(2) to the extent such annuity is attributable to such
officer's service as a public safety officer.

[[Page S6473]]

``(b) Exceptions.--
``(1) In general.--Subsection (a) shall not apply with
respect to the death of any public safety officer if--
``(A) the death was caused by the intentional misconduct of
the officer or by such officer's intention to bring about
such officer's death;
``(B) the officer was voluntarily intoxicated (as defined
in section 1204 of the Omnibus Crime Control and Safe Streets
Act of 1968) at the time of death; or
``(C) the officer was performing such officer's duties in
grossly negligent manner at the time of death.
``(2) Exception for benefits paid to certain individuals.--
Subsection (a) shall not apply to any payment to an
individual whose actions were a substantial contributing
factor to the death of the officer.
(b) Effective Date.--The amendments made by this subsection
shall apply to amounts received in taxable years beginning
after December 31, 1996, with respect to individuals dying
after such date.
____

amendment no. 563

(Purpose: To clarify the tax treatment of certain disability benefits
received by former police officers or firefighters)

On page 267, between lines 15 and 16, insert the following:

SEC. . TREATMENT OF CERTAIN DISABILITY BENEFITS RECEIVED BY
FORMER POLICE OFFICERS OR FIREFIGHTERS.

(a) General Rule.--For purposes of determining whether any
amount to which this section applies is excludable from gross
income under section 104(a)(1) of the Internal Revenue Code
of 1986, the following conditions shall be treated as
personal injuries or sickness in the course of employment:
(1) Heart disease.
(2) Hypertension.
(b) Amounts To Which Section Applies.--This section shall
apply to any amount--
(1) which is payable--
(A) to an individual (or to the survivors of an individual)
who was a full-time employee of any police department or fire
department which is organized and operated by a State, by any
political subdivision thereof, or by any agency or
instrumentality of a State or political subdivision thereof,
and
(B) under a State law (as in existence on July 1, 1992)
which irrebuttably presumed that heart disease and
hypertension are work-related illnesses but only for
employees separating from service before such date; and
(2) which is received in calendar year 1989, 1990, or 1991.

For purposes of the preceding sentence, the term ``State''
includes the District of Columbia.
(c) Waiver of Statute of Limitations.--If, on the date of
the enactment of this Act (or at any time within the 1-year
period beginning on such date of enactment) credit or refund
of any overpayment of tax resulting from the provisions of
this section is barred by any law or rule of law, credit or
refund of such overpayment shall, nevertheless, be allowed or
made if claim therefore is filed before the date 1 year after
such date of enactment.

SEC. . REMOVAL OF DOLLAR LIMITATION ON BENEFIT PAYMENTS
FROM A DEFINED BENEFIT PLAN MAINTAINED FOR
CERTAIN POLICE AND FIRE EMPLOYEES.

(a) In General.--Subparagraph (G) of section 415(b)(2) of
the Internal Revenue Code of 1986 is amended by striking
``participant--'' and all that follows and inserting
``participant, subparagraphs (C) and (D) of this paragraph
and subparagraph (B) of paragraph (1) shall not apply.''
(b) Effective Date.--The amendment made by subsection (a)
shall apply to years beginning after December 31, 1996.

amendment no. 564

(Purpose: To provide for diversification in section 401(k) plan
investments)

On page 208, between lines 16 and 17, insert the following:

SEC. . DIVERSIFICATION IN SECTION 401(K) PLAN INVESTMENTS.

(a) Limitations on Investment in Employer Securities and
Employer Real Property by Cash or Deferred Arrangements.--
Section 407(d)(3) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1107(d)(3)) is amended by adding at
the end the following:
``(D)(i) the term `eligible individual account plan' does
not include that portion of an individual account plan that
consists of elective deferrals (as defined in section
402(g)(3) of the Internal Revenue Code of 1986) pursuant to a
qualified cash or deferred arrangement as defined in section
401(k) of the Internal Revenue Code of 1986 (and earnings
allocable thereto), if such elective deferrals (or earnings
allocable thereto) are required to be invested in qualifying
employer securities or qualifying employer real property or
both pursuant to the documents and instruments governing the
plan or at the direction of a person other than the
participant on whose behalf such elective deferrals are made
to the plan (or the participant's beneficiary).
``(ii) For purposes of subsection (a), such portion shall
be treated as a separate plan.
``(iii) This subparagraph shall not apply to an individual
account plan if the fair market value of the assets of all
individual account plans maintained by the employer equals
not more than 10 percent of the fair market value of the
assets of all pension plans maintained by the employer.
``(iv) This subparagraph shall not apply to an individual
account plan that is an employee stock ownership plan as
defined in section 409(a) or 4975(e)(7) of the Internal
Revenue Code.''.
(v) This subparagraph shall not apply to an individual
account plan if not more than 1 percent of an employees
eligible compensation deposited to the plan as an elective
deferral (as so defined) is required to be invested in the
qualifying employer securities.
(b) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to employer securities and employer real property
acquired after the beginning of the first plan year beginning
after the 90th day after the date of enactment of this Act.
(2) Special Rule for certain acquisitions.--Employer
securities and employer real property acquired pursuant to a
binding written contract to acquire such securities and real
property in effect on the date of enactment of this Act and
at all times thereafter, shall be treated as acquired
immediately before such date.
____

AMENDMENT NO. 565

(Purpose: To expand non-Amtrak States' use of the Intercity Passenger
Rail Funds)

Beginning on page 189, line 24, strike ``and'' and all that
follows through page 190, line 1, and insert the following:
``(III) capital expenditures related to rail operations for
Class II or Class III rail carriers in the State,
``(IV) any project that is eligible to receive funding
under section 5309, 5310, or 5311 of title 49, United States
Code.
``(V) any project that is eligible to receive funding under
section 130 of title 23, United States Code, and
``(VI) the payment of interest.
____

Amendment No. 553

The PRESIDING OFFICER. And amendment No. 553 as a part of that
agreement is agreed to.
The amendment (No. 553) was agreed to, as follows:

amendment no. 553

(Purpose: To express the sense of the Senate that the Internal Revenue
Code of 1986 needs reform)

At the end of page 11, insert the following:

SEC. . SENSE OF THE SENATE REGARDING REFORM OF THE INTERNAL
REVENUE CODE OF 1986.

(a) Findings.--The Senate finds that--
(1) the Internal Revenue Code of 1986 (``tax code'') is
unnecessarily complex, having grown from 14 pages at its
inception to 3,458 pages by 1995;
(2) this complexity resulted in taxpayers spending about
5,300,000,000 hours and $225,000,000,000 trying to comply
with the tax code in 1996;
(3) the current congressional budgetary process is weighted
too heavily toward tax increases, as evidenced by the fact
that since 1954 there have been 27 major bills enacted that
increased Federal income taxes and only 9 bills that
decreased Federal income taxes, 3 of which were de minimis
decreases;
(4) the tax burden on working families has reached an
unsustainable level, as evidenced by the fact that in 1948
the average American family with children paid only 4.3
percent of its income to the Federal Government in direct
taxes and today the average family pays about 25 percent;
(5) the tax code unfairly penalizes saving and investment
by double taxing these activities while only taxing income
used for consumption once, and as a result the United States
has one of the lowest saving rates, at 4.7 percent, in the
industrialized world;
(6) the tax code stifles economic growth by discouraging
work and capital formation through excessively high tax
rates;
(7) Congress and the President have found it necessary, on
2 separate occasions, to enact laws to protect taxpayers from
the abuses of the Internal Revenue Service and a third bill
has been introduced in the 105th Congress; and
(8) the complexity of the tax code has increased the number
of Internal Revenue Service employees responsible for
administering the tax laws to 110,000 and this costs the
taxpayers $9,800,000,000 each year.
(b) Sense of the Senate.--It is the sense of the Senate
that--
(1) the Internal Revenue Code of 1986 needs broad-based
reform; and
(2) the President should submit to Congress a comprehensive
proposal to reform the Internal Revenue Code of 1986.

The PRESIDING OFFICER. Who seeks the floor?
Mr. COATS addressed the Chair.
The PRESIDING OFFICER. The Senator from Indiana.
Mr. COATS. May I inquire now what the time situation is?

____________________